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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Securities Law of 1953 is amended | ||||||||||||||||||||||||
5 | by changing Section 11 as follows:
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6 | (815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
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7 | Sec. 11. Duties and powers of the Secretary of State.
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8 | A. (1) The administration of this Act is vested in the | ||||||||||||||||||||||||
9 | Secretary of State,
who may from time to time make, amend and | ||||||||||||||||||||||||
10 | rescind such rules and
regulations as may be necessary to carry | ||||||||||||||||||||||||
11 | out this Act, including rules and
regulations governing | ||||||||||||||||||||||||
12 | procedures of registration, statements, applications and
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13 | reports for various classes of securities, persons and matters | ||||||||||||||||||||||||
14 | within his or
her jurisdiction and defining any terms, whether | ||||||||||||||||||||||||
15 | or not used in this Act,
insofar as the definitions are not | ||||||||||||||||||||||||
16 | inconsistent with this Act. The rules and
regulations adopted | ||||||||||||||||||||||||
17 | by the Secretary of State under this Act shall be effective
in | ||||||||||||||||||||||||
18 | the manner provided for in the Illinois Administrative | ||||||||||||||||||||||||
19 | Procedure Act.
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20 | (2) Among other things, the Secretary of State shall have | ||||||||||||||||||||||||
21 | authority, for
the purposes of this Act, to prescribe the form | ||||||||||||||||||||||||
22 | or forms in which required
information shall be set forth, | ||||||||||||||||||||||||
23 | accounting practices, the items or
details to be shown in |
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1 | balance sheets and earning statements, and the
methods to be | ||||||
2 | followed in the preparation of accounts, in the appraisal
or | ||||||
3 | valuation of assets and liabilities, in the determination of
| ||||||
4 | depreciation and depletion, in the differentiation of | ||||||
5 | recurring and
non-recurring income, in the differentiation of | ||||||
6 | investment and operating
income, and in the preparation of | ||||||
7 | consolidated balance sheets or income
accounts of any person, | ||||||
8 | directly or indirectly, controlling or
controlled by the | ||||||
9 | issuer, or any person under direct or indirect common
control | ||||||
10 | with the issuer.
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11 | (3) No provision of this Act imposing any liability shall | ||||||
12 | apply to any act
done or omitted in good faith in conformity | ||||||
13 | with any rule or regulation of the
Secretary of State under | ||||||
14 | this Act, notwithstanding that the rule
or regulation may, | ||||||
15 | after the act or omission, be amended or
rescinded or be | ||||||
16 | determined by judicial or other authority to be invalid for any
| ||||||
17 | reason.
| ||||||
18 | (4) The Securities Department of the Office of the | ||||||
19 | Secretary of State shall
be deemed a criminal justice agency | ||||||
20 | for purposes of all federal and state laws
and regulations and, | ||||||
21 | in that capacity, shall be entitled to access to any
| ||||||
22 | information available to criminal justice agencies
and has the | ||||||
23 | power to
appoint special agents to conduct all investigations, | ||||||
24 | searches, seizures,
arrests, and other duties imposed under the | ||||||
25 | provisions of any law
administered by the Department. The | ||||||
26 | special agents have and may
exercise all the powers of peace |
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1 | officers solely for the purpose of
enforcing provisions of this | ||||||
2 | Act.
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3 | The Director must authorize to each special agent employed | ||||||
4 | under
this Section a distinct badge that, on its face, (i) | ||||||
5 | clearly states that
the badge is authorized by the Department | ||||||
6 | and (ii) contains a
unique and identifying number.
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7 | Special agents shall comply with all training requirements
| ||||||
8 | established for law enforcement officers by provisions of the
| ||||||
9 | Illinois Police Training Act.
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10 | (5) The Secretary of State, by rule, may conditionally or | ||||||
11 | unconditionally
exempt any person, security, or transaction, | ||||||
12 | or any class or classes of
persons, securities,
or transactions | ||||||
13 | from any provision of Section 5, 6, 7, 8, 8a, or 9 of this
Act | ||||||
14 | or of any rule promulgated under these Sections, to the extent | ||||||
15 | that
such
exemption is
necessary or appropriate in the public | ||||||
16 | interest, and is consistent with the
protection of investors.
| ||||||
17 | B. The Secretary of State may, anything in this Act to the | ||||||
18 | contrary
notwithstanding, require financial statements and | ||||||
19 | reports of the issuer,
dealer, salesperson, investment | ||||||
20 | adviser, or investment adviser
representative as often as | ||||||
21 | circumstances may
warrant. In addition, the Secretary of
State | ||||||
22 | may secure information or books and records from or through | ||||||
23 | others
and may make or cause to be made investigations | ||||||
24 | respecting the business,
affairs, and property of the issuer of | ||||||
25 | securities, any person involved in the
sale or offer for sale, | ||||||
26 | purchase or offer to purchase of any mineral investment
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1 | contract, mineral deferred delivery contract, or security and | ||||||
2 | of dealers,
salespersons, investment advisers, and investment | ||||||
3 | adviser
representatives that are registered or are the
subject | ||||||
4 | of an application for registration under this Act. The
costs of | ||||||
5 | an investigation shall be borne by the registrant or
the | ||||||
6 | applicant, provided that the registrant or applicant shall not
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7 | be obligated to pay the costs without his, her or its consent | ||||||
8 | in
advance.
