AB547_EN

Assembly Bill No. 547–Committee on Judiciary

CHAPTER..........

AN ACT relating to securities; making various changes to provisions governing securities; 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:

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

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

representative, investment adviser or representative of an investment

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

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

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

social security number of the applicant and any other information the

administrator determines by regulation to be necessary and appropriate to

facilitate the administration of this chapter.

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

has filed and maintains a completed and current registration with the

Securities and Exchange Commission or a self-regulatory organization if

the information contained in that registration is readily available to the

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

central registration depository or another depository for registrations that

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

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

content determined by the administrator by regulation and a consent to

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

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

additional information by an applicant.

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

Central Registration Depository of the National Association of Securities

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

Administrators Association or its successor.

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

90.380 1. Unless a proceeding under NRS 90.420 has been

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

adviser or representative of an investment adviser becomes effective 30

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

including any amendment, if all requirements imposed pursuant to NRS

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

complete when the applicant has furnished information responsive to each

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

authorize an earlier effective date of licensing.

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

adviser or representative of an investment adviser is effective until

terminated by revocation, suspension, expiration or withdrawal.

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

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

sales representative is licensed.

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

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

administrator by regulation or order authorizes multiple licenses.

5. If a person licensed as a sales representative terminates association

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

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

sales representative was acting shall promptly notify the administrator.

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

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

investment adviser or representative of an investment adviser to be issued

to applicants subject to limitations and conditions on the nature of the

activities that may be conducted by persons so licensed.

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

adviser or representative of an investment adviser expires if:

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

when it is due; or

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

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

licensed person:

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

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

the amount of $25,

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

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

expiration, and the licensed person must thereafter submit a new

application for licensing if he desires to be relicensed.

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

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

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

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

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

licensed person [or essential employee] from association with a licensed

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

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

officer, director, sales representative, investment adviser or representative

of an investment adviser, or a person occupying a similar status or

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

administrator finds that the order is in the public interest and that the

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

adviser, any partner, officer, director, sales representative, investment

adviser, representative of an investment adviser , or person occupying a

similar status or performing similar functions or any person directly or

indirectly controlling the broker-dealer or investment adviser:

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

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

denying effectiveness, was incomplete in a material respect or contained a

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

false or misleading with respect to a material fact;

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

now or formerly in effect or a regulation or order adopted or issued under

this chapter;

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

administrator of another state or a court of competent jurisdiction that the

person has violated the Securities Act of 1933, the Securities Exchange Act

of 1934, the Investment Advisers Act of 1940, the Investment Company

Act of 1940, the Commodity Exchange Act or the securities law of any

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

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

state;

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

misdemeanor which the administrator finds:

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

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

commit any of the foregoing offenses;

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

investment adviser, depository institution, insurance company or

fiduciary; or

(3) Involves the larceny, theft, robbery, extortion, forgery,

counterfeiting, fraudulent concealment, embezzlement, fraudulent

conversion or misappropriation of money or securities or conspiracy to

commit any of the foregoing offenses;

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

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

investment adviser, representative of an investment adviser, underwriter,

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

company, depository institution or insurance company or from engaging in

or continuing any conduct or practice in connection with any of the

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

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

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

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

an investment adviser;

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

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

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

state, Canadian province or territory or by the Securities and Exchange

Commission or a comparable regulatory agency of another country, entered

after notice and opportunity for hearing, denying, suspending or revoking

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

adviser or representative of an investment adviser;

(2) A suspension or expulsion from membership in or association

with a member of a self-regulatory organization;

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

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

for hearing by the administrator, the securities agency or administrator of

another state, Canadian province or territory, the Securities and Exchange

Commission or a comparable regulatory agency of another country, or the

Commodity Futures Trading Commission; or

(5) An order by the Commodity Futures Trading Commission

denying, suspending or revoking registration under the Commodity

Exchange Act;

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

business;

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

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

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

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

broker-dealer or investment adviser;

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

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

knowledge of the securities business; or

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

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

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

fact or transaction known to the director when the license became effective

unless the proceeding is instituted within 90 days after issuance of the

license.

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

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

representative, investment adviser or representative of an investment

adviser or is adjudicated mentally incompetent or subjected to the control

of a committee, conservator or guardian or cannot be located after

reasonable search, the administrator may by order deny the application or

revoke the license.

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

performing the function of a representative of an investment adviser or

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

does not include an investment adviser, sales representative or

representative of an investment adviser who holds a license or registration

issued in accordance with the provisions of this chapter.]

Sec. 4. NRS 90.440 is hereby amended to read as follows:

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

applicant without prejudice before the license becomes effective.

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

investment adviser or representative of an investment adviser becomes

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

withdraw or within such shorter period as the administrator determines,

unless:

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

is filed;

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

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

the application.

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

withdrawal becomes effective at the time and upon the conditions the

administrator by order determines. If additional information is requested,

withdrawal is effective 30 days after the additional information is filed.

Although no proceeding is pending or instituted and withdrawal becomes

effective, the administrator may institute a proceeding pursuant to NRS

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

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

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

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

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

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

the administrator under this chapter or to aid in enforcement of this

chapter.

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

administrator may publish information concerning a violation of this

chapter or a regulation or order of the administrator under this chapter or

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

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

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

chapter the administrator or any officer or employee designated by the

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

hearings, administer oaths and affirmations, render findings of fact and

conclusions of law, subpoena witnesses, compel their attendance, take

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

papers, correspondence, memoranda, agreements or other documents or

records which the administrator determines to be relevant or material to the

investigation or proceeding. A person whom the administrator does not

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

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

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

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

as to the facts and circumstances concerning the matter to be investigated.

4. If the activities constituting an alleged violation for which the

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

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

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

of another state.

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

the administrator or a designated officer or employee pursuant to subpoena,

the administrator or designated officer or employee may apply to the court

for an order compelling compliance. A request for an order of compliance

may be addressed to:

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

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

subject to service of process in this state; or

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

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

state.

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

compliance, the administrator shall either send notice of the request by

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

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

respondent actual notice.

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

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

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

advisory service if:

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

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

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

who purchases or offers to purchase a security [or investment advisory

service] if:

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

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

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

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

offer:

(a) Originates in this state; or

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

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

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

accepted in this state if acceptance:

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

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

writing, outside this state.

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

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

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

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

acceptance is mailed.

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

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

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

(a) Is not published in this state; or

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

circulation outside this state during the past 12 months.

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

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

to all editions.

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

purchase made in a radio or television program or other electronic

communication received in this state which originates outside this state is

not made in this state.

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

other electronic communication is considered as having originated in this

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

located within the state, unless:

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

outside this state for redistribution to the general public in this state;

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

network with the electronic signal originating from outside this state for

redistribution to the general public in this state;

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

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

electronic system; or

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

which originates within this state, but which is not intended for

redistribution to the general public in this state.

Sec. 7. Sections 1 and 2 of this act expire by limitation on the date on

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

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

to restrict the use of professional, occupational and recreational licenses of

persons who:

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

proceeding to determine the paternity of a child or to establish or enforce

an obligation for the support of a child; or

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

children,

are repealed by the Congress of the United States.

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