requires two-thirds majority vote (§ 2)                                                   

                                                                                                  

 

Assembly Bill No. 547–Committee on Judiciary

 

(On Behalf of Secretary of State)

 

March 23, 2001

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Makes various changes to provisions governing securities. (BDR 7‑502)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to securities; making various changes to provisions governing securities; increasing the licensing fees for broker-dealers, sales representatives, investment advisers and representatives of an investment adviser; making various changes to provisions governing the authority of the administrator of the securities division of the office of the secretary of state in licensing matters; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. NRS 90.350 is hereby amended to read as follows:

1-2    90.350  1.  An applicant for licensing as a broker-dealer, sales

1-3  representative, investment adviser or representative of an investment

1-4  adviser must file with the administrator an application for licensing and a

1-5  consent to service of process pursuant to NRS 90.770 and pay the fee

1-6  required by NRS 90.360. The application for licensing must contain the

1-7  social security number of the applicant and any other information the

1-8  administrator determines by regulation to be necessary and appropriate to

1-9  facilitate the administration of this chapter.

1-10    2.  The requirements of subsection 1 are satisfied by an applicant who

1-11  has filed and maintains a completed and current registration with the

1-12  Securities and Exchange Commission or a self-regulatory organization if

1-13  the information contained in that registration is readily available to the

1-14  administrator through [a central depository system approved by him.] the

1-15  central registration depository or another depository for registrations that

1-16  has been approved by the administrator by regulation or order. Such an

1-17  applicant must also file a notice with the administrator in the form and

1-18  content determined by the administrator by regulation and a consent to

1-19  service of process pursuant to NRS 90.770 and the fee required by

2-1  NRS 90.360. The administrator, by order, may require the submission of

2-2  additional information by an applicant.

2-3    3.  As used in this section, “central registration depository” means the

2-4  Central Registration Depository of the National Association of Securities

2-5  Dealers, Inc., or its successor, and the North American Securities

2-6  Administrators Association or its successor.

2-7    Sec. 2.  NRS 90.360 is hereby amended to read as follows:

2-8    90.360  1.  An applicant for licensing shall pay a nonrefundable

2-9  licensing fee, due annually in the following amounts:

2-10    (a) Broker-dealer, [$150.] $200.

2-11    (b) Sales representative, [$55.] $75.

2-12    (c) Investment adviser, [$150.] $200.

2-13    (d) Representative of an investment adviser, [$55.] $75.

2-14    2.  The administrator by regulation may require licensing of branch

2-15  offices and impose a fee for the licensing and an annual fee.

2-16    3.  For the purpose of this section, a “branch office” means any place of

2-17  business in this state other than the principal office in the state of the

2-18  broker-dealer, from which one or more sales representatives transact

2-19  business.

2-20    Sec. 3.  NRS 90.380 is hereby amended to read as follows:

2-21    90.380  1.  Unless a proceeding under NRS 90.420 has been

2-22  instituted, the license of any broker-dealer, sales representative, investment

2-23  adviser or representative of an investment adviser becomes effective 30

2-24  days after an application for licensing has been filed and is complete,

2-25  including any amendment, if all requirements imposed pursuant to NRS

2-26  90.370 and 90.375 have been satisfied. An application or amendment is

2-27  complete when the applicant has furnished information responsive to each

2-28  applicable item of the application. The administrator may [by order]

2-29  authorize an earlier effective date of licensing.

2-30    2.  The license of a broker-dealer, sales representative, investment

2-31  adviser or representative of an investment adviser is effective until

2-32  terminated by revocation, suspension, expiration or withdrawal.

2-33    3.  The license of a sales representative is only effective with respect to

2-34  transactions effected on behalf of the broker-dealer or issuer for whom the

2-35  sales representative is licensed.

2-36    4.  A person shall not at any one time act as a sales representative for

2-37  more than one broker-dealer or for more than one issuer, unless the

2-38  administrator by regulation or order authorizes multiple licenses.