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9 | C. Whenever it shall appear to the Secretary of State, | ||||||
10 | either upon
complaint or otherwise, that this Act, or any rule | ||||||
11 | or regulation
prescribed under authority thereof, has been or | ||||||
12 | is about to be violated,
he or she may, in his or her | ||||||
13 | discretion, do one or more of the
following:
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14 | (1) require or permit the person to file with the | ||||||
15 | Secretary
of State a statement in writing under oath, or | ||||||
16 | otherwise, as to all the facts
and circumstances concerning | ||||||
17 | the subject matter which the Secretary of State
believes to | ||||||
18 | be in the public interest to investigate, audit, examine, | ||||||
19 | or
inspect;
| ||||||
20 | (2) conduct an investigation, audit, examination, or | ||||||
21 | inspection as
necessary or advisable for the protection of | ||||||
22 | the interests of the
public; and
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23 | (3) appoint investigators to conduct all | ||||||
24 | investigations, searches,
seizures,
arrests, and other | ||||||
25 | duties imposed under the provisions of any law
administered | ||||||
26 | by the Department. The Director must authorize to each
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1 | investigator employed under this Section a distinct badge
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2 | that,
on its face,
(i) clearly states that the badge is | ||||||
3 | authorized by the Department and
(ii) contains a unique and | ||||||
4 | identifying number.
| ||||||
5 | D. (1) For the purpose of all investigations, audits, | ||||||
6 | examinations, or
inspections which in the opinion
of the | ||||||
7 | Secretary of State are necessary and proper for the enforcement
| ||||||
8 | of this Act, the Secretary of State or a person designated by | ||||||
9 | him or
her is empowered to administer oaths and affirmations, | ||||||
10 | subpoena witnesses,
take evidence, and require, by subpoena or | ||||||
11 | other lawful means provided by
this Act or the rules adopted by | ||||||
12 | the Secretary of State,
the production of any books and | ||||||
13 | records, papers,
or other
documents which the Secretary of | ||||||
14 | State or a person designated by him
or her deems relevant or | ||||||
15 | material to the inquiry.
| ||||||
16 | (2) The Secretary of
State or a person designated by him or | ||||||
17 | her is further empowered to
administer oaths and affirmations, | ||||||
18 | subpoena witnesses, take evidence, and
require the production | ||||||
19 | of any books and records, papers, or other documents
in this
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20 | State at the request of a securities agency of another state, | ||||||
21 | if the
activities constituting the alleged violation for which | ||||||
22 | the information is
sought would be in violation of Section 12 | ||||||
23 | of this Act if the activities
had occurred in this State.
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24 | (3) The Circuit Court of any County of this State, upon | ||||||
25 | application of the
Secretary of State or a person designated by | ||||||
26 | him or her may order the
attendance of witnesses, the |
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1 | production of books and records, papers, accounts
and documents | ||||||
2 | and the giving of testimony before the Secretary of State or a
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3 | person designated by him or her; and any failure to obey the | ||||||
4 | order
may be punished by the Circuit Court as a contempt | ||||||
5 | thereof.
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6 | (4) The fees of subpoenaed witnesses under this Act for
| ||||||
7 | attendance and travel shall be the same as fees of witnesses | ||||||
8 | before the
Circuit Courts of this State, to be paid when the | ||||||
9 | witness
is excused from further attendance, provided, the | ||||||
10 | witness is
subpoenaed at the instance of the Secretary of | ||||||
11 | State; and payment of the fees shall be made and audited in the | ||||||
12 | same manner as other expenses of
the Secretary of State.
| ||||||
13 | (5) Whenever a subpoena is issued at the request of a | ||||||
14 | complainant or
respondent as the case may be, the Secretary of | ||||||
15 | State may require that the cost
of service and the fee of the | ||||||
16 | witness shall be borne by the party at whose
instance the | ||||||
17 | witness is summoned.
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18 | (6) The Secretary of State shall have power at his or her | ||||||
19 | discretion, to
require a deposit to cover the cost of the | ||||||
20 | service and
witness fees and the payment of the legal witness | ||||||
21 | fee and mileage to the
witness served with subpoena.
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22 | (7) A subpoena issued under this Act shall be served in the | ||||||
23 | same manner
as a subpoena issued out of a circuit court.
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24 | (8) The Secretary of State may in any investigation, | ||||||
25 | audits, examinations,
or inspections cause the taking of | ||||||
26 | depositions of persons residing within or
without this State in |
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1 | the manner provided in civil actions under the laws of
this | ||||||
2 | State.
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3 | E. Anything in this Act to the contrary notwithstanding:
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4 | (1) If the Secretary of State shall find that the offer | ||||||
5 | or sale or
proposed offer or sale or method of offer or | ||||||
6 | sale of any securities by any
person, whether exempt or | ||||||
7 | not, in this State, is fraudulent, or would
work or tend to | ||||||
8 | work a fraud or deceit, or is being offered or sold in
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9 | violation of Section 12,
or there has been a failure or | ||||||
10 | refusal to submit any notification filing or
fee required | ||||||
11 | under this Act,
the Secretary of State may by written order | ||||||
12 | prohibit
or suspend the offer or sale of securities by that | ||||||
13 | person or deny or revoke the
registration of the securities | ||||||
14 | or the exemption from registration
for the securities.
| ||||||
15 | (2) If the Secretary of State shall find that any | ||||||
16 | person has violated
subsection C, D, E, F, G, H, I, J, or K | ||||||
17 | of Section 12 of
this Act, the Secretary of State may by | ||||||
18 | written order temporarily or
permanently prohibit or | ||||||
19 | suspend the person from offering or
selling any securities, | ||||||
20 | any mineral
investment contract, or any mineral deferred | ||||||
21 | delivery contract in this
State, provided that any person | ||||||
22 | who is the subject of an order of
permanent prohibition may | ||||||
23 | petition the Secretary of State for a hearing to
present | ||||||
24 | evidence of rehabilitation or change in circumstances | ||||||
25 | justifying
the amendment or termination of the order of | ||||||
26 | permanent prohibition.
