TITLE XXXVIII
SECURITIES
CHAPTER 421-B
SECURITIES
Title and Definitions
Section 421-B:1
421-B:1 Short Title. –
This chapter may be cited as the Uniform Securities Act.
Source. 1981, 214:1, eff. Jan. 1, 1982.
Section 421-B:2
421-B:2 Definitions. –
When used in this chapter, unless the context otherwise requires:
I. ""Administrative hearing'' means a proceeding in which the legal rights, duties, immunities, or privileges of a respondent are required by law or rule to be determined by the department after an opportunity for a hearing.
I-a. ""Advertisement'' shall include any notice, circular, letter, or other written communication given to more than one person, or any notice or other announcement in any publication or verbal communication by radio, television, or other electronic media, which offers:
(a) Any analysis, report, or publication concerning securities or which is to be used in making any determination as when to buy or sell securities; or
(b) Any graph, chart, formula, or other device to be used in making any determination concerning when to buy or sell any security, or which security to buy or sell.
I-b. ""Affiliate'' means any person directly or indirectly controlling, controlled by, or under common control with another person.
II. ""Agent'' means any individual, other than a broker-dealer, issuer or issuer-dealer, who represents a broker-dealer, issuer or issuer-dealer in effecting or attempting to effect purchases or sales of securities or an individual other than an investment adviser who represents an investment adviser by providing investment advice or who is an investment adviser representative. ""Agent'' does not include an individual who represents an issuer in:
(a) Effecting transactions in a security exempted by RSA 421-B:17, I(a), (b), (c), (d), (e), (g), (h) or (j);
(b) Effecting transactions exempted from RSA 421-B:17, II(a), (d), (e), (f), (g), (i), (j), (k), (l), (m), (n), (o), (p)(1), or (q);
(c) Effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state;
(d) Effecting transactions in securities registered by notification under RSA 421-B:12 if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state;
(e) Effecting other transactions, if such individual is an officer or director of the issuer, no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, and upon application, such individual is specifically authorized by name in an order issued by the secretary of state; or
(f) Effecting transactions under RSA 421-B:11, I-a(e), if such individual is an officer or director of the issuer to whom no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state.
III. ""Broker-dealer'' means any person engaged in the business of effecting transactions in securities for the account of others or for his own account. ""Broker-dealer'' does not include:
(a) An agent;
(b) An issuer;
(c) A bank, savings institution or trust company;
(d) A person who has no place of business in this state if he effects transactions in this state exclusively with or through:
(1) The issuers of the securities involved in the transactions,
(2) Other broker-dealers, or
(3) Banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit sharing trusts, or other financial institutions or institutional buyers, or to broker-dealers, whether the purchaser is acting for itself or in some fiduciary capacity;
(e) A designated matching service; or
(f) Other persons not within the intent of this paragraph whom the secretary of state by rule or order designates.
IV. ""Attorney general'' means the attorney general or delegatee.
IV-a. (a) ""Branch office'' means:
(1) With regard to an investment adviser, any location other than the main office, identified by any means to broker-dealers or other investment advisers or to the public, customers, or clients as a location at which an investment adviser conducts an investment advisory business.
(2) With regard to a broker-dealer, any location where one or more agents, as defined in paragraph II, regularly conducts the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security, or is held out as such, excluding:
(A) Any location that is established solely for customer service and/or back-office-type functions where no sales activities are conducted and that is not held out to the public as a branch office;
(B) Any location that is the agent's primary residence; provided that:
(i) Only one agent, or multiple agents who reside at that location and are members of the same immediate family, conduct business at the location;
(ii) The location is not held out to the public as an office and the agent does not meet with customers at the location;
(iii) Neither customer funds nor securities are handled at that location;
(iv) The agent is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements, and other communications to the public by such agent;
(v) The agent's correspondence and communications with the public are subject to the broker-dealer's supervision;
(vi) Electronic communications, such as e-mail are made through the electronic system of the broker-dealer;
(vii) All orders for securities are entered through the designated branch office or an electronic system established by the broker-dealer that is reviewable at the branch office;
(viii) Written supervisory procedures pertaining to supervision of activities conducted at the residence are maintained by the broker-dealer; and
(ix) A list of the residence locations are maintained by the broker-dealer;
(C) Any location, other than a primary residence, that is used for securities business for less than 30 business days in any one calendar year, provided the broker-dealer complies with the provisions of IV-a (a)(2)(B)(ii) through (viii);
(D) Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, which is not held out to the public as an office;
(E) Any location that is used primarily to engage in non-securities activities and from which the agent effects no more than 25 securities transactions in any one calendar year; provided that any advertisement or sales literature identifying such location also sets forth the address and telephone number of the location from which the agent conducting business at the non-branch locations is directly supervised;
(F) The floor of a registered national securities exchange where a broker-dealer conducts a direct access business with public customers;
(G) A temporary location established in response to the implementation of a business continuity plan; or
(H) Any other location not within the intent of this paragraph as the secretary of state may determine.
(b) Notwithstanding the exclusions provided in subparagraph IV-a(a)(2), any location that is responsible for supervising the activities of agents of the broker dealer at one or more non-branch locations of the broker-dealer shall be a branch office.
(c) ""Business day'' as used in this paragraph shall not include any partial day provided that the agent or investment adviser representative spends at least 4 hours of such day at his or her designated branch office during the hours that such office is normally open for business.
IV-b. ""Complaint'' means a written statement submitted within a reasonable time following the incident complained of by a person, association, partnership, corporation, state agency (including the staff of the department) or by any other legal entity that sets forth specific allegations and requests administrative action by the department.
V. ""Department'' means the department of state.
V-a. ""Designated matching service'' means a matching service designated by rule or order by the secretary of state under this section in accordance with RSA 421-B:17, II(s).
V-b. ""Designated matching service facility'' means an Internet location or computer system operated, or a seminar or meeting conducted, by a designated matching service in accordance with RSA 421-B:17, II(s).
V-c. ""Ex parte communication'' means the transmittal of information or argument concerning the merits of the subject matter of any adjudicatory proceeding to or from a decision maker in that proceeding without proper notice to and opportunity to participate in by all parties.
V-d. ""Federal covered adviser'' means a person who is registered under section 203 of the Investment Advisers Act of 1940.
V-e. ""Federal covered security'' means any security that is a covered security under Section 18(b) of the Securities Act of 1933 or rules or regulations promulgated thereunder.
VI. ""Fraud,'' ""deceit,'' and ""defraud'' are not limited to common law deceit.
VII. ""Guaranteed'' means guaranteed as to payment of principal and interest or principal and dividends.
VII-a. ""Hearing'' means the receipt and consideration by the department of evidence or argument, or both, in accordance with these rules and applicable law, and includes:
(a) Conducting trial-type evidentiary hearings;
(b) Directing the filing of exhibits, affidavits, memoranda or briefs;
(c) Directing the delivery of oral argument; or
(d) Any combination of these or similar methods.
VIII. ""Industrial bond'' means any obligation issued by a governmental unit (including the United States, any state, any political subdivision of a state, or any agency, or corporate or other instrumentality, of one or more of them) other than a general obligation of a governmental unit having power to tax property or of an agency of the state of New Hampshire:
(a) Which is issued as part of an issue, all or a major portion of the proceeds of which are to be used directly or indirectly in any trade or business, and
(b) The payment of the principal or interest on which (under the terms of such obligation or any underlying arrangement) is, in whole or in major part:
(1) Secured by any interest in property used or to be used in a trade or business or in payment in respect of such property, or
(2) To be derived from payments in respect of property or borrowed money, used or to be used in a trade or business.
IX. ""Investment adviser'' means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities, or other investments, or as to the advisability of investing in, purchasing or selling securities, or as to the advisability of making other investments, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities, or other investments. ""Investment adviser'' also includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. ""Investment adviser'' does not include:
(a) A bank, savings institution or trust company;
(b) A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of the profession;
(c) A broker-dealer whose performance of these services is solely incidental to the conduct of business as a broker-dealer and who receives no special compensation for them;
(d) A publisher of any bona fide newspaper, news magazine or business or financial publication of general, regular, and paid circulation;
(e) A person whose advice, analyses, or reports relate only to securities exempted by RSA 421-B:17, I(a);
(f) A person who has no place of business in this state if the person's only clients in this state are other investment advisers, federal covered advisers, broker-dealers or persons to whom sales are exempted under RSA 421-B:17, II(g);
(g) A person who transacts business in the field of insurance, provided such business is solely and exclusively in the field of insurance;
(h) Any real estate broker who does not promote or sell any interest in any limited partnership;
(i) Any person that is a federal covered adviser;
(j) A person who has no place of business in this state and who, during the preceding 12 month period, has had not more than 5 clients, other than those specified in subparagraph (f), who are residents of this state;
(k) Such other persons not within the intent of this paragraph as the secretary of state may by rule or order designate.
IX-a. ""Investment adviser representative'' means any partner, officer, director, or a person occupying a similar status or performing similar functions, or other individual, except clerical or ministerial personnel, who is employed by or associated with an investment adviser that is licensed or required to be licensed under this chapter, or who has a place of business located in this state and is employed by or associated with a federal covered adviser; and who does any of the following:
(a) Makes any recommendations or otherwise renders advice regarding securities or other investments;
(b) Manages accounts or portfolios of clients;
(c) Determines which recommendation or advice regarding securities or other investments should be given;
(d) Solicits, offers, or negotiates for the sale of or sells investment advisory services; or
(e) Supervises employees who perform any of the functions in subparagraphs (a)-(d).
IX-b. ""Investment advisory contract'' means any contract or agreement whereby a person agrees to act as an investment adviser or to manage any investment or trading account for a person other than an investment adviser as defined in RSA 421-B:2, IX.
X. ""Investment metal'' means any object which contains gold, silver, or platinum, or any other metal which the secretary of state may specify by rule upon a showing that such other metal is being purchased and sold by the public as an investment.
XI. ""Investment gem'' means any gem which the secretary of state may specify by rule upon a showing that such gem is being purchased and sold by the public as an investment.
XII. ""Investment metal contract'' or ""investment gem contract'':
(a) Means:
(1) A sale of an investment metal or investment gem in which the seller or an affiliate of the seller retains physical possession of the investment metal or investment gem; or
(2) A contract of purchase or sale which provides for the future delivery of an investment metal or investment gem, or any option to purchase or option to sell such a contract; or
(3) A sale of an investment metal or investment gem pursuant to a contract known to the trade as a margin account, margin contract, leverage account, or leverage contract provided, however, that, for the purposes of this paragraph, the term ""leverage contract'' shall also mean any contract for the purchase or sale of any investment metal or investment gem, whereby the seller, or an agent, affiliate or representative of the seller, directly or indirectly arranges, or offers to arrange, for the financing of any portion of the total amount of the purchase or sale of the investment metal or investment gem.
(b) But shall not include:
(1) The sale of an investment metal or investment gem where the seller has reasonable grounds to believe that the investment metal or investment gem is being acquired for manufacturing, commercial or industrial purposes; or
(2) The sale, or contract for the future purchase or sale, of jewelry, art objects or other manufactured or crafted goods other than bullion or bulk sales of coins; or
(3) The sale of an investment metal or investment gem where full payment is made to the seller and physical delivery is made to the purchaser personally, and not to an agent, within 20 days of the date of purchase provided that a purchaser may designate a bank, savings institution, trust company, or licensed broker-dealer, within this state only, and not within any other state, to accept physical delivery on his behalf if such bank, savings institution, trust company or licensed broker-dealer maintains such investment metal or investment gem in safekeeping and as the specifically identifiable property of the purchaser; or
(4) Any futures contracts traded on a commodities exchange registered under the Federal Commodity Futures Trading Commission Act of 1974.
XII-a. ""Investor member'' means an investor who has been properly qualified by and uses a designated matching service. Any of the following investors are properly qualified: any institutional buyer as described in RSA 421-B:17, II(g), any accredited investor as defined in Regulation D, 230.501 of the Securities and Exchange Act of 1933; or any individual investor who certifies that such investor possesses sufficient knowledge and experience in business and financial matters so as to be capable of evaluating the merits and the risks of prospective investments.
XIII. ""Issuer'' means any person who issues or proposes to issue any security and any promoter who acts for an issuer to be formed, except:
(a) With respect to certificates of deposit or trust certificates, ""issuer'' means the person performing the act and assuming the duties of depositor, manager or trustee pursuant to the provisions of the trust or other instrument under which the security is issued;
(b) With respect to certificates of interest or participation in oil, gas or mining rights, titles or leases, ""issuer'' means the owner of any such right, title or lease, who creates a fractional interest therein for the purposes of sale.
XIII-a. ""Issuer-dealer'' means any person including, but not limited to, a corporation, partnership, limited liability company, association, joint stock company, trust where the interests of the beneficiaries are evidenced by a security, unincorporated organization, government, political subdivision of a government, or any other entity, organized in this state or having its principal office in this state, and issuing its own securities for sale directly to any member of the general public who is not a general partner, executive officer, manager, or director of the issuer.
XIII-b. ""Issuer-member'' means an issuer who uses a designated matching service facility in accordance with RSA 421-B:17, II(s).
XIV. ""Non-issuer'' means not directly or indirectly for the benefit of the issuer or an affiliate of the issuer.
XIV-a. ""NSMIA'' means the National Securities Improvement Act of 1996, or rules or regulations promulgated thereunder.
XV. ""Open end mutual fund'' means an open end management company as defined in the Investment Company Act of 1940.
XV-a. ""Order'' means an order issued pursuant to this chapter.
XV-b. ""Other investment company'' means a closed end management company, face amount certificate company, or unit investment trust as such terms are defined in the Investment Company Act of 1940.
XVI. ""Person'' means an individual, corporation, partnership, association, joint stock company, trust where the interests of the beneficiaries are evidenced by a security, unincorporated organization, a government, political subdivision of a government, or any other entity.
XVI-a. ""Petition'' means a written request for action by the secretary of state including a staff petition for relief and any petition for rehearing pursuant to RSA 541.
XVI-b. ""Presiding officer'' means a person to whom the secretary of state has delegated the authority to preside over some or all of an administrative hearing.
XVII. ""Purchasing for investment'' means a purchase made for investment and not for the purpose of resale. In determining whether securities have been purchased for investment, the length of the period for which the securities are held will be one of the factors considered. Securities held for 2 years after their purchase shall be conclusively deemed to have been purchased for investment.
XVII-a. ""Revocation'' means the recall and cancellation of a license, registration, or privilege for either a definite or indefinite period of time. A new application and fee shall be submitted prior to the issuance of a new license or registration if the applicant otherwise qualifies.
XVIII. ""Rule'' means a rule as defined in RSA 541-A:1, XV, subject to all of the requirements of RSA 541-A.
XIX. ""Sale,'' ""sell,'' ""offer for sale,'' or ""offer to sell'' includes the following meanings and transactions:
(a) ""Sale'' or ""sell'' includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.
(b) ""Offer'' or ""offer to sell'' includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.
(c) Any security given or delivered with, or as a bonus on account of; any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
(d) A purported gift of assessable stock is considered to involve an offer and sale.
(e) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.
(f) The terms defined in this paragraph do not include:
(1) Any bona fide pledge or loan; or
(2) Any stock dividend, whether or not the corporation distributing the dividend is the issuer of the stock.
XIX-a. ""Sanction'' means any penalty imposed or authorized for imposition by the secretary of state, pursuant to RSA 421-B, including but not limited to license suspension or revocation, order to cease and desist or monetary penalties.
XIX-b. ""Secretary of state'' means the secretary of state or designee.
XIX-c. ""Securities Act of 1933,'' ""Securities Exchange Act of 1934,'' ""Investment Advisers Act of 1940,'' and ""Investment Company Act of 1940'' mean the federal statutes of those names as amended before or after the effective date of this paragraph.
XX. (a) ""Security'' means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit sharing agreement; membership interest in a limited liability company; partnership interest in a registered limited liability partnership; partnership interest in a limited partnership; collateral trust certificate; preorganization certificate or subscription; transferable shares; investment contract; investment metal contract or investment gem contract; voting trust certificate; certificate of deposit for a security; certificate of interest or participation in an oil, gas or mining right, title or lease or in payments out of production under such a right, title or lease; or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. ""Security'' does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or for some other specified period.
(b) Notwithstanding subparagraph (a), a membership interest in a limited liability company or a partnership interest in a registered limited liability partnership is not a security if:
(1) The secretary of state, by rule or order, determines that it is not a security;
(2) The limited liability company is a professional limited liability company or foreign professional limited liability company under RSA 304-D; or
(3) The registered limited liability partnership or foreign registered limited liability partnership:
(A) Is licensed, registered, certified, or otherwise authorized under the provisions of RSA 309-B, 310-A, 311, 315, 316, 317-A, 318, 326-B, 327, 329, 330-A or 332-B to render professional services, as defined in RSA 304-D:1, VI, including necessary related services, or
(B) Is related to a registered limited liability partnership or foreign registered limited liability partnership licensed, registered, certified, or otherwise authorized under the provisions of RSA 309-B, 310-A, 311, 315, 316, 317-A, 318, 326-B, 327, 329, 330-A or 332-B to render professional services, as defined in RSA 304-D:1, VI.
(c) For purposes of subparagraph (b)(3) of this paragraph, a registered limited liability partnership or foreign registered limited liability partnership is related to a registered limited liability partnership or foreign registered limited liability partnership engaged in the rendering of professional services if:
(1) Such registered limited liability partnership or foreign registered limited liability partnership provides services related or complementary to the professional services rendered by, or provides services or facilities to, the registered limited liability partnership or foreign registered limited liability partnership engaged in the rendering of professional services; and
(2) Either:
(A) At least a majority of the partners in one partnership are partners in the other partnership, or
(B) At least a majority of partners in each partnership also hold interests or are members in another person, and each partnership renders services pursuant to an agreement with such other person, or
(C) The partnerships are affiliates within the meaning of RSA 421-B:2, I.
(D) In connection with the issuance of a cease and desist order issued by the secretary of state, and any hearings conducted, under RSA 421-B:23, I(a), the secretary may presume that a membership interest in a limited liability company or a partnership interest in a registered limited liability partnership is a security, and the person relying on subparagraph (b) of this paragraph has the burden of proving that the interest is not a security under the provisions of subparagraph (b).
XX-a. ""Staff'' means the employees of the department including but not limited to classified employees, contract employees, and shall include students involved in paid or unpaid programs.
XX-b. ""Solicitor'' means an investment adviser, investment adviser agent, or investment adviser representative that:
(a) Is licensed under this chapter;
(b) Conducts an investment advisory business solely for the purpose of soliciting, directly or indirectly, any client for, or referring any client to, an investment adviser licensed under this chapter;
(c) Receives a cash fee for such solicitation or referral; and
(d) Operates pursuant to a written agreement with the investment adviser that:
(1) Describes the solicitation activities to be engaged in on behalf of the investment adviser and the compensation to be received therefor;
(2) Contains an undertaking to perform the duties under the agreement in a manner consistent with the instructions of the investment adviser and the provisions of this chapter; and
(3) Requires, at the time of any solicitation activities for which compensation is paid or to be paid by the investment adviser, that the client be provided with a current copy of the investment adviser's written disclosure statement that describes the solicitation arrangement.
XXI. ""State'' means any state, territory, or possession of the United States, the District of Columbia or Puerto Rico.
XXII. ""Suspension'' means the temporary recall or denial of any license, registration or privilege granted for a specified period of time. Such license, registration or privilege shall be reinstated and returned to the person when he otherwise qualifies without the necessity of a new application or fee, provided any suspended license, registration, or privilege has not expired in the interim.
Source. 1981, 214:1. 1987, 183:1; 411:2, 3. 1990, 100:1. 1991, 43:1-3; 126:1; 355:71, 72, 89, II. 1992, 288:31, 34-37. 1994, 388:1, 2; 412:49. 1996, 212:13; 239:6-20. 1997, 112:1; 296:1-7. 2001, 260:1, 2. 2003, 156:1, eff. Aug. 16, 2003. 2006, 245:1, eff. July 1, 2006. 2007, 104:3, 6, eff. July 1, 2007.
Fraudulent and Other Prohibited Practices
Section 421-B:3
421-B:3 Sales and Purchases. –
I. It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II. For purposes of this section, a fraudulent or deceptive device or contrivance shall include, but shall not be limited to:
(a) Representing in the offer or sale of securities, in writing or orally, that there is a guarantee against risk or loss.
(b) Inducing excessive trading in a customer's account, or inducing trading beyond that customer's known financial resources.
(c) Effecting transactions in the account of a customer without his or her knowledge or maintaining discretionary accounts without written authorization.
Source. 1981, 214:1, eff. Jan. 1, 1982. 2006, 245:2, eff. July 1, 2006.
Section 421-B:3-a
421-B:3-a Suitability of Recommendation; Reasonable Grounds Required. –
I. In recommending to a customer the purchase, sale, or exchange of a security, a broker-dealer or broker-dealer agent must have reasonable grounds for believing that the recommendation is suitable for the customer upon the basis of the facts, if any, disclosed by the customer after reasonable inquiry as to his or her other security holdings and as to his or her financial situation and needs.
II. Before the execution of a transaction recommended to a noninstitutional customer, other than transactions with customers where investments are limited to money market mutual funds, a broker-dealer, salesperson, investment adviser, or investment adviser representative shall make reasonable efforts to obtain information concerning:
(a) The customer's financial status.
(b) The customer's tax status.
(c) The customer's investment objectives.
(d) Such other information used or considered to be reasonable by the broker-dealer, salesperson, investment adviser, or investment adviser representative in making recommendations to the customer.
Source. 2003, 156:2, eff. Aug. 16, 2003.
Section 421-B:4
421-B:4 Advisory Activities. –
I. It is unlawful for any person who receives any consideration from another person primarily for advising the other person as to the value of securities or their purchase or sale whether through the issuance of analyses or reports or otherwise:
(a) To employ any device, scheme, or artifice to defraud another person; or
(b) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person.
II. It is unlawful for any investment adviser or investment adviser agent to enter into, extend, or renew any investment advisory contract the terms of which are in contravention of such rules as the secretary of state may adopt as necessary or appropriate in the public interest or for the protection of investors.
III. It is unlawful for any investment adviser or investment adviser agent to take or have custody of any securities or funds of any client in contravention of such rules as the secretary of state may adopt as necessary or appropriate in the public interest or for the protection of investors.
IV. It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of paragraph I for any investment adviser or investment adviser agent who has custody or possession of any funds or securities in which any client has any beneficial interest, to do any act or take any action, directly or indirectly, with respect to any such funds or securities, unless:
(a) All such securities of each such client are segregated, marked to identify the particular client who has the beneficial interest therein, and held in safekeeping in some place reasonably free from risk of destruction or other loss; and
(b) All such funds of such clients are deposited in one or more bank accounts which contain only clients' funds, such account or accounts are maintained in the name of the investment adviser as agent or trustee for such clients, and the investment adviser maintains a separate record for each such account which shows the name and address of the bank where such account is maintained, the dates and amounts of deposits in and withdrawals from such account, and the exact amount of each client's beneficial interest in such account; and
(c) Such investment adviser, immediately after accepting custody or possession of such funds or securities from any client, notifies such client in writing of the place and manner in which such funds and securities will be maintained, and thereafter, if and when there is any change in the place or manner in which such funds or securities are being maintained, gives each such client written notice thereof; and
(d) Such investment adviser sends to each client, not less frequently than once every 3 months, an itemized statement showing the funds and securities in the custody or possession of the investment adviser at the end of such period, and all debits, credits, and transactions in such client's account during such period; and
(e) (1) All such funds and securities of clients are verified by actual examination at least once during each calendar year by an independent public accountant at a time that shall be chosen by such accountant without prior notice to the investment adviser. A certificate of such accountant stating that an examination of such funds and securities has been made, and describing the nature and extent of the examination, shall be attached to a completed Form ADV-E (17 C.F.R. 279.8) and transmitted to the secretary of state promptly after each examination.
(2) Subparagraph IV(e)(1) shall not apply to an investment adviser also registered as a broker-dealer under section 15 of the Securities Exchange Act of 1934 if (i) such broker-dealer is subject to and in compliance with Rule 15c3-1 (Reg. 240.15c3-1, 25,126) under the Securities Exchange Act of 1934, or (ii) such broker-dealer is a member of an exchange whose members are exempt from Rule 15c3-1 (Reg. 240.15c3-1, 25,126) under the provisions of paragraph (b)(2) thereof, and such broker-dealer is in compliance with all rules and settled practices of such exchange imposing requirements with respect to financial responsibility and the segregation of funds or securities carried for the account of customers.