2-39    5.  If a person licensed as a sales representative terminates association

2-40  with a broker-dealer or issuer or ceases to be a sales representative, the

2-41  sales representative and the broker-dealer or issuer on whose behalf the

2-42  sales representative was acting shall promptly notify the administrator.

2-43    6.  The administrator by regulation may authorize one or more special

2-44  classifications of licenses as a broker-dealer, sales representative,

2-45  investment adviser or representative of an investment adviser to be issued

2-46  to applicants subject to limitations and conditions on the nature of the

2-47  activities that may be conducted by persons so licensed.

2-48    7.  The license of a broker-dealer, sales representative, investment

2-49  adviser or representative of an investment adviser expires if:

3-1    (a) The statement required pursuant to NRS 90.375 is not submitted

3-2  when it is due; or

3-3    (b) The annual fee required by NRS 90.360 is not paid when it is due.

3-4    8.  A license that has expired may be reinstated retroactively if the

3-5  licensed person:

3-6    (a) Submits the statement required pursuant to NRS 90.375; and

3-7    (b) Pays the fee required by NRS 90.360, plus a fee for reinstatement in

3-8  the amount of $25,

3-9  within 30 days after the date of expiration. If the license is not reinstated

3-10  within that time, it shall be deemed to have lapsed as of the date of

3-11  expiration, and the licensed person must thereafter submit a new

3-12  application for licensing if he desires to be relicensed.

3-13    Sec. 4.  NRS 90.420 is hereby amended to read as follows:

3-14    90.420  1.  The administrator by order may deny, suspend or revoke

3-15  any license, fine any licensed person , [or essential employee,] limit the

3-16  activities governed by this chapter that an applicant[,] or licensed person

3-17  [or essential employee] may perform in this state, bar an applicant[,] or

3-18  licensed person [or essential employee] from association with a licensed

3-19  broker-dealer or investment adviser or bar from employment with a

3-20  licensed broker-dealer or investment adviser a person who is a partner,

3-21  officer, director, sales representative, investment adviser or representative

3-22  of an investment adviser, or a person occupying a similar status or

3-23  performing a similar function for an applicant or licensed person, if the

3-24  administrator finds that the order is in the public interest and that the

3-25  applicant or licensed person or, in the case of a broker-dealer or investment

3-26  adviser, any partner, officer, director, sales representative, investment

3-27  adviser, representative of an investment adviser , or person occupying a

3-28  similar status or performing similar functions or any person directly or

3-29  indirectly controlling the broker-dealer or investment adviser:

3-30    (a) Has filed an application for licensing with the administrator which,

3-31  as of its effective date, or as of any date after filing in the case of an order

3-32  denying effectiveness, was incomplete in a material respect or contained a

3-33  statement that was, in light of the circumstances under which it was made,

3-34  false or misleading with respect to a material fact;

3-35    (b) Has violated or failed to comply with a provision of this chapter as

3-36  now or formerly in effect or a regulation or order adopted or issued under

3-37  this chapter;

3-38    (c) Is the subject of an adjudication or determination after notice and

3-39  opportunity for hearing, within the last 5 years by a securities agency or

3-40  administrator of another state or a court of competent jurisdiction that the

3-41  person has violated the Securities Act of 1933, the Securities Exchange Act

3-42  of 1934, the Investment Advisers Act of 1940, the Investment Company

3-43  Act of 1940, the Commodity Exchange Act or the securities law of any

3-44  other state, but only if the acts constituting the violation of that state’s law

3-45  would constitute a violation of this chapter had the acts taken place in this

3-46  state;

3-47    (d) Within the last 10 years has been convicted of a felony or

3-48  misdemeanor which the administrator finds:

4-1       (1) Involves the purchase or sale of a security, taking a false oath,

4-2  making a false report, bribery, perjury, burglary, robbery or conspiracy to

4-3  commit any of the foregoing offenses;