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1 | (3) If the Secretary of State shall find that any | ||||||
2 | person is engaging or
has engaged in the business of | ||||||
3 | selling or offering for sale securities as a
dealer or | ||||||
4 | salesperson or is acting or has acted as an investment | ||||||
5 | adviser,
investment adviser representative, or
federal | ||||||
6 | covered investment adviser,
without prior thereto and at | ||||||
7 | the time thereof having complied with the
registration or | ||||||
8 | notice filing requirements of this Act, the Secretary of
| ||||||
9 | State may by
written order prohibit or suspend the person | ||||||
10 | from engaging in the
business of selling or offering for | ||||||
11 | sale securities, or acting as an investment
adviser, | ||||||
12 | investment adviser representative, or federal covered | ||||||
13 | investment
adviser, in this State.
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14 | (4) In addition to any other sanction or remedy | ||||||
15 | contained in this
subsection E, the Secretary of State, | ||||||
16 | after finding that any provision of
this Act has been | ||||||
17 | violated, may impose a fine as provided by rule,
regulation | ||||||
18 | or order not to exceed $100,000 $10,000 for each
violation | ||||||
19 | of this Act, may
issue an order of public censure against | ||||||
20 | the violator, and may charge as
costs of investigation all | ||||||
21 | reasonable expenses, including attorney's fees and
witness | ||||||
22 | fees.
| ||||||
23 | (5) In addition to any other sanction or remedy | ||||||
24 | contained in this
subsection E, the Secretary of State, | ||||||
25 | after finding that any provision of
this Act has been | ||||||
26 | violated, shall notify all of the clients of any sanctioned |
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1 | party, by registered mail to the last known address of each | ||||||
2 | client as carried on the books of the sanctioned party, | ||||||
3 | that a violation has taken place. The costs of this | ||||||
4 | notification shall be covered by fines imposed on the | ||||||
5 | sanctioned party. The Secretary of State, and his or her | ||||||
6 | Office, are protected from liability as a result of any | ||||||
7 | failure to carry out any notification required under this | ||||||
8 | subdivision E(5) as a result of any conduct other than | ||||||
9 | wilful or wanton misconduct. | ||||||
10 | F. (1) The Secretary of State shall not deny, suspend or | ||||||
11 | revoke the
registration of securities, suspend or revoke the | ||||||
12 | registration of a
dealer, salesperson, investment adviser, or | ||||||
13 | investment adviser
representative, prohibit or suspend the
| ||||||
14 | offer or sale of any securities, prohibit or suspend any person | ||||||
15 | from
offering or selling any securities in this State, prohibit | ||||||
16 | or
suspend a dealer or salesperson from engaging in the | ||||||
17 | business of selling or
offering for sale securities, prohibit | ||||||
18 | or suspend a person from acting as
an investment adviser or | ||||||
19 | federal covered investment adviser, or investment
adviser | ||||||
20 | representative, impose any
fine for violation of this Act, | ||||||
21 | issue an
order of public censure, or enter into an agreed | ||||||
22 | settlement except after an
opportunity for hearing upon not | ||||||
23 | less than 10 days notice given by personal
service or | ||||||
24 | registered mail or certified mail, return receipt requested, to
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25 | the person or persons concerned. Such notice shall state the | ||||||
26 | date and time
and place of the hearing and shall contain a |
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1 | brief statement of
the proposed action of the Secretary of | ||||||
2 | State and the grounds for
the proposed action. A failure to | ||||||
3 | appear at the hearing or
otherwise respond to the allegations | ||||||
4 | set forth in the notice of
hearing shall constitute an | ||||||
5 | admission of any facts alleged therein and shall
constitute | ||||||
6 | sufficient basis to enter an order.
| ||||||
7 | (2) Anything herein contained to the contrary | ||||||
8 | notwithstanding, the Secretary
of State may temporarily | ||||||
9 | prohibit or suspend, for a maximum period of 90 days,
by an | ||||||
10 | order effective immediately, the offer or sale or registration | ||||||
11 | of
securities, the registration of a dealer, salesperson, | ||||||
12 | investment
adviser, or investment adviser representative, or
| ||||||
13 | the offer or sale of securities by any person, or the business | ||||||
14 | of rendering
investment advice, without the notice and prior | ||||||
15 | hearing in this subsection
prescribed, if the Secretary of | ||||||
16 | State shall in his or her opinion, based on
credible evidence, | ||||||
17 | deem it necessary to prevent an imminent violation of this
Act | ||||||
18 | or to prevent losses to investors which the Secretary of State | ||||||
19 | reasonably
believes will occur as a result of a prior violation | ||||||
20 | of this Act. Immediately
after taking action without such | ||||||
21 | notice and hearing, the Secretary
of State shall deliver a copy | ||||||
22 | of the
temporary order to the respondent named therein by | ||||||
23 | personal service or
registered mail or certified mail, return | ||||||
24 | receipt requested. The temporary
order shall set forth the | ||||||
25 | grounds for the action and shall advise that the
respondent may | ||||||
26 | request a hearing, that
the request for a hearing will not stop |
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| |||||||
1 | the effectiveness of the temporary
order and that respondent's | ||||||
2 | failure to request a hearing within 30 days
after the date of | ||||||
3 | the entry of the temporary order shall constitute an
admission | ||||||
4 | of any facts alleged therein and shall constitute sufficient
| ||||||
5 | basis to make the temporary order final. Any provision of this | ||||||
6 | paragraph
(2) to the contrary notwithstanding, the Secretary of | ||||||
7 | State may not
pursuant to the provisions of this paragraph (2) | ||||||
8 | suspend the registration
of a dealer, limited Canadian dealer, | ||||||
9 | salesperson, investment
adviser, or investment adviser | ||||||
10 | representative based upon sub-paragraph (n)
of paragraph (l) of | ||||||
11 | subsection E of Section 8 of this Act or revoke
the | ||||||
12 | registration of securities or revoke the registration of any
| ||||||
13 | dealer, salesperson, investment adviser representative, or | ||||||
14 | investment
adviser.