(f) (1) Direct deduction (automatic payment) of investment adviser fees from a client account to the investment adviser does not constitute custody of client funds if:
(A) The client provides written authorization permitting the adviser's fees to be paid directly from the client's account held by an independent custodian.
(B) The adviser sends to the client and the custodian at the same time, a bill showing the amount of the fee, the value of the client's assets on which the fee was based, and the specific manner in which the adviser's fee was calculated.
(C) The custodian agrees to send to the client a statement, at least quarterly, indicating all amounts disbursed from the account including the amount of advisory fees paid directly to the advisers.
(2) Absent any of the conditions in subparagraphs(f)(1)(A)-(C), the adviser is deemed to have custody of client funds.
IV-a. It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of paragraph I for any investment adviser licensed or required to be licensed to fail to disclose to any client or prospective client all material facts with respect to:
(a) A financial condition of the adviser that is reasonably likely to impair the ability of the adviser to meet contractual commitments to clients, if the adviser has discretionary authority (express or implied) or custody over such client's funds or securities, or requires prepayment of advisory fees of more than $500 from such client, 6 months or more in advance; or
(b) A legal or disciplinary event that is material to an evaluation of the advisers integrity or ability to meet contractual commitments to clients.
V. A person who is an investment adviser or investment adviser agent is a fiduciary and has a duty to act primarily for the benefit of the person's clients. While the extent and nature of this duty varies according to the nature of the relationship between an investment adviser and the clients and the circumstances of each case, an investment adviser or investment adviser agent shall not engage in unethical business practices which constitute violations of paragraph I, including the following:
(a) Recommending to a client to whom investment supervisory, management, or consulting services are provided the purchase, sale, or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known by the investment adviser or investment adviser agent.
(b) Exercising any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within 10 business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specified security shall be executed, or both.
(c) Introducing trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives, and character of the account in light of the fact that an adviser in such situations can directly benefit from the number of securities transactions effected in a client's account. This subparagraph appropriately forbids an excessive number of transaction orders to be induced by an investment adviser or investment adviser agent for a client's account.
(d) Placing an order to purchase or sell a security for the account of a client without the authority to do so.
(e) Placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third party trading authorization from the client.
(f) Borrowing money or securities from a client unless a client is a broker-dealer, an affiliate of the investment adviser, or a financial institution engaged in the business of loaning funds.
(g) Loaning money to a client unless the investment adviser is a financial institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser.
(h) Misrepresenting to any advisory client, or prospective advisory client, the qualifications of the investment adviser, investment adviser agent, or any employee of the investment adviser, or misrepresenting the nature of the advisory services being offered or fees to be charged for such services, or omitting to state a material fact necessary to make the statements made regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading.
(i) Providing a report or recommendation to any advisory client prepared by someone other than the investment adviser or investment adviser agent without disclosing that fact. This prohibition does not apply to a situation where the investment adviser or investment adviser agent uses published research reports or statistical analysis to render advice or where an adviser orders such a report in the normal course of providing service.
(j) Charging a client an unreasonable advisory fee.
(k) Failing to disclose to clients in writing before any advice is rendered any material conflict of interest relating to the investment adviser, investment adviser agent, or any of its employees which could reasonably be expected to impair the rendering of unbiased and objective advice including:
(1) Compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients or such services; and
(2) Charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the adviser or its employees.
(l) Guaranteeing a client that a specific result will be achieved, such as gain or no loss, with advice which will be rendered.
(m) Publishing, circulating, or distributing any advertisement which does not comply with Rule 206(4)-1 under the Investment Advisers Act of 1940.
(n) Disclosing the identity, affairs, or investments of any client unless required by law to do so, or unless consented to in writing by the client.
(o) Taking any action, directly or indirectly, with respect to those securities or funds in which any client has any beneficial interest, where the investment adviser or investment adviser agent has custody or possession of such securities or funds when the adviser's action is subject to and does not comply with the requirements of Reg. 206(4)-2 under the Investment Advisers Act of 1940.
(p) Entering into, extending, or renewing any investment adviser contract unless such contract is in writing and discloses, in substance, the services to be provided, the term of the contract, the advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of contract termination or non-performance, whether the contract grants discretionary power to the investment adviser or investment adviser agent, that no assignment of such contract shall be made by the investment adviser without the written consent of the other party to the contract, or that:
(1) Provides for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client except that this subparagraph shall not:
(A) Be construed to prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date; or
(B) Apply to an investment advisory contract with a person (except a trust, governmental plan, collective trust fund, or separate account), provided that the contract relates to the investment of assets in excess of $1,000,000, if the contract provides for compensation based on the asset value of the company or fund under management averaged over a specified period and increasing and decreasing proportionately with the investment performance of the company or fund over a specified period in relation to the investment record of an appropriate index of securities prices or such other measure of investment performance as the secretary of state by rule may specify.
(2) The provisions of subparagraph (1) shall not be deemed to prohibit an investment adviser from entering into, performing, renewing or extending an investment advisory contract that provides for compensation to the investment adviser on the basis of a share of the capital gains upon, or the capital appreciation of, the funds, or any portion of the funds, of a client, provided that the client entering into the contract subject to this section is a qualified client defined as:
(A) A natural person who or a company that immediately after entering into the contract has as least $750,000 under the management of the investment adviser.
(B) A natural person who or a company that the investment adviser entering into the contract (and any person acting on his behalf) reasonably believes, immediately prior to entering into the contract, either:
(i) Has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $1,500,000 at the time the contract is entered into; or
(ii) Is a qualified purchaser as defined in section 2(a)(51)(A) of the Investment Company Act of 1940 (14 U.S.C. section 802-a(a)(51)(A)) at the time the contract is entered into.
(C) A natural person who immediately prior to entering into the contract is:
(i) An executive officer, director, trustee, general partner, or person serving in a similar capacity, of the investment adviser; or
(ii) An employee of the investment adviser (other than an employee performing solely clerical, secretarial or administrative functions with regard to the investment adviser) who, in connection with his or her regular functions or duties, participates in the investment activities of such investment adviser, provided that such employee has been performing such functions and duties for or on behalf of the investment adviser, or substantially similar functions or duties for or on behalf of another company for at least 12 months.
(3) The secretary of state, by rule, upon his or her own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or any class or classes of persons or transactions, from subparagraph (1), if and to the extent that the exemption relates to an investment advisory contract with any person that the secretary of state determines does not need the protections of subparagraph (1), on the basis of such factors as financial sophistication, net worth, knowledge of and experience in financial matters, amount of assets under management, relationship with a licensed investment adviser, and such other factors as the secretary of state determines are consistent with this paragraph.
(q) Failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information in violation of section 204A of the Investment Advisers Act of 1940.
(r) Entering into, extending, or renewing any advisory contract which would violate section 205 of the Investment Advisers Act of 1940 and the rules promulgated thereunder. This provision shall apply to all investment advisers and investment adviser agents licensed or required to be licensed under this chapter.
(s) Indicating, in an advisory contract, any condition, stipulation, or provisions binding any person to waive compliance with any provision of this chapter or of the Investment Advisers Act of 1940 or any other practice that would violate section 215 of the Investment Advisers Act of 1940.
(t) Engaging in any act, practice, or course of business which is fraudulent, deceptive, or manipulative in contravention of section 206(4) of the Investment Advisers Act of 1940, notwithstanding the fact that such investment adviser is not registered or required to be registered under section 203 of the Investment Advisers Act of 1940.
(u) Engaging in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of this chapter or any rule adopted under it.
The conduct set forth above is not inclusive. Engaging in other conduct such as nondisclosure, incomplete disclosure, or deceptive practices, shall be deemed an unethical business practice. The federal statutory and regulatory provisions referenced in this paragraph shall apply to investment advisers and investment adviser agents, regardless of whether the federal provision limits its application to advisers subject to federal registration.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:89, II. 1992, 288:31. 1997, 296:8. 2001, 260:3, eff. July 13, 2001.
Section 421-B:5
421-B:5 Unlawful Activities. –
It is unlawful for any person to effect any transaction in, or to induce the purchase or sale of any security by means of any manipulative, deceptive or otherwise fraudulent device or contrivance, including any fictitious quotation. The terms ""manipulative, deceptive, or otherwise fraudulent device or contrivance'' shall include, but shall not be limited to, the following practices:
I. Effecting any transaction in a security which involves no change in the beneficial ownership thereof, or entering any order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale or purchase of the security, have been or will be entered by or for the same or affiliated persons, for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security.
II. Effecting, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in the security or raising or depressing the price of the security, for the purpose of inducing the purchase or sale of the security by others.
III. Inducing the purchase or sale of any security by the circulation or dissemination of information to the effect that the price of the security will or is likely to rise or fall because of market operations of any one or more persons conducted for the purpose of raising or depressing the price of the security, if he is selling or offering to sell, or purchasing or offering to purchase the security, or is receiving a consideration, directly or indirectly, from any such person.
IV. Any act of any broker-dealer designed to effect with or for any customer's account, in respect to which such broker-dealer or his or her agent or employee is vested with any discretionary power, any transaction for the purchase or sale of a security unless:
(a) Immediately after effecting such transaction such broker-dealer makes a record of such transaction, which record includes:
(1) The name of such customer.
(2) The name, amount, and price of the security.
(3) The date and time when such transaction took place.
(b) Such broker-dealer sends each month to each customer, in whose account such broker-dealer exercises any discretionary authority, an itemized statement showing the funds and securities in the custody or possession of the broker-dealer at the end of such period, and all debits, credits, and transactions in such client's account during such period.
V. Using information in violation of Rule 10b-5 of the Securities Exchange Act of 1934 about an issuer, learned from the issuer's officers, directors, or key employees, which is not generally available to the public and which would significantly affect the market price of the issuer's securities for personal benefit, directly or indirectly, in the offer, sale, or purchase of the issuer's securities, as a basis for making a recommendation regarding a security.
VI. Creating an atmosphere of false supply or demand in a market for publicly traded securities or engaging in market manipulations.
VII. Creating unreasonable delays in delivering securities.
VIII. Representing that securities will be listed on a national exchange or that application for listing will be made, without any basis in fact for such representation.
IX. Selling or soliciting the purchase of one security from a market in publicly traded securities conditioned upon the customer's agreement to purchase another security.
Source. 1981, 214:1, eff. Jan. 1, 1982. 2006, 245:3, 4, eff. July 1, 2006.
Licensing of Broker-Dealers, Agents, Issuer-Dealers, and Investment Advisers
Section 421-B:6
421-B:6 Licensing Requirements. –
I. It is unlawful for any person to transact business in this state as a broker-dealer, issuer-dealer, investment adviser, or agent unless such person is licensed under this chapter. Except with respect to advisers whose only clients are those described in RSA 421-B:2, IX(f), it is unlawful for any federal covered adviser to conduct advisory business in this state unless such person complies with the provisions of RSA 421-B:7, I-b. An investment adviser representative is required to be licensed as an agent under this section, in addition to any agent license held as a representative of any broker-dealer.
I-a. In connection with an offering of securities made pursuant to section 18(b)(4)(D) of the Securities Act of 1933 that requires only a notice filing in this state pursuant to RSA 421-B:11, I-a(e), a completed application for licensure as an issuer-dealer, an agent of an issuer-dealer and for an agent of the issuer, or authorization without licensure for an officer or director described in RSA 421-B:2, II(e), shall be filed with the secretary of state no later than 15 days after the first sale of securities in or from this state, and the license or authorization will become effective without further action or review by the secretary of state. Provided that the application is complete and accompanied by the appropriate fees, the effective date of the license or authorization shall for all purposes be the date of first sale.
I-b. The issuer-dealer applications referred to in paragraph I-a shall set forth and be limited to the name of the issuer, the state of the issuer's formation, a description of the securities sold, the date of first sale of such securities in or from this state, the name or names of the representative or representatives of the issuer who are engaged in the sale of the securities, and confirmation that no agent has been convicted of a felony. The applications need only be signed by that person or those persons who are authorized to do so by the issuer's board of directors or other governing body. At the same time, the issuer shall submit a consent to service of process pursuant to RSA 421-B:30, VII, and shall pay the fees required by RSA 421-B:31. Each application shall be on a form prescribed by the secretary of state, consistent with the provisions of this section.
II. It is unlawful for any broker-dealer, issuer-dealer, and investment adviser to employ an agent unless the agent is licensed, or for a federal covered adviser to employ, supervise, or associate with an investment adviser representative having a place of business located in this state, unless such investment adviser representative is licensed as an agent under this chapter, or is exempt from the licensing requirements. Under this chapter, an agent's license is only in effect when such agent is associated with a particular broker-dealer, investment adviser, federal covered adviser, issuer-dealer, or a particular issuer. No agent shall at any time represent more than one broker-dealer or issuer-dealer, except that where broker-dealers or issuer-dealers affiliated by direct common control are licensed under this chapter, an agent may represent any such broker-dealer or issuer-dealer. When an agent begins or terminates those activities that make the person an agent, the broker-dealer, issuer-dealer, federal covered adviser, and investment adviser shall promptly notify the secretary of state. When an investment adviser representative begins or terminates employment with a federal covered adviser, the investment adviser representative shall promptly notify the secretary of state.
II-a. No person shall be issued an issuer-dealer license unless at least one person engaged in offering securities for sale on behalf of the issuer-dealer is licensed as an issuer-dealer agent.
III. All licenses for agents, broker-dealers, investment advisers, and issuer-dealers or notice filings for federal covered advisers shall expire every year on December 31.
III-a. A federal covered adviser who has paid a notice filing fee in this state for a particular calendar year and subsequently during that year becomes a state regulated investment adviser licensed in this state, shall not be assessed an additional fee (initial license fee) as it makes the transition to a licensed investment adviser in that year. A state regulated investment adviser who has paid a license fee in this state for a particular calendar year and subsequently during that year becomes a federal covered adviser, shall not be assessed an additional fee (notice filing fee) for the transition to a federal covered adviser in that year.
IV. All licensed agents, broker-dealers, investment advisers, federal covered advisers, and issuer-dealers and any persons applying for such licenses shall be liable for the fees established pursuant to RSA 421-B:31.
V. (a) Prior to opening or closing a branch office in this state, a broker-dealer or investment adviser shall send written notification directly to the secretary of state of the location of the branch office, telephone number, name of the individual supervising the office, the date of the opening or closing, and any other pertinent information required by the secretary of state.
(b)(1) It is prohibited for any branch office or agent of a broker-dealer or investment adviser to conduct a securities or investment advisory business in this state under any name other than that of the broker-dealer or investment adviser with which the branch office is associated or agent is licensed.
(2) If more than one business enterprise is conducted from a branch office location, disclosures shall clearly set forth the name of each business enterprise, what business activity is conducted by each organization, and each licensed agent's relationship to each organization; provided, however, that this requirement shall not apply to television, radio, or billboard advertising that pertains exclusively to a non-securities product.
(c)(1) Each broker-dealer branch office within this state shall be supervised by a manager who is a licensed agent in New Hampshire and who shall have qualified as a principal by passing a National Association of Securities Dealers principal's examination applicable to the licensee's business conducted at that location.
(2) Each broker-dealer and investment adviser shall establish and maintain supervisory procedures that are reasonably designed to achieve compliance with all applicable securities laws and statutes. The responsibility for such supervisory procedure shall be determined by various factors, including but not limited to:
(A) The firm's size, organizational structure, and scope of business activities, and the number and location of offices.
(B) The nature and complexity of procedures and services offered.
(C) The volume of business conducted.
(D) The number of agents and investment advisors assigned to a location.
(E) Whether a location has an on-site principal.
(F) Whether the office is a non-branch location.
(G) The disciplinary history of its agents and investment adviser representatives.
VI. The following sales of securities shall not constitute acts requiring licensure as a broker-dealer, issuer-dealer, or issuer-dealer agent:
(a) Sales of securities made pursuant to qualified pension plans, qualified profit-sharing plans, and dividend reinvestment plans.
(b) Sales of securities of a corporation to its officers, its directors, and sales made pursuant to RSA 421-B:17, I(h).
(c) Sales or distributions of securities to majority owned subsidiaries.
VII. The following sales of securities shall not constitute acts requiring licensure as an issuer-dealer: RSA 421-B:17, I(a); (b); (h); (i); (j); (k); and II(a); (b); (d); (e); (f); (g); (j); (k); (l); (m); (n); (o); (p)(1); and (q).
VII-a. The secretary of state shall have the authority to issue orders exempting otherwise non-exempt sales of securities from the issuer-dealer and issuer-dealer agent licensing requirements of RSA 421-B:6 if the secretary of state determines:
(a) That all or substantially all of the proposed sales of securities fall within one or more of the exemptions set forth in:
(1) RSA 421-B:17; or
(2) RSA 421-B:6; and
(b) That granting the exemption will be consistent with the purposes fairly intended by the policy and provisions of this title.
VII-b. (a) The use of a senior-specific certification or designation by any person in connection with the offer, sale, or purchase of securities, or the provision of advice as to the value of, or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a dishonest and unethical practice in the securities business within the meaning of RSA 421-B:10, I(b)(7). The prohibited use of such certifications or professional designation includes, but is not limited to, the following:
(1) Use of a certification or professional designation by a person who has not actually earned, or is otherwise ineligible to use such certification or designation;
(2) Use of a nonexistent or self-conferred certification or professional designation;
(3) Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification or professional designation does not have; and
(4) Use of a certification or professional designation that was obtained from a designating or certifying organization that:
(A) Is primarily engaged in the business of instruction in sales or marketing;
(B) Does not have reasonable standards or procedures for assuring the competency of its designees or certificants;
(C) Does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or
(D) Does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certificate.
(b) There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of RSA 421-B:6, VII-b(a)(4) when the organization has been accredited by:
(1) The American National Standards Institute; or
(2) The National Commission for Certifying Agencies; or
(3) An organization that is on the United States Department of Education's list entitled ""Accrediting Agencies Recognized for Title IV Purposes'' and the designation or credential issued therefrom does not primarily apply to sales and/or marketing.
(c) In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include:
(1) Use of one or more words such as ""senior,'' ""retirement,'' ""elder,'' or like words, combined with one or more words such as ""certified,'' ""registered,'' ""chartered,'' ""adviser,'' ""specialist,'' ""consultant,'' ""planner,'' or like words, in the name of the certification or professional designation; and
(2) The manner in which those words are combined.
(d) For purposes of this subparagraph; ""financial services regulatory agency'' includes, but is not limited to, an agency that regulates broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940. For the purposes of this paragraph, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title:
(1) Indicates seniority or standing within the organization; or
(2) Specifies an individual's area of specialization within the organization.
(e) Nothing in this paragraph shall limit the secretary of state's authority to enforce existing provisions of law.
VIII. (a) A broker-dealer that is resident in Canada and has no office or other physical presence in this state may, provided the broker-dealer is licensed in accordance with this section, effect transactions in securities with or for, or induce or attempt to induce the purchase or sale of any security by:
(1) A person from Canada who is temporarily resident in this state, with whom the Canadian broker-dealer had a bona fide broker-dealer-client relationship before the person entered the United States; or
(2) A person from Canada who is resident in this state, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor.
(b) An agent who will be representing a Canadian broker-dealer licensed under this section may, provided the agent is licensed in accordance with this section, effect transactions in securities in this state as permitted for the broker-dealer in subparagraph (a).
(c) A Canadian broker-dealer may become licensed under this section, provided that the broker-dealer:
(1) Files an application in the form required by the jurisdiction in which it has its head office;
(2) Files a consent to service of process;
(3) Is registered as a broker or dealer in good standing in the jurisdiction from which it is effecting transactions into this state and files evidence thereof; and
(4) Is a member of a self-regulatory organization or stock exchange in Canada.
(d) An agent who will be representing a Canadian broker-dealer licensed under this section in effecting transactions in securities in this state may become licensed under this section, provided that the agent:
(1) Files an application in the form required by the jurisdiction in which the broker-dealer has its head office;
(2) Files a consent to service of process; and
(3) Is registered in good standing in the jurisdiction from which he or she is effecting transactions into this state and files evidence thereof.
(e) If no denial order is in effect and no proceeding is pending under this chapter, the license becomes effective on the thirtieth day after an application is filed unless earlier made effective.
(f) A Canadian broker-dealer licensed under this section shall:
(1) Maintain its provincial or territorial registration and its membership in a self-regulatory organization or stock exchange in good standing;
(2) Provide the secretary of state upon request with its books and records relating to its business in this state as a broker-dealer;
(3) Inform the secretary of state forthwith of any criminal action taken against the broker-dealer or its agent or of any finding or sanction imposed on the broker-dealer as a result of any self-regulatory or regulatory action involving fraud, theft, deceit, misrepresentation, or similar conduct; and
(4) Disclose to its clients in the state that the broker-dealer and its agents are not subject to the full regulatory requirements in this chapter.
(g) An agent of a Canadian broker-dealer licensed under this section shall:
(1) Maintain his or her provincial or territorial registration in good standing;
(2) Inform the secretary of state forthwith of any criminal action, taken against him or her, or of any finding or sanction imposed on the agent as a result of any self-regulatory or regulatory action involving fraud, theft, deceit, misrepresentation, or similar conduct.
(h) Renewal applications for Canadian broker-dealers and agents under this section shall be filed before December 1 each year and may be made by filing the most recent renewal application, if any, filed in the jurisdiction in which the broker-dealer has its head office, or if no such renewal application is required, the most recent application filed pursuant to subparagraph (c)(1) or subparagraph (d)(1), as the case may be.
(i) Every applicant for a license or renewal of a license under this section shall pay the fee for broker-dealers and agents as required under RSA 421-B:31.
(j) A Canadian broker-dealer or agent licensed under this section shall only effect transactions in this state:
(1) As permitted in subparagraph (a) or (b);
(2) With or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, and (iii) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts or other financial institutions or institutional buyers, whether acting for themselves or as trustees; and
(3) As otherwise permitted by this chapter.
(k) A Canadian broker-dealer or agent licensed under this section and acting in accordance with the limitations set out in subparagraph (j) is exempt from all of the requirements of this chapter, except the anti-fraud provisions and the requirements set out in this section. Such Canadian broker-dealer or agent may only have its license under this section denied, suspended or revoked for a breach of the anti-fraud provisions of this chapter or the requirements in this section.
IX. Under the provisions of NSMIA and this chapter, until October 11, 1999, if a federal covered adviser fails to or refuses to pay fees pursuant to RSA 421-B:31 prior to acting as a federal covered adviser in this state, licensure as an investment adviser of such federal covered adviser shall be required in this state.
Source. 1981, 214:1. 1985, 334:2. 1987, 411:2. 1989, 20:1. 1991, 355:89, II. 1992, 288:38. 1994, 388:4. 1996, 239:21. 1997, 112:2; 296:9. 2001, 194:1, 2; 260:4-6. 2005, 224:1, eff. Jan. 1, 2006. 2006, 245:5-7, eff. July 1, 2006. 2007, 104:2, eff. July 1, 2007. 2008, 332:1, eff. Jan. 1, 2009.
Section 421-B:7
421-B:7 Licensing Procedure. –
I. (a) A broker-dealer, issuer-dealer, agent, or investment adviser may obtain an initial or renewal license by filing with the secretary of state or his or her designee an application together with the fees required by RSA 421-B:31 and a consent to service of process pursuant to RSA 421-B:30, VII, and paying any reasonable costs charged by the designee for processing such filings. The consent to service of process for investment adviser applicants shall consist of the appropriate execution page of the Form ADV. The application shall be on a form prescribed by the secretary of state and shall contain whatever information the secretary of state requires concerning such matters as, but not limited to, the applicant's form and place of organization; the applicant's proposed method of doing business; the qualifications and business history of the applicant; in the case of a broker-dealer, issuer-dealer, or investment adviser, the qualifications and business history of any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer, issuer-dealer, or investment adviser; and, in the case of an investment adviser, Form ADV, specimens of investment adviser contracts, and the qualifications and business history of any employee; any injunction or administrative order or conviction of a misdemeanor involving a security or any aspect of the securities business and any conviction of a felony; and the applicant's financial condition and history. The secretary of state may by rule or order require an applicant for initial license to publish an announcement of the application in one or more specified newspapers published in this state. If no denial order is in effect and no proceeding is pending under RSA 421-B:10, licensing becomes effective at noon of the thirtieth day after an application is filed. The secretary of state may by rule or order specify an earlier effective date, and may by order defer the effective date until noon of the thirtieth day after filing of any amendment.
(b) (1) No person shall be issued a broker-dealer license unless one person occupying a supervisory position has successfully passed a principal examination appropriate for the business conducted by the broker-dealer and has actively engaged in the securities business as a licensed principal in a similar supervisory capacity for a minimum of 3 of the preceding 5 years.