4-4       (2) Arises out of the conduct of business as a broker-dealer,

4-5  investment adviser, depository institution, insurance company or
fiduciary; or

4-6       (3) Involves the larceny, theft, robbery, extortion, forgery,

4-7  counterfeiting, fraudulent concealment, embezzlement, fraudulent

4-8  conversion or misappropriation of money or securities or conspiracy to

4-9  commit any of the foregoing offenses;

4-10    (e) Is or has been permanently or temporarily enjoined by any court of

4-11  competent jurisdiction, unless the order has been vacated, from acting as an

4-12  investment adviser, representative of an investment adviser, underwriter,

4-13  broker-dealer or as an affiliated person or employee of an investment

4-14  company, depository institution or insurance company or from engaging in

4-15  or continuing any conduct or practice in connection with any of the

4-16  foregoing activities or in connection with the purchase or sale of a security;

4-17    (f) Is or has been the subject of an order of the administrator, unless the

4-18  order has been vacated, denying, suspending or revoking his license as a

4-19  broker-dealer, sales representative, investment adviser or representative of

4-20  an investment adviser;

4-21    (g) Is or has been the subject of any of the following orders which were

4-22  issued within the last 5 years, unless the order has been vacated:

4-23      (1) An order by the securities agency or administrator of another

4-24  state, Canadian province or territory or by the Securities and Exchange

4-25  Commission or a comparable regulatory agency of another country, entered

4-26  after notice and opportunity for hearing, denying, suspending or revoking

4-27  the person’s license as a broker-dealer, sales representative, investment

4-28  adviser or representative of an investment adviser;

4-29      (2) A suspension or expulsion from membership in or association

4-30  with a member of a self-regulatory organization;

4-31      (3) An order of the United States Postal Service relating to fraud;

4-32      (4) An order to cease and desist entered after notice and opportunity

4-33  for hearing by the administrator, the securities agency or administrator of

4-34  another state, Canadian province or territory, the Securities and Exchange

4-35  Commission or a comparable regulatory agency of another country, or the

4-36  Commodity Futures Trading Commission; or

4-37      (5) An order by the Commodity Futures Trading Commission

4-38  denying, suspending or revoking registration under the Commodity

4-39  Exchange Act;

4-40    (h) Has engaged in unethical or dishonest practices in the securities

4-41  business;

4-42    (i) Is insolvent, either in the sense that liabilities exceed assets or in the

4-43  sense that obligations cannot be met as they mature, but the administrator

4-44  may not enter an order against a broker-dealer or investment adviser under

4-45  this [subparagraph] paragraph without a finding of insolvency as to the

4-46  broker-dealer or investment adviser;

5-1    (j) Is determined by the administrator in compliance with NRS 90.430

5-2  not to be qualified on the basis of lack of training, experience and

5-3  knowledge of the securities business; or

5-4    (k) Has failed reasonably to supervise a sales representative [or

5-5  employee.] , employee or representative of an investment adviser.

5-6    2.  The administrator may not institute a proceeding on the basis of a

5-7  fact or transaction known to the director when the license became effective

5-8  unless the proceeding is instituted within 90 days after issuance of the

5-9  license.

5-10    3.  If the administrator finds that an applicant or licensed person is no

5-11  longer in existence or has ceased to do business as a broker-dealer, sales

5-12  representative, investment adviser or representative of an investment

5-13  adviser or is adjudicated mentally incompetent or subjected to the control

5-14  of a committee, conservator or guardian or cannot be located after

5-15  reasonable search, the administrator may by order deny the application or

5-16  revoke the license.

5-17    [4.  As used in this section, “essential employee” means a person

5-18  performing the function of a representative of an investment adviser or

5-19  sales representative, or a similar function, for a licensed person. The term

5-20  does not include an investment adviser, sales representative or

5-21  representative of an investment adviser who holds a license or registration

5-22  issued in accordance with the provisions of this chapter.]