| ||||||
15 | (3) The Secretary of State may issue a temporary order | ||||||
16 | suspending or
delaying the effectiveness of any registration of | ||||||
17 | securities under
subsection A or B of Section 5, 6 or 7 of this | ||||||
18 | Act subsequent to and upon
the basis of the issuance of any | ||||||
19 | stop, suspension or similar order by the
Securities and | ||||||
20 | Exchange Commission with respect to the securities which are
| ||||||
21 | the subject of the registration under subsection A or B of | ||||||
22 | Section 5, 6 or
7 of this Act, and the order shall become | ||||||
23 | effective as of the date
and time of effectiveness of the | ||||||
24 | Securities and Exchange Commission order and
shall be vacated | ||||||
25 | automatically at such time as the order of the
Securities and | ||||||
26 | Exchange Commission is no longer in effect.
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1 | (4) When the Secretary of State finds that an application | ||||||
2 | for registration
as a dealer, salesperson, investment adviser, | ||||||
3 | or investment
adviser representative should be denied, the | ||||||
4 | Secretary
of State may enter an order denying the registration. | ||||||
5 | Immediately
after taking such action, the Secretary of State | ||||||
6 | shall deliver a
copy of the order to the respondent named | ||||||
7 | therein by personal service or
registered mail or certified | ||||||
8 | mail, return receipt requested. The order shall
state the | ||||||
9 | grounds for the action and that the matter will be set
for | ||||||
10 | hearing upon written request filed with the Secretary of State | ||||||
11 | within 30
days after the receipt of the request by the | ||||||
12 | respondent. The
respondent's failure to request a hearing | ||||||
13 | within 30 days after receipt of
the order shall constitute an | ||||||
14 | admission of any facts alleged
therein and shall make the order | ||||||
15 | final. If a hearing is held, the
Secretary of State shall | ||||||
16 | affirm, vacate, or modify the order.
| ||||||
17 | (5) The findings and decision of the Secretary of State | ||||||
18 | upon the
conclusion of each final hearing held pursuant to this | ||||||
19 | subsection shall
be set forth in a written order signed on | ||||||
20 | behalf of the Secretary of
State by his or her designee and | ||||||
21 | shall be filed as a public record. All
hearings shall be held | ||||||
22 | before a person designated by the Secretary of State,
and | ||||||
23 | appropriate records thereof shall be kept.
| ||||||
24 | (6) Notwithstanding the foregoing, the Secretary of State, | ||||||
25 | after
notice and opportunity for hearing, may at his or her | ||||||
26 | discretion enter into
an agreed settlement, stipulation or |
| |||||||
| |||||||
1 | consent order with a respondent in
accordance with the | ||||||
2 | provisions of the Illinois Administrative
Procedure Act. The | ||||||
3 | provisions of the agreed settlement, stipulation or
consent | ||||||
4 | order shall have the full force and effect of an order issued | ||||||
5 | by the
Secretary of State.
| ||||||
6 | (7) Anything in this Act to the contrary notwithstanding, | ||||||
7 | whenever
the Secretary of State finds that a person is | ||||||
8 | currently expelled from, refused
membership in or association | ||||||
9 | with, or limited in any material capacity by a
self-regulatory | ||||||
10 | organization registered under the Federal 1934 Act or the
| ||||||
11 | Federal 1974 Act because of a fraudulent or deceptive act or a | ||||||
12 | practice in
violation of a rule, regulation, or standard duly | ||||||
13 | promulgated by the
self-regulatory organization, the Secretary | ||||||
14 | of State may, at his or her
discretion, enter a Summary Order | ||||||
15 | of Prohibition, which shall prohibit the
offer
or sale of any | ||||||
16 | securities, mineral investment contract, or mineral deferred
| ||||||
17 | delivery contract by the person in this State. The order shall | ||||||
18 | take effect
immediately upon its entry. Immediately after | ||||||
19 | taking the action the Secretary
of State shall deliver a copy | ||||||
20 | of the order to the named Respondent by
personal service or | ||||||
21 | registered mail or certified mail, return receipt
requested. A | ||||||
22 | person who is the subject of an Order of Prohibition may
| ||||||
23 | petition the Secretary of State for a hearing to present | ||||||
24 | evidence of
rehabilitation or change in circumstances | ||||||
25 | justifying the
amendment or termination of the Order of | ||||||
26 | Prohibition.
|
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1 | G. No administrative action shall be brought by the | ||||||
2 | Secretary of State
for relief under this Act or upon or because | ||||||
3 | of any of the matters for
which relief is granted by this Act | ||||||
4 | after the earlier to occur of (i) 3
years from the date upon | ||||||
5 | which the Secretary of State had notice of facts
which in the | ||||||
6 | exercise of reasonable diligence would lead to actual
knowledge | ||||||
7 | of the alleged violation of the Act, or (ii) 5 years from the
| ||||||
8 | date on which the alleged violation occurred.
