Full Text of SB1758 101st General Assembly
SB1758ham001 101ST GENERAL ASSEMBLY | Rep. Emanuel Chris Welch Filed: 5/16/2019
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| 1 | | AMENDMENT TO SENATE BILL 1758
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 1758 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Consumer Installment Loan Act is amended by | 5 | | changing Section 15 as follows:
| 6 | | (205 ILCS 670/15) (from Ch. 17, par. 5415)
| 7 | | Sec. 15. Charges permitted.
| 8 | | (a) Every licensee may
lend a principal amount not | 9 | | exceeding $40,000 and, except as to small consumer loans as | 10 | | defined in this Section, may charge,
contract for
and receive | 11 | | thereon interest at an annual percentage rate of no more than | 12 | | 36%, subject to the provisions of this Act; provided, however, | 13 | | that the limitation on the annual percentage rate contained in | 14 | | this subsection (a) does not apply to title-secured loans, | 15 | | which are loans upon which interest is charged at an annual | 16 | | percentage rate exceeding 36%, in which, at commencement, an |
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| 1 | | obligor provides to the licensee, as security for the loan, | 2 | | physical possession of the obligor's title to a motor vehicle, | 3 | | and upon which a licensee may charge, contract for, and receive | 4 | | thereon interest at the rate agreed upon by the licensee and | 5 | | borrower. For purposes of this Section, the annual percentage | 6 | | rate shall be calculated in accordance with the federal Truth | 7 | | in Lending Act.
| 8 | | (b) For purpose of this Section, the following terms shall | 9 | | have the
meanings ascribed herein.
| 10 | | "Applicable interest" for a precomputed loan contract | 11 | | means the amount of
interest attributable to each monthly | 12 | | installment period. It is computed
as if each installment | 13 | | period were one month and any interest charged for
extending | 14 | | the first installment period beyond one month is ignored. The
| 15 | | applicable interest for any monthly installment period is, for | 16 | | loans other than small consumer loans as defined in this | 17 | | Section, that portion of
the precomputed interest that bears | 18 | | the same ratio to the total precomputed
interest as the | 19 | | balances scheduled to be outstanding during that month bear
to | 20 | | the sum of all scheduled monthly outstanding balances in the | 21 | | original
contract. With respect to a small consumer loan, the | 22 | | applicable interest for any installment period is that portion | 23 | | of the precomputed monthly installment account handling charge | 24 | | attributable to the installment period calculated based on a | 25 | | method at least as favorable to the consumer as the actuarial | 26 | | method, as defined by the federal Truth in Lending Act.
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| 1 | | "Interest-bearing loan" means a loan in which the debt is
| 2 | | expressed as a principal amount plus interest charged on actual | 3 | | unpaid
principal balances for the time actually outstanding.
| 4 | | "Precomputed loan" means a loan in which the debt is | 5 | | expressed as the sum
of the original principal amount plus | 6 | | interest computed actuarially in
advance, assuming all | 7 | | payments will be made when scheduled.
| 8 | | "Small consumer loan" means a loan upon which interest is | 9 | | charged at an annual percentage rate exceeding 36% and with an | 10 | | amount financed of $4,000 or less. "Small consumer loan" does | 11 | | not include a title-secured loan as defined by subsection (a) | 12 | | of this Section or a payday loan as defined by the Payday Loan | 13 | | Reform Act. | 14 | | "Substantially equal installment" includes a last | 15 | | regularly scheduled payment that may be less than, but not more | 16 | | than 5% larger than, the previous scheduled payment according | 17 | | to a disclosed payment schedule agreed to by the parties. | 18 | | (c) Loans may be interest-bearing or precomputed.
| 19 | | (d) To compute time for either interest-bearing or | 20 | | precomputed loans for
the calculation of interest and other | 21 | | purposes, a month shall be a calendar
month and a day shall be | 22 | | considered 1/30th of a month when calculation is
made for a | 23 | | fraction of a month. A month shall be 1/12th of a year. A
| 24 | | calendar month is that period from a given date in one month to | 25 | | the same
numbered date in the following month, and if there is | 26 | | no same numbered
date, to the last day of the following month. |
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| 1 | | When a period of time
includes a month and a fraction of a | 2 | | month, the fraction of the month is
considered to follow the | 3 | | whole month. In the alternative, for
interest-bearing loans, | 4 | | the licensee may charge interest at the rate of
1/365th of the | 5 | | agreed annual rate for each day actually
elapsed.
| 6 | | (d-5) No licensee or other person may condition an | 7 | | extension of credit to a consumer on the consumer's repayment | 8 | | by preauthorized electronic fund transfers. Payment options, | 9 | | including, but not limited to, electronic fund transfers and | 10 | | Automatic Clearing House (ACH) transactions may be offered to | 11 | | consumers as a choice and method of payment chosen by the | 12 | | consumer. | 13 | | (e) With respect to interest-bearing loans:
| 14 | | (1) Interest shall be computed on unpaid principal | 15 | | balances outstanding
from time to time, for the time | 16 | | outstanding, until fully paid. Each
payment shall be | 17 | | applied first to the accumulated interest and the
remainder | 18 | | of the payment applied to the unpaid principal balance; | 19 | | provided
however, that if the amount of the payment is | 20 | | insufficient to pay the
accumulated interest, the unpaid | 21 | | interest continues to accumulate to be
paid from the | 22 | | proceeds of subsequent payments and is not added to the | 23 | | principal
balance.
| 24 | | (2) Interest shall not be payable in advance or | 25 | | compounded. However, if
part or all of the consideration | 26 | | for a new loan contract is the unpaid
principal balance of |
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| 1 | | a prior loan, then the principal amount payable under
the | 2 | | new loan contract may include any unpaid interest which has | 3 | | accrued.