(2) No person shall be issued a broker-dealer license if any control person of such person was an officer, supervisor, or owner of 10 percent or more of the securities of any firm liquidated under the Securities Investor Protection Act of 1970.
I-a. Unless otherwise provided, all investment adviser and investment adviser representative applications, renewals, amendments, reports, notices, related filings and fees required to be filed with the secretary of state pursuant to this chapter and rules adopted thereunder, shall be filed electronically with and transmitted to Investment Adviser Registration Depository (hereinafter referred to as the IARD). The following additional conditions relate to such electronic filings:
(a) When a signature or signatures are required by the particular instructions of any filing to be made through IARD, a duly authorized officer of the applicant and/or the applicant himself or herself, as required, shall affix his or her electronic signature to the filing by typing his or her name in the appropriate fields and submitting the filing to IARD. Submission of a filing in this manner shall constitute irrefutable evidence of legal signature by any individuals whose names are typed on the filing.
(b) Solely for purposes of a filing made through IARD, a document is considered filed with the secretary of state when all fees are received and the filing is accepted by IARD on behalf of the state.
(c) (1) Any documents or fees required to be filed with the secretary of state that are not permitted to be filed with or cannot be accepted by IARD shall be filed directly with the secretary of state. The application shall not be complete until all documents and fees required by this chapter and rules adopted thereunder have been submitted through the IARD, where possible, or submitted to and received directly by the secretary of state.
(2) The following documents shall be required to be filed directly with the secretary of state:
(A) A financial statement which shall be audited, or, in the instance where no audited financial statement is in existence, certified by the appropriate person as presenting fairly in all material respects, the financial condition of the firm.
(B) A copy of the applicant's articles of incorporation, if a corporation, or other business formation documents, if the applicant is any other form of business entity.
(C) Until IARD provides for the filing of the second part of Form ADV, currently designated Part II, the second part of Form ADV.
(d) There shall be 2 ""hardship exemptions'' from the requirements to make electronic filings as required by this section:
(1) Temporary hardship exemption:
(A) Investment advisers licensed or required to be licensed under this chapter who experience unanticipated technical difficulties that prevent submission of an electronic filing to IARD may request a temporary hardship exemption from the requirements to file electronically.
(B) To request a temporary hardship exemption, the investment adviser shall:
(i) File Form ADV-H (17 CFR 279.3) in paper format with the administrator where the investment adviser's principal place of business is located, no later than one business day after the filing that is the subject of the Form ADV-H was due; and
(ii) Submit the filing that is the subject of the Form ADV-H in electronic format to IARD no later than 7 business days after the filing was due.
(C) The temporary hardship exemption will be deemed effective upon receipt by the secretary of state of the complete Form ADV-H. Multiple temporary hardship exemption requests within the same calendar year may be disallowed by the secretary of state.
(2) Continuing hardship exemption:
(A) A continuing hardship exemption shall be granted only if the investment adviser is able to demonstrate that the electronic filing requirements of this rule are prohibitively burdensome.
(B) To apply for a continuing hardship exemption, the investment adviser shall:
(i) File Form ADV-H (17 CFR 279.3) in paper format with the secretary of state at least 20 business days before filing is due; and
(ii) If a filing is due to more than one administrator, the Form ADV-H shall be filed with the administrator where the investment adviser's principal place of business is located. The administrator who receives the application shall grant or deny the application within 10 business days after the filing of Form ADV-H.
(C) An exemption is effective upon approval by the secretary of state. The time period of the exemption may be no longer than one year after the date on which the Form ADV-H is filed. If the secretary of state approves the application, the investment adviser shall, no later than 5 business days after the exemption approval date, submit filings to IARD in paper format (along with the appropriate processing fees) for the period of time for which the exemption is granted.
(3) The decision to grant or deny a request for a hardship exemption shall be made by the administrator where the investment adviser's principal place of business is located, which decision shall be followed by the secretary of state.
(e) (1) An investment adviser shall file with IARD, in accordance with the instructions in the Form ADV, any amendments to the investment adviser's Form ADV. An amendment shall be considered to be filed promptly if the amendment is filed within 30 days of the event that requires the filing of the amendment.
(2) An investment adviser representative is under a continuing obligation to update information required by Form U-4 as changes occur. An investment adviser representative and the investment adviser shall file promptly with IARD any amendments to the representative's Form U-4.
(3) Within 90 days of the end of the investment adviser's fiscal year, an investment adviser shall file an updated Form ADV with IARD.
(f) (1) By June 30, 2001, each investment adviser licensed or required to be licensed under this chapter shall resubmit its Form ADV electronically (if it has not previously done so) with IARD unless it has been granted a hardship exemption under this section.
(2) If the amendment to Form ADV is made after June 30, 2001, or at an earlier date if an investment adviser has filed its Form ADV (17 CFR 279.1), or any amendments to Form ADV, electronically with IARD, the licensee shall file amendments to Form ADV required by this paragraph electronically with IARD, unless it has been granted a hardship exemption under this paragraph.
(g) By June 30, 2001, for each investment adviser representative licensed or required to be licensed under this chapter, Form U-4 must be resubmitted electronically if it has not previously been done with IARD, unless the investment adviser, filing on behalf of the investment adviser representative, has been granted a hardship exemption under this paragraph.
I-b. Except with respect to federal covered advisers whose only clients are those described in RSA 421-B:2, IX(f), a federal covered adviser shall file with the secretary of state or his or her designee, prior to acting as a federal covered adviser in this state, a notice, which shall consist of a copy of the most recent complete Form ADV filed with the Securities and Exchange Commission (SEC) and a Form U-2, and shall pay initial and annual fees in accordance with RSA 421-B:31. Initial fees shall be paid before business is transacted in this state, and annual fees shall be paid on or before December 31 of the current year for the ensuing year. Federal covered advisers shall submit copies to the secretary of state of all documents filed with the Securities and Exchange Commission pursuant to the securities laws within 10 business days of their submission to the Securities and Exchange Commission. Documents and fees that are accepted by IARD may be submitted through IARD. Other documents filed or deemed filed with the SEC shall be submitted directly to the secretary of state. Until IARD provides for the filing of Part 2 of Form ADV, the secretary of state shall deem filed Part 2 of Form ADV if a federal covered adviser provides, within 5 days of a request, Part 2 of Form ADV to the secretary of state. Because the secretary of state deems Part 2 of the Form ADV to be filed, a federal covered adviser is not required to submit Part 2 of Form ADV to the secretary of state unless requested.
I-c. (a) The application for withdrawal of licensure as an investment adviser pursuant to Section 204(e) of the Investment Advisers Act of 1940 shall be completed by following the instructions on Form ADV-W. (Notice of Withdrawal from Registration as Investment Adviser) (17 CFR 279.2) and filed upon Form ADV-W with IARD.
(b) The application for withdrawal of licensure as an investment adviser representative pursuant to Section 204(e) of the Investment Advisers Act of 1940 shall be completed by following the instructions on Form U-5 (Uniform Termination Notice for Securities Industry Registration) and filed upon Form U-5 with IARD.
II. A licensed broker-dealer or investment adviser may file an application for licensing of a successor, whether or not the successor is then in existence, for the unexpired portion of the term. There shall be no filing fee.
II-a. The secretary of state may issue a limited license to a broker-dealer whose license is similarly restricted by the National Association of Securities Dealers.
III. The secretary of state may, by rule or order, require a minimum capital for broker-dealers, subject to the limitations of section 15 of the Securities Exchange Act of 1934, and establish minimum financial requirements for investment advisers, subject to the limitations of section 222 of the Investment Advisers Act of 1940, which may include different requirements for those investment advisers who maintain custody of clients' funds or securities or who have discretionary authority over such funds or securities and those investment advisers who do not.
IV. [Repealed.]
V. The secretary of state may by rule prescribe standards of qualification with respect to training, experience and knowledge of the securities business and provide for examinations, which may be written or oral or both, to be taken by any class of or all applicants, as well as persons who represent or will represent an investment adviser, and the secretary of state may by order require an examination of a licensed broker-dealer, agent or investment adviser for due cause.
VI. The secretary of state may, as an alternative means of licensing, under RSA 421-B:6 or in conjunction with this section, license agents, broker-dealers, or investment advisers by means of or through the facilities of a national organization which facilitates licensing on a nationwide basis.
VII. (a) Each applicant for individual broker-dealer licensure or licensure as an agent of a broker-dealer shall provide the secretary of state with proof of obtaining a passing score on the Uniform Securities Agent State Law Examination (Series 63 examination) or the Uniform Combined State Law Examination (Series 66 examination).
(b) Each applicant for individual investment adviser licensure, investment adviser agent licensure, or investment adviser representative licensure shall provide the secretary of state with proof of obtaining a passing score on one of the following examination requirements:
(1) The Uniform Investment Adviser Law Examination (Series 65 examination); or
(2) The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).
(c) (1) Any individual who was registered or licensed as an investment adviser, investment adviser agent, or investment adviser representative in any jurisdiction in the United States on January 1, 2000 shall not be required to satisfy the examination requirements for investment adviser licensure in this state, except that the secretary of state may require additional examinations for any individual found to have violated any state or federal securities law.
(2) Any individual who has not been registered or licensed in any jurisdiction for a period of 2 years shall be required to comply with the examination requirements.
(d)(1) The examination requirement shall not apply to an individual who upon application holds one of the following professional designations:
(A) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;
(B) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;
(C) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;
(D) Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;
(E) Chartered Investment Counselor (CIC) awarded by the Investment Counsel Association of America, Inc.; or
(F) Such other professional designation as the secretary of state may by rule or order recognize.
(2) The examination requirements shall not apply to a solicitor that submits an application to the secretary of state containing:
(A) A request for a waiver of the examination requirements;
(B) A copy of the solicitation agreement described in RSA 421-B:2, XX-b(d);
(C) A copy of the disclosure document of the investment adviser on whose behalf the solicitor solicits or refers clients disclosing the arrangements between the solicitor and the investment adviser; and
(D) An undertaking that, prior to, or at the time of, entering into any investment advisory contract with a client, the investment adviser will obtain from such client a signed and dated acknowledgment of receipt of the investment adviser's written disclosure statement and acknowledgment that the investment advisory contract is being entered into pursuant to a solicitation arrangement with the solicitor as described in the investment adviser's written disclosure statement.
VIII. Except for applicants subject to issuer-dealer licensing under RSA 421-B:6, I-a and I-b:
(a) Applications for an issuer-dealer's license in New Hampshire may be obtained from and shall be filed at the office of the secretary of state.
(b) Each applicant for a license under this paragraph shall make application on the appropriate state of New Hampshire form and shall supply the following information:
(1) Name, address, and telephone number.
(2) Date and place of incorporation or organization, and type of organization.
(3) Principals, officers, directors, or managing agents.
(4) References or letters of recommendation.
(5) General business plan.
(6) Type and amount of securities to be sold.
(7) Signature of the general partner, or in the case of a corporation, the person or persons so authorized by corporate resolution.
(c) In addition, each applicant shall submit a requisition for license of issuer-dealers agents on the appropriate form and shall supply the following information:
(1) Name of corporation.
(2) Name and address of all persons being appointed as issuer-dealer agents.
(3) Signature of principal.
(d) Each applicant shall submit to the department of safety with the requisite fees a completed criminal records release authorization form, signed by the applicant under penalty of perjury, notarized, and releasing criminal record information to the secretary of state.
(e) In addition to the forms required by subparagraphs (b), (c), and (d), the application for an issuer-dealer's license shall consist of:
(1) The articles of incorporation and by-laws of the issuer-dealer or the partnership agreement, certified by the appropriate person as complete current copies of the same.
(2) A financial statement which shall be audited or, if no audited financial statement is in existence, certified by the appropriate person as a complete, accurate pro forma financial statement.
(3) Copies of all circulars, prospectuses, or memoranda of the issue.
(4) The appropriate fee pursuant to RSA 421-B:31.
(f) Each applicant for licensure as an issuer-dealer shall appoint the secretary of state and his or her successors in office as its agent to receive service of all legal process issued against it in any civil action or proceeding in this state, and shall agree that process so served shall be valid and binding upon said applicant. The appointment shall be irrevocable. It shall bind said applicant and any successor in interest as to the assets or liabilities of said applicant, and it shall remain in effect as long as there are outstanding in this state any obligations or liability, or the potential for obligations or liability, resulting from the activities creating the need for the license.
(g) The secretary of state shall issue an issuer-dealer license to the applicant if the following criteria have been met:
(1) Timely filing of an application with the secretary of state complete in all respects.
(2) Demonstration by the applicant of complete fulfillment of the requirements of RSA 421-B.
(h) If an application for an original issuer-dealer license in the state of New Hampshire fails to meet the requirements of RSA 421-B, the secretary of state shall deliver to the applicant a written denial of the application, specifying the requirement which the applicant failed to meet and how the applicant is deficient. The notice of denial shall be issued according to procedures set forth in this chapter.
IX. (a) Except for applicants subject to issuer-dealer licensing under RSA 421-B:6, I-a and I-b, applications for license as an issuer-dealer agent may be obtained and shall be filed at the office of the secretary of state.
(b) Each applicant for a license under this paragraph shall provide a personal statement of agent on the appropriate state of New Hampshire form and shall supply the following:
(1) Name, address, and date of birth.
(2) Past and present occupations.
(3) Name and address or employer, whether or not a member of the firm, and names of other firm partners.
(4) Information regarding securities experience, employment, and licenses held, applied for, or denied.
(5) A consent to service of process appointing the secretary of state as agent for service of process.
(6) Signature of applicant.
(c) The secretary of state shall issue an issuer-dealer agent's license to the applicant if the following criteria have been met:
(1) Timely filing of an application with the secretary of state complete in all respects.
(2) Demonstration by the applicant of complete fulfillment of the requirements of this chapter.
(d) If an application for an original issuer-dealer agent's license in the state of New Hampshire fails to meet the requirements of RSA 421-B, the secretary of state shall deliver to the applicant a written denial of the application, specifying the requirement which the applicant failed to meet and how the applicant is deficient. The notice of denial shall be issued according to procedures set forth in this chapter.
X. Except for applicants subject to issuer-dealer licensing under RSA 421-B:6, I-a and I-b:
(a) Application for renewal of an issuer-dealer license shall be made by December 31 of each year to the secretary of state and shall include the fee prescribed by RSA 421-B:31.
(b) Applications for renewal of an issuer-dealer agent's license in New Hampshire shall be made by December 31 of each year to the secretary of state and shall include the fee prescribed by RSA 421-B:31.
(c) The secretary of state shall notify the applicant in writing as to how the renewal application is deficient. The applicant may then correct the deficiency or file with the secretary of state a written request for a hearing.
(d) The secretary of state shall issue a renewal issuer-dealer or issuer-dealer agent's license to the applicant if the following criteria have been met:
(1) Timely filing of an application with the secretary of state complete in all respects; and
(2) Demonstration by the applicant of complete fulfillment of the requirements of this chapter.
(e) The secretary of state may, at his or her discretion, issue duplicate or replacement issuer-dealer or issuer-dealer agent's licenses upon:
(1) A written request therefor signed by the applicant.
(2) Proof that good cause exists for the issuance of the duplicate or replacement license.
XI. (a) The suspension of an issuer-dealer's or issuer-dealer agent's license shall temporarily withdraw the authority to conduct an issuer-dealer's or issuer-dealer agent's business in New Hampshire until the time specified in the order of suspension. The authority to conduct an issuer-dealer's or issuer-dealer agent's business in New Hampshire shall be recovered only by complying with all of the requirements of this section regarding the renewal of an issuer-dealer's or issuer-dealer agent's license and the payment of any penalties assessed in connection with the cause for suspension.
(b)(1) Any person holding an issuer-dealer's or issuer-dealer agent's license may voluntarily return that license to the secretary of state. The return of such license shall be accompanied by the licensee's signed, written statement as to why the license is being voluntarily returned to the secretary of state. The voluntary surrender of an issuer-dealer's or issuer-dealer agent's license shall serve to withdraw the authority for the issuer-dealer or issuer-dealer agent to conduct an issuer-dealer's or issuer-dealer agent's business in New Hampshire.
(2) Voluntary return of an issuer-dealer's or issuer-dealer agent's license shall not be permitted if there exists, at the time the license is presented to the secretary of state, any cause for involuntary revocation or suspension of the license, unless the licensee presenting the license shall state in writing that the voluntary return of the license is in lieu of proceedings relating to the involuntary revocation or suspension of the license to do business as an issuer-dealer or issuer-dealer agent in New Hampshire.
(c) Except as authorized by statute, an issuer-dealer's or issuer-dealer agent's license shall not be revoked or suspended except in accordance with procedures set forth in this chapter.
(d) Any issuer-dealer or issuer-dealer agent whose license has been revoked or suspended shall, within 5 days after the date of the order of revocation or suspension, return the license to the secretary of state.
Source. 1981, 214:1. 1986, 131:2. 1987, 411:2. 1990, 58:1. 1991, 355:73, 89, II. 1992, 288:31, 39. 1994, 388:5. 1997, 112:3; 296:10, 11. 2001, 260:7, 8, eff. July 13, 2001. 2006, 245:8-10, 29, I, eff. July 1, 2006. 2007, 104:7, eff. July 1, 2007.
Section 421-B:8
421-B:8 Post-Licensing Provisions; Records, Reports and Replies. –
I. Every broker-dealer or issuer-dealer doing business in this state unless otherwise directed shall, within 60 days after the close of the fiscal year, make and transmit to the secretary of state a filing under oath of its chief managing officer showing or providing the financial statement, changes in management, changes in ownership, and any significant changes in the method of doing business for the preceding fiscal year, except as provided by section 15(h) of the Securities Exchange Act of 1934 in the case of a broker-dealer, and section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser. Said filing shall include statements or periodic reports filed with any regulatory, state or federal authority or exchange if so directed by order or rule of the secretary of state. Every broker-dealer shall include audited financial statements certified by an independent certified public accountant consisting of a balance sheet, income statement, statement of cash flows, a reconciliation of surplus and appropriate notes prepared in accordance with generally accepted accounting principles.
II. The secretary of state may extend the time for filing such statement for cause shown for a period of not more than 60 days. A broker-dealer or issuer-dealer failing to file its annual statement as required by paragraph I shall forfeit to the state $25 for each day of delinquency, provided, however, that the secretary of state may, for good cause shown, abate all or a portion of said delinquency penalty. The secretary of state may refuse to continue, or may suspend or revoke, the license of any broker-dealer or issuer-dealer failing to file its annual statement when due. When the sixtieth day falls on a weekend, or on a New Hampshire state or federal legal holiday, the due date shall be automatically extended to the next business day following such weekend or holiday.
III. In addition to the above, the secretary of state may require at any reasonable time and in any reasonable manner from any person or company subject to this chapter:
(a) Statements, reports, including reports audited by independent public accountants, answers to questionnaires and other information, and evidence thereof, in whatever reasonable form he designates, and at such reasonable intervals as he may choose, or from time to time;
(b) A full explanation of the programming of any data storage or communications systems in use; and
(c) Information from any books, records, electronic data processing systems, computers or any other information storage system.
IV. The secretary of state may prescribe forms for the reports under paragraph III. The forms shall be consistent, as far as practicable, with those prescribed by other states.
V. Any officer, manager or agent of any broker-dealer, investment adviser, or issuer-dealer authorized to do or doing securities business in this state, and any person controlling or having a contract under which he has a right to control such a broker-dealer, investment adviser, or issuer-dealer, whether exclusively or otherwise, and any person with executive authority over or in charge of any segment of such a broker-dealer's, investment adviser's, or issuer-dealer's affairs, shall reply promptly in writing or in other designated form, to any written inquiry from the secretary of state requesting a reply.
VI. The secretary of state may require that any communication made to him under this section be verified.
VII. In the absence of actual malice, no communication required by the secretary of state under this section shall subject the person making it to an action for damages for defamation.
VIII. The information obtained pursuant to paragraph III shall be privileged.
IX. Any director, officer, agent or employee of any broker-dealer, investment adviser, or issuer-dealer who subscribes to, makes, or concurs in making or publishing, any annual or other statement required by law, having actual knowledge that the same contains any material statement which is false, shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person.
IX-a. If the information contained in any document filed with the secretary of state is or becomes inaccurate or incomplete in any material respect, the licensee or federal covered adviser shall file a correcting amendment promptly if the document is filed with respect to a licensee or when such amendment is required to be filed with the Securities and Exchange Commission if the document is filed with respect to a federal covered adviser, unless notification of the correction has been given under RSA 421-B:6, II.
X. Persons licensed under this chapter to conduct securities business shall abide by the rules of the Securities and Exchange Commission, National Association of Securities Dealers, national and regional stock exchanges, and other self-regulating organizations which have jurisdiction over the licensee, which set forth standards of conduct in the securities industry.
XI. With respect to investment advisers, the secretary of state may require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients. To the extent determined by the secretary of state, in the secretary of state's discretion, information furnished to clients or prospective clients of an investment adviser that would be in compliance with the Investment Advisers Act of 1940 and the rules thereunder may be used in whole or partial satisfaction of this requirement.
XII. (a) Every licensed broker-dealer and investment adviser shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the secretary of state prescribes by rule or order, except as provided by section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer, and section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser. All records so required, shall be true and accurate, and shall be preserved for a period of not less than 6 years, the first 2 years in an easily accessible place and form, subject to the exceptions previously referenced in this section.
(b) Every broker-dealer licensed or required to be licensed under this chapter shall, at a minimum, make and keep true, accurate, and current the following records:
(1) Unless otherwise provided by order of the Securities and Exchange Commission, each broker-dealer licensed or required to be licensed under this chapter shall make, maintain and preserve books and records in compliance with Securities and Exchange Commission rules 17a-3 (17 C.F.R. 240.17a-3), 17a-4 (17 C.F.R. 240.17a-4), 15c2-6 (17 C.F.R. 240.15c2-6), and 15c2-11 (17 C.F.R. 240.15c2-11).
(2) To the extent that the Securities and Exchange Commission promulgates changes to the above-referenced rules, broker-dealers in compliance with such rules as amended shall not be subject to enforcement action by the secretary of state for violation of this section to the extent that the violation results solely from the broker-dealer's compliance with the amended rules.
(c) Every investment adviser licensed or required to be licensed under this chapter shall make and keep true, accurate and current the following books, ledgers, and records:
(1) A journal or journals, including cash receipts and disbursements records, and any other records of original entry forming the basis of entries in any ledger.
(2) General and auxiliary ledgers or other comparable records, reflecting asset, liability, reserve, capital, income, and expense accounts.
(3) A memorandum of each order given by the investment adviser for the purchase or sale of any security or any instruction received by the investment adviser from the client concerning the purchase, sale, receipt, or delivery of a particular security, and of any modification or cancellation of any such order or instruction. Such memoranda shall show the terms and conditions of the order, instruction, modification, or cancellation; shall identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed such order; and shall show the account for which entered, the date of entry, and the bank or broker-dealer by or through whom executed where appropriate. Orders entered pursuant to the exercise of discretionary power shall be so designated.
(4) All checkbooks, bank statements, canceled checks, and cash reconciliations of the investment adviser.
(5) All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such.
(6) All trial balances, financial statements, and internal audit working papers relating to the business of such investment adviser.
(7) Originals of all written communications received and copies of all written communications sent by such investment adviser relating to (A) any recommendation made, or proposed to be made and any advice given or proposed to be given, (B) any receipt, disbursement or delivery of funds or securities, or (C) the placing or execution of any order to purchase or sell any security; provided, however, (i) that the investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for the investment adviser, and (ii) that if the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication, or other investment advisory service to more than 10 persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with the copy of such notice, circular or advertisement, a memorandum describing the list and the source thereof.
(8) A list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities, or transactions of any client.
(9) All powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof.
(10) All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such.
(11) A copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication that the investment adviser circulates or distributes, directly or indirectly, to 10 or more persons (other than persons connected with such investment adviser) and, if such notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication recommends the purchase or sale of a specific security and does not state the reasons for such recommendation, a memorandum of the investment adviser indicating the reasons therefor.
(12) (A) A record of every transaction in a security in which the investment adviser or any advisory representative of such investment adviser has, or by reason of such transaction, acquires any direct or indirect beneficial ownership, except (i) transactions effected in any account over which neither the investment adviser nor any advisory representative of the investment adviser has any direct or indirect influence or control; and (ii) transactions in securities which are direct obligations of the United States. Such record shall state the title and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale, or other acquisition or disposition); the price at which it was effected; and the name of the broker-dealer or bank with or through whom the transaction was effected. Such record may also contain a statement declaring that the reporting or recording of any such transaction shall not be construed as an admission that the investment adviser or advisory representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded not later than 10 days after the end of the calendar quarter in which the transaction was effected.