| ||||||
9 | H. The action of the Secretary of State in denying, | ||||||
10 | suspending, or revoking
the registration of a dealer, limited | ||||||
11 | Canadian dealer, salesperson, investment adviser, or | ||||||
12 | investment adviser representative, in
prohibiting
any person | ||||||
13 | from engaging in the business of offering or selling securities | ||||||
14 | as a
dealer, limited Canadian dealer, or salesperson, in | ||||||
15 | prohibiting or
suspending the offer or sale of
securities by | ||||||
16 | any person, in prohibiting a person from acting as an | ||||||
17 | investment
adviser, federal covered investment adviser, or | ||||||
18 | investment adviser
representative, in denying, suspending, or
| ||||||
19 | revoking the registration of securities, in
prohibiting or | ||||||
20 | suspending the offer or sale or proposed offer or sale of
| ||||||
21 | securities, in imposing any fine for violation of this Act, or | ||||||
22 | in issuing any
order shall be subject to judicial review in the | ||||||
23 | Circuit Courts
of
Cook or Sangamon Counties in this State. The
| ||||||
24 | Administrative Review
Law shall apply to and
govern every | ||||||
25 | action for the judicial review of final actions or decisions
of | ||||||
26 | the Secretary of State under this Act.
|
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| |||||||
1 | I. Notwithstanding any other provisions of this Act to the | ||||||
2 | contrary,
whenever it shall appear to the Secretary of State | ||||||
3 | that any
person is engaged or about to engage in any acts or | ||||||
4 | practices which
constitute or will constitute a violation of | ||||||
5 | this Act or of any rule or
regulation prescribed under | ||||||
6 | authority of this Act, the Secretary of State
may at his or her | ||||||
7 | discretion, through the Attorney General take any of the
| ||||||
8 | following actions:
| ||||||
9 | (1) File a complaint and apply for a temporary | ||||||
10 | restraining order without
notice, and upon a proper showing | ||||||
11 | the court may enter a temporary
restraining order without | ||||||
12 | bond, to enforce this Act.
| ||||||
13 | (2) File a complaint and apply for a preliminary or | ||||||
14 | permanent
injunction, and, after notice and a hearing and | ||||||
15 | upon a proper showing,
the court may grant a preliminary or | ||||||
16 | permanent injunction and may order the
defendant to make an | ||||||
17 | offer of rescission with respect to any sales or
purchases | ||||||
18 | of securities, mineral investment contracts, or mineral
| ||||||
19 | deferred delivery contracts determined by the court to be | ||||||
20 | unlawful under
this Act.
| ||||||
21 | (3) Seek the seizure of assets when probable cause | ||||||
22 | exists that the
assets
were
obtained by a defendant through | ||||||
23 | conduct in violation of Section 12,
paragraph F, G, I, J, | ||||||
24 | K, or L of this Act, and thereby subject to a judicial
| ||||||
25 | forfeiture hearing as required under this Act.
| ||||||
26 | (a) In the event that such probable cause exists |
| |||||||
| |||||||
1 | that the subject of an
investigation who is alleged to | ||||||
2 | have committed one of the relevant
violations of this | ||||||
3 | Act has in his possession assets obtained as a
result | ||||||
4 | of the conduct giving rise to the violation, the | ||||||
5 | Secretary of
State may seek a seizure warrant in any | ||||||
6 | circuit court in Illinois.
| ||||||
7 | (b) In seeking a seizure warrant, the Secretary of | ||||||
8 | State, or his
or her designee, shall submit to the | ||||||
9 | court a sworn affidavit detailing the
probable cause | ||||||
10 | evidence for the seizure, the location of the assets
to | ||||||
11 | be seized, the relevant violation under Section 12 of | ||||||
12 | this Act, and
a statement detailing any known owners or | ||||||
13 | interest holders in the
assets.
| ||||||
14 | (c) Seizure of the assets shall be made by any | ||||||
15 | peace officer upon
process of the seizure warrant | ||||||
16 | issued by the court. Following the
seizure of assets | ||||||
17 | under this Act and pursuant to a seizure warrant,
| ||||||
18 | notice of seizure, including a description of the | ||||||
19 | seized assets, shall
immediately be returned to the | ||||||
20 | issuing court. Seized assets shall be
maintained | ||||||
21 | pending a judicial forfeiture hearing in accordance | ||||||
22 | with
the instructions of the court.
| ||||||
23 | (d) In the event that management of seized assets | ||||||
24 | becomes necessary
to prevent the devaluation, | ||||||
25 | dissipation, or otherwise to preserve the
property, | ||||||
26 | the court shall have jurisdiction to appoint a |
| |||||||
| |||||||
1 | receiver,
conservator, ancillary receiver, or | ||||||
2 | ancillary conservator for that
purpose, as provided in | ||||||
3 | item (2) of this subsection.
| ||||||
4 | (4) Seek the forfeiture of assets obtained through | ||||||
5 | conduct in violation of
Section 12, paragraph F, G, H, I, | ||||||
6 | J, K, or L when authorized by law. A
forfeiture must be | ||||||
7 | ordered by a circuit court or an action brought by the
| ||||||
8 | Secretary of State as provided for in this Act, under a | ||||||
9 | verified complaint
for forfeiture.
| ||||||
10 | (a) In the event assets have been seized pursuant | ||||||
11 | to this Act,
forfeiture
proceedings shall be | ||||||
12 | instituted by the Attorney General within 45
days of | ||||||
13 | seizure.
| ||||||
14 | (b) Service of the complaint filed under the | ||||||
15 | provisions of this Act
shall
be made in the manner as | ||||||
16 | provided in civil actions in this State.
| ||||||
17 | (c) Only an owner of or interest holder in the | ||||||
18 | property may file an
answer asserting a claim against | ||||||
19 | the property. For purposes of this Section,
the owner | ||||||
20 | or interest holder shall be
referred to as claimant.