The unpaid principal balance of a precomputed loan | 4 | | is the balance due
after refund or credit of unearned | 5 | | interest as provided in paragraph (f),
clause (3). The | 6 | | resulting loan contract shall be deemed a new and separate
| 7 | | loan transaction for all purposes.
| 8 | | (3) Loans must be fully amortizing and be repayable in | 9 | | substantially equal and consecutive weekly, biweekly, | 10 | | semimonthly, or monthly installments. Notwithstanding this | 11 | | requirement, rates may vary according to an
index that is | 12 | | independently verifiable and beyond the control of the | 13 | | licensee.
| 14 | | (4) The lender or creditor may, if the contract | 15 | | provides, collect a
delinquency or collection charge on | 16 | | each installment in default for a period of
not less than | 17 | | 10 days in an amount not exceeding 5% of the installment on
| 18 | | installments in excess of $200, or $10 on installments of | 19 | | $200 or less, but
only
one delinquency and collection | 20 | | charge may be collected on any installment
regardless of | 21 | | the period during which it remains in default.
| 22 | | (f) With respect to precomputed loans:
| 23 | | (1) Loans shall be repayable in substantially equal and | 24 | | consecutive weekly, biweekly, semimonthly, or
monthly | 25 | | installments of principal and interest combined, except | 26 | | that the
first installment period may be longer than one |
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| 1 | | month by not more than 15
days, and the first installment | 2 | | payment amount may be larger than the
remaining payments by | 3 | | the amount of interest charged for the extra days;
and | 4 | | provided further that monthly installment payment dates | 5 | | may be omitted
to accommodate borrowers with seasonal | 6 | | income.
| 7 | | (2) Payments may be applied to the combined total of | 8 | | principal and
precomputed interest until the loan is fully | 9 | | paid. Payments shall be
applied in the order in which they | 10 | | become due, except that any insurance
proceeds received as | 11 | | a result of any claim made on any insurance, unless
| 12 | | sufficient to prepay the contract in full, may be applied | 13 | | to the unpaid
installments of the total of payments in | 14 | | inverse order.
| 15 | | (3) When any loan contract is paid in full by cash, | 16 | | renewal or
refinancing, or a new loan, one month or more | 17 | | before the final installment
due date, a licensee shall | 18 | | refund or credit the obligor with
the total of
the | 19 | | applicable interest for all fully unexpired installment | 20 | | periods, as
originally scheduled or as deferred, which | 21 | | follow the day of prepayment;
provided, if the prepayment | 22 | | occurs prior to the first installment due date,
the | 23 | | licensee may retain 1/30 of the applicable interest for a | 24 | | first
installment period of one month for each day from the | 25 | | date of the loan to
the date of prepayment, and shall | 26 | | refund or credit the obligor
with the
balance of the total |
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| 1 | | interest contracted for. If the maturity of the loan
is | 2 | | accelerated for any reason and judgment is entered, the | 3 | | licensee shall
credit the borrower with the same refund as | 4 | | if prepayment in full had been
made on the date the | 5 | | judgement is entered.
| 6 | | (4) The lender or creditor may, if the contract | 7 | | provides, collect a
delinquency or collection charge on | 8 | | each installment in default for a period of
not less than | 9 | | 10 days in an amount not exceeding 5% of the installment on
| 10 | | installments in excess of $200, or $10 on installments of | 11 | | $200 or less, but
only
one delinquency or collection charge | 12 | | may be collected on any installment
regardless of the | 13 | | period during which it remains in default.
| 14 | | (5) If the parties agree in writing, either in the loan | 15 | | contract or in a
subsequent agreement, to a deferment of | 16 | | wholly unpaid installments, a
licensee may grant a | 17 | | deferment and may collect a deferment charge as
provided in | 18 | | this Section. A deferment postpones the scheduled due date | 19 | | of
the earliest unpaid installment and all subsequent | 20 | | installments as
originally scheduled, or as previously | 21 | | deferred, for a period equal to the
deferment period. The | 22 | | deferment period is that period during which no
installment | 23 | | is scheduled to be paid by reason of the deferment. The
| 24 | | deferment charge for a one month period may not exceed the | 25 | | applicable
interest for the installment period immediately | 26 | | following the due date of
the last undeferred payment. A |
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| 1 | | proportionate charge may be made for
deferment for periods | 2 | | of more or less than one month. A deferment charge
is | 3 | | earned pro rata during the deferment period and is fully | 4 | | earned on the
last day of the deferment period. Should a | 5 | | loan be prepaid in full during
a deferment period, the | 6 | | licensee shall credit to the obligor a
refund of the | 7 | | unearned deferment charge in addition to any other refund | 8 | | or
credit made for prepayment of the loan in full.
| 9 | | (6) If two or more installments are delinquent one full | 10 | | month or more on
any due date, and if the contract so | 11 | | provides, the licensee may reduce the
unpaid balance by the | 12 | | refund credit which would be required for prepayment
in | 13 | | full on the due date of the most recent maturing | 14 | | installment in default.