5-23    Sec. 5.  NRS 90.440 is hereby amended to read as follows:

5-24    90.440  1.  An application for a license may be withdrawn by the

5-25  applicant without prejudice before the license becomes effective.

5-26    2.  Withdrawal from licensing as a broker-dealer, sales representative,

5-27  investment adviser or representative of an investment adviser becomes

5-28  effective 30 days after receipt by the administrator of an application to

5-29  withdraw or within such shorter period as the administrator determines,

5-30  unless:

5-31    (a) A proceeding to revoke or suspend is pending when the application

5-32  is filed;

5-33    (b) A proceeding to revoke or suspend or to impose conditions upon the

5-34  withdrawal is instituted within 30 days after the application is filed; or

5-35    (c) Additional information is requested by the administrator regarding

5-36  the application.

5-37    3.  If a proceeding is pending or instituted under subsection 2,

5-38  withdrawal becomes effective at the time and upon the conditions the

5-39  administrator by order determines. If additional information is requested,

5-40  withdrawal is effective 30 days after the additional information is filed.

5-41  Although no proceeding is pending or instituted and withdrawal becomes

5-42  effective, the administrator may institute a proceeding pursuant to NRS

5-43  90.420 within [1 year] 2 years after withdrawal became effective and enter

5-44  an order as of the last date on which licensing was effective.

5-45    Sec. 6.  NRS 90.620 is hereby amended to read as follows:

5-46    90.620  1.  The administrator may make an investigation, within or

5-47  outside of this state, as he finds necessary to determine whether a person

5-48  has violated or is about to violate this chapter or any regulation or order of

6-1  the administrator under this chapter or to aid in enforcement of this

6-2  chapter.

6-3    2.  Except as otherwise provided in subsection 4 of NRS 90.730, the

6-4  administrator may publish information concerning a violation of this

6-5  chapter or a regulation or order of the administrator under this chapter or

6-6  concerning types of securities or acts or practices in the offer, sale or

6-7  purchase of types of securities which may operate as a fraud or deceit.

6-8    3.  For the purposes of an investigation or proceeding under this

6-9  chapter the administrator or any officer or employee designated by the

6-10  administrator by regulation , [or] order or written direction may conduct

6-11  hearings, administer oaths and affirmations, render findings of fact and

6-12  conclusions of law, subpoena witnesses, compel their attendance, take

6-13  evidence and require the production, by subpoena or otherwise, of books,

6-14  papers, correspondence, memoranda, agreements or other documents or

6-15  records which the administrator determines to be relevant or material to the

6-16  investigation or proceeding. A person whom the administrator does not

6-17  consider to be the subject of an investigation is entitled to reimbursement at

6-18  the rate of 25 cents per page for copies of documents which he is required

6-19  by subpoena to produce. The administrator may require or permit a person

6-20  to file a statement, under oath or otherwise as the administrator determines,

6-21  as to the facts and circumstances concerning the matter to be investigated.

6-22    4.  If the activities constituting an alleged violation for which the

6-23  information is sought would be a violation of this chapter had the activities

6-24  occurred in this state, the administrator may issue and apply to enforce

6-25  subpoenas in this state at the request of a securities agency or administrator

6-26  of another state.

6-27    5.  If a person does not testify or produce the documents required by

6-28  the administrator or a designated officer or employee pursuant to subpoena,

6-29  the administrator or designated officer or employee may apply to the court

6-30  for an order compelling compliance. A request for an order of compliance

6-31  may be addressed to:

6-32    (a) The district court in and for the county where service may be

6-33  obtained on the person refusing to testify or produce, if the person is

6-34  subject to service of process in this state; or

6-35    (b) A court of another state having jurisdiction over the person refusing

6-36  to testify or produce, if the person is not subject to service of process in this

6-37  state.

6-38    6.  Not later than the time the administrator requests an order for

6-39  compliance, the administrator shall either send notice of the request by

6-40  registered or certified mail, return receipt requested, to the respondent at

6-41  the last known address or take other steps reasonably calculated to give the

6-42  respondent actual notice.