| ||||||
21 | (d) The answer must be signed by the owner or | ||||||
22 | interest holder under
penalty of perjury and must set | ||||||
23 | forth:
| ||||||
24 | (i) the caption of the proceedings as set forth | ||||||
25 | on the notice of
pending forfeiture and the name of | ||||||
26 | the claimant;
|
| |||||||
| |||||||
1 | (ii) the address at which the claimant will | ||||||
2 | accept mail;
| ||||||
3 | (iii) the nature and extent of the claimant's | ||||||
4 | interest in the
property;
| ||||||
5 | (iv) the date, identity of the transferor, and | ||||||
6 | circumstances of the
claimant's acquisition of the | ||||||
7 | interest in the property;
| ||||||
8 | (v) the name and address of all other persons | ||||||
9 | known to have an
interest in the property;
| ||||||
10 | (vi) the specific provisions of this Act | ||||||
11 | relied on in asserting that
the
property is not | ||||||
12 | subject to forfeiture;
| ||||||
13 | (vii) all essential facts supporting each | ||||||
14 | assertion; and
| ||||||
15 | (viii) the precise relief sought.
| ||||||
16 | (e) The answer must be filed with the court within | ||||||
17 | 45 days after service
of the complaint.
| ||||||
18 | (f) A property interest is exempt from forfeiture | ||||||
19 | under this Act if its
owner or interest holder | ||||||
20 | establishes by a preponderance of
evidence that the | ||||||
21 | owner or interest holder:
| ||||||
22 | (i) is not legally accountable for the conduct | ||||||
23 | giving rise to
the forfeiture, did not acquiesce in | ||||||
24 | it, and did not know
and could not reasonably have | ||||||
25 | known of the conduct or
that the conduct was likely | ||||||
26 | to occur;
|
| |||||||
| |||||||
1 | (ii) with respect to conveyances, did not hold | ||||||
2 | the property
jointly or in common with a person | ||||||
3 | whose conduct gave
rise to the forfeiture;
| ||||||
4 | (iii) does not hold the property for the | ||||||
5 | benefit of or as a
nominee for any person whose | ||||||
6 | conduct gave rise to its
forfeiture and the owner | ||||||
7 | or interest holder acquires it
as a bona fide | ||||||
8 | purchaser for value without knowingly
taking part | ||||||
9 | in the conduct giving rise to the forfeiture; or
| ||||||
10 | (iv) acquired the interest after the
| ||||||
11 | commencement of the conduct giving rise to its | ||||||
12 | forfeiture
and the owner or interest holder | ||||||
13 | acquired the interest as a
mortgagee, secured | ||||||
14 | creditor, lienholder, or bona fide
purchaser for | ||||||
15 | value without knowledge of the conduct
that gave | ||||||
16 | rise to the forfeiture.
| ||||||
17 | (g) The hearing must be held within 60 days after | ||||||
18 | the answer is filed
unless continued for good cause.
| ||||||
19 | (h) During the probable cause portion of the | ||||||
20 | judicial in rem proceeding
wherein the Secretary of | ||||||
21 | State presents its case-in-chief, the court
must | ||||||
22 | receive and consider, among other things, any relevant
| ||||||
23 | hearsay evidence and information. The laws of evidence | ||||||
24 | relating
to civil actions shall apply to all other | ||||||
25 | portions of the judicial in
rem proceeding.
| ||||||
26 | (i) The Secretary of State shall show the existence |
| |||||||
| |||||||
1 | of probable cause
for forfeiture of the property. If | ||||||
2 | the Secretary of State shows
probable cause, the | ||||||
3 | claimant has the burden of showing by a
preponderance | ||||||
4 | of the evidence that the claimant's interest in the
| ||||||
5 | property is not subject to forfeiture.
| ||||||
6 | (j) If the Secretary of State does not show the | ||||||
7 | existence of probable
cause or a claimant has an | ||||||
8 | interest that is exempt under
subdivision I (4)(d) of | ||||||
9 | this Section, the court shall order the interest in the
| ||||||
10 | property returned
or conveyed to the claimant and shall | ||||||
11 | order all other property
forfeited to the Secretary of | ||||||
12 | State pursuant to all provisions of this Act. If
the | ||||||
13 | Secretary of State does show the existence of probable
| ||||||
14 | cause and the claimant does not establish by a | ||||||
15 | preponderance of
the evidence that the claimant has an | ||||||
16 | interest that is exempt under
subsection D herein, the | ||||||
17 | court shall order all the property forfeited
to the | ||||||
18 | Secretary of State pursuant to the provisions of the | ||||||
19 | Section.
| ||||||
20 | (k) A defendant convicted in any criminal | ||||||
21 | proceeding is precluded
from later denying the | ||||||
22 | essential allegations of the criminal offense
of which | ||||||
23 | the defendant was convicted in any proceeding for
| ||||||
24 | violations of the Act giving rise to forfeiture of | ||||||
25 | property herein
regardless of the pendency of an appeal | ||||||
26 | from that conviction.