Thereafter, and in lieu of any | 15 | | other default or deferment charges, the
agreed rate of | 16 | | interest or, in the case of small consumer loans, interest | 17 | | at the rate of 18% per annum, may be charged on the unpaid | 18 | | balance until fully paid.
| 19 | | (7) Fifteen days after the final installment as | 20 | | originally scheduled or
deferred, the licensee, for any | 21 | | loan contract which has not previously been
converted to | 22 | | interest-bearing under paragraph (f), clause (6), may | 23 | | compute
and charge interest on any balance remaining | 24 | | unpaid, including unpaid
default or deferment charges, at | 25 | | the agreed rate of interest or, in the case of small | 26 | | consumer loans, interest at the rate of 18% per annum, |
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| 1 | | until fully
paid. At the time of payment of said final | 2 | | installment, the licensee shall
give notice to the obligor | 3 | | stating any amounts unpaid.
| 4 | | (Source: P.A. 96-936, eff. 3-21-11 .)
| 5 | | Section 10. The Illinois Securities Law of 1953 is amended | 6 | | by changing Sections 2.11, 2.12b, 8, and 12 and by adding | 7 | | Section 3.5 as follows:
| 8 | | (815 ILCS 5/2.11) (from Ch. 121 1/2, par. 137.2-11)
| 9 | | Sec. 2.11. Investment adviser. "Investment adviser" means | 10 | | any person
who, for compensation, engages in this State in the | 11 | | business of advising
others, either directly or through | 12 | | publications or writings, as to the
value of securities or as | 13 | | to the advisability of investing in, purchasing,
or selling | 14 | | securities or who, in this State for direct or indirect
| 15 | | compensation and as part of a regular advisory business, issues | 16 | | or
promulgates analyses or reports concerning securities or any | 17 | | financial
planner or other person who, as an integral component | 18 | | of other financially
related services, provides the foregoing | 19 | | investment advisory services to
others for compensation and as | 20 | | part of a business , or who holds himself or
herself out as | 21 | | providing the foregoing investment advisory services to
others | 22 | | for compensation; but "investment adviser" does not include:
| 23 | | (1) a bank or trust company, or the regular employees of a | 24 | | bank or trust
company;
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| 1 | | (2) any lawyer, accountant, engineer, geologist or teacher | 2 | | (i) whose
performance of such services is solely incidental to | 3 | | the practice of his
or her profession or (ii) who:
| 4 | | (A) does not exercise investment discretion with | 5 | | respect to the
assets of clients or maintain custody of the | 6 | | assets of clients for the
purpose of investing those | 7 | | assets, except when the person is acting as a
bona fide | 8 | | fiduciary in a capacity such as an executor, trustee, | 9 | | personal
representative, estate or trust agent, guardian, | 10 | | conservator, or person
serving in a similar fiduciary | 11 | | capacity;
| 12 | | (B) does not accept or receive, directly or indirectly, | 13 | | any
commission, fee, or other remuneration contingent upon | 14 | | the purchase or sale
of any specific security by a client | 15 | | of such person; and
| 16 | | (C) does not advise on the purchase or sale of specific | 17 | | securities,
except that this clause (C) shall not apply | 18 | | when the advice about specific
securities is based on | 19 | | financial statement analyses or tax considerations
that | 20 | | are reasonably related to and in connection with the | 21 | | person's profession;
| 22 | | (3) any registered dealer or partner, officer, director or | 23 | | regular
employee of a registered dealer, or registered | 24 | | salesperson, whose
performance of these services, in each case, | 25 | | is solely incidental to the
conduct of the business of the | 26 | | registered dealer or registered salesperson,
as the case may |
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| 1 | | be, and who receives no special compensation, directly or
| 2 | | indirectly, for such services;
| 3 | | (4) any publisher or regular employee of such publisher of | 4 | | a bona fide
newspaper, news magazine or business or financial | 5 | | publication of regular
and established paid circulation;
| 6 | | (5) any person whose advice, analyses or reports relate | 7 | | only to
securities which are direct obligations of, or | 8 | | obligations guaranteed as to
principal or interest by, the | 9 | | United States, any state
or any political subdivision of any | 10 | | state, or any public agency or
public instrumentality of any | 11 | | one or more of the foregoing;
| 12 | | (5.5) any person who is a federal covered investment | 13 | | adviser; or
| 14 | | (6) any other persons who are not within the intent of this | 15 | | Section as
the Secretary of State may designate by rules and | 16 | | regulations or order.
| 17 | | (Source: P.A. 90-70, eff. 7-8-97.)
| 18 | | (815 ILCS 5/2.12b) (from Ch. 121 1/2, par. 137.2-12b)
| 19 | | Sec. 2.12b. Investment adviser representative. "Investment | 20 | | adviser
representative" means, with respect to an investment | 21 | | adviser who is required
to register under this Act, any | 22 | | partner, officer, director of (or a person
occupying a similar | 23 | | status or performing similar functions), or other
natural | 24 | | person employed by or associated with an investment adviser, | 25 | | except
clerical or ministerial personnel, who in this State:
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| 1 | | (1) makes any recommendations or otherwise renders | 2 | | advice regarding
securities or investment products ;
| 3 | | (2) manages accounts or portfolios of clients;
| 4 | | (3) determines what recommendation or advice regarding | 5 | | securities or investments should
be given;
| 6 | | (4) supervises any employee who performs any of the | 7 | | foregoing; or
| 8 | | (5) solicits, refers, offers, or negotiates for the | 9 | | sale
of, or sells, investment advisory services.
| 10 | | With respect to a federal covered investment adviser, | 11 | | "investment adviser
representative" means any person who is an | 12 | | investment adviser representative
with a place of business in | 13 | | this State as such terms are defined by the
Securities and | 14 | | Exchange Commission under Section 203A of the Federal 1940
| 15 | | Investment Advisers Act.
| 16 | | (Source: P.A. 90-70, eff. 7-8-97; 90-667, eff. 7-30-98; 91-809, | 17 | | eff.