(B) For purposes of this subparagraph (c)(12) the term ""advisory representative'' shall mean any partner, officer, or director of the investment adviser; any employee who makes any recommendation, who participates in the determination of which recommendation shall be made, or whose functions or duties relate to the determination of which recommendation shall be made; any employee who, in connection with the employee's duties, obtains any information concerning which securities are being recommended prior to the effective dissemination of such recommendations or of the information concerning such recommendations; and any of the following persons who obtain information concerning securities recommendations being made by such investment adviser, prior to the effective dissemination of such recommendations or of the information concerning such recommendations: (i) any person in a control relationship to the investment adviser, (ii) any affiliated person of such controlling person, and (iii) any affiliated person of such affiliated person. ""Control'' shall have the same meaning as that set forth in section 2(a)(9) of the Investment Company Act of 1940, as amended.
(C) An investment adviser shall not be deemed to have violated the provisions of this subparagraph because of failure to record securities transactions of any investment advisory representative if the investment adviser establishes that adequate procedures were instituted and reasonable diligence used to obtain promptly reports of all transactions required to be recorded.
(13) (A) Notwithstanding the provisions of subparagraph (c)(12) where the investment adviser is primarily engaged in a business or businesses other than advising advisory clients, a record shall be maintained of every transaction in a security in which the investment adviser or any advisory representative of such investment adviser has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, except (i) transactions effected in any account over which neither the investment adviser nor any advisory representative of the investment adviser has any direct or indirect influence or control; and (ii) transactions in securities which are direct obligations of the United States. Such record shall state the title and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale or other acquisition or disposition); the price at which it was effected, and the name of the broker-dealer or bank with or through whom the transaction was effected. Such record may also contain a statement declaring that the reporting or recording of any such transaction shall not be construed as an admission that the investment adviser or advisory representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded not later than 10 calendar days after the end of the calendar quarter in which the transaction was effected.
(B) An investment adviser is ""primarily engaged in a business or businesses other than advising advisory clients'' when, for each of its most recent 3 fiscal years or for the period of time since organization, whichever is less, the investment adviser derived, on an unconsolidated basis, more than 50 percent of (i) its total sales and revenues, and (ii) its income or loss before income taxes and extraordinary items, from such other business or businesses.
(C) For purposes of this subparagraph (c)(13), the term ""advisory representative,'' when used in connection with a company primarily engaged in a business or businesses other than advising advisory clients, means any partner, officer, director, or employee of the investment adviser who makes any recommendation, who participates in the determination of which recommendation shall be made or whose functions or duties relate to the determination of which recommendation shall be made, or whose functions or duties relate to the determination of which securities are being recommended prior to the effective dissemination of such recommendations or of the information concerning such recommendations; and any of the following persons who obtain information concerning securities recommendations being made by such investment adviser prior to the effective dissemination of such recommendations or of the information concerning such recommendations: (i) any person in a control relationship to the investment adviser, (ii) any affiliated person of such controlling person, and (iii) any affiliated person of such affiliated person. ""Control'' shall have the same meaning as that set forth in section 2(a)(9) of the Investment Company Act of 1940, as amended.
(D) An investment adviser shall not be deemed to have violated the provisions of this subparagraph (c)(13) because of failure to record securities transactions of any advisory representative if the investment adviser establishes that adequate procedures were instituted and reasonable diligence used to obtain promptly reports of all transactions required to be recorded.
(14) (A) (i) A copy of each written statement and each amendment or revision thereof, given or sent to any client or prospective client of such investment adviser;
(ii) Any summary of material changes that is required by Part 2 of Form ADV but is not contained in the written statement; and
(iii) A record of the dates that each written statement, each amendment or revision thereto, and each summary of material changes was given or offered to any client or to any prospective client who subsequently becomes a client.
(B) A memorandum describing any legal or disciplinary event listed in Item 8 of Part 2A or Item 3 of Part 2B of Form ADV and presumed to be material, if the event involved the investment adviser or any of its supervised persons and is not disclosed in the written statements described in subparagraph XII(c)(14)(A). The memorandum shall explain the investment adviser's determination that the presumption of materiality is overcome, and shall discuss the factors described in those items.
(15) All accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of the performance or rate of return of any or all managed accounts or securities recommendations in any notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication that the investment adviser circulates or distributes, directly or indirectly, to 10 or more persons (other than persons connected with such investment adviser); provided, however, that, with respect to the performance of managed accounts, the retention of all account statements, if they reflect all debts, credits, and other transactions in a client's account for the period of the statement, and all worksheets necessary to demonstrate the calculation of the performance or rate of return of all managed accounts shall be deemed to satisfy the requirements of this subparagraph.
(16) Copies, with original signatures of the investment adviser's appropriate signatory and the investment adviser representative, of each initial Form U-4 and each amendment to Disclosure Reporting Pages (DRPs U-4) must be retained by the investment adviser (filing on behalf of the investment adviser representative), and shall be made available for inspection upon regulatory request.
(17) A separate file on all written complaints of customers and action taken by the investment adviser, if any, or a separate record of such complaints and a clear reference to the files containing the correspondence connected with such complaints as maintained in such office. A ""complaint'' shall be deemed to mean any written statement of a customer or any person acting on behalf of a customer alleging a grievance involving the activities of those persons under the control of the investment adviser in connection with the solicitation or execution of any transaction or the disposition of securities or funds of that customer.
(18) A litigation file open to inspection by the secretary of state documenting any criminal or civil actions filed in any state or federal court against the investment adviser's branch office or against any of its personnel with respect to a securities transaction and the disposition of any such litigation.
(d) If an investment adviser subject to subparagraph (c) has custody or possession of securities or funds of any client, the records required to be made and kept under subparagraph (b), shall also include:
(1) A journal or other record showing all purchases, sales, receipts, and deliveries of securities (including certificate numbers) for such accounts, and all other debits and credits to such accounts.
(2) A separate ledger account for each such client showing all purchases, sales, receipts, and deliveries of securities, the date and price of each such purchase and sale, and all debits and credits.
(3) Copies of confirmations of all transactions effected by or for the account of any such client.
(4) A record for each security in which any such client has a position, which record shall show the name of each such client having any interest in each security, the amount or interest of each such client, and the location of each such security.
(e) Every investment adviser subject to subparagraph (c) who renders any investment supervisory or management service to any client shall, with respect to the portfolio being supervised or managed and to the extent that the information is reasonably available to or obtainable by the investment adviser, make and keep true, accurate, and current:
(1) Records showing separately for each such client the securities purchased and sold, and the date, amount, and price of each such purchase and sale.
(2) For each security in which any such client has a current position, information from which the investment adviser can promptly furnish the name of each such client, and the current amount or interest of such client.
(f) Any books or records required by this paragraph may be maintained by the investment adviser in such manner that the identity of any client to whom such investment adviser renders investment advisory services is indicated by numerical or alphabetical code or some similar designation.
(g) (1) All books and records required to be made under the provisions of subparagraphs (a)-(e)(1) and (h) and (i), inclusive of this paragraph (except for books and records required to be made under the provisions of subparagraph (b)(11) and (b)(15) of this paragraph), shall be maintained and preserved in an easily accessible place for a period of not less than 5 years from the end of the fiscal year during which the last entry was made on such record, the first 2 years in an appropriate office of the investment adviser.
(2) Partnership articles and any amendments thereto, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor shall be maintained in the principal office of the investment adviser and preserved until at least 3 years after termination of the enterprise.
(3) Books and records required to be made under the provisions of subparagraphs (b)(11) and (b)(15) shall be maintained and preserved in an easily accessible place for a period of not less than 5 years, the first 2 years in an appropriate office of the investment adviser, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated, directly or indirectly, any notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication.
(h) An investment adviser subject to subparagraph (c) of this paragraph, before ceasing to conduct or discontinuing business as an investment adviser, shall arrange for and be responsible for the preservation of the books and records required to be maintained and preserved under this paragraph for the remainder of the period specified in this paragraph, and shall notify the secretary of state in writing of the exact address where such books and records will be maintained during such period.
(i) (1) The records required to be maintained and preserved pursuant to this paragraph shall be immediately produced or reproduced by photograph, on film, or, as provided in subparagraph (i)(2), on magnetic disk, tape or other computer storage medium, and be maintained and preserved for the required time in that form. If records are produced or reproduced by the photographic film or computer storage medium, the investment adviser shall:
(A) Arrange the records and index the films or computer storage medium so as to permit the immediate location of any particular record.
(B) Be ready at all times to provide, and promptly provide, any facsimile enlargement of film or computer printout or copy of the computer storage medium which the secretary of state by its examiners or other representatives may request.
(C) Store separately from the original one other copy of the film or computer storage medium for the time required.
(D) With respect to records stored on computer storage medium, maintain procedures for maintenance and preservation of, and access to, records so as to reasonably safeguard records from loss, alteration, or destruction.
(E) With respect to records stored on film, at all times have available for the secretary of state's examination its records pursuant to provisions of this chapter, and facilities for immediate, easily readable projection of the film and for producing easily readable facsimile enlargements.
(2) Pursuant to subparagraph (i)(1) an investment adviser may maintain and preserve, on computer tape or disk or other computer storage medium, records which, in the ordinary course of the adviser's business, are created by the adviser on electronic media or are received by the adviser solely on electronic media or by electronic data transmission.
(j) For purposes of this paragraph, ""investment supervisory services'' means the giving of continuous advice as to the investment of funds on the basis of the individual needs of each client.
(k) Every investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of this paragraph, provided the investment adviser is licensed in such state and is in compliance with such state's recordkeeping requirements.
XIII. (a) (1) Unless otherwise provided in this section, an investment adviser licensed or required to be licensed under this chapter shall, in accordance with the provisions of this section, furnish each advisory client and prospective advisory client with a written disclosure statement which may be a copy of Part II of its Form ADV or written documents containing at least the information then so required by Part II of Form ADV, and such other information as the secretary of state may require. When Form ADV, Part 2 replaces Form ADV, Part II, each investment adviser shall furnish each advisory client and prospective advisory client with a firm brochure and one or more supplements as required by this section. The brochure and supplements shall contain all information required by Part 2 of Form ADV, (17 C.F.R. 279.1), and such other information as the secretary of state may require.
(2) An investment adviser shall deliver:
(A) The current brochure required by this section to a client or prospective client, and
(B) The current brochure supplements for each investment adviser representative who will provide advisory services to the client. For purposes of this section, an investment adviser representative shall provide advisory services to a client if the investment adviser representative will:
(i) Regularly communicate investment advice to that client; or
(ii) Formulate investment advice for assets of that client; or
(iii) Make discretionary investment decisions for assets of that client; or
(iv) Solicit, offer or negotiate for the sale of or sell investment advisory services.
(3) An investment adviser shall deliver the disclosure statement required by this section to an advisory client or prospective advisory client not less than 48 hours prior to entering into any investment advisory contract with such client or prospective client, or at the time of entering into any such contract, if the advisory client has the right to terminate the contract without penalty within 5 business days after entering into the contract.
(b) Any disclosure statement requested in writing by an advisory client pursuant to an offer required by this subdivision shall be mailed or delivered within 7 days of the receipt of the request.
(c) If the adviser is the general partner of a limited partnership, the manager of a limited liability company, or the trustee of a trust, then for purposes of this section the investment adviser shall treat each of the partnership's limited partners, the company's members, or the trust's beneficial owners as a client. For purposes of this section, a limited liability partnership or limited liability limited partnership is a ""limited partnership.''
(d) If an investment adviser renders substantially different types of investment advisory services to different advisory clients, the investment adviser may provide them with different disclosure documents or brochures, provided that each client receives all applicable information about services and fees. The brochure delivered to a client may omit any information required by Part 2A of Form ADV if such information is applicable only to a type of investment advisory service or fee that is not rendered or charged, or proposed to be rendered or charged, to that client or prospective client.
(e) The investment adviser shall amend its brochure and any brochure supplements and deliver the amendments to clients promptly when information contained in the brochure or brochure supplements becomes materially inaccurate. The instructions to Part 2 of Form ADV contain updating and delivery instructions that the investment adviser shall follow. An amendment will be considered to be delivered promptly if the amendment is delivered within 30 days of the event that requires the filing of the amendment.
(f) Nothing in this paragraph shall relieve any investment adviser from any obligation pursuant to any provision of this chapter or the rules and regulations thereunder or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this paragraph.
(g) (1) If the investment adviser is a sponsor of a wrap fee program, then the brochure, required to be delivered by subparagraph XIII(a) to a client or prospective client of the wrap fee program, must be a wrap fee brochure containing all information required by Form ADV. Any additional information in a wrap fee brochure shall be limited to information applicable to wrap fee programs that the investment adviser sponsors.
(2) The investment adviser does not have to offer or deliver a wrap fee brochure if another sponsor of the wrap fee program offers or delivers to the client or prospective client of the wrap fee program a wrap fee program brochure containing all the information the investment adviser's wrap fee program brochure must contain.
(3) A wrap fee brochure does not take the place of any brochure supplements that the investment adviser is required to deliver under this paragraph.
(h) All investment advisers licensed or required to be licensed under this chapter must deliver to each of their clients their current brochure and all required brochure supplements within 30 days from the date of effectiveness of Part 2 of Form ADV.
(i) For the purpose of this paragraph:
(1) ""Current brochure'' and ""current brochure supplement'' mean the most recent revision of the brochure or brochure supplement, including all subsequent amendments (i.e., stickers).
(2) ""Entering into'' in reference to an investment advisory contract, does not include an extension or renewal without material change of any such contract which is in effect immediately prior to such extension or renewal.
(3) ""Sponsor'' of a wrap fee program means an investment adviser that is compensated under a wrap fee program for sponsoring, organizing, or administering the program, or for selecting, or providing advice to clients regarding the selection of other investment advisers in the program.
(4) ""Wrap fee program'' means an advisory program under which a specified fee or fees, not based directly upon transactions in a client's account, is charged for investment advisory services (which may include portfolio management or advice concerning the selection of other investment advisers) and the execution of client transactions.
XIV. (a) Every licensed investment adviser who has custody of client funds or securities or requires payment of advisory fees 6 months or more in advance and in excess of $500 per client shall file with the secretary of state an audited balance sheet as of the end of the investment adviser's fiscal year. Each balance sheet filed pursuant to this subparagraph shall be:
(1) Examined in accordance with generally accepted auditing standards and prepared in conformity with generally accepted accounting principles;
(2) Audited by an independent public accountant or an independent certified public accountant; and
(3) Accompanied by an opinion of the accountant as to the report of financial position and by a note stating the principles used to prepare it, the basis of included securities, and any other explanations required for clarity.
(b) [Repealed.]
(c) The financial statements required by this paragraph shall be filed with the secretary of state within 90 days following the end of the investment adviser's fiscal year.
(d) Every investment adviser that has its principal place of business in a state other than this state shall maintain such books or records as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser:
(1) Is registered or licensed as such in the state in which it maintains its principal place of business; and
(2) Is in compliance with the applicable books and records requirements of the state in which it maintains its principal place of business.
XV. Every licensed broker-dealer shall comply with minimum financial requirements and financial reporting requirements as follows:
(a) Each broker-dealer licensed or required to be licensed under this chapter shall comply with Securities and Exchange Commission Rules 15c3-1 (17 C.F.R. 240.15c3-1), 15c3-2 (17 C.F.R. 240.15c3-2), and 15c3-3 (17 C.F.R. 240.15c3-3).
(b) Each broker-dealer licensed or required to be licensed under this chapter shall comply with Securities and Exchange Commission Rules 17a-11 (17 C.F.R. 240.17a-11) and shall file with the secretary of state upon request, or as required by this chapter or orders or rules promulgated thereunder, copies of notices and reports required under Securities and Exchange Commission Rules 17a-5, 17a-10, and 17a-11.
(c) To the extent that the Securities and Exchange Commission promulgates changes to the above-referenced rules, broker-dealers in compliance with such rules as amended shall not be subject to enforcement action by the secretary of state for violation of this section to the extent that the violation results solely from the broker-dealer's compliance with the amended rules.
XVI. Every licensed investment adviser shall comply with minimum financial requirements and financial reporting requirements as follows:
(a) An investment adviser licensed or required to be licensed under this chapter who has custody of client funds or securities shall maintain at all times a minimum net worth of $35,000, and every investment adviser licensed or required to be licensed under this chapter who has discretionary authority over client funds or securities, but does not have custody of client funds or securities, shall maintain at all times a minimum net worth of $10,000.
(b) Unless otherwise exempted, as a condition of the right to continue to transact business in this state, every investment adviser licensed or required to be licensed under this chapter shall by the close of business on the next business day notify the secretary of state if such investment adviser's total worth is less than the minimum required. After transmitting such notice, each investment adviser shall file by the close of business on the next business day, a report with the secretary of state of its financial condition, including the following:
(1) A trial balance of all ledger accounts;
(2) A statement of all client funds or securities which are not segregated;
(3) A computation of the aggregate amount of client ledger debit balances; and
(4) A statement as to the number of client accounts.
(c) For purposes of this paragraph, the term ""net worth,'' shall mean an excess of assets over liabilities, as determined by generally accepted accounting principles, but shall not include as assets: prepaid expenses (except as to items properly classified as current assets under generally accepted accounting principles), deferred charges, goodwill, franchise rights, organizational expenses, patents, copyrights, marketing rights, unamortized debt discount and expense, all other assets of intangible nature; home, home furnishings, automobiles, and any other personal items not readily marketable in the case of an individual; advances or loans to stockbrokers and officers in the case of a corporation; and advances or loans to partners in the case of a partnership.
(d) The secretary of state may require that a current appraisal be submitted in order to establish the worth of any asset.
(e) For purposes of these rules an investment adviser shall not be deemed to be exercising discretion when it places a trade order with a broker-dealer, pursuant to a third party trading agreement if:
(1) The investment adviser has executed a separate investment adviser contract exclusively with its client which acknowledges that a third party trading agreement will be executed to allow the investment adviser to effect securities transactions for the client in the client's broker-dealer account;
(2) The investment adviser contract specifically states that the client does not grant discretionary authority to the investment adviser, and the investment adviser in fact does not exercise discretion with respect to the account; and
(3) A third party trading agreement is executed between the client and a broker-dealer which specifically limits the investment adviser's authority in the client's broker-dealer account to the placement of trade orders and deduction of investment adviser fees.
(f) Every investment adviser that has its principal place of business in a state other than this state shall maintain such minimal capital as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser is licensed in such state and is in compliance with such state's minimal capital requirements.
Source. 1981, 214:1. 1987, 411:2, 3. 1990, 100:2-4. 1991, 355:74. 1992, 288:31, 40. 1994, 388:6, 7. 1997, 296:12-14. 1999, 90:1. 2001, 260:9-12, eff. July 13, 2001. 2006, 245:11, eff. July 1, 2006. 2007, 104:8, eff. July 1, 2007.
Section 421-B:9
421-B:9 Post-Licensing Provisions; Examinations. –
I. The records of a broker-dealer licensed or required to be licensed under this chapter, of an investment adviser registered or required to be registered under this chapter, and of an issuer-dealer licensed or required to be licensed under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the secretary of state, within or without this state, as the secretary of state considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The secretary of state may copy, and remove for audit or inspection, copies of all records the secretary of state reasonably considers necessary or appropriate to conduct the audit or inspection.
II. For the purpose of ascertaining compliance with law or relationships and transactions between any person and any broker-dealer, investment adviser, or issuer-dealer or proposed broker-dealer, investment adviser, or issuer-dealer and in circumstances where the secretary of state has reasonable grounds to believe there is noncompliance with or violation of any law, rule, or order, he may, as often and to the extent he deems advisable, examine the accounts, records, documents, and transactions pertaining to or affecting the securities affairs or proposed securities affairs and transactions of:
(a) Any person having a contract under which he enjoys by terms or in fact the exclusive or dominant right to manage or control the broker-dealer, investment adviser, or issuer-dealer;
(b) Any person in this state engaged in, proposing to be engaged in, holding himself out as so engaging, or proposing or assisting in the promotion, formation, or financing of a broker-dealer, investment adviser, or issuer-dealer, or corporation or other group to finance a broker-dealer, investment adviser, or issuer-dealer or the production of its business;
(c) Any rating bureau or organization;
(d) Any licensee or other person subject to this chapter; or
(e) If adequate information cannot be obtained, any broker-dealer, issuer-dealer, investment adviser, holding company or person holding the shares of voting stock or proxies of a broker-dealer, investment adviser, or issuer-dealer as voting trustee or otherwise, for the purpose of controlling the management thereof.
III. Whenever the secretary of state decides to examine the affairs of any person, he shall designate one or more examiners and instruct them as to the scope of the examination. The examiner shall, upon demand, exhibit his official credentials to the person under examination.
(a) The secretary of state shall conduct each examination in an expeditious, fair and impartial manner.
(b) Upon any such examination the secretary of state, or the examiner if specifically so authorized in writing by the secretary of state, shall have power to administer oaths, and to examine under oath any individual as to any matter relevant to the affairs under examination or relevant to the examination.
(c) Every person being examined, and all of the officers, attorneys, employees, agents, and representatives of such person shall make freely available to the secretary of state or his examiners the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination and shall facilitate the examination.
(d) If the secretary of state or examiner finds any accounts or records to be inadequate, or kept or posted in a manner not in accordance with commonly accepted securities accounting principles, the secretary of state may employ experts to reconstruct, rewrite, post or balance them at the expense of the person being examined if such person has failed to maintain, complete or correct such records or accounting after the secretary of state or examiner has given him written notice and a reasonable opportunity to do so.
(e) Neither the secretary of state nor any examiner shall remove any record, account, document, file or other property of the person being examined from the offices or place of such person except with the written consent of such person in advance of such removal or pursuant to an order of court duly obtained. This provision shall not be deemed to affect the making and removal of copies or abstracts of any such record, account, document, or file.
(f) Any individual who refuses without just cause to be examined under oath or who willfully obstructs or interferes with the examiners in the exercise of their authority pursuant to this section shall be guilty of a misdemeanor.
IV. (a) Upon completion of an examination, the examiner in charge shall make a true report thereof which shall comprise only facts appearing upon the books, records or other documents of the person examined, or as ascertained from the sworn testimony of its officers or agents or other individuals examined concerning its affairs, and such conclusions and recommendations as may reasonably be warranted from such facts. The report of examination shall be verified by the oath of the examiner in charge thereof.
(b) Such a report of examination of a broker-dealer or issuer-dealer so verified shall be prima facie evidence in any delinquency proceeding against the broker-dealer or issuer-dealer, its officers, employees, or agents upon the facts stated therein, whether or not the report has been filed as provided in subparagraph V(c) of this section.
V. (a) The secretary of state shall deliver a copy of the examination report to the person examined, together with a notice affording such person 20 days or such additional reasonable period as the secretary of state for good cause may allow, within which to review the report and recommend changes therein.
(b) If so requested by the person examined, within the period allowed under subparagraph V(a), or if deemed advisable by the secretary of state without such request, the secretary of state shall hold a closed hearing relative to the report and shall not file the report in the department until after such closed hearing and his order thereon; except, that the secretary of state may furnish a copy of the report to the governor, secretary of state or state treasurer pending final decision thereon.
(c) If no such closed hearing has been requested or held, the examination report, with such modifications, if any, thereof as the secretary of state deems proper, shall be accepted by the secretary of state and filed upon expiration of the review period provided for in subparagraph V(a). The report shall in any event be so accepted and filed within 6 months after final hearing thereon.
(d) The secretary of state shall forward to the person examined a copy of the examination report as filed, together with any recommendations or statements relating thereto which he deems proper.
(e) The report when so filed in the department shall be admissible in evidence in accordance with rules of the superior court, in any action or proceeding brought by the secretary of state against the person examined, or against its officers, employees or agents. In any such action or proceeding, the secretary of state or his examiners may, however, at any time testify and offer proper evidence as to information secured or matters discovered during the course of an examination, whether or not a written report of the examination has been either made, furnished, or filed in the department.
VI. All reports pursuant to this section shall be absolutely privileged and although filed in the department as provided in paragraph V shall nevertheless not be for public inspection. The comments and recommendations of the examiner shall also be deemed confidential information and shall not be available for public inspection, except as the secretary of state in his or her discretion may deem advisable.