However, evidence of the |
| |||||||
| |||||||
1 | pendency of an appeal is admissible.
| ||||||
2 | (l) An acquittal or dismissal in a criminal | ||||||
3 | proceeding for violations of
the Act giving rise to the | ||||||
4 | forfeiture of property herein shall not
preclude civil | ||||||
5 | proceedings under this provision; however, for good
| ||||||
6 | cause shown, on a motion by the Secretary of State, the | ||||||
7 | court may
stay civil forfeiture proceedings during the | ||||||
8 | criminal trial for a
related criminal indictment or | ||||||
9 | information alleging violation of the
provisions of | ||||||
10 | Section 12 of the Illinois Securities Law of 1953.
| ||||||
11 | Property subject to forfeiture under this Section | ||||||
12 | shall not be subject
to return or release by a court | ||||||
13 | exercising jurisdiction over a
criminal case involving | ||||||
14 | the seizure of the property unless the return
or | ||||||
15 | release is consented to by the Secretary of State.
| ||||||
16 | (m) All property declared forfeited under this Act | ||||||
17 | vests in the State on
the commission of the conduct | ||||||
18 | giving rise to forfeiture together
with the proceeds of | ||||||
19 | the property after that time. Any such
property or | ||||||
20 | proceeds subsequently transferred to any person remain
| ||||||
21 | subject to forfeiture and thereafter shall be ordered | ||||||
22 | forfeited unless
the transferee claims and establishes | ||||||
23 | in a hearing under the
provisions of this Act that the | ||||||
24 | transferee's interest is exempt under
the Act. Any | ||||||
25 | assets forfeited to the State shall be disposed of in
| ||||||
26 | following manner:
|
| |||||||
| |||||||
1 | (i) all forfeited property and assets shall be | ||||||
2 | liquidated by the
Secretary of State in accordance | ||||||
3 | with all laws and
rules governing the disposition | ||||||
4 | of such property;
| ||||||
5 | (ii) the Secretary of State shall provide the | ||||||
6 | court at the time the
property and assets are | ||||||
7 | declared forfeited a verified
statement of | ||||||
8 | investors subject to the conduct giving rise to the
| ||||||
9 | forfeiture;
| ||||||
10 | (iii) after payment of any costs of sale, | ||||||
11 | receivership, storage, or
expenses for | ||||||
12 | preservation of the property seized, other costs
| ||||||
13 | to the State, and payment to claimants for any | ||||||
14 | amount
deemed exempt from forfeiture, the proceeds | ||||||
15 | from
liquidation shall be distributed pro rata to | ||||||
16 | investors subject to the
conduct giving rise to the | ||||||
17 | forfeiture; and
| ||||||
18 | (iv) any proceeds remaining after all verified | ||||||
19 | investors have
been made whole shall be | ||||||
20 | distributed 25% to the
Securities Investors | ||||||
21 | Education Fund, 25%
to the Securities Audit and
| ||||||
22 | Enforcement Fund, 25% to the Attorney General or | ||||||
23 | any
State's Attorney bringing criminal charges for | ||||||
24 | the conduct
giving rise to the forfeiture, and 25% | ||||||
25 | to other law
enforcement agencies participating in | ||||||
26 | the investigation of
the criminal charges for the |
| |||||||
| |||||||
1 | conduct giving rise to the
forfeiture. In the event | ||||||
2 | that no other law enforcement
agencies are | ||||||
3 | involved in the investigation of the conduct
| ||||||
4 | giving rise to the forfeiture, then the portion to | ||||||
5 | other law
enforcement agencies shall be | ||||||
6 | distributed to the
Securities Investors Education | ||||||
7 | Fund.
| ||||||
8 | (n) The Secretary of State shall notify by | ||||||
9 | certified mail, return
receipt
requested, all known | ||||||
10 | investors in the matter giving rise to the forfeiture
| ||||||
11 | of the forfeiture proceeding and sale of assets | ||||||
12 | forfeited arising from the
violations of this Act, and | ||||||
13 | shall further publish notice in a paper of
general | ||||||
14 | circulation in the district in which the violations | ||||||
15 | were prosecuted.
The notice to investors shall | ||||||
16 | identify the name, address, and other
identifying | ||||||
17 | information about any defendant prosecuted for | ||||||
18 | violations
of this Act that resulted in forfeiture and | ||||||
19 | sale of property, the offense
for which the defendant | ||||||
20 | was convicted, and that the court has ordered
| ||||||
21 | forfeiture and sale of property for claims of investors | ||||||
22 | who incurred losses
or damages as a result of the | ||||||
23 | violations. Investors may then file a claim
in a form | ||||||
24 | prescribed by the Secretary of State in order to share | ||||||
25 | in
disbursement of the proceeds from sale of the | ||||||
26 | forfeited property.
Investor claims must be filed with |
| |||||||
| |||||||
1 | the Secretary of State within 30 days
after receipt of | ||||||
2 | the certified mail return receipt, or within 30 days | ||||||
3 | after the
last
date of publication of the general | ||||||
4 | notice in a paper of general circulation
in the | ||||||
5 | district in which the violations were prosecuted, | ||||||
6 | whichever occurs
last.
| ||||||
7 | (o) A civil action under this subsection must be | ||||||
8 | commenced within 5
years
after
the last conduct giving | ||||||
9 | rise to the forfeiture became known or should
have | ||||||
10 | become known or 5 years after the forfeitable property | ||||||
11 | is
discovered, whichever is later, excluding time | ||||||
12 | during which either the
property or claimant is out of | ||||||
13 | this State or in confinement or during which
criminal | ||||||
14 | proceedings relating to the same conduct are in | ||||||
15 | progress.
| ||||||
16 | (p) If property is seized for evidence and for | ||||||
17 | forfeiture, the time
periods
for
instituting judicial | ||||||
18 | forfeiture proceedings shall not begin until the
| ||||||
19 | property is no longer necessary for evidence.
| ||||||
20 | (q) Notwithstanding other provisions of this Act, | ||||||
21 | the Secretary of State
and
a
claimant of forfeitable | ||||||
22 | property may enter into an agreed-upon settlement
| ||||||
23 | concerning the forfeitable property in such an amount | ||||||
24 | and upon such
terms as are set out in writing in a | ||||||
25 | settlement agreement.