1-1-01.)
| 18 | | (815 ILCS 5/3.5 new) | 19 | | Sec. 3.5. Authority of Secretary of State. Notwithstanding | 20 | | any other law, the Secretary of State has the authority to | 21 | | enforce this Act as it pertains to the offer, sale, or | 22 | | investment advice concerning a covered security as defined by | 23 | | Section 2.29.
| 24 | | (815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
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| 1 | | Sec. 8. Registration of dealers, limited Canadian dealers, | 2 | | Internet portals,
salespersons, investment advisers, and | 3 | | investment adviser representatives.
| 4 | | A. Except as otherwise provided in this subsection A, every | 5 | | dealer,
limited Canadian dealer, salesperson, investment | 6 | | adviser,
and investment adviser representative shall be | 7 | | registered as such with the
Secretary of State. No dealer or | 8 | | salesperson need be registered as such when
offering or selling | 9 | | securities in transactions
exempted by subsection A, B, C, D, | 10 | | E, G, H, I, J, K, M, O, P, Q, R or S of
Section 4 of this Act, | 11 | | provided that such dealer or salesperson is not
regularly | 12 | | engaged in the business of offering or selling securities
in | 13 | | reliance
upon the exemption set forth in subsection G or M of | 14 | | Section 4 of this Act. No
dealer, issuer or controlling person | 15 | | shall employ a salesperson unless such
salesperson is | 16 | | registered as such with the Secretary of State or is employed
| 17 | | for the purpose of offering or selling securities solely in
| 18 | | transactions exempted by subsection A, B, C,
D, E, G, H, I, J, | 19 | | K, L, M, O, P, Q, R or S of Section 4 of this Act;
provided that | 20 | | such salesperson need not be registered when
effecting | 21 | | transactions in this State limited to those transactions | 22 | | described
in Section 15(h)(2) of the Federal 1934 Act or | 23 | | engaging in the
offer or sale of securities in respect of which | 24 | | he or she has beneficial
ownership and is a controlling person. | 25 | | The Secretary of State may, by
rule, regulation or order and |
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| 1 | | subject to such terms, conditions, and
fees as
may be | 2 | | prescribed in such rule, regulation or order, exempt from the
| 3 | | registration requirements of this Section 8 any investment | 4 | | adviser, if the
Secretary of State shall find that such | 5 | | registration is not necessary in
the public interest by reason | 6 | | of the small number of clients or otherwise
limited character | 7 | | of operation of such investment adviser.
| 8 | | B. An application for registration as a dealer or limited | 9 | | Canadian
dealer, executed, verified, or
authenticated by or on | 10 | | behalf of the applicant,
shall be filed with the Secretary of | 11 | | State, in such form as the Secretary of
State may by rule, | 12 | | regulation or order prescribe, setting forth or accompanied
by:
| 13 | | (1) The name and address of the applicant, the location | 14 | | of its principal
business office and all branch offices, if | 15 | | any, and the
date of its organization;
| 16 | | (2) A statement of any other Federal or state licenses | 17 | | or
registrations
which have been granted the applicant and | 18 | | whether any such licenses or
registrations have ever been | 19 | | refused, cancelled, suspended, revoked or
withdrawn;
| 20 | | (3) The assets and all liabilities, including | 21 | | contingent
liabilities of
the applicant, as of a date not | 22 | | more than 60 days prior to the filing of
the application;
| 23 | | (4) (a) A brief description of any civil or criminal
| 24 | | proceeding of which
fraud is an essential element pending | 25 | | against the applicant and whether the
applicant has ever |
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| 1 | | been convicted of a felony, or of any misdemeanor of
which | 2 | | fraud is an essential element;
| 3 | | (b) A list setting forth the name, residence and | 4 | | business address and
a 10 year occupational statement of | 5 | | each principal of the applicant and a
statement describing | 6 | | briefly any civil or criminal proceedings of which
fraud is | 7 | | an essential element pending against any such principal and | 8 | | the
facts concerning any conviction of any such principal | 9 | | of a felony, or of
any misdemeanor of which fraud is an | 10 | | essential element;
| 11 | | (5) If the applicant is a corporation: a list
of its | 12 | | officers and directors
setting forth the residence and | 13 | | business address of each; a 10-year
occupational statement | 14 | | of each such officer or director; and a
statement | 15 | | describing briefly any civil or criminal proceedings of | 16 | | which
fraud is an essential element pending against each | 17 | | such officer or
director and the facts concerning any | 18 | | conviction of any officer or director
of a felony, or of | 19 | | any misdemeanor of which fraud is an essential element;
| 20 | | (6) If the applicant is a sole proprietorship, a | 21 | | partnership,
limited liability company, an unincorporated | 22 | | association or any similar
form of business organization:
| 23 | | the name, residence and business address of the proprietor | 24 | | or of each
partner, member, officer, director, trustee or | 25 | | manager; the limitations, if
any, of the liability of each | 26 | | such individual; a 10-year occupational
statement of each |
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| 1 | | such individual; a statement describing briefly any civil
| 2 | | or criminal proceedings of which fraud is an essential | 3 | | element pending
against each such individual and the facts | 4 | | concerning any conviction of
any such individual of a | 5 | | felony, or of any misdemeanor of
which fraud is an | 6 | | essential element;
| 7 | | (7) Such additional information as the Secretary of
| 8 | | State may by rule or regulation prescribe as necessary to | 9 | | determine the
applicant's financial responsibility, | 10 | | business repute and qualification to
act as a dealer.