VI-a. The broker-dealer or other person examined pursuant to this section shall bear the expense of the examination. Such expenses shall be limited to a reasonable per diem allowance for compensation and expenses as determined by the secretary of state. The per diem allowance shall not exceed $100. Notwithstanding any other provision of law, domestic issuer-dealers shall be exempt from bearing the expense of examinations conducted pursuant to this section, except for the mileage expenses to and from the examination incurred by the department.
VII. [Repealed.]
VIII. Notwithstanding any other provision of law, the broker-dealer or other person liable for the travel expense of an examination pursuant to paragraph VII shall make such payment either directly to the individual conducting the examination, whether or not such individual is a classified state employee, or to the state of New Hampshire, as may be directed by the secretary of state. The secretary of state may direct that the travel expense allowance be paid directly to the individual conducting the examination. The compensation allowance shall be paid directly to the state. The amounts paid directly to individuals conducting the examination pursuant to this section may be in excess of any amounts that may be appropriated for such purposes.
Source. 1981, 214:1. 1987, 411:2, 3, 17. 1989, 144:1. 1990, 100:5, 6. 1991, 355:75, 89, II, 90. 1992, 288:31, 41. 1995, 201:3. 1997, 112:4. 2001, 260:13, 21, I. 2003, 156:3, eff. Aug. 16, 2003. 2006, 245:12, eff. July 1, 2006. 2007, 104:1, eff. July 1, 2007.
Section 421-B:10
421-B:10 Denial, Revocation, Suspension, Cancellation and Withdrawal of Application. –
I. The secretary of state may by order deny, suspend, or revoke any license or application, or bar any person from licensure if he or she finds:
(a) That the order is in the public interest, and
(b) That the applicant or licensee or, in the case of a broker-dealer, issuer-dealer, or investment adviser, any partner, officer or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer, issuer-dealer, or investment adviser:
(1) Has filed an application for licensing which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
(2) Has willfully violated or failed to comply with any provision of this title or a predecessor law, or of any other state's or Canadian province's securities laws, or the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or any rule under any of such statutes, or any order thereunder of which he has notice and to which he is subject;
(3) Has been convicted, within the past 10 years, of any misdemeanor involving a security or any aspect of the securities business, or any felony, unless annulled;
(4) Is permanently, preliminarily, or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business;
(5) Is the subject of an order of the secretary of state denying, suspending, or revoking any license as a broker-dealer, issuer-dealer, agent, or investment adviser;
(5-a) Is the subject of an adjudication or order entered after notice and opportunity for hearing by an administrator of another state, federal agency, or Canadian province that reflects that person has violated the securities laws of another state or Canadian province.
(6) Is the subject of an order entered within the past 5 years by the securities administrator of any other state or by the Securities and Exchange Commission denying, suspending, or revoking licenses or registration as a broker-dealer, issuer-dealer, agent, or investment adviser, or the substantial equivalent of those terms, or is the subject of an order of the Securities and Exchange Commission suspending or expelling him from a national securities exchange or national securities association registered under the Securities Exchange Act of 1934 or is the subject of a United States Postal Service fraud order or has been convicted within the past 10 years of any misdemeanor involving a security or any aspect of the securities business, or any felony which has not been annulled by a court;
(7) Has engaged in dishonest or unethical practices in the securities business;
(8) Has failed to maintain the minimum net capital or to comply with the limitation on aggregate indebtedness which the secretary of state by rule prescribes;
(9) Is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided in this section; or
(10) Has failed reasonably to supervise his agents if he is a broker-dealer, issuer-dealer, or his employees if he is an investment adviser; or
(11) Has failed to pay the proper filing fee; but the secretary of state may enter only a denial order under this clause, and he shall vacate any such order when the deficiency has been corrected; or
(12) Has offered or sold securities in this state through any unlicensed agent; or
(13) Has made any material misrepresentation to the secretary of state, or upon request reasonably made by the secretary of state, has withheld or concealed information from, or refused to furnish information to, the secretary of state; or
(14) For other good cause shown.
II. The following provisions govern the application of RSA 421-B:10, I(b)(9):
(a) The secretary of state may not enter an order against a broker-dealer on the basis of the lack of qualification of any person other than the broker-dealer himself if he is an individual, or an agent of the broker-dealer.
(b) The secretary of state may not enter an order against an investment adviser on the basis of the lack of qualification of any person other than the investment adviser himself if he is an individual, or any other person who represents the investment adviser in doing any of the acts which make him an investment adviser.
(c) The secretary of state may not enter an order solely on the basis of lack of experience if the applicant or licensee is qualified by training or knowledge or both.
(d) The secretary of state may consider that an agent who will work under the supervision of a licensed broker-dealer need not have the same qualifications as a broker-dealer.
(e) The secretary of state may consider that an investment adviser is not necessarily qualified solely on the basis of experience as a broker-dealer or agent. When he finds that an applicant for initial or renewal licensing as a broker-dealer is not qualified as an investment adviser, he may by order condition the applicant's license as a broker-dealer upon his not transacting business in this state as an investment adviser.
(f) The secretary of state may by rule provide for an examination which may be written or oral or both, to be taken by any class of or all applicants, as well as persons who represent or will represent an investment adviser in doing any of the acts which make him an investment adviser.
III. The secretary of state may issue an order requiring the person to whom any license has been granted to show cause why the license should not be revoked. The order shall be calculated to give reasonable notice of the time and place for the revocation hearing, and shall state the reasons for the issuance of the order. The secretary of state may by order summarily postpone or suspend any license pending final determination of any order to show cause, or of any other proceeding under this section, provided he finds that the public interest would be irreparably harmed by delay in issuing such order. Upon the entry of the order, the secretary of state shall promptly notify the applicant or licensee, as well as the employer or prospective employer if the applicant or licensee is an agent, that it has been entered and of the reasons for the order and that within 10 days after the receipt of a written request the matter will be set down for hearing. If the person to whom an order to show cause is issued fails to request a hearing within 30 days of receipt of such order, and none is ordered by the secretary of state, then such person shall be deemed in default, and the order shall, on the thirty-first day, become permanent, and shall remain in full force and effect until and unless later modified or vacated by the secretary of state, for good cause shown. If a hearing is requested or ordered, the secretary of state, after notice of and opportunity for hearing, may modify or vacate the order or extend it until final determination.
III-a. All hearings shall be conducted in accordance with the rules adopted pursuant to this chapter. After the hearing, the secretary of state shall enter an order making such disposition of the matters as the facts require. If the person to whom the license was granted fails to appear at a hearing of which he has been duly notified, such person shall be deemed in default and the proceeding may be determined against him upon consideration of the order to show cause, the allegations of which may be deemed to be true. The secretary of state may adopt rules of procedure concerning all proceedings conducted pursuant to this section.
IV. If the secretary of state finds that any licensee or applicant for license is no longer in existence or has ceased to do business as a broker-dealer, issuer-dealer, agent, or investment adviser, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the secretary of state may by order revoke the license or deny the application. The secretary of state may deem abandoned and withdrawn any application for licensure made pursuant to this chapter, if any applicant fails to respond in writing within 90 days to a written request from the secretary of state requesting a response.
V. Withdrawal of a license as a broker-dealer, issuer-dealer, agent, or investment adviser becomes effective 30 days after receipt of an application to withdraw or within such shorter period of time as the secretary of state may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within 30 days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the secretary of state by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the secretary of state may nevertheless institute a revocation or suspension proceeding under RSA 421-B:10, I(b)(2) within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which registration was effective.
VI. In lieu of, or in addition to, any such order to suspend or revoke any license or application, the secretary of state may, upon hearing, assess an administrative fine of not more than $2,500 per violation.
Source. 1981, 214:1. 1987, 411:2. 1990, 76:1. 1991, 355:76, 89, II. 1992, 288:31, 42, 43. 1997, 112:5-9. 1999, 90:2. 2003, 156:4, eff. Aug. 16, 2003. 2008, 332:2, eff. Jan. 1, 2009.
Registration of Securities
Section 421-B:11
421-B:11 Registration Requirement and Notice Filing of Securities. –
I. It is unlawful for any person to offer or sell any security in this state unless it is registered under this chapter, the security or transaction is exempted under RSA 421-B:17, or it is a federal covered security for which the fee has been paid and documents have been filed as required by paragraph I-a of this section.
I-a. With respect to notice filings of covered securities, the following requirements shall apply:
(a) Prior to the offer or sale of any class or portfolio of covered securities under section 18(b)(2) of the Securities Act of 1933, a notice shall be filed which includes:
(1) A consent to service of process on Form U-2 signed by the issuer;
(2) A Form N-1A, prospectus, or amendment that contains a complete description of the offering; and
(3) The fee required for each class in RSA 421-B:31.
All mutual funds doing business in this state offering multiple classes of shares shall submit a notice filing for each class individually, and pay the fee set forth in RSA 421-B:31. All mutual funds doing business in this state offering securities through a combined prospectus shall submit a notice filing for each portfolio and each class thereof contained in the combined prospectus and pay fees set forth in RSA 421-B:31. Annual renewals of notice filings shall be made for each class of mutual fund shares not later than May 1 of each year and shall include (i) the fee set forth in RSA 421-B:31 and (ii) a current prospectus.
(b) Prior to the offer or sale of covered securities under section 18(b)(3) of the Securities Act of 1933, a notice shall be filed which includes:
(1) The name, address, and telephone number of the issuer, and the type of securities to be sold;
(2) A consent to service of process on Form U-2 signed by the issuer;
(3) Any document filed with the Securities and Exchange Commission; and
(4) The fee required in RSA 421-B:31, I(k) and RSA 421-B:31, II (g).
(c) Prior to the offer or sale of covered securities under section 18(b)(4)(A) of the Securities Act of 1933, a notice shall be filed which includes:
(1) The name, address, and telephone number of the issuer, and the type of securities to be sold;
(2) A consent to service of process on Form U-2 signed by the issuer;
(3) The most recent 10-K and 10-Q reports filed with the Securities and Exchange Commission;
(4) The name of a registered broker-dealer who will effect transactions in this state; and
(5) The fee required in RSA 421-B:31, I(h).
(d) Prior to the offer or sale of covered securities under section 18(b)(4)(C) of the Securities Act of 1933, a notice shall be filed which includes:
(1) The name, address, and telephone number of the issuer, and the type of securities to be sold;
(2) A consent to service of process on Form U-2 signed by the issuer;
(3) A copy of the prospectus;
(4) The name of a registered broker-dealer who will effect transactions in this state; and
(5) The fee required in RSA 421-B:31, I(k) and 421-B:31, II(g).
(e)(1) No later than 15 days after the first sale in this state of covered securities under section 18(b)(4)(D) of the Securities Act of 1933, a notice shall be filed which includes:
(A) The name, address, and telephone number of the issuer and the type of securities to be sold;
(B) A consent to service of process on Form U-2 signed by the issuer;
(C) A complete Form D, including pages 1-8, filed with the Securities and Exchange Commission;
(D) The name of any registered broker-dealer who will effect transactions in this state;
(E) The fee pursuant to RSA 421-B:31, I(h); and
(F) A statement indicating the date on which the first sale in this state of covered securities under section 18(b)(4)(D) of the Securities Act of 1933 occurred.
(2) Notwithstanding the exemption in RSA 421-B:17, II(a)(2) and the exclusions from the computation of sales in RSA 421-B:17, II(a)(3), any offering filed as a covered security under section 18(b)(4)(D) of the Securities Act of 1933 with the United?States Securities and Exchange Commission or any other state must be notice filed in this state pursuant to RSA 421-B:11, I-a(e)(1).
I-b. (a) Whenever it appears to the secretary of state that a particular security or transaction offered or sold in this state has not been preempted by federal law or regulation from the registration requirements of this section, the secretary of state may issue an order requiring any person who claims the benefit of federal preemption with respect to the security or transaction to prove that the registration requirement of this section has been preempted. The order shall be calculated to give reasonable notice of the time and place for the hearing, which shall be held within 10 days of the issuance of the order, and shall state the reasons for the entry of the order.
(b) All hearings shall be conducted in accordance with this chapter. After the hearing, the secretary of state shall enter an order making such disposition of the matter as the facts require. If the person claiming the benefit of federal preemption fails to appear at a hearing of which he has been duly notified, such person shall be deemed in default, and the proceeding may be determined against him upon consideration of the order, the allegations of which may be deemed to be true. The secretary of state may adopt rules of procedure concerning all proceedings conducted pursuant to this section.
(c) In any judicial or administrative proceeding under this chapter, the burden of proving an exemption, preemption or an exception from a definition is upon the person claiming it.
(d) Qualification for any of the notice filing provisions of RSA 421-B:11, I-a is predicated upon compliance with federal law, and associated regulations, cited in each provision.
II. (a) Before the secretary of state may accept (1) articles of incorporation for a new corporation under RSA 293-A or an application for a certificate of authority for a foreign corporation under RSA 293-A, (2) a certificate of limited partnership for a new limited partnership or an application for registration of a foreign limited partnership under RSA 304-B, (3) a certificate of formation for a new limited liability company or an application for registration as a foreign limited liability company under RSA 304-C, or (4) an application for registration of a registered limited liability partnership or a notice of registration of a foreign registered limited liability partnership under RSA 304-A, the following requirements shall be met:
(1) Along with a $50 filing fee, a statement shall be filed with the secretary of state that the capital stock of the corporation, memberships, or the interests of the limited partnership, registered limited liability partnership, foreign registered limited liability partnership, or limited liability company have been registered, or when offered will be registered, under this chapter or are exempted, or when offered will be exempted, under this chapter, or are or will be offered in a transaction exempted from registration under this chapter, or are not securities under this chapter, or are federal covered securities under this chapter; and, in the case of a New Hampshire corporation, limited partnership, registered limited liability partnership, or limited liability company, that the articles of incorporation or certificate of limited partnership state whether the capital stock, memberships, or interests in the limited partnership, registered limited liability partnership or limited liability company will be sold or offered for sale within the meaning of this chapter.
(2) The statement shall be signed by the incorporators of a corporation to be formed, by an executive officer of an existing corporation, by the general partners or intended general partners if a limited partnership, by one or more members or managers authorized to do so if a limited liability company, or by one or more partners authorized to do so if a registered limited liability partnership or foreign registered limited liability partnership.
(b) Notwithstanding any provision of law to the contrary, the statement filed pursuant to this paragraph shall not by itself constitute a registration, or a notice of exemption from registration, of securities within the meaning of sections 448 and 461(i)(3) of the United States Internal Revenue Code and the regulations promulgated thereunder.
Source. 1981, 214:1. 1994, 388:8. 1996, 212:14. 1997, 112:10, 11, 21, 22; 120:40; 296:15, 24. 1998, 250:1. 2001, 260:14. 2003, 156:5, eff. Aug. 16, 2003. 2006, 245:13, 27, 28, eff. July 1, 2006. 2007, 104:4, eff. July 1, 2007.
Section 421-B:12
421-B:12 Registration by Notification. –
I. The following securities may be registered by notification:
(a) Any industrial development or industrial revenue bond; and
(b) Any securities issued by a person or organization exclusively for social, religious, educational, benevolent, fraternal, charitable, reformatory, athletic, chamber of commerce, trade, industrial development, or professional association purposes and not for pecuniary gain, and no part of the net earnings of which inures to the benefit of any private stockholder or individual.
II. A registration statement under this section shall contain the consent to service of process required by RSA 421-B:30, VII and such additional information as the secretary of state by rule or otherwise requires.
III. If no stop order is in effect, no proceeding is pending under RSA 421-B:16 and no order has been issued, a registration statement under this section automatically becomes effective at 5 o'clock in the afternoon on the fifth full business day after the filing of the registration statement or the last amendment, or at such earlier time as the secretary of state by order determines, provided the price and terms of the offering have been filed with the secretary of state.
IV. The secretary of state may by order require that any security otherwise permitted to be registered under this section be registered by qualification under RSA 421-B:14 if he determines that registration by qualification is in the public interest and is necessary for the protection of investors.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:89, II. 1992, 288:31, eff. July 1, 1992.
Section 421-B:13
421-B:13 Registration by Coordination. –
I. Any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination.
I-a. [Repealed.]
II. A registration statement under this section shall contain the following information and be accompanied by the following documents in addition to the information specified in RSA 421-B:15 and the consent to service of process required by RSA 421-B:30, VII:
(a) Two copies of the latest form of prospectus filed under the Securities Act of 1933;
(b) If the secretary of state by rule or otherwise requires, a copy of the articles of incorporation and bylaws (or their substantial equivalents) currently in effect, a copy of any agreements with or among underwriters, a copy of any indenture or other instrument governing the issuance of the security to be registered, and a specimen or copy of the security;
(c) If the secretary of state requests, any other information or copies of any other documents, filed under the Securities Act of 1933; and
(d) An undertaking to forward all future amendments to the federal prospectus, other than an amendment which merely delays the effective date of the registration statement, promptly and in any event not later than the first business day after the day they are forwarded to or filed with the Securities and Exchange Commission, or such longer period as the secretary of state permits.
III. A registration statement under this section automatically becomes effective at the moment the federal registration statement becomes effective if all the following conditions are satisfied:
(a) No stop order is in effect and no proceeding is pending under RSA 421-B:16;
(b) The registration statement has been on file with the secretary of state for at least 20 days; and
(c) A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions has been on file for 2 full business days or such shorter period as the secretary of state permits by rule or otherwise and the offering is made within those limitations.
IV. The secretary of state may by rule or otherwise waive either or both of the conditions specified in subparagraphs III(b) and (c).
V. The registrant shall promptly notify the secretary of state by telephone, telegram, or similar means of communication of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. ""Price amendment'' means the final federal amendment which includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent upon the offering price.
VI. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the secretary of state may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until there is compliance with this section, if he promptly notifies the registrant by telephone, telegram, or similar means of communication, and promptly confirms by letter or telegram when he notifies by telephone of the issuance of the order. If the registrant proves compliance with the requirements of this section as to notice and post-effective amendment the stop order is void as of the time of its entry.
VII. If the federal registration statement becomes effective before all the conditions in this section are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all of the conditions are satisfied. If the registrant advises the secretary of state of the date when the federal registration statement is expected to become effective, the secretary of state shall promptly advise the registrant by telephone, telegram, or similar means of communication, at the registrant's expense, whether all the conditions are satisfied and whether he then contemplates the institution of a proceeding under RSA 421-B:16; but this advice by the secretary of state does not preclude the institution of such a proceeding at any time.
Source. 1981, 214:1. 1986, 131:1. 1987, 349:3; 393:3; 411:2. 1989, 167:1. 1991, 355:77, 78, 89, II. 1992, 288:31. 1993, 313:12. 2001, 260:21, II, eff. July 13, 2001.
Section 421-B:14
421-B:14 Registration by Qualification. –
I. Any security may be registered by qualification.
II. A registration statement under this section shall contain the information specified in RSA 421-B:15 and the consent to service of process required by RSA 421-B:30, VII, and shall contain such further information and be accompanied by such further documents as the secretary of state by rule or otherwise requires.
III. A registration statement under this section becomes effective when the secretary of state so orders.
IV. The secretary of state may by rule or order require, as a condition of registration under this section, that a prospectus containing any designated part of the information specified in paragraph II be sent or given to each person to whom an offer is made before or concurrently with:
(a) The first written offer made to him (otherwise than by means of a public advertisement) by or for the account of the issuer or any other person on whose behalf the offering is being made, or by any underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by him as a participant in the distribution;
(b) The confirmation of any sale made by or for the account of any such person;
(c) Payment pursuant to any such sale; or
(d) Delivery of the security pursuant to any such sale, whichever first occurs.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:79, 89, II. 1992, 288:31, eff. July 1, 1992.
Section 421-B:15
421-B:15 Provisions Applicable to Registration Generally. –
I. A registration statement may be filed with the secretary of state by the issuer, any other person on whose behalf the offering is to be made, or a licensed broker-dealer.
II. Every registration statement shall specify:
(a) The amount of securities to be offered in this state;
(b) The states in which a registration statement or similar document in connection with the offering has been or is to be filed; and
(c) Any adverse order, judgment, or decree entered in connection with the offering by the regulatory authorities in each state or by any court or the Securities and Exchange Commission.
II-a. (a) Issuers of securities registered under this chapter shall provide quarterly financial reports within 60 days of the end of each quarter to their shareholders, partners, and members. Such quarterly reports need not be independently audited.
(b) The requirements of subparagraph (a) shall not apply to issuers of securities required to file reports pursuant to section 13 or section 15 of the federal Securities Exchange Act of 1934.
III. Any document filed under this chapter or a predecessor chapter within 5 years preceding the filing with the secretary of state of a registration statement may be incorporated by reference in the registration statement to the extent that the document is currently accurate.
IV. The secretary of state may by rule or otherwise permit the omission of any item of information or document from any registration statement.
V. The secretary of state may by rule or order require as a condition of registration by qualification or coordination:
(a) That any security issued within the past 3 years or to be issued to a promoter for a consideration substantially different from the public offering price, or to any person for a consideration other than cash, be deposited in escrow; and
(b) That the proceeds from the sale of the registered security in this state be impounded until the issuer receives a specified amount from the sale of the security either in this state or elsewhere.
VI. The secretary of state may by rule or order determine the conditions of any escrow or impounding required under this section, but he may reject a depository solely because of location in another state only if the offering is not being registered under the Securities Act of 1933 and the principal place of business of the registrant is in this state.
VII. The secretary of state may by rule or order require as a condition of registration that any security registered by qualification or coordination be sold only on a specified form of subscription or sale contract, and that a signed or conformed copy of each contract be filed with the secretary of state or preserved for any period up to 3 years specified in the rule or order.
VIII. Every registration statement shall be effective, for the purpose of any non-issuer distribution until withdrawn, suspended, or revoked. All outstanding securities of the same class as a registered security are considered to be registered for the purpose of any non-issuer transaction so long as the registration statement is effective. A registration statement may not be withdrawn for one year from its effective date if any securities of the same class are outstanding. With respect to non-issuer sales of covered securities under section 18(b)(4)(A) of the Securities Act of 1933, refer to RSA 421-B:11 and RSA 421-B:31, I(h).
IX. So long as a registration statement is effective, the secretary of state may by rule or order require the person who filed the registration statement to file with him reports, not more often than quarterly, to keep reasonably current the information contained in the registration statement, to disclose the process of the offering and the use of any proceeds received from the offering, and to submit reports of sales. The secretary of state may by rule or order require that the issuer distribute annual reports to its shareholders.
IX-a. [Repealed.]
X. A registration statement relating to a security issued by a face amount certificate company or a redeemable security issued by an open-end management company or unit investment trust, as those terms are defined in the Investment Company Act of 1940, may be amended after its effective date so as to increase the securities specified as proposed to be offered. Such an amendment becomes effective when the secretary of state so orders.
XI. So long as a registration statement is effective the secretary of state may require an issuer to file with him an annual report in such form as the secretary of state by rule prescribes. Failure to file the annual report within 30 days after its request may be deemed a request for withdrawal.
XII. No registration shall be deemed to be filed with the secretary of state until the fee established pursuant to RSA 421-B:31 has been paid.
XIII. The secretary of state may, as an alternative means of registration under RSA 421-B:12, 421-B:13 or 421-B:14, register securities by means of or through the facilities of a national organization which facilitates securities registration on a nationwide basis.
XIV. All mutual funds doing business in this state offering multiple classes of shares shall register each class individually, and pay the fee set forth in RSA 421-B:31, I(d). All mutual funds doing business in this state offering securities through a combined prospectus shall register each portfolio and each class thereof contained in the combined prospectus and pay the fees set forth in RSA 421-B:31, I, unless it can be shown that such securities are specifically exempted from registration under this chapter.
XV. The secretary of state may deem abandoned and withdrawn any registration statement submitted pursuant to this chapter if any registrant fails to respond in writing within 90 days to a written request from the secretary of state requesting a response.
Source. 1981, 214:1. 1986, 115:1. 1987, 393:4; 411:2. 1988, 248:1. 1991, 355:80. 1992, 288:31, 44, 45. 1994, 388:9-11. 1996, 239:22. 1997, 112:12; 296:16, 23. 2001, 260:15. 2003, 156:6, 7, eff. Aug. 16, 2003. 2006, 245:14, 26, eff. July 1, 2006.
Section 421-B:15-a
421-B:15-a Uniform Limited Offering Registration. –
The attorney general shall adopt rules, pursuant to RSA 541-A, relative to adoption in this state of Form ULOR-C, the general registration form for corporations registering under state securities law securities that are exempt from registration with the Securities and Exchange Commission under Rule 504 of Regulation D.
Source. 1992, 288:24, eff. Jan. 1, 1993.