| ||||||
26 | (r) Nothing in this Act shall apply to property |
| |||||||
| |||||||
1 | that constitutes
reasonable
bona
fide attorney's fees | ||||||
2 | paid to an attorney for services rendered or to be
| ||||||
3 | rendered in the forfeiture proceeding or criminal | ||||||
4 | proceeding relating
directly thereto when the property | ||||||
5 | was paid before its seizure and before
the issuance of | ||||||
6 | any seizure warrant or court order prohibiting | ||||||
7 | transfer of
the property and when the attorney, at the | ||||||
8 | time he or she received the
property, did not know that | ||||||
9 | it was property subject to forfeiture under
this Act.
| ||||||
10 | The court shall further have jurisdiction and authority, in | ||||||
11 | addition to the
penalties and other remedies in this Act | ||||||
12 | provided, to enter an order for
the appointment of the court or | ||||||
13 | a person as a receiver, conservator,
ancillary receiver or | ||||||
14 | ancillary conservator for the defendant or the
defendant's | ||||||
15 | assets located in this State, or to require restitution,
| ||||||
16 | damages or disgorgement of profits on behalf of the person or | ||||||
17 | persons
injured by the act or practice constituting the subject | ||||||
18 | matter of the
action, and may assess costs against the | ||||||
19 | defendant for the use of the
State; provided, however, that the | ||||||
20 | civil remedies of rescission and
appointment of a receiver, | ||||||
21 | conservator, ancillary receiver
or ancillary conservator shall | ||||||
22 | not be available against any person by
reason of the failure to | ||||||
23 | file with the Secretary of State, or on account of
the contents | ||||||
24 | of, any report of sale provided for in subsection G or P of
| ||||||
25 | Section 4, paragraph (2) of subsection D of Sections 5 and 6, | ||||||
26 | or paragraph
(2) of subsection F of Section 7 of this Act. |
| |||||||
| |||||||
1 | Appeals may be
taken as in other civil cases.
| ||||||
2 | J. In no case shall the Secretary of State, or any of his | ||||||
3 | or her
employees or agents, in the administration of this Act, | ||||||
4 | incur any official or
personal liability by instituting an | ||||||
5 | injunction or other proceeding or
by denying, suspending or | ||||||
6 | revoking the registration of a dealer or
salesperson, or by | ||||||
7 | denying, suspending or revoking the registration of
securities | ||||||
8 | or prohibiting the offer or sale of securities, or by | ||||||
9 | suspending or
prohibiting any person from acting as a dealer, | ||||||
10 | limited Canadian dealer,
salesperson, investment adviser, or | ||||||
11 | investment adviser
representative or from offering or selling | ||||||
12 | securities.
| ||||||
13 | K. No provision of this Act shall be construed to require | ||||||
14 | or to
authorize the Secretary of State to require any | ||||||
15 | investment adviser
or federal covered investment adviser | ||||||
16 | engaged in rendering investment
supervisory services to | ||||||
17 | disclose the
identity, investments, or affairs of any client of | ||||||
18 | the investment
adviser or federal covered investment adviser, | ||||||
19 | except insofar as the
disclosure may be necessary or
| ||||||
20 | appropriate in a particular proceeding or investigation having | ||||||
21 | as its
object the enforcement of this Act.
| ||||||
22 | L. Whenever, after an examination, investigation or
| ||||||
23 | hearing, the Secretary of State deems it of public interest or | ||||||
24 | advantage,
he or she may certify a record to the State's | ||||||
25 | Attorney of the county in
which the act complained of, examined | ||||||
26 | or investigated occurred. The
State's Attorney of that county |
| |||||||
| |||||||
1 | within 90 days after receipt of the record
shall file a written | ||||||
2 | statement at the Office of the Secretary of State,
which | ||||||
3 | statement shall set forth the action taken upon the record, or | ||||||
4 | if no
action has been taken upon the record that fact, together | ||||||
5 | with the reasons
therefor, shall be stated.
| ||||||
6 | M. The Secretary of State may initiate, take, pursue, or | ||||||
7 | prosecute any
action authorized or permitted under Section 6d | ||||||
8 | of the Federal 1974 Act.
| ||||||
9 | N. (1) Notwithstanding any provision of this Act to the | ||||||
10 | contrary, to
encourage uniform interpretation, administration, | ||||||
11 | and enforcement of the
provisions of this Act, the Secretary of | ||||||
12 | State may cooperate with the
securities agencies or | ||||||
13 | administrators of one or more states, Canadian provinces
or | ||||||
14 | territories, or another country, the Securities and Exchange | ||||||
15 | Commission, the
Commodity Futures Trading Commission, the | ||||||
16 | Securities Investor Protection
Corporation, any | ||||||
17 | self-regulatory organization, and any governmental law
| ||||||
18 | enforcement or regulatory agency.
| ||||||
19 | (2) The cooperation authorized by paragraph (1) of this | ||||||
20 | subsection includes,
but is not limited to, the following:
| ||||||
21 | (a) establishing or participating in a central | ||||||
22 | depository or depositories
for registration under this Act | ||||||
23 | and for documents or records required under
this Act;
| ||||||
24 | (b) making a joint audit, inspection, examination, or | ||||||
25 | investigation;
| ||||||
26 | (c) holding a joint administrative hearing;
|
| |||||||
| |||||||
1 | (d) filing and prosecuting a joint civil or criminal | ||||||
2 | proceeding;
| ||||||
3 | (e) sharing and exchanging personnel;
| ||||||
4 | (f) sharing and exchanging information and documents; | ||||||
5 | or
| ||||||
6 | (g) issuing any joint statement or policy.
| ||||||
7 | (Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
| ||||||
8 | Section 99. Effective date. This Act takes effect upon | ||||||
9 | becoming law.
|