| 11 | | (8) (a) No applicant shall be registered or | 12 | | re-registered as a
dealer or limited Canadian dealer
under | 13 | | this Section unless and until each principal of the dealer | 14 | | has
passed an examination conducted by the Secretary of | 15 | | State or a
self-regulatory organization of securities | 16 | | dealers or similar person, which
examination has been | 17 | | designated by the Secretary of State by rule,
regulation or | 18 | | order to be satisfactory for purposes of determining | 19 | | whether
the applicant has sufficient knowledge of the | 20 | | securities business and laws
relating thereto to act as a | 21 | | registered dealer. Any dealer who was
registered on | 22 | | September 30, 1963, and has continued to be so registered;
| 23 | | and any principal of any registered dealer, who was acting | 24 | | in such capacity
on and continuously since September 30, | 25 | | 1963; and any individual who has
previously passed a | 26 | | securities dealer examination administered by the
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| 1 | | Secretary of State or any examination designated by the | 2 | | Secretary of State
to be satisfactory for purposes of | 3 | | determining whether the applicant has
sufficient knowledge | 4 | | of the securities business and laws relating thereto
to act | 5 | | as a registered dealer by rule, regulation or order, shall | 6 | | not be
required to pass an examination in order to continue | 7 | | to act in such
capacity. The Secretary of State may by | 8 | | order waive the examination
requirement for any principal | 9 | | of an applicant for registration under this
subsection B | 10 | | who has had such experience or education relating to the
| 11 | | securities business as may be determined by the Secretary | 12 | | of State to be
the equivalent of such examination. Any | 13 | | request for such a waiver shall be
filed with the Secretary | 14 | | of State in such form as may be prescribed by rule
or | 15 | | regulation.
| 16 | | (b) Unless an applicant is a member of the body | 17 | | corporate known as the
Securities Investor Protection | 18 | | Corporation established pursuant to the Act
of Congress of | 19 | | the United States known as the Securities Investor
| 20 | | Protection Act of 1970, as amended, a member of an | 21 | | association of
dealers registered as a national securities | 22 | | association pursuant to Section
15A of the Federal 1934 | 23 | | Act,
or a member of a self-regulatory organization or stock | 24 | | exchange in Canada
which the Secretary of State has | 25 | | designated by rule or order,
an applicant shall not be | 26 | | registered or
re-registered unless and until there is filed |
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| 1 | | with the Secretary of State
evidence that such applicant | 2 | | has in effect insurance or other equivalent
protection for | 3 | | each client's cash or securities held by such applicant, | 4 | | and
an undertaking that such applicant will continually | 5 | | maintain such insurance
or other protection during the | 6 | | period of registration or re-registration.
Such insurance | 7 | | or other protection shall be in a form and amount | 8 | | reasonably
prescribed by the Secretary of State by rule or | 9 | | regulation.
| 10 | | (9) The application for the registration of a dealer or | 11 | | limited Canadian
dealer shall be
accompanied by a filing | 12 | | fee and a fee for each branch office in this State, in
each | 13 | | case in the amount established pursuant to Section 11a of | 14 | | this
Act, which fees shall not be returnable in any event.
| 15 | | (10) The Secretary of State shall notify the dealer or | 16 | | limited Canadian
dealer by written notice (which may be by | 17 | | electronic or
facsimile transmission) of the effectiveness | 18 | | of the registration as a dealer in
this State.
| 19 | | (11) Any change which renders no longer accurate any
| 20 | | information
contained in any application for registration | 21 | | or re-registration of a
dealer or limited Canadian dealer | 22 | | shall be reported to the Secretary of
State within 10 | 23 | | business days
after the occurrence of such change; but in | 24 | | respect to assets and
liabilities only materially adverse | 25 | | changes need be reported.
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| 1 | | C. Any registered dealer, limited Canadian dealer, issuer, | 2 | | or
controlling person desiring to
register a salesperson shall | 3 | | file an application with the Secretary of
State, in such form | 4 | | as the Secretary of State may by rule or regulation
prescribe, | 5 | | which the salesperson is required by this Section to provide
to | 6 | | the dealer, issuer, or controlling person, executed, verified, | 7 | | or
authenticated by the salesperson setting forth or
| 8 | | accompanied by:
| 9 | | (1) the name, residence and business address of the | 10 | | salesperson;
| 11 | | (2) whether any federal or State license or | 12 | | registration as dealer,
limited Canadian dealer, or | 13 | | salesperson has ever been refused the salesperson
or | 14 | | cancelled, suspended, revoked, withdrawn, barred, limited, | 15 | | or
otherwise adversely affected in a similar manner or | 16 | | whether the salesperson has
ever been censured or expelled;
| 17 | | (3) the nature of employment with, and names and | 18 | | addresses of, employers
of the salesperson for the 10 years | 19 | | immediately preceding the date of
application;
| 20 | | (4) a brief description of any civil or criminal | 21 | | proceedings of which
fraud is an essential element pending | 22 | | against the salesperson, and whether
the salesperson has | 23 | | ever been convicted of a felony, or of any misdemeanor
of | 24 | | which fraud is an essential element;
| 25 | | (5) such additional information as the Secretary of | 26 | | State may by rule,
regulation or order prescribe as |
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| 1 | | necessary to determine the salesperson's
business repute | 2 | | and qualification to act as a salesperson; and
| 3 | | (6) no individual shall be registered or re-registered | 4 | | as a
salesperson
under this Section unless and until such | 5 | | individual has passed an
examination conducted by the | 6 | | Secretary of State or a self-regulatory
organization of | 7 | | securities dealers or similar person, which examination | 8 | | has
been designated by the Secretary of State by rule, | 9 | | regulation or order to be
satisfactory for purposes of | 10 | | determining whether the applicant has
sufficient knowledge | 11 | | of the securities business and laws relating thereto
to act | 12 | | as a registered salesperson.