Section 421-B:16
421-B:16 Denial, Suspension, and Revocation of Registration. –
I. The secretary of state may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if he finds:
(a) That the order is in the public interest; and
(b) That any of the following are true:
(1) The registration statement as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment under RSA 421-B:15, X, as of its effective date, or any report under RSA 421-B:15, XI is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;
(2) Any provision of this chapter or any rule lawfully imposed under this chapter has been willfully violated, in connection with the offering, by
(i) The person filing the registration statement,
(ii) The issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer, or
(iii) Any underwriter;
(3) The security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction of any court of competent jurisdiction entered under any other federal or state act applicable to the offering; but the secretary of state may not institute a proceeding against an effective registration statement under this numbered subparagraph more than one year from the date of the order or injunction relied on, and may not enter an order under this numbered subparagraph on the basis of an order or injunction entered under any other state law unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this numbered subparagraph;
(4) The issuer's enterprise or method of business includes or would include activities which are illegal where performed;
(5) The offering has worked or tended to work a fraud upon purchasers or would so operate;
(6) The offering has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participation, or unreasonable amounts or kinds of options;
(7) Except with respect to securities which are being registered by notification the terms of the securities are unfair and inequitable; provided, however, that the secretary of state may not determine that an offering is unfair and inequitable solely on the grounds that the securities are to be sold at an excessive price where the offering price has been determined by arms length negotiation between nonaffiliated parties. The selling price of any security being sold by a broker-dealer licensed in this state shall be presumed to have been determined by arms length negotiation;
(8) When a security is sought to be registered by notification and it is not eligible for such registration;
(9) When a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by RSA 421-B:13, II(d);
(10) The applicant or registrant has failed to pay the proper filing fee; but the secretary of state may enter only a denial order under this numbered subparagraph and he shall vacate any such order when the deficiency has been corrected;
(11) The secretary of state may not institute a stop-order proceeding against an effective registration statement on the basis of a fact or transaction known to him when the registration statement became effective unless the proceeding is instituted within the next 30 days.
II. The secretary of state may issue an order requiring the person for whom a registration was made to show cause why the registration should not be revoked. The order shall be calculated to give reasonable notice of the time and place for the revocation hearing, and shall state the reasons for the issuance of the order. The secretary of state may by order summarily suspend a registration pending final determination of any order to show cause, provided the secretary of state finds the public interest will be irreparably harmed by delay in issuing such order. If the registration is suspended pending final determination of any order to show cause, a hearing on the merits shall be held within 10 days of the issuance of the order or suspension.
II-a. The secretary of state may issue a stop order suspending the offer and sale of a federal covered security, except a covered security under section 18(b)(1) of the Securities Act of 1933, if the secretary of state finds that:
(1) The order is in the public interest; and
(2) There is a failure to comply with any condition established under sections RSA 421-B:2, 421-B:11, or 421-B:31.
III. All hearings shall be conducted in accordance with the rules adopted for the purposes of this chapter. After the hearing, the secretary of state shall enter an order making such disposition of the matter as the facts require. If the person for whom the registration was made fails to appear at a hearing of which he has been duly notified, such person shall be deemed in default and the proceeding may be determined against him upon consideration of the order to show cause, the allegations of which may be deemed to be true. The secretary of state may adopt rules of procedure concerning all proceedings conducted pursuant to this section.
IV. The secretary of state may vacate or modify a stop order if he finds that the conditions which prompted entry have changed or that it is otherwise in the public interest to do so.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:81, 89, II. 1992, 288:31, 46. 1997, 296:17, eff. June 20, 1997.
Section 421-B:17
421-B:17 Exemptions. –
I. The following securities are exempted from RSA 421-B:11, and RSA 421-B:18, I:
(a) Any security, including a revenue obligation, issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency, or corporate or other instrumentality, of one or more of the foregoing, or any certificate of deposit for any of the foregoing, but this exemption shall not include any industrial development bond or any industrial revenue bond;
(b) Any security issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, or any agency, or corporate or other instrumentality, of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor;
(c) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state;
(d) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings and loan association, or any building and loan or similar association organized under the laws of any state and authorized to do business in this state;
(e) Any security issued or guaranteed by any federal credit union or any credit union, or similar association organized and supervised under the laws of this state;
(f) (1) Any security listed or approved for listing upon notice of issuance on the following securities markets, and any other security of the same issuer that is of senior or substantially equal rank; any security called for by subscription rights or warrants so listed or approved; or any warrant or right to purchase or subscribe to any of the securities exempted in this subparagraph:
(i) The New York Stock Exchange, the American Stock Exchange, the Chicago Board Options Exchange, or the National Association of Securities Dealers Automated Quotation Market System.
(ii) The Boston Stock Exchange or the securities designated by the board of governors of the Federal Reserve System as ""O.T.C. Margin Stocks,'' if quotations have become available and public trading has taken place for such class of security prior to the offer or sale of that security in reliance upon this exemption.
(iii) Upon petition by an exchange and after review of such exchange's performance, its memorandum of understanding with the North American Securities Administrators Association and upon review of any other information the secretary of state may require, the secretary may by order designate such exchange as qualified under subparagraph (i) or (ii) for the exemption provided by subparagraph (f)(1).
(2) The secretary of state may withdraw an exemption in subparagraph (f)(1) if the secretary determines, for any security or class of securities sought to be sold in reliance upon this exemption, that the listing requirements or standards have been so changed, or so insufficiently applied, that the protection of investors contemplated and relied upon by the legislature in granting this exemption is no longer afforded or is substantially reduced.
(3) The exemption provided by the subparagraph shall not be available to securities listed on the American Stock Exchange Emerging Marketplace, the National Association of Securities Dealers Automated Quotation Small Cap Market, or any other securities market affiliated with a market named in subparagraph (f)(1)(i) or (ii) and so designated by the secretary of state.
(4) Issuers of securities that are exempt under subparagraph (f)(1)(i) shall pay a fee for the initial public offering prior to the first sale of the securities in this state.
(5) The secretary of state shall adopt rules relative to suitability requirements for investors purchasing securities offered pursuant to subparagraph (f)(1)(i). For the purposes of adopting the initial set of rules as provided by this section the secretary of state shall be authorized to adopt emergency rules as provided in RSA 541-A:18, notwithstanding the requirement under RSA 541-A:18, I, requiring an imminent peril to public health or safety.
(g) Any commercial paper which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within 9 months of the date of issuance, exclusive of days of grace, or any renewal of the paper which is likewise limited, or any guarantee of the paper or of any renewal which are not advertised for sale to the general public in newspapers or other publications of general circulation or otherwise, or by radio, television or direct mailing;
(h) Any interest in any employee's savings, stock purchase, pension, profit sharing or similar benefit plan, including, but not limited to a plan that provides for direct purchases of the employer's securities and options by employees or a self-employed person's retirement plan so long as the issuer's board of directors has approved the plan and its primary purpose is to benefit employees rather than to raise capital;
(i) Any security issued or guaranteed by any railroad, other common carrier or public utility which is subject to regulation in respect to the issuance or guarantee of its securities by a governmental authority of the United States;
(j) Any interest in a common trust fund or similar fund maintained by a state bank or trust company organized and operating under the laws of New Hampshire, or a national bank wherever located, for the collective investment and reinvestment of funds contributed to such common trust fund or similar fund by the bank or trust company in its capacity as trustee, executor, administrator, or guardian; and any interest in a collective investment fund or similar fund maintained by the bank or trust company, or in a separate account maintained by an insurance company, for the collective investment and reinvestment of funds contributed to such collective investment fund or similar fund by the bank, trust company or insurance company in its capacity as trustee or agent, which interest is issued in connection with an employee's savings, pension, profit sharing, or similar benefit plan, or a self-employed person's retirement plan;
(k) Any security which meets all of the following conditions:
(1) If the issuer is not organized under the laws of the United States or a state, it has appointed a duly authorized agent in the United States for service of process and has set forth the name and address of the agent in its prospectus;
(2) A class of the issuer's securities is required to be and is registered under section 12 of the Securities Exchange Act of 1934, and has been so registered for the 3 years immediately preceding the offering date;
(3) Neither the issuer nor a significant subsidiary has had a material default during the last 7 years, or for the period of the issuer's existence if less than 7 years, in the payment of
(i) Principal, interest, dividend or sinking fund installment on preferred stock or indebtedness for borrowed money, or
(ii) Rentals under leases with terms of 3 years or more;
(4) The issuer has had consolidated net income, before extraordinary items and the cumulative effect of accounting changes of at least $1,000,000 in 4 of its last 5 fiscal years including its last fiscal year; and if the offering is of interest bearing securities, has had for its last fiscal year, net income, before deduction for income taxes and depreciation, of at least 1 1/2 times the issuer's annual interest expense, giving effect to the proposed offering and the intended use of the proceeds. For the purposes of this subparagraph ""last fiscal year'' means the most recent year for which audited financial statements are available, provided that such statements cover a fiscal period ended not more than 15 months from the commencement of the offering;
(5) If the offering is of stock or shares other than preferred stock or shares, the securities have voting rights and the rights include:
(i) The right to have at least as many votes per share, and
(ii) The right to vote on at least as many general corporate decisions, as each of the issuer's outstanding classes of stock or shares, except as otherwise required by law; and
(6) If the offering is of stock or shares, other than preferred stock or shares, the securities are owned beneficially or of record, on any date within 6 months prior to the commencement of the offering, by at least 1,200 persons, and on that date there are at least 750,000 such shares outstanding with an aggregate market value, based on the average bid price for that day, of at least $3,750,000. In connection with the determination of the number of persons who are beneficial owners of the stock or shares of an issuer, the issuer or broker-dealer may rely in good faith for the purposes of this clause upon written information furnished by the record owners;
(l) Any certificate of indebtedness sold or issued for investment, other than a certificate of indebtedness pledged as a security for a loan made contemporaneously therewith, by an industrial loan and thrift company;
(m) Any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional association;
(n) Any security designated by rule or order by the secretary of state after a finding that the designation is consistent with the purposes fairly intended by the policy and provisions of this title.
II. The following transactions are exempted from RSA 421-B:11 and RSA 421-B:18, I:
(a) (1) Any non-issuer transactions, whether or not effected by or through a broker-dealer resulting in the completion of 5 or fewer sales of securities of a single issuer by the same non-issuer within any period of 12 consecutive months. The secretary of state, on a case-by-case basis, may by rule or order, retroactively or prospectively, increase the number of persons to whom sales may be made under this exemption.
(2) Any sale of securities by an issuer, if:
(A) The number of purchasers of securities of the issuer, in all jurisdictions combined, does not in consequence of the sale, exceed 10 in number during any 12 consecutive months and 25 in number during the issuer's existence.
(B) The securities sold in reliance on this subparagraph have not been offered to the public by any form of general solicitation or general advertisement.
(C) A commission or remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this chapter or an agent registered under this chapter for soliciting a prospective purchaser.
(D) Except for sales of securities registered under the Securities Act of 1933 or exempted by section 3(b) of that act, the seller reasonably believes that all buyers are purchasing for investment.
(3) For purposes of subparagraph (2):
(A) ""General solicitation'' and ""general advertisement'' includes, but is not limited to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, and any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. General solicitation and general advertisement shall not include communications and disclosure material specifically directed to persons with whom the seller or its representatives had a substantial and pre- existing relationship.
(B) The computation of the number of sales that may be made under this exemption shall include sales made under RSA 421-B:17,II(k), but shall not include sales made under any other exemption provided for in RSA 421-B:17 or sales made pursuant to 17 C.F.R. section 230.506
(C) The secretary of state, on a case-by-case basis, may by rule or order increase the number of persons to whom sales may be made under this exemption.
(b) Any non-issuer distribution of an outstanding security, other than common stock, rated in the top 3 categories of Moody's, Fitch's, or Standard & Poor's Securities Manuals if:
(1) Either Moody's, Fitch's, or Standard & Poor's Securities Manuals, or other recognized manuals approved by the secretary of state, contains the names of the issuer's officers and directors, a balance sheet of the issuer as of a date not more than 18 months prior to the date of such sale, and a profit and loss statement for the fiscal year preceding the date of such balance sheet, and
(2) The issuer or its predecessor has been in active, continuous business operation for the 5-year period next preceding the date of sale, and
(3) If the security has a fixed maturity or fixed interest or dividend provision, the issuer has not, within the 3 preceding fiscal years, defaulted in payment of principal, interest, or dividends on any such securities.
(c) The execution of any orders by a licensed broker-dealer for the purchase or sale of any security, pursuant to an unsolicited offer to purchase or sell; provided that such broker-dealer acts as agent for the purchaser or sell; provided that such broker-dealer acts as agent for the purchaser or seller, and has no direct material interest in the sale or distribution of such security, receives no commission, profit, or other compensation from any source other than the purchaser and seller and delivers to the purchaser and seller written confirmation of the transaction which clearly itemizes his commission, or other compensation and which clearly indicates the sale was an unsolicited transaction.
(d) Any non-issuer sale of notes or bonds secured by a mortgage lien if the entire mortgage, together with all notes or bonds secured thereby, is sold to a single purchaser at a single sale.
(e) Any judicial sale, exchange, or issuance of securities made pursuant to an order of a court of competent jurisdiction.
(f) The sale, by a pledgeholder, of a security pledged with him in good faith as collateral for a bona fide debt.
(g) Any offer or sale to a bank savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit sharing trust, a venture capital company which operates a small business investment company under the Small Business Investment Act of 1958, as amended, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity.
(h) [Repealed.]
(i) Any offer, but not a sale, of a security for which a registration statement has been filed under both this chapter and the Securities Act of 1933, if no stop order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under either act; and any offer of a security if the sale of such security is or would be exempt under this section. The secretary of state may by rule or order exempt such other offers, but not sales, of securities for which a registration statement has been filed, consistent with the purposes of this chapter.
(j) The offer and sale by a cooperative association organized under the laws of New Hampshire of its securities when such securities are offered and sold only to its members, or when the purchase of such securities is necessary or incidental to establishing membership in such association, or when such securities are issued as patronage dividends.
(k) Any offer or sale of securities, including offers and sales pursuant to preorganization subscriptions for the securities of an issuer to be formed, by a corporation, limited partnership, registered limited liability partnership, or limited liability company if after giving effect to the sale, the aggregate number of holders of all of the issuer's securities, all of whom shall have purchased for investment, does not exceed 10, exclusive of persons designated in subparagraph (g), provided that no commission or other remuneration has been paid and neither the issuer nor any person acting on its behalf offers or sells the securities by any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, and any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. All sales pursuant to this subparagraph must be consummated within 60 days after the date of incorporation or formation of the issuer. The secretary of state may by rule or order increase the number of persons to whom sales may be made under this exemption.
(l) The issuance and delivery of any securities of one corporation to another corporation or its securities holders in exchange for the acquisition by the issuer or a subsidiary of the issuer of all or substantially all of the assets of such other corporation, or in connection with a consolidation or merger of such corporation or a share exchange between the issuer or a subsidiary of the issuer and such other corporation, provided that the secretary of state has been furnished with a general description of the transaction, with the documents to be distributed to offerees, and with such other information as he prescribes by rule not less than 10 business days prior to such issuance and delivery.
(m) Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter or among underwriters.
(n) The distribution by a corporation of its or other securities to its own security holders as a stock dividend or as a dividend from earnings or surplus or as a liquidating distribution; or upon conversion of an outstanding convertible security; or pursuant to a stock split or reverse stock split.
(o) Any offer or sale of securities by an affiliate of the issuer of the securities if:
(1) A registration statement is in effect with respect to securities of the same class of such issuer, and
(2) Such offer or sale has been exempted from registration by rule or order of the secretary of state.
(p) Any transaction pursuant to an offer to existing security holders of the issuer, where the securities held by such existing security holders were issued by the issuers for value, including, but not limited to, persons who at the time of the transaction are holders of convertible securities, non-transferable warrants, or transferable warrants exercisable within not more than 90 days of their issuance, if:
(1) No commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in this state, or
(2) The issuer first files a notice specifying the terms of the offer and the secretary of state does not by order disallow the exemption within the next 10 full business days.
(q) Any acquisitions or mergers made pursuant to RSA 384:57-60, governing interstate acquisitions and mergers of banks and bank holding companies.
(r) (1) Any offer or sale of securities offered or sold in compliance with 17 C.F.R. sections 230.501-230.503 and 230.505, which satisfies the following further conditions and limitations:
(A) No commission, fee, or other remuneration shall be paid or given, directly or indirectly, to any person for soliciting any prospective purchaser in this state unless such person is appropriately registered as a broker-dealer or agent of a broker-dealer in this state.
(B) The issuer shall file with the secretary of state no later than 10 days prior to the receipt of consideration or the delivery of a subscription agreement by an investor in this state which results from an offer being made in reliance upon this exemption:
(i) A notice on Securities and Exchange Commission Form D (17 C.F.R. section 239.500).
(ii) All information furnished by the issuer to the offeree.
(iii) A consent to service of process pursuant to RSA 421-B:30.
(iv) A filing fee in the amount set forth at RSA 421-B:31, I(h).
(v) The federal Form D at such other times and in the form required under 17 C.F.R. section 230.503 to be filed with the Securities and Exchange Commission.
(C) In all sales to persons who are not ""accredited investors,'' as defined by 17 C.F.R. section 230.501(a), in this state, the following conditions shall be satisfied or the issuer and any person acting on its behalf shall believe and have reasonable grounds to believe, after making reasonable inquiry and obtaining written representations from the investor, that the following conditions have been satisfied:
(i) The investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to the purchaser's other security holdings, financial situation, and needs. For the purpose of this condition only, it may be presumed that if the investment does not exceed 10 percent of the investor's net worth exclusive of home, home furnishings, and automobiles it is suitable; or
(ii) The purchaser, either alone or with his or her purchaser representative has such knowledge and experience in financial and business matters that he or she is or they are capable of evaluating the merits and risks of the prospective investment.
(D) In those instances where sales are made to persons who are not ""accredited investors'' as defined by 17 C.F.R. section 230.501(a), where offering documents do not meet the disclosure requirements of 17 C.F.R. section 230.502(b), the secretary of state shall require additional disclosure or impose additional conditions to insure said disclosure requirements are met.
(E) The exemption authorized by this subparagraph shall be known and may be cited as the ""uniform limited offering exemption.''
(2) No exemption under this subparagraph shall be available for transactions involving the securities of any issuer if any part of RSA 421-B:17-a, I applies to any of the parties.
(s) (1) The use of a designated matching service facility by an issuer-member shall not constitute an offer to purchase or sell within the meaning of RSA 421-B:2, XIX.
(2) A person may apply to the secretary of state to be a designated matching service by filing an application for designation as matching service, as defined by the secretary of state. No designation will be made unless the applicant demonstrates that it:
(i) Owns or will own, operates or will operate, sponsors or will sponsor, or conducts or will conduct a matching service facility limited to providing investor members with the investor packages and identities of issuer-members;
(ii) Enforces the requirement that each issuer-member, prior to the sale of securities, complies with RSA 421-B:11;
(iii) Will not be involved in any manner in the sale, offer for sale, solicitation of a sale, or offer to buy a security other than as set forth in subparagraph (2)(i);
(iv) Believes, after making a reasonable factual inquiry, that any person who uses the matching service facility in the capacity of an investor is a properly qualified investor member;
(v) Is a governmental entity, quasi-governmental entity, an institution of higher education, or a domestic nonprofit corporation that is associated with a governmental or quasi-governmental entity or an institution of higher education;
(vi) Does not employ any person required to be registered under this chapter as a broker-dealer, investment adviser, salesman, or agent;
(vii) Does not have, and does not employ any person who has, a business relationship with any investor member or issuer-member other than to provide such member access to the matching service facility;
(viii) Charges fees only in an amount necessary to cover its reasonable operating costs and that are unrelated to the amount of money being raised by any issuer-member or the amount of securities sold by any member;
(ix) Agrees not to use any advertisement of its matching service facility that advertises any particular issuer or any particular securities or the quality of any securities or that is false or misleading or otherwise likely to deceive a reader thereof, and upon objection by the secretary of state, agrees to cease any advertisement;
(x) Agrees not to publish or distribute any issuer-member material to which the secretary of state raises objection, and upon objection by the secretary of state, agrees to cease any publication of such material;
(xi) Enforces the requirement that no issuer-member will make a sale of securities until 5 calendar days after delivery to the purchaser of a final offering circular or final documents; and
(xii) Meets such other conditions as the secretary of state considers appropriate for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this chapter and the rules adopted under this chapter.
(3) Designation under this subparagraph is not available to any matching service formed in a manner that constitutes part of a scheme to violate or evade the provision of this chapter or rules adopted under this chapter.
(4) The secretary of state, upon 10 days' notice and after a hearing, may withdraw a person's designation as a matching service if the person does not meet the standards for designation provided in this section.
(t) Any transaction designated by rule or order by the secretary of state after a finding that the designation is consistent with the purposes fairly intended by the policy and provisions of this title.
III. The secretary of state may issue an order requiring any person who claims the benefit of an exemption with respect to a specific security or transaction, to show cause why the exemption should not be revoked. The order shall be calculated to give reasonable notice of the time and place for the revocation hearing, and shall state the reasons for the entry of the order. The secretary of state may by order summarily suspend, deny or revoke an exemption pending final determination of any order to show cause, provided the secretary of state finds the public interest will be irreparably harmed by delay in issuing such an order. If an exemption is denied, revoked or suspended pending final determination of an order to show cause, a hearing on the merits shall be held within 10 days of the issuance. The secretary of state may deem abandoned and withdraw any filing made pursuant to this section, if any person fails to respond in writing within 90 days, to a written request from the secretary of state requesting a response.
IV. All hearings shall be conducted in accordance with rules adopted pursuant to this chapter. After the hearing, the secretary of state shall enter an order making such disposition of the matter as the facts require. If the person claiming the benefit of the exemption fails to appear at a hearing of which he has been duly notified, such person shall be deemed in default, and the proceeding may be determined against him upon consideration of the order to show cause, the allegations of which may be deemed to be true. The secretary of state may adopt rules of procedure concerning all proceedings conducted pursuant to this subdivision.
V. In any judicial or administrative proceeding under this chapter, the burden of proving an exemption or an exception from a definition is upon the person claiming it.
Source. 1981, 214:1. 1985, 334:1. 1987, 155:4; 411:2. 1989, 144:2. 1991, 16:1; 17:1; 139:1; 196:2; 355:89, II. 1992, 288:31. 1994, 19:4; 388:12-16. 1995, 304:2. 1996, 212:15; 239:24-28, 30, 39, 40; 288:11. 1997, 112:13-19; 296:18. 1998, 250:2. 2001, 194:3, eff. July 1, 2001; 260:16, eff. July 13, 2001. 2006, 245:15-17, 29, II, eff. July 1, 2006.
Section 421-B:17-a
421-B:17-a Registered Securities Offerings and Filings for Exemption From Registration; General Standards of Conduct and Disclosure. –
The following standards shall apply to all registered offerings of securities and to any exempt offerings which require a filing with the secretary of state other than the filing of the notice described in RSA 421-B:11, I-a(e), except as provided by RSA 421-B:6, I-b:
I. Additional disclosures shall be made in offering documents or registration statements, or an application for registration or a filing for exemption from the registration requirement shall be denied, or further conditions for an exemption or registration shall be imposed, if any of the persons, other than persons licensed in this state, issuing or offering securities in this state:
(a) Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any state's securities law within 5 years prior to the instant securities offering in this state.
(b) Has been convicted within 5 years prior to making the instant offer of a security in this state of:
(1) Any felony or misdemeanor in connection with the offer, purchase, or sale of any security.
(2) Any felony involving fraud or deceit, including but not limited to:
(A) Forgery.
(B) Embezzlement.
(C) Obtaining money under false pretenses.
(D) Larceny.
(E) Conspiracy to defraud.
(c) Is currently subject to a material administrative enforcement order or judgment entered by a state's securities administrator within 5 years prior to offering securities in this state or is subject to any state's administrative enforcement order or judgment in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within 5 years prior to offering securities in this state.
(d) Is subject to a material administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase, or sale of securities.
(e) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily, preliminarily, or permanently restraining or enjoining such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within 5 years prior to offering securities in this state.
II. Offering documents filed with the secretary of state shall be delivered to prospective investors at least 48 hours before investors commit to the investment, provided that the secretary of state, for good cause shown, shall suspend this requirement by order.
III. In addition to the disclosures required pursuant to RSA 421-B, additional disclosures shall be included in any offering document for a registered offering of securities pursuant to the policies and guidelines promulgated by the North American Securities Administrators Association (NASAA) for the benefit of investors to provide full and fair disclosure of a particular investment opportunity to investors. In addition, such offerings shall be subject to any further standards, including suitability standards, promulgated by NASAA for such offerings.