6-43    Sec. 7.  NRS 90.830 is hereby amended to read as follows:

6-44    90.830  1.  NRS 90.310, 90.330, 90.460, 90.570, 90.580, 90.610 and

6-45  90.660 apply to a person who sells or offers to sell a security or investment

6-46  advisory service if:

6-47    (a) An offer to sell is made in this state; or

6-48    (b) An offer to purchase is made and accepted in this state.

7-1    2.  NRS 90.310, 90.330, 90.570, 90.580 and 90.610 apply to a person

7-2  who purchases or offers to purchase a security [or investment advisory

7-3  service] if:

7-4    (a) An offer to purchase is made in this state; or

7-5    (b) An offer to sell is made and accepted in this state.

7-6    3.  For the purpose of this section, an offer to sell or to purchase is

7-7  made in this state, whether or not either party is present in this state, if the

7-8  offer:

7-9    (a) Originates in this state; or

7-10    (b) Is directed by the offeror to a destination in this state and received

7-11  where it is directed, or at a post office in this state if the offer is mailed.

7-12    4.  For the purpose of this section, an offer to purchase or to sell is

7-13  accepted in this state if acceptance:

7-14    (a) Is communicated to the offeror in this state; and

7-15    (b) Has not previously been communicated to the offeror, orally or in

7-16  writing, outside this state.

7-17  Acceptance is communicated to the offeror in this state, whether or not

7-18  either party is present in this state, if the offeree directs it to the offeror in

7-19  this state reasonably believing the offeror to be in this state and it is

7-20  received where it is directed, or at any post office in this state if the

7-21  acceptance is mailed.

7-22    5.  For the purpose of subsections 1 to 4, inclusive, an offer to sell or to

7-23  purchase made in a newspaper or other publication of general, regular and

7-24  paid circulation is not made in this state if the publication:

7-25    (a) Is not published in this state; or

7-26    (b) Is published in this state but has had more than two-thirds of its

7-27  circulation outside this state during the past 12 months.

7-28    6.  For the purpose of subsection 5, if a publication is published in

7-29  editions, each edition is a separate publication except for material common

7-30  to all editions.

7-31    7.  For the purpose of subsections 1 to 4, inclusive, an offer to sell or to

7-32  purchase made in a radio or television program or other electronic

7-33  communication received in this state which originates outside this state is

7-34  not made in this state.

7-35    8.  For the purpose of subsection 7, a radio or television program or

7-36  other electronic communication is considered as having originated in this

7-37  state if either the broadcast studio or originating source of transmission is

7-38  located within the state, unless:

7-39    (a) The program or communication is syndicated and distributed from

7-40  outside this state for redistribution to the general public in this state;

7-41    (b) The program is supplied by a radio, television or other electronic

7-42  network with the electronic signal originating from outside this state for

7-43  redistribution to the general public in this state;

7-44    (c) The program or communication is an electronic signal that originates

7-45  outside this state and is captured for redistribution to the general public in

7-46  this state by a community antenna or cable, radio, cable television, or other

7-47  electronic system; or

7-48    (d) The program or communication consists of an electronic signal

7-49  which originates within this state, but which is not intended for

7-50  redistribution to the general public in this state.

7-51    Sec. 8.  Sections 1 and 3 of this act expire by limitation on the date on

7-52  which the provisions of 42 U.S.C. § 666 requiring each state to establish

7-53  procedures under which the state has authority to withhold or suspend, or

7-54  to restrict the use of professional, occupational and recreational licenses of

7-55  persons who:

7-56    1.  Have failed to comply with a subpoena or warrant relating to a

7-57  proceeding to determine the paternity of a child or to establish or enforce

7-58  an obligation for the support of a child; or

7-59    2.  Are in arrears in the payment for the support of one or more

7-60  children,

7-61  are repealed by the Congress of the United States.

 

7-62  H