| 13 | | Any salesperson who was registered prior to September | 14 | | 30, 1963, and has
continued to be so registered, and any | 15 | | individual who has passed a securities
salesperson
| 16 | | examination administered by the Secretary of State or an | 17 | | examination
designated by the Secretary of State by rule, | 18 | | regulation or order to be
satisfactory for purposes of | 19 | | determining whether the applicant has
sufficient knowledge | 20 | | of the securities business and laws relating thereto
to act | 21 | | as a registered salesperson, shall not be required to pass | 22 | | an
examination in order to continue to act as a | 23 | | salesperson. The Secretary of
State may by order waive the | 24 | | examination requirement for any applicant for
registration | 25 | | under this subsection C who has had such experience or
| 26 | | education relating to the securities business as may be |
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| 1 | | determined by the
Secretary of State to be the equivalent | 2 | | of such examination. Any request
for such a waiver shall be | 3 | | filed with the Secretary of State in such form
as may be | 4 | | prescribed by rule, regulation or order.
| 5 | | (7) The application for registration of a salesperson | 6 | | shall be
accompanied
by a filing fee and a Securities Audit | 7 | | and Enforcement Fund fee, each
in the amount established | 8 | | pursuant to Section 11a of this Act, which shall
not be | 9 | | returnable in any event.
| 10 | | (8) Any change which renders no longer accurate any
| 11 | | information
contained in any application for registration | 12 | | or re-registration as a
salesperson shall be reported to | 13 | | the Secretary of State within 10 business
days after the | 14 | | occurrence of such change. If the activities are terminated
| 15 | | which rendered an individual a salesperson for the dealer, | 16 | | issuer or
controlling person, the dealer, issuer or | 17 | | controlling person, as the case
may be, shall notify the | 18 | | Secretary of State, in writing, within 30 days of
the | 19 | | salesperson's cessation of activities, using the | 20 | | appropriate termination
notice form.
| 21 | | (9) A registered salesperson may transfer his or her
| 22 | | registration
under this Section 8 for the unexpired term | 23 | | thereof from one registered
dealer or limited Canadian | 24 | | dealer to another by the giving of notice of the
transfer | 25 | | by the new
registered dealer or limited Canadian dealer to | 26 | | the Secretary of State in
such form and subject to
such |
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| 1 | | conditions as the Secretary of State shall by rule or | 2 | | regulation
prescribe. The new registered dealer or limited | 3 | | Canadian dealer shall
promptly file an application
for | 4 | | registration of such salesperson as provided in this | 5 | | subsection C,
accompanied by the filing fee prescribed by | 6 | | paragraph (7) of this
subsection C.
| 7 | | C-5. Except with respect to federal covered investment | 8 | | advisers whose only
clients
are investment companies as defined | 9 | | in the Federal 1940 Act, other investment
advisers, federal | 10 | | covered investment advisers, or any similar person which the
| 11 | | Secretary of State may prescribe by rule or order, a federal | 12 | | covered investment
adviser shall file with the Secretary of | 13 | | State, prior to acting as a federal
covered investment adviser | 14 | | in this State, such documents as have been filed
with the | 15 | | Securities and Exchange Commission as the Secretary of State by | 16 | | rule
or order may prescribe. The notification of a federal | 17 | | covered investment
adviser shall be accompanied by a | 18 | | notification filing fee established pursuant
to Section 11a of | 19 | | this Act, which shall not be returnable in any event. Every
| 20 | | person acting as a federal covered investment adviser in this | 21 | | State shall file
a notification filing and pay an annual | 22 | | notification filing fee established
pursuant to Section 11a of | 23 | | this Act, which is not
returnable in any event. The failure to | 24 | | file any such notification shall
constitute a violation of | 25 | | subsection D of Section 12 of this Act, subject to
the |
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| 1 | | penalties enumerated in Section 14 of this Act.
Until October | 2 | | 10, 1999 or other date as may be legally permissible, a
federal | 3 | | covered investment adviser who fails to file the notification | 4 | | or
refuses to pay the fees as required by this subsection shall | 5 | | register as an
investment adviser with the Secretary of State | 6 | | under Section 8 of this
Act.
The civil remedies
provided for in | 7 | | subsection A of Section 13 of this Act and the civil remedies
| 8 | | of rescission and appointment of receiver, conservator, | 9 | | ancillary receiver, or
ancillary conservator provided for in | 10 | | subsection F of Section 13 of this Act
shall not be available | 11 | | against any person by reason of the failure to file any
such | 12 | | notification or to pay the notification fee or on account of | 13 | | the contents
of any such notification.
| 14 | | D. An application for registration as an investment | 15 | | adviser,
executed, verified, or authenticated by or on behalf | 16 | | of the applicant, shall be
filed with
the Secretary of State, | 17 | | in such form
as the Secretary of State may by rule or | 18 | | regulation prescribe, setting
forth or accompanied by:
| 19 | | (1) The name and form of organization under which the | 20 | | investment adviser
engages or intends to engage in | 21 | | business; the state or country and date of
its | 22 | | organization; the location
of the adviser's principal | 23 | | business office and branch offices, if any; the
names and | 24 | | addresses of the adviser's principal, partners, officers,
| 25 | | directors, and persons performing similar functions or, if |
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| 1 | | the
investment adviser is an individual, of the individual; | 2 | | and the
number of the adviser's employees who perform | 3 | | investment advisory functions;
| 4 | | (2) The education, the business affiliations for the | 5 | | past 10 years, and
the present business affiliations of the | 6 | | investment adviser and of
the adviser's principal, | 7 | | partners, officers, directors, and persons
performing | 8 | | similar functions and of any person controlling the
| 9 | | investment adviser;
| 10 | | (3) The nature of the business of the investment | 11 | | adviser,
including the manner of giving advice and | 12 | | rendering analyses or reports;
| 13 | | (4) The nature and scope of the authority of the | 14 | | investment
adviser with respect to clients' funds and | 15 | | accounts;
| 16 | | (5) The basis or bases upon which the investment | 17 | | adviser is
compensated;
| 18 | | (6) Whether the investment adviser or any principal,
| 19 | | partner, officer, director, person performing similar | 20 | | functions or person
controlling the investment adviser (i) | 21 | | within 10 years of the
filing of the application has been | 22 | | convicted of a felony, or of
any misdemeanor of which fraud | 23 | | is an essential element, or (ii) is
permanently or | 24 | | temporarily enjoined by order or judgment from acting as an
| 25 | | investment adviser, underwriter, dealer, principal or | 26 | | salesperson, or
from engaging in or continuing any conduct |
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| 1 | | or practice in connection with
any such activity or in | 2 | | connection with the purchase or sale of any
security, and | 3 | | in each case the facts relating to the conviction,
order or | 4 | | judgment;
| 5 | | (7) (a) A statement as to whether the investment | 6 | | adviser is
engaged or is to engage primarily in the | 7 | | business of rendering investment
supervisory services; and
| 8 | | (b) A statement that the investment adviser will | 9 | | furnish his,
her, or its clients with such information as | 10 | | the Secretary of State
deems necessary in the form | 11 | | prescribed by the
Secretary of State by rule or regulation;
| 12 | | (8) Such additional information as the Secretary of | 13 | | State may, by rule,
regulation or order prescribe as | 14 | | necessary to determine the applicant's
financial | 15 | | responsibility, business repute and qualification to act | 16 | | as an
investment adviser.