Source. 2006, 245:18, eff. July 1, 2006.
Miscellaneous Provisions
Section 421-B:18
421-B:18 Filing of Sales and Advertising Literature and Other Information. –
I. Subject to the limitations of section 222 of the Investment Advisers Act of 1940 and section 18 of the Securities Act of 1933, the secretary of state may by rule or order require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser.
II. Subject to the limitations of section 222 of the Investment Advisers Act of 1940 and section 18 of the Securities Act of 1933, the secretary of state may require at any reasonable time and in any reasonable manner from any person or issuer subject to this title, statements; reports, including reports audited by independent public accountants and sales reports; answers to questionnaires; and other information and evidence thereof, in whatever reasonable form he designates, and at such reasonable intervals as he may choose, or from time to time.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:89, II. 1992, 288:31. 1994, 388:17. 1997, 296:19, eff. June 20, 1997.
Section 421-B:19
421-B:19 Misleading Filings. –
It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.
Source. 1981, 214:1. 1987, 411:2. 1989, 144:3. 1991, 355:82, eff. July 1, 1991.
Section 421-B:20
421-B:20 Unlawful Representations Concerning Registration or Exemption. –
I. Neither the fact that a registration statement or an application for a license has been filed under this chapter with the state of New Hampshire nor the fact that a security is effectively registered or a person is licensed in the state of New Hampshire constitutes a finding by the secretary of state that any document filed under RSA 421-B is true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the secretary of state has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security, or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with the provisions of this paragraph.
II. The full text of paragraph I shall be reproduced, in type no smaller than 12 point boldface type, on any one of the first 5 pages of any prospectus or other offering document, when offered to New Hampshire residents in a private offering. Public offerings shall bear either a legend approved by the North American Securities Administrators Association, Inc., such as the modified Federal Regulation S-K legend or the legend required on Form U-7 which is required for offerings not federally registered. This paragraph shall not apply to offers and sales of federal covered securities.
Source. 1981, 214:1. 1987, 411:2. 1989, 144:4. 1990, 100:8. 1991, 355:83. 1992, 288:47. 1994, 388:18. 1996, 239:31. 1997, 296:20, eff. June 20, 1997.
Section 421-B:21
421-B:21 Administration. –
I. This chapter shall be administered by the secretary of state who may appoint deputy secretaries of state or designees who shall serve as director and who may be classified or unclassified employees whose salary shall be that of or comparable to that of a deputy secretary of state, to administer the provisions of this chapter. The secretary of state may also appoint deputy directors who shall perform such duties as may be assigned by the secretary of state, deputy secretary of state, or designee, or director, to administer the provisions of this chapter. The secretary of state shall, to the greatest extent practical, physically and substantively consolidate the activities and functions related to corporations, limited partnerships, and other business organizations and entities administered by the department of state with the activities and functions related to the registration of securities.
I-a. Notwithstanding any other provision of law, the secretary of state shall have exclusive authority and jurisdiction:
(a) To register securities.
(b) (1) To license the following:
(A) Broker-dealers.
(B) Investment advisers.
(C) Issuer-dealers.
(D) Agents.
(E) Investment adviser representatives.
(2) The exclusive authority and jurisdiction to issue licenses pursuant to RSA 421-B:21, I-a(b) shall not be read to limit the authority of the department of insurance to license sellers of products where licensure is required both by RSA 421-B and Title XXXVII.
(c) Pursuant to RSA 421-B:28, III, together with the attorney general, to issue, amend, or rescind such orders as are reasonably necessary to carry out the provisions of this chapter.
(d) To bring administrative actions to enforce the securities law.
(e) To investigate and impose penalties for violations of the securities laws, including but not limited to:
(1) Revoking, suspending, or denying licenses and registrations.
(2) Fines.
(3) Rescission, restitution, or disgorgement.
(f) Together with the attorney general, to bring actions pursuant to RSA 421-B:23, I(b) and (c).
(g) To investigate conduct that would be an unfair or deceptive act or practice under RSA 358-A and that is subject to the jurisdiction of the director of securities regulation pursuant to RSA 358-A:3, I.
(h) To issue letters of censure, caution, warning, or admonition pursuant to audits or inspections under RSA 421-B:9, investigations under RSA 421-B:22, or hearings under RSA 421-B:26-a.
II. The secretary of state shall have all powers specifically granted or reasonably implied in order to perform the substantive responsibilities imposed by this title.
II-a. The secretary of state shall collect all fees and charges required under this chapter and shall pay them to the state treasurer to be deposited in the general fund as unrestricted revenue, except as provided in paragraphs II-b and II-c.
II-b. [Repealed.]
II-c. The state treasurer shall pay the expenses of investor education conducted pursuant to RSA 421-B:26, IV out of the investor education fund consisting of the funds collected pursuant to RSA 421-B:26, I, II, and III. The investor education fund shall be nonlapsing and continually appropriated for the purpose of paying the expenses of investor education, except that, as provided in RSA 421-B:26, IV, the fund shall at no time exceed $725,000.
III. It is unlawful for the secretary of state or any officers or employees of the secretary of state to use for personal benefit any information which is filed with or obtained by the secretary of state and which is not made public. No provision of this chapter authorizes the secretary of state or any officers or employees of the secretary of state to disclose any such information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of this chapter either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the secretary of state or any officers or employees of the secretary of state.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:84. 1992, 288:48. 1994, 388:19. 2001, 158:69, eff. July 1, 2001; 260:17, 21, III, eff. July 13, 2001. 2006, 245:19, 20, eff. July 1, 2006. 2007, 104:5, eff. July 1, 2007. 2008, 332:3, eff. Jan. 1, 2009.
Section 421-B:22
421-B:22 Investigations and Subpoenas. –
I. The secretary of state may:
(a) Make such public or private investigations within or without this state as he deems necessary to determine whether any person has violated or is about to violate this title or any rule or order under this title, or to aid in the enforcement of this title or in the adopting of rules and forms under this title;
(b) Require or permit any person to file a statement in writing, under oath or otherwise as the secretary of state determines, as to all the facts and circumstances concerning the matter being investigated;
(c) Publish information which is contained in any order issued by the secretary of state;
(d) Hold hearings, upon reasonable notice, in respect to any matter arising out of the administration of this chapter;
(e) Conduct investigations and hold hearings for the purpose of compiling information with a view to recommending changes in this title to the legislature; and
(f) Require an issuer, broker-dealer, or agent to report to him all transactions as they pertain to any security. Such reports shall be made within 10 days after demand therefor by the secretary of state and shall be open for public inspection only upon a court order. The secretary of state shall not make known, in any manner not provided by law, any information contained in such reports.
II. For the purpose of any investigation, hearing or proceeding under this title, the secretary of state or any officer designated by him may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the secretary of state deems relevant or material to the inquiry.
III. In the event that a person refuses to obey a subpoena issued to him or her or any order or determination the secretary of state is authorized to make, the superior court, upon application by the attorney general or secretary of state or any officer designated by the secretary of state, may issue to the person an order directing him or her to appear before the attorney general or secretary of state, or the officer designated by him or her, to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.
IV. In any investigation to determine whether any person has violated or is about to violate this title or any rule or order under this title, upon the secretary of state's prevailing at hearing, or the person charged with the violation being found in default, or pursuant to a consent order issued by the secretary of state, the secretary of state shall be entitled to recover the costs of the investigation, and any related proceedings, including reasonable attorney's fees, in addition to any other penalty provided for under this chapter.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:89, II. 1992, 288:49. 1994, 388:20. 2003, 156:9, eff. Aug. 16, 2003. 2008, 332:4, eff. Jan. 1, 2009.
Section 421-B:23
421-B:23 Cease and Desist Orders; Injunctions; Receivers. –
I. Whenever it appears to the secretary of state that any person has engaged or is about to engage in any act or practice constituting a violation of this chapter or any rule or order under this chapter:
(a) The secretary of state shall have the power to issue and cause to be served upon such person an order requiring the person to cease and desist from violations of this chapter. The order shall be calculated to give reasonable notice of the rights of the person to request a hearing on the order and shall state the reasons for the entry of the order. The order shall be served at the last known address of such person. Service of the order and publication of the order in a newspaper of general circulation in the area of the last known address of such person shall serve to duly notify the person of the order and of the right to a hearing on the order. A hearing shall be held not later than 10 days after the request for such hearing is received by the secretary of state after which and within 20 days of the date of the hearing the secretary of state shall issue a further order vacating the cease and desist order or making it permanent as the facts require. All hearings shall be conducted in accordance with the rules adopted pursuant to this chapter. If the person to whom a cease and desist order is issued fails to appear at the hearing after being duly notified, such person shall be deemed in default, and the proceeding may be determined against him or her upon consideration of the cease and desist order, the allegations of which may be deemed to be true. If the person to whom a cease and desist order is issued fails to request a hearing within 30 calendar days of receipt of such order, but in any case no later than 60 calendar days from the issuance of the order, then such person shall likewise be deemed in default, and the order shall, on the thirty-first day from the receipt of the order and no later than the sixty-first day from the issuance of the order, become permanent, and shall remain in full force and effect until and unless later modified or vacated by the secretary of state, for good cause shown. The secretary of state may adopt rules of procedure concerning all proceedings conducted pursuant to this section;
(b) The attorney general or secretary of state or his or her designee may, with or without prior administrative action by the secretary of state, bring an action in the superior court to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, restraining order, or writ of mandamus shall be granted. In addition, the court may issue an order for other appropriate or ancillary relief, to include an asset freeze, accounting, writ of attachment, writ of general or specific execution, and an appointment of a receiver or conservator, that may be the administrator, for the defendant or the defendant's assets. The court shall not require the attorney general or secretary of state to post a bond; and
(c) The attorney general or secretary of state or his or her designee may bring an action for injunctive relief and civil penalties for violations of any provision of this chapter. In any action brought by the attorney general or secretary of state or his or her designee, the civil penalties shall not exceed $5,000 for each violation in the case of knowing violations, or $2,500 for each violation in the case of negligent violations, and each of the acts specified shall constitute a separate violation. The action may be brought in the superior court of the county in which the defendant resides or has his or her principal place of business, or, with the consent of the parties or if the defendant is a nonresident and has no place of business within the state, in the superior court of Merrimack county.
II. In a proceeding in superior court under this section where the state prevails, the secretary of state and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
Source. 1981, 214:1. 1987, 411:2. 1989, 144:5. 1991, 158:1; 355:89, II. 1992, 288:50. 1994, 388:21. 2003, 156:10, Aug. 16, 2003.
Section 421-B:24
421-B:24 Criminal Penalty. –
I. Any person who willfully violates any provisions of RSA 421-B:3, 421-B:4, 421-B:5 or fails to comply with an order from the secretary of state to cease and desist or for an injunction issued pursuant to RSA 421-B:23, or who fails to comply with an order to pay a fine, penalty, rescission, restitution, or disgorgement greater than $10,000 pursuant to RSA 421-B:10, 421-B:23, or 421-B:26, or who violates RSA 421-B:19 knowing that the statement was false or misleading in any material respect, shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction for any other offense.
II. Any person who willfully violates RSA 421-B:6, 421-B:11 or 421-B:20 shall be guilty of a class A misdemeanor if a natural person, and guilty of a felony if any other person. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction for any other offense. For any subsequent offense, any person shall be guilty of a class B felony.
III. [Repealed.]
IV. Nothing in this chapter limits the power of the state to punish any person for any conduct which constitutes a crime by statute.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:93, II. 2005, 206:10, eff. Jan. 1, 2006. 2006, 310:2, eff. Aug. 18, 2006.
Section 421-B:25
421-B:25 Civil Liabilities. –
I. Any person who sells a security in violation of RSA 421-B:11 or 421-B:20, I or of any condition imposed under RSA 421-B:14, IV or RSA 421-B:15, V, VI and VII, is liable to the person purchasing the security from him, who may sue either in equity for rescission upon tender of the security or at law for damages if he no longer owns the security. In any action for rescission, the purchaser shall be entitled to recover the consideration paid for the security together with interest at the legal rate, costs, and reasonable attorney's fees, less the amount of any income received on the securities. In an action at law, damages shall be the consideration paid for the security together with interest at the legal rate to the date of disposition, costs, and reasonable attorney's fees, less the value of the security at the date of disposition.
II. Any person who violates RSA 421-B:3 in connection with the purchase or sale of any security shall be liable to any person damaged by the violation of that section who sold such security to him or to whom he sold such security, and any person who violates RSA 421-B:5 in connection with the purchase or sale of any security shall be liable to any person damaged by the conduct proscribed by RSA 421-B:5. Any person who violates RSA 421-B:4 in connection with the purchase or sale of any security shall be liable to any investment advisory client of his who is damaged by the violation of that section. Damages in an action pursuant to this paragraph shall include the actual damages sustained plus interest from the date of payment or sale, costs, and reasonable attorney's fees.
III. Every person who directly or indirectly controls a person liable under paragraph I or II, every partner, principal executive officer, or director of such person, every person occupying a similar status or performing a similar function, every employee of such person who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the acts or transactions constituting the violation, are also liable jointly and severally with and to the same extent as such person. There is contribution as in cases of contract among the several persons so liable.
IV. No person shall be liable under paragraphs I and III who shall sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist.
V. Any tender specified in this section may be made at any time before entry of judgment. Tender by a purchaser shall require only notice of willingness to exchange the security for the amount computed pursuant to paragraph I. Tender by a seller shall require only notice of willingness to pay the amount specified in exchange for the security. Any notice may be given by service as in civil actions or by certified mail to the last known address of the person liable.
VI. Every cause of action under this chapter survives the death of any person who might have been a plaintiff or defendant.
VII. A person may not recover under this section in actions commenced more than 6 years after his first payment of money to the broker-dealer or issuer in the contested transaction.
VIII. No purchaser may commence an action under paragraph I if, before suit is commenced, the purchaser has received a written offer to repurchase the security for cash payable on delivery of the security equal to the consideration paid, together with interest at the legal rate from the date of payment, less the amount of any income received on the security or, if the purchaser no longer owns the security, an offer to pay an amount in cash equal to the damages computed in accordance with paragraph I and the purchaser has failed to accept such offer in writing within 30 days of its receipt. No offer shall be effective to prevent suit under this section unless a duplicate copy thereof shall have been filed with the secretary of state at least 20 days prior to its delivery to the offeree and the secretary of state shall not have objected to the offer within that time. The offer shall be in the form and contain the information the secretary of state by rule or order prescribes. If the offer is not performed in accordance with its terms, suit by the offeree under this section shall be permitted without regard to this subdivision.
IX. No person who has made or engaged in the performance of any contract in violation of any provision of this section or any rule or order under this section or has acquired any purported rights under any such contract with knowledge of the facts by reason of which its making or performance was in violation may base any suit on such violation under the contract.
X. Any condition, stipulation or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter in the purchase or sale of any security is void.
XI. The rights and remedies promulgated by this chapter are in addition to any other right or remedy that may exist at law or in equity, but this chapter does not create any cause of action not specified in this section or RSA 421-B:8, V. No civil cause of action may be based solely upon the failure of a broker-dealer or agent to comply with the requirements of RSA 421-B:6, I or III, except a cause of action arising under RSA 421-B:23.
Source. 1981, 214:1. 1987, 411:2. 1991, 158:2. 355:89, II. 1992, 288:31, eff. July 1, 1992.
Section 421-B:26
421-B:26 Administrative Penalty; Investor Education. –
I. Any person who knowingly violates any rule or order of the secretary of state may, upon hearing, except where another penalty is expressly provided, be subject to such suspension or revocation of any registration or license, or administrative fine not to exceed $2,500 for each violation in lieu of or in addition to such suspension or revocation as may be applicable under this title for violation of the provision to which such rule or order relates.
II. Any person who negligently violates any rule or order of the secretary of state may, upon hearing, except where another penalty is expressly provided, be subject to such suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or administrative fine not to exceed $1,500 for each violation in lieu of or in addition to such suspension or revocation as may be applicable under this title for violation of the provision to which such rule or order relates.
III. Any person who, either knowingly or negligently, violates any provisions of this chapter may, upon hearing, and in addition to any other penalty provided for by law, be subject to such suspension, revocation or denial of any registration or license, including the forfeiture of any application fee, or an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and such administrative action or fine may be imposed in addition to any criminal penalties imposed pursuant to RSA 421-B:24 or civil liabilities imposed pursuant to RSA 421-B:25.
III-a. Every person who directly or indirectly controls a person liable under paragraph I, II, or III every partner, principal executive officer, or director of such person, every person occupying a similar status or performing a similar function, every employee of such person who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the acts or transactions constituting the violation, either knowingly or negligently, may, upon hearing, and in addition to any other penalty provided for by law, be subject to such suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and such administrative action or fine may be imposed in addition to any criminal penalties imposed pursuant to RSA 421-B:24 or civil liabilities imposed pursuant to RSA 421-B:25. No person shall be liable under this paragraph who shall sustain the burden of proof that such person did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist.
III-b. Notwithstanding any provision to the contrary, violation of a cease and desist order may result in an administrative fine not to exceed $2,500 per day for as long as such violation continues. This fine shall be in addition to any other penalties provided.
IV. All moneys collected as an administrative penalty under this chapter and all moneys collected pursuant to RSA 421-B:31, I(g) and RSA 421-B:31, I(h) shall be credited to an investor education fund to be maintained by the state treasurer. Funds in excess of $725,000 at the end of each fiscal year shall be credited to the general fund. The secretary of state, after deducting administrative costs, shall use moneys credited to that fund to provide information to residents of this state about investments in securities, to help investors and potential investors evaluate their investment decisions, protect themselves from unfair, inequitable, or fraudulent offerings, choose their broker-dealers, agents, or investment advisers more carefully, be alert for false or misleading advertising or other harmful practices, and know their rights as investors.
V. After notice and hearing, the secretary of state may enter an order of rescission, restitution, or disgorgement directed to a person who has violated this chapter, or a rule or order under this chapter. Rescission, restitution or disgorgement shall be in addition to any other penalty provided for under this chapter.
VI. The secretary of state may order any person who violates RSA 421-B:3, 421-B:4, 421-B:5, 421-B:11, 421-B:19 and 421-B:23, upon hearing, and in addition to any other penalty provided for by law, to make a written offer to the purchaser of the security to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid for the security together with interest at the legal rate, less the amount of any income received by the purchaser on the security, or if the purchaser no longer owns the security, an offer to pay an amount in cash equal to consideration paid for the security together with interest at the legal rate, less the amount the purchaser received on disposition of the security and less the amount of any income received by the purchaser on the security.
VII. [Repealed.]
VIII. Any person who, either knowingly or negligently, engages in any conduct prohibited by RSA 421-B:10, I(b)(2), (7), (10), (12), or (13) may, upon hearing, and in addition to any other penalty provided for by law, be subject to an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and such administrative action or fine may be imposed in addition to any criminal penalties imposed pursuant to RSA 421-B:24 or civil liabilities imposed pursuant to RSA 421-B:25.
Source. 1981, 214:1. 1987, 411:4. 1990, 76:2. 1991, 42:1; 355:89, II. 1992, 288:31, 51, 52. 1994, 388:22, 32. 1995, 201:4. 1996, 239:32, 33. 1997, 112:20. 2001, 158:70. 2003, 156:11, eff. Aug. 16, 2003. 2007, 263:101, eff. July 1, 2007. 2009, 128:3, eff. June 29, 2009.
Section 421-B:26-a
421-B:26-a Hearing Procedures. –
I. Notwithstanding any other law to the contrary, all adjudicatory proceedings pursuant to this chapter shall be conducted by the secretary of state or by a presiding officer appointed by the secretary of state. All hearings conducted pursuant to this chapter shall be governed by the provisions of this section and the provisions of RSA 541-A shall not apply to this chapter.
II. A document shall be considered filed when it is actually received at the department's office in Concord, New Hampshire, and conforms to the requirements of this chapter.
III. For the purposes of this section:
(a) All complaints, petitions, motions, responses, and replies shall be signed by the proponent of the document or, if the party appears by a representative, by the representative.
(b) License, registration, and exemption applications shall be signed only by the applicant or properly authorized designee.
(c) The signature on a document filed with the department shall constitute a certification that:
(1) The signer has read the document and is authorized to file it;
(2) There are good grounds to support the representations made therein; and
(3) The document has not been filed for purposes of delay or harassment.
(d) A willful violation of subparagraph (c), shall, to the extent consistent with the policy of the statutes administered by the secretary of state, be a basis for entering an order adverse to the party committing the violation.
IV. Within a reasonable time after receipt of a complaint:
(a) The department staff or a presiding officer shall review the complaint to determine whether any basis exists for administrative action.
(b) If the complaint is insufficient or no basis exists which warrants administrative action, the complaint shall be dismissed and no hearing shall be scheduled on such complaint.
(c) If the staff determines that sufficient basis exists which warrants administrative action, the staff shall petition the secretary of state for relief.
(d) On any complaint, the staff shall temporarily defer any action and refer the subject matter of the complaint to the appropriate agency if a more complete investigation is necessary. The results of the investigation shall be used to determine the necessity of conducting a hearing by the department.
V. Within a reasonable time after receipt of a petition:
(a) The secretary of state may issue an order either denying or granting the petition or granting in part and denying in part. If any part of the petition is granted, the respondent shall be informed, as part of the hearing notice, of the respondent's right to a hearing.
(b) A petition may include a request for summary action prior to a hearing.
(c) The staff may, sua sponte, petition for relief whenever it has reasonable grounds to believe that a violation of law or rule has occurred, is occurring, or is about to occur.
VI. Notices of hearings shall:
(a) Be prepared and forwarded in a manner which affords interested persons sufficient opportunity to prepare for and deal with the issues to be considered and decided upon at the hearing.
(b) Given in writing and addressed to the address of record of the person being called in for the hearing. The notice shall be prepared on an official form of the department and shall be sent in a sealed envelope through the United States mail, personal services, or by Federal Express or other similar delivery service.
VII. A notice of hearing shall include:
(a) The time, date, and location of the hearing.
(b) The statute or rule which has allegedly been violated and a statement of the legal authority under which the hearing is to be held.
(c) An explicit description of the alleged violation or a copy of the complaint or petition for relief or both the copy of complaint and petition for relief.
VIII. Each hearing shall be set for a date as soon as practicable after the complaint has been received and reviewed. The hearing shall be scheduled to allow sufficient and reasonable time for the preparation of the case by both the department and interested parties.
IX. A request for continuance of a hearing shall be made in writing and received by the department, absent exigent circumstances, at least 5 working days prior to the hearing. Exigent circumstances are described as, but not limited to:
(a) Absence from the jurisdiction;
(b) Serious illness;
(c) Hospitalization;
(d) Death of a family member.
X. The written request or motion for continuance shall contain the following:
(a) The specific reason or reasons for the request; and
(b) Optional dates and times when all interested parties shall be available.
XI. Each presiding officer may, at any stage of the hearing process, withdraw from a case if the presiding officer has or has had a personal or business relationship with any party, witness, or representative that may hinder such presiding officer from being able to arrive at an impartial decision on the issue or issues, or for any other reason that may interfere with the presiding officer's ability to remain impartial.
XII. Parties shall have the right to:
(a) Appear pro se or be represented by an attorney.
(b) Cross-examine witnesses, and
(c) Present evidence and witnesses on their own behalf.
XIII. Except as provided as follows, administrative hearings shall be open to the public:
(a) The presiding officer may, on the presiding officer's own motion or at the request of a party, rule that the public be excluded from a hearing if necessary, pursuant to RSA 91-A:3, II, to protect the interests and rights of the parties to the hearing.
(b) In matters involving sensitive issues, a presiding officer may consult with the office of the attorney general for a ruling on the privacy issue.
(c) Members of the press shall be admitted to the hearing whenever the public is permitted. If the press is present at a hearing, the presiding officer shall brief them, off the record, in the presence of all parties, as to the nature and purpose of the hearing.
(d) In the event a party objects to the attendance of persons not involved in the hearing, the presiding officer shall ascertain the reason for such objection and determine whether the reason given justifies closing the hearing to such persons.
XIV. Subject to the laws governing the department of state, and within the general scope of his powers, each presiding officer shall have the authority to:
(a) Schedule and hold hearings.
(b) Administer oaths and affirmations.
(c) Issue subpoenas on behalf of the state.
(d) Determine the order of proof in any proceeding.
(e) Receive relevant evidence and rule on offers of proof in hearings.
(f) Take judicial notice of any facts which are of common knowledge and general notoriety.
(g) Take, or cause to be taken, depositions.
(h) Regulate and control the course of an administrative hearing.
(i) Hold conferences for the settlement or simplification of issues, or for obtaining stipulations as to issues of fact or proof by consent of the parties.
(j) Dispose of procedural requests, including adjournments or continuances at the request of the parties or on the presiding officer's own motion.
(k) Interview and examine witnesses and parties as the case may require.
(l) Direct parties to appear at hearings.
(m) Consider and evaluate the facts and evidence on the record in making findings of fact and conclusions of law and dispositions.
(n) Determine credibility or weight of evidence in making findings of fact and conclusions of law.
(o) Render oral and written decisions, reports, or recommendations as authorized by statute or rule.
(p) Take any action in a proceeding necessary to conduct and complete the case, consistent with applicable statutes, rules, and precedents.
XV. During any proceeding, the secretary of state shall, upon motion or upon his own motion, direct all parties to attend an informal conference to aid in the disposition of the proceeding. Such conferences:
(a) May be recorded unless all parties wish to discuss possible settlements off the record. Such recordings shall be part of the record.
(b) Shall be held, in addition to settlement possibilities, to consider:
(1) Possible simplification of the issues.
(2) Possible amendments to the pleadings.
(3) Possible admissions of fact, admissions of documents, or other stipulations which might avoid unnecessary proof.
(4) The identification and possible limitations on the number of witnesses.
(5) Possible changes to the method of proceeding or hearing schedule which would otherwise be applicable.
(6) The distribution of written testimony, if any, and exhibits to the parties.
(7) Possible consolidation of the examination of witnesses by the parties.
(8) Any other matters which might contribute to the prompt, orderly, and fair conduct of the proceeding.
A prehearing conference or other informal conference shall be conducted in person or, with the consent of the parties, shall be conducted by means of electronic communications.
XVI. The presiding officer shall cause the administrative hearing to be electronically recorded. Such recording shall be made available, upon written request by a party and upon a fee sufficient to reimburse the full cost of providing the tape, or a true and accurate copy of such tape or tapes. A party may request, in writing, a transcript of the hearing but shall first pay the full costs for such transcription as determined by the secretary of state.
XVII. In the event there is a clear dispute of facts between the parties in which credibility of testimony will determine the outcome of the hearing, the presiding officer on his own motion or that of a party, may sequester witnesses until they are called to testify.
XVIII. In any administrative hearing in which administrative action affecting the rights or privileges of any party may be taken, an oath or affirmation shall be administered by the presiding officer to each witness prior to receiving testimony, provided, however, that if a witness asserts an objection to the taking of an oath for religious or other related reasons, an affirmation shall be administered. Once a witness has been sworn at any hearing, it shall not be necessary to swear the witness again for subsequent testimony on the same day and in the same case. The record of the proceeding shall indicate that a person was recalled to testify and reminded that such person was still under oath or affirmation.
XIX. Motions shall be in written form unless presented at the hearing. Written motions shall be included in the record of the proceeding and filed together with the case file. Oral motions shall be recorded in full in any transcript of the proceeding or, at the discretion of the presiding officer, noted in the minutes of the proceeding and submitted in written form within a reasonable time. A presiding officer may rule upon a motion when made or may defer decision until a later time in the hearing, or until after the conclusion of the hearing.
XX. Administrative hearings shall not be bound by common law or statutory rules of evidence, nor by technical or formal rules of procedure. All relevant, material, and reliable evidence shall be admissible. Such evidence may include, but shall not be limited to, depositions, affidavits, official documents, and testimony of witnesses. Provided, however, the presiding officer may, in the presiding officer's discretion, exclude any irrelevant, immaterial, unreliable, or unduly cumulative or repetitious evidence. Applicable statutory and constitutional provisions and immunities requiring exclusion of evidence in civil proceedings shall be recognized, provided, however, that nothing contained herein shall prohibit a party from waiving such party's privilege or immunity.
XXI. Within a reasonable time after the hearing, the presiding officer shall issue a written decision stating the action to be taken by the department and may set forth findings of fact, conclusions of law, and disposition. All decisions shall be reached upon the basis of a preponderance of the evidence. The decision of the presiding officer shall be construed as the decision of the secretary of state.
XXII. Any party to whom notice has been forwarded pursuant to and in accordance with these rules who fails to appear shall have a default judgment rendered against him.
XXIII. The presiding officer may take judicial notice.
XXIV. Where the interests of justice will be better served without prejudice to the substantial rights of any party, a presiding officer may sever one case from another or may consolidate 2 or more cases, preserving to all parties the right of appeal from the single or several decisions rendered.
XXV. Once a hearing notice has been issued commencing an adjudicatory proceeding, no party shall communicate with the presiding officer or the secretary of state concerning the merits of the case except upon notice to all parties nor shall any party cause another person to make such communications.
XXVI. Within 30 days after a final decision, any party may file a motion for reconsideration which shall serve as a petition for rehearing under RSA 541. No distinctions shall be made between the terms ""reconsideration'' and ""rehearing.'' A motion for reconsideration shall:
(1) Identify each error of law, error of reasoning, or erroneous conclusion contained in the final order which the moving party wishes the secretary of state to reconsider.
(2) Concisely state the correct factual finding, correct reasoning, and correct conclusion being advocated.
(3) Include any memorandum of law the petitioner wishes to submit.
XXVII. Within 30 days after a final decision, the presiding officer may reconsider, revise or reverse any final action on the presiding officer's own motion. If reconsideration is based upon the existing record, prior notice shall not be given to the parties. If the presiding officer believes further information or argument should be considered, the parties shall be provided with an appropriate notice and opportunity to be heard before any revision is made in the previous action.
XXVIII. The filing of a motion for reconsideration shall not operate as a stay of any order or decision, but a motion for stay may be combined with a motion for reconsideration.
Source. 1996, 239:34, eff. Aug. 9, 1996.
Section 421-B:27
421-B:27 Judicial Review of Orders. –
Requests for rehearings and appeals from orders of the secretary of state shall be governed by RSA 541 and by the rules adopted by the secretary of state pursuant to title XXXVIII and RSA 541-A.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:85. 1992, 288:53, eff. July 1, 1992.
Section 421-B:28
421-B:28 Rulemaking Authority; Forms; Orders. –
I. The secretary of state may adopt rules pursuant to RSA 541-A relative to:
(a) Registration statements;
(b) Applications;
(c) Reports;
(d) Definitions of terms consistent with this chapter, whether or not they are used in the chapter;
(e) Classification of securities, persons and matters within the jurisdiction of the secretary of state and different requirements for different classes; and
(f) Any other matter reasonably necessary to carry out the provisions of this title.
II. The secretary of state may prepare, alter or withdraw such forms as are necessary to comply with the provisions of this title.
III. The attorney general may issue, amend or rescind such orders as are reasonably necessary to carry out the provisions of this chapter.
IV. All actions undertaken by the secretary of state pursuant to this section shall be taken only when the secretary of state finds such action necessary or appropriate to the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this title. In adopting rules, preparing forms, setting standards, and reviewing offerings, the secretary of state may cooperate with the securities administrators of other states, self regulatory organizations, and the Securities and Exchange Commission in order to implement the policy of this chapter in an efficient and effective manner and to achieve maximum uniformity in the form and content of registration statements, applications, reports, and requirements for issuers, broker-dealers, and investment advisors, where practicable.
V. The secretary of state may use a standard form widely used in the industry, including forms promulgated by the Securities and Exchange Commission, provided such forms are incorporated by reference in rules adopted by the secretary of state pursuant to RSA 541-A.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:89, II. 1992, 288:31. 1994, 388:23. 1996, 239:35, eff. Aug. 9, 1996.
Section 421-B:28-a
421-B:28-a Advisory Councils and Committees. –
The secretary of state may appoint such advisory councils and committees to aid in the enforcement of this chapter as are deemed necessary.
Source. 1994, 388:24, eff. June 9, 1994.
Section 421-B:28-b
421-B:28-b Electronic Filings. –
Electronic filings, when received by the secretary of state, are deemed filed, and are prima facie evidence that a filing has been duly authorized and made by the signatory on the application or document, are admissible in any civil or administrative proceeding brought by the secretary of state under this chapter, and admissible in evidence in accordance with the rules of the superior court in any action brought by the attorney general under this chapter.
Source. 1994, 388:24, eff. June 9, 1994.
Section 421-B:29
421-B:29 Administrative Files and Opinions. –
I. A document is filed when it is received by the secretary of state.
II. The secretary of state shall keep a register of all applications for licensing and registration statements which are or have ever been effective under this chapter and all denial, suspension, or revocation orders which have been entered under this chapter. The register shall be open for public inspection.
III. The information contained in or filed with any registration statement, application, or report may be made available to the public under such rules as the secretary of state adopts pursuant to RSA 541-A.
IV. Upon request and at such reasonable charges as he prescribes, the secretary of state shall furnish to any person photostatic or other copies, certified under his seal of office if requested, of any entry in the register or any document which is a matter of public record. In any proceeding or prosecution under this chapter any copy so certified is prima facie evidence of the contents of the entry or document certified.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:86. 1992, 288:31, eff. July 1, 1992.
Section 421-B:30
421-B:30 Scope of the Chapter and Service of Process. –
I. RSA 421-B:3; RSA 421-B:6, I; RSA 421-B:11; RSA 421-B:20; and RSA 421-B:25 apply to persons who sell or offer to sell when:
(a) An offer to sell is made in this state, or
(b) An offer to buy is made and accepted in this state.
II. RSA 421-B:3; RSA 421-B:6, I; RSA 421-B:20; and RSA 421-B:25 apply to persons who buy or offer to buy when:
(a) An offer to buy is made in this state, or
(b) An offer to sell is made and accepted in this state.
III. For the purpose of this chapter, an offer to sell or to buy is made in this state, whether or not either party is then present in this state, when the offer:
(a) Originates from this state, or
(b) Is directed by the offeror to this state and received at the place to which it is directed, or at any post office in this state in the case of a mailed offer.
IV. For the purpose of this chapter, an offer to buy or to sell is accepted in this state when 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; and acceptance is communicated to the offeror in this state, whether or not either party is then present in this state, when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed, or at any post office in this state in the case of a mailed acceptance.
V. An offer to sell or to buy is not made in this state when:
(a) The publisher circulates or there is circulated on his behalf in this state any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in this state, or which is published in this state but has had more than 2/3 of its circulation outside this state during the past 12 months, or
(b) A radio or television program originating outside this state is received in this state.
V-a. (a) (1) Broker-dealers, investment advisers, broker-dealer agents, and investment adviser representatives who use the Internet to distribute information on available products and services through certain communications made on the Internet directed generally to anyone having access to the Internet, and transmitted through postings on bulletin boards, displays on ""home pages,'' or similar methods referred to as ""Internet communications,'' shall not be deemed to be making an offer to buy or sell in this state for purposes of RSA 421-B:3; RSA 421-B:6, I; RSA 421-B:20; and RSA 421-B:25 based solely on that fact if the following conditions are observed:
(A) The Internet communication contains a legend in which it is clearly stated that:
(i) The broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative in question may only transact business in this state if first licensed, excluded, or exempted from state broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative licensing requirements, as may be.
(ii) Follow-up, individualized responses to persons in this state by such broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative that involve either the effecting of or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as may be, will not be made absent compliance with state broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative licensing requirements, or an applicable exemption or exclusion.
(B) The Internet communication contains a mechanism, including and without limitation, technical ""firewalls'' or other implemented policies and procedures, designed reasonably to ensure that prior to any subsequent, direct communication with prospective customers or clients in this state, said broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative is first licensed in this state or qualifies for an exemption or exclusion from such requirement. Nothing in this paragraph shall be construed to relieve a state licensed broker-dealer, investment adviser, broker-dealer agent, or investment adviser representative from any applicable securities registration requirement in this state.
(C) The Internet communication does not involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as may be, in this state over the Internet, but is limited to the dissemination of general information on products and services.
(D) In the case of a broker-dealer agent or investment adviser representative:
(i) The affiliation with the broker-dealer or investment adviser of the broker-dealer agent or investment adviser representative is prominently disclosed within the Internet communication.
(ii) The broker-dealer or investment adviser with whom the broker-dealer agent or investment adviser representative is associated retains responsibility for reviewing and approving the content of any Internet communication by a broker-dealer agent or investment adviser representative.
(iii) The broker-dealer or investment adviser with whom the broker-dealer agent or investment adviser representative is associated first authorizes the distribution of information on the particular products and services through the Internet communication.
(iv) In disseminating information through the Internet communication, the broker-dealer agent or investment adviser representative acts within the scope of the authority granted by the broker-dealer or investment adviser.
(2) Subparagraph (a) of this paragraph extends to state broker-dealer, investment adviser, broker-dealer agent, and investment adviser representative registration requirements only, and does not excuse compliance with applicable securities registration, antifraud, or related provisions.
(3) Nothing in this subparagraph shall be construed to affect the activities of any broker-dealer, investment adviser, broker-dealer agent, and investment adviser representative engaged in business in this state that is not subject to the jurisdiction of the secretary of state as a result of the National Securities Markets Improvements Act of 1996, as amended.
(b) (1) An offer of securities by means of the Internet is not subject to the registration and exemption requirements of RSA 421-B:11 where the following conditions apply:
(A) The Internet offer indicates, directly or indirectly, that the securities are not being offered to the residents of this state.
(B) An offer is not otherwise specifically directed to any person in this state by, or on behalf of, the issuer of securities.
(2) Sales of securities that are the subject of an Internet offer are allowed in this state where the following conditions apply:
(A) No sales of the securities shall be made in any state until the offering has been registered and declared effective and the final prospectus or Form U-7 has been delivered to the investor prior to such sale.
(B) The sales are exempt from registration.
VI. RSA 421-B:3, RSA 421-B:4, and RSA 421-B:5, so far as any person is concerned, and RSA 421-B:6, so far as investment advisors are concerned, apply when any act instrumental in effecting prohibited conduct is done in this state, whether or not either party is then present in this state.
VII. Every applicant for licensing under this chapter and every issuer who proposes to offer a security in this state through any person acting on an agency basis in the common-law sense shall file with the secretary of state, in such form as the secretary of state prescribes by rule, irrevocable consent appointing the secretary of state to receive service of any lawful process in any non-criminal suit, action, or proceeding against the applicant or the applicant's successor, executor, or administrator which arises under this chapter or any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration or notice filing need not file another. In instances where an offering is firmly underwritten, the issuer shall not be required to file a consent. Service may be made by leaving a copy of the process in the office of the secretary of state along with $5, but it is not effective unless:
(a) The plaintiff, who may be the attorney general in a suit, action, or proceeding instituted by him, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address on file with the attorney general, and
(b) The plaintiff's affidavit of compliance with this paragraph is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.
VIII. When any person, including any nonresident of this state engages in conduct prohibited or made actionable by this chapter or any rule or order under this chapter, and he has not filed a consent to service of process under paragraph VII and personal jurisdiction over him cannot otherwise be obtained in this state, that conduct shall be considered equivalent to his appointment of the secretary of state to receive service of any lawful process in any non-criminal suit, action, or proceeding against him or his successor, executor, or administrator which grows out of that conduct and which is brought under this chapter or any rule or order under this chapter, with the same force and validity as if served on him personally. Service may be made by leaving a copy of the process along with $5 in the office of the secretary of state, and it is not effective unless:
(a) The plaintiff who may be the attorney general in a suit, action, or proceeding instituted by him, immediately sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last known address or takes other steps which are reasonably calculated to give actual notice, and
(b) The plaintiff's affidavit of compliance with this paragraph is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.
IX. When process is served under this chapter, the court, or the secretary of state in a proceeding before him, shall order such continuance as may be necessary to afford the defendant or respondent reasonable opportunity to defend.
Source. 1981, 214:1. 1987, 411:2. 1991, 355:87, 88, 89, II. 1992, 288:31. 1996, 239:36, 37. 1997, 296:21, eff. June 20, 1997. 2006, 245:21, eff. July 1, 2006.
Section 421-B:31
421-B:31 Fees. –
I. Initial fees and fees for amendments shall be as follows:
(a) Broker-dealer's and investment adviser's fees
(1) Broker-dealer's initial license fee $ 250
(2) Investment adviser's initial license fee $ 200
(3) Non-refundable broker-dealer's and $ 50
investment adviser's application fee
(4) Amended dealer's license fee $ 100
(5) Non-refundable fee for a federal covered $ 250
adviser's initial notice filing
(6) Notice filing amendment fee for a name $ 100
change of a federal covered adviser
(b) Agent's fees
(1) Agent's initial license fee $ 100
(2) Non-refundable agent's license application $ 30
fee
(3) Amended agent's license fee $ 25
(c) Issuer-dealer's fees
(1) Issuer-dealer agent's initial license fee $ 50
(2) Non-refundable issuer-dealer agent's $ 25
application fee
(3) Issuer-dealer initial license fee $ 50
(d) Non-refundable registration fee for offers and $ 1,000
sales of each class of open end mutual funds
required to register under RSA 421""B:11, I""b
(e) Registration fee prior to offers or sales of securities in this state
2/10 of one percent
of the offering
value of the
securities offered
in the registration
statement, provided
said fee shall not
be more than
$1,050, plus a
$200 non-refundable
examination fee
(f) Fee prior to offers and sales of securities in $ 1,000
initial public offerings in this state under
RSA 421""B:17, I(f)(1)(i)
(g) Non-refundable fee prior to offers or sales of:
(1) Securities under RSA 421""B:17, II(r)
(2) Covered securities of other investment
companies under section 18(b)(2) of the
Securities Act of 1933
(3) Non-issuer transactions under section $ 500
18(b)(4)(A) of the Securities Act of
1933-- a one-time filing fee
(h) Non-refundable fee submitted no later than 15 $ 500
days after the first sale for an initial and
annual renewal notice filing fee for sales of
covered securities under section 18(b)(4)(D)
of the Securities Act of 1933
(i) A copying and printing charge may be assessed
per page for each document
(j) Non-refundable initial notice filing fee prior $ 1,000
to offers or sales of each class of an open
end mutual fund under section 18(b)(2) of the
Securities Act of 1933
(k) Initial notice filing fee prior to offers or
sales of covered securities under sections
18(b)(4)(C) and 18(b)(3) of the Securities Act
of 1933
2/10 of one percent of the offering
value of the
securities offered
in the registration
statement, provided
said fee shall not
be more than
$1,050, plus a
$200 non-refundable
initial notice fee
II. Renewal fees shall be as follows:
(a) Broker-dealer's license renewal fee $ 250
(b) Investment adviser's license renewal fee $ 200
(c) Annual notice filing fee for a federal covered $ 200
adviser
(d) Agent's license renewal fee $ 100
(e) Issuer-dealer license renewal fee $ 50
(f) Issuer-dealer agent's license renewal fee $ 50
(g) Annual notice filing fee for offers or sales of
covered securities under sections 18(b)(4)(C)
and 18(b)(3) of the Securities Act of 1933
2/10 of one percent of the offering
value of the
securities offered
in the registration
statement, provided
said fee shall not
be more than
$1,050
(h) Annual non-refundable notice filing fee for $ 1,000
offers and sales of each class of an issuer of
open end mutual funds which are covered
securities under section 18(b)(2) of the
Securities Act of 1933, due on or before May 1
of each year
(i) Annual non-refundable registration fee for each $ 1,000
class of an issuer of open end mutual funds,
due on or before May 1 of each year, if
required to register under RSA 421""B:11, I""b
(j) Annual registration fee for securities offered in
this state, due one year from the effective
date of registration, and each year thereafter
2/10 of one percent of the offering value of the securities offered
in the registration
statement, provided
said fee shall not
be more than $1,050
III. In addition to any other penalties, provisions, or fees prescribed under this chapter, a late filing fee of 1/10 of one percent of the offering value of (1) securities offered in the registration statement, or (2) an offering of federal covered securities, provided said fee shall not be more than $525, shall be imposed if:
(a) It is requested that the provisions of RSA 421-B:13, III(b) be waived; or
(b) Securities sold in this state are more than registered on the effective application filed with the secretary of state, where the maximum registration fee has not been paid; or
(c) The registration application is amended to increase the amount registered in this state, where the maximum registration fee has not been paid, subsequent to the effectiveness of the registration in this state; or
(d) Federal covered securities sold in this state are more than described in the notice filing made, where the maximum notice filing fee or the total amount of a flat fee has not been paid; or
(e) The notice filing for federal covered securities sold in this state is amended to increase the amount to be sold, subsequent to the date the filing was made in this state.
IV. (a) Any person who offers or sells securities in New Hampshire under (1) RSA 421-B:12, 13, or 14, where less than the maximum filing fee has been paid in this state, (2) RSA 421-B:17, II(r), (3) a notice filing under section 18(b)(4)(D) of the Securities Act of 1933, or (4) a notice filing under section 18(b) of the Securities Act of 1933 where less than the maximum filing fee has been paid in this state shall file a sales report with the secretary of state. Such reports shall be filed one year from (1) the effective date of the registration or exemption or (2) the date the notice filing under section 18(b) of the Securities Act of 1933 was made with the secretary of state, and a final sales report shall be filed within 60 days of the termination of the offering. The sales report shall indicate the termination date, the total number and amount of sales in this state, and the total number and amount of sales in all jurisdictions. Any person who (1) fails to file a sales report or (2) fails to submit annual audited financial statements to the secretary of state under RSA 421-B:15, II-a shall pay a penalty of $25 for each day of delinquency; provided, however, that the secretary of state may, for good cause shown, abate all or a portion of said delinquency penalty. The provisions of this paragraph shall not apply to federal covered securities pursuant to section 18(b)(2) of the Securities Act of 1933.
(b) Any person who fails to timely file the notice required pursuant to RSA 421-B:11, I-a(e) shall pay a penalty of $500 if the notice filing is delinquent by no more than 90 days or a penalty of $1,000 if the notice filing is delinquent by more than 90 days; provided, however, that if the filing is delinquent by more than one year, the person failing to timely file the required notice may be subject to the provisions of RSA 421-B:23, RSA 421-B:24, RSA 421-B:25, and RSA 421-B:26 for such failure.
Source. 1981, 214:1. 1982, 42:112, 113. 1987, 411:2, 18. 1989, 20:2-6. 1990, 100:7. 1991, 355:89, II. 1992, 288:54. 1994, 388:25 to 28. 1995, 201:1. 1996, 239:38. 1997, 296:22. 1998, 250:3. 2003, 156:16, eff. Aug. 16, 2003. 2006, 245:22, 23, eff. July 1, 2006.
Section 421-B:31-a
421-B:31-a Interstate Cooperation. –
The secretary of state and the secretary of state's staff shall maintain close relations with the securities and corporate administrators of other states and shall actively participate in the activities and affairs of the North American Security Administrators Association and other organizations so far as it will, in the secretary of state's judgment, enhance the purposes of the securities and corporate laws. The actual and necessary travel and related expenses incurred in attending meetings of said association, their committees, subcommittees, hearings, and other official activities, as well as the general expenses of participation in such associations, shall be a charge on available funds and the appropriation of the office of the secretary of state.
Source. 1993, 344:17. 1999, 225:21, eff. Sept. 7, 1999.
Section 421-B:32
421-B:32 Statutory Policy. –
This chapter shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it and to coordinate the interpretation of this chapter with the related federal regulation.
Source. 1981, 214:1, eff. Jan. 1, 1982.
Section 421-B:33
421-B:33 Severability of Provisions. –
If any provision of this chapter or the application of this chapter to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.
Source. 1981, 214:1, eff. Jan. 1, 1982.
Section 421-B:34
421-B:34 Saving Provisions. –
I. Prior law exclusively governs all suits, actions, prosecutions, or proceedings which are pending or may be initiated on the basis of facts or circumstances occurring before January 1, 1982, except that no civil suit or action may be maintained to enforce any liability under prior law unless brought within any period of limitation which applied when the cause of action accrued and in any event within 3 years after January 1, 1982.
II. All effective licenses and qualifications under prior law, all administrative orders relating to such registrations, and all conditions imposed upon such registrations remain in effect so long as they would have remained in effect if this chapter had not been passed. They are considered to have been filed, entered, or imposed under this chapter, but are governed by prior law.
III. Prior law applies in respect of any offer or sale made within one year after January 1, 1982, pursuant to an offering begun in good faith before that date on the basis of an exemption available under prior law.
IV. Judicial review of all administrative orders as to which review proceedings have not been instituted by January 1, 1982, are governed by this chapter, except that no review proceeding may be instituted unless the petition is filed within any period of limitation which applied to a review proceeding when the order was entered and in any event within 60 days after January 1, 1982.
Source. 1981, 214:1, eff. Jan. 1, 1982.