| 17 | | (9) No applicant shall be registered or re-registered | 18 | | as an investment
adviser under this Section unless and | 19 | | until each principal of the applicant
who is actively | 20 | | engaged in the conduct and management of the applicant's
| 21 | | advisory business in this State has passed an examination | 22 | | or completed an
educational program conducted by the | 23 | | Secretary of State or an association
of investment advisers | 24 | | or similar person, which examination or educational
| 25 | | program has been designated by the Secretary of State by | 26 | | rule, regulation
or order to be satisfactory for purposes |
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| 1 | | of determining whether the
applicant has sufficient | 2 | | knowledge of the securities business and laws
relating | 3 | | thereto to conduct the business of a registered investment | 4 | | adviser.
| 5 | | Any person who was a registered investment adviser | 6 | | prior to September 30,
1963, and has continued to be so | 7 | | registered, and any individual who has
passed an investment | 8 | | adviser examination administered by the Secretary of
| 9 | | State, or passed an examination or completed an educational | 10 | | program
designated by the Secretary of State by rule, | 11 | | regulation or order to be
satisfactory for purposes of | 12 | | determining whether the applicant has
sufficient knowledge | 13 | | of the securities business and laws relating thereto
to | 14 | | conduct the business of a registered investment adviser, | 15 | | shall not be
required to pass an examination or complete an | 16 | | educational program in
order to continue to act as an | 17 | | investment adviser. The Secretary of State
may by order | 18 | | waive the examination or educational program requirement | 19 | | for any
applicant for registration under this subsection D | 20 | | if the principal
of the applicant who is actively engaged | 21 | | in the conduct and management of the
applicant's advisory | 22 | | business in this State has had such experience
or education | 23 | | relating to the securities business as may be determined by | 24 | | the
Secretary of State to be the equivalent of the | 25 | | examination or
educational program. Any request for a | 26 | | waiver shall be filed
with the Secretary of State in such |
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| 1 | | form as may be prescribed by
rule or regulation.
| 2 | | (10) No applicant shall be registered or re-registered | 3 | | as an
investment adviser under this Section 8 unless the | 4 | | application for
registration or re-registration is | 5 | | accompanied by an application for
registration or | 6 | | re-registration for each person
acting as an investment | 7 | | adviser representative on
behalf of the adviser and
a | 8 | | Securities Audit and Enforcement Fund fee that shall not be | 9 | | returnable in any
event is paid with respect to each | 10 | | investment adviser representative.
| 11 | | (11) The application for registration of an investment | 12 | | adviser shall be
accompanied by a filing fee and a fee for | 13 | | each branch office in this State, in
each case in the | 14 | | amount established pursuant to Section 11a of this
Act, | 15 | | which fees shall not be returnable in any event.
| 16 | | (12) The Secretary of State shall notify the investment | 17 | | adviser by written
notice (which may be by electronic or | 18 | | facsimile transmission)
of
the effectiveness of the | 19 | | registration as an investment adviser in this State.
| 20 | | (13) Any change which renders no longer accurate any | 21 | | information contained
in any application for registration | 22 | | or re-registration of an investment adviser
shall be | 23 | | reported to the Secretary of State within 10 business days | 24 | | after the
occurrence of the change. In respect to assets | 25 | | and liabilities of
an investment adviser that retains | 26 | | custody of clients' cash or
securities or accepts |
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| 1 | | pre-payment of fees in excess of $500 per client and
6 or | 2 | | more months in advance only materially adverse changes need | 3 | | be reported by
written notice (which may be by electronic | 4 | | or facsimile
transmission) no later
than the close of | 5 | | business on the second business day following the discovery
| 6 | | thereof.
| 7 | | (14) Each application for registration as an | 8 | | investment adviser shall
become effective automatically on | 9 | | the 45th day following the filing of the
application, | 10 | | required documents or information, and payment of the | 11 | | required
fee unless (i) the Secretary of State has | 12 | | registered the investment adviser
prior to that date or | 13 | | (ii) an action with respect to the applicant is
pending | 14 | | under Section 11 of this Act.
| 15 | | D-5. A registered investment adviser or federal covered | 16 | | investment adviser
desiring to register an investment adviser | 17 | | representative shall file an
application with the Secretary of | 18 | | State, in the form as the Secretary of State
may by rule or | 19 | | order prescribe, which the investment adviser representative | 20 | | is
required by this Section to provide to the investment | 21 | | adviser, executed,
verified, or authenticated by the | 22 | | investment adviser representative and setting
forth or | 23 | | accompanied by:
| 24 | | (1) The name, residence, and business address of the | 25 | | investment
adviser representative;
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| 1 | | (2) A statement whether any federal or state license or | 2 | | registration as a
dealer, salesperson, investment adviser, | 3 | | or investment adviser representative
has ever been | 4 | | refused, canceled, suspended, revoked or withdrawn;
| 5 | | (3) The nature of employment with, and names and | 6 | | addresses of,
employers of the investment adviser | 7 | | representative for the 10 years immediately
preceding the | 8 | | date of application;
| 9 | | (4) A brief description of any civil or criminal | 10 | | proceedings, of which
fraud is an essential element, | 11 | | pending against the investment adviser
representative and | 12 | | whether the investment adviser representative has ever | 13 | | been
convicted of a felony or of any misdemeanor of which | 14 | | fraud is an essential
element;
| 15 | | (5) Such additional information as the Secretary of | 16 | | State may by rule or
order prescribe as necessary to | 17 | | determine the investment adviser
representative's business | 18 | | repute or qualification to act as an investment
adviser | 19 | | representative;
| 20 | | (6) Documentation that the individual has passed an | 21 | | examination conducted
by the Secretary of State, an | 22 | | organization of investment advisers, or similar
person, | 23 | | which examination has been designated by the Secretary of | 24 | | State by rule
or order to be satisfactory for purposes of | 25 | | determining whether the
applicant has sufficient knowledge | 26 | | of the investment advisory or securities
business and laws |
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| 1 | | relating to that business to act as a registered investment
| 2 | | adviser representative; and
| 3 | | (7) A Securities Audit and Enforcement Fund fee | 4 | | established under
Section 11a of this Act, which shall not | 5 | | be returnable in any event.
| 6 | | The Secretary of State may by order waive the examination | 7 | | requirement for an
applicant for registration under this | 8 | | subsection D-5 who has had the experience
or education relating | 9 | | to the investment advisory or securities business as may
be | 10 | | determined by the Secretary of State to be the equivalent of | 11 | | the
examination. A request for a waiver shall be filed with the | 12 | | Secretary of State
in the form as may be prescribed by rule or | 13 | | order.
| 14 | | A change that renders no longer accurate any information | 15 | | contained in any
application for registration or | 16 | | re-registration as an investment adviser
representative must | 17 | | be reported to the Secretary of State within 10 business
days | 18 | | after the occurrence of the change. If the activities that | 19 | | rendered an
individual an investment adviser representative | 20 | | for the investment adviser are
terminated, the investment | 21 | | adviser shall notify the Secretary of State in
writing (which | 22 | | may be by electronic or facsimile transmission), within 30 days
| 23 | | of the investment adviser representative's termination, using | 24 | | the
appropriate termination notice form as the Secretary of | 25 | | State may prescribe by
rule or order.
| 26 | | A registered investment adviser representative may |
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| 1 | | transfer his or her
registration under this Section 8 for the | 2 | | unexpired term of the registration
from one registered | 3 | | investment adviser to another by the giving of notice of
the | 4 | | transfer by the new investment adviser to the Secretary of | 5 | | State in the
form and subject to the conditions as the | 6 | | Secretary of State shall prescribe.
The new registered | 7 | | investment adviser shall promptly file an application for
| 8 | | registration of the investment adviser representative as | 9 | | provided in this
subsection, accompanied by the Securities | 10 | | Audit and Enforcement Fund fee
prescribed by paragraph (7) of | 11 | | this
subsection D-5.
| 12 | | E. (1) Subject to the provisions of subsection F of Section | 13 | | 11 of
this Act, the registration of a dealer, limited Canadian | 14 | | dealer,
salesperson, investment adviser, or investment adviser
| 15 | | representative may be denied, suspended or revoked if the | 16 | | Secretary of State
finds that the dealer, limited Canadian | 17 | | dealer, Internet portal, salesperson,
investment adviser, or | 18 | | investment adviser representative or any
principal officer, | 19 | | director, partner, member, trustee, manager or any
person who | 20 | | performs a similar function of the dealer, limited Canadian
| 21 | | dealer, Internet portal, or investment adviser:
| 22 | | (a) has been convicted of any felony
during the 10 year | 23 | | period preceding the date of filing of any application for
| 24 | | registration or at any time thereafter, or of any | 25 | | misdemeanor of
which fraud is an essential element;
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| 1 | | (b) has engaged in any unethical practice in connection | 2 | | with any
security, or in any fraudulent business practice;
| 3 | | (c) has failed to account for any money or property, or | 4 | | has failed to
deliver any security, to any person entitled | 5 | | thereto when due or within
a reasonable time thereafter;
| 6 | | (d) in the case of a dealer, limited Canadian dealer, | 7 | | or investment
adviser, is insolvent;
| 8 | | (e) in the case of a dealer, limited Canadian dealer,
| 9 | | salesperson, or registered principal of a dealer or
limited | 10 | | Canadian dealer
(i) has
failed
reasonably to supervise the
| 11 | | securities activities of any of its salespersons or other | 12 | | employees and the
failure
has permitted or facilitated a | 13 | | violation of Section 12 of this Act or (ii) is
offering or | 14 | | selling or has offered or sold securities in this
State | 15 | | through a salesperson other than a registered salesperson, | 16 | | or, in
the case of a salesperson, is selling or has sold | 17 | | securities in this State
for a dealer, limited Canadian | 18 | | dealer, issuer or controlling person with
knowledge that | 19 | | the
dealer, limited Canadian dealer, issuer or controlling | 20 | | person has not
complied with the provisions of
this Act
or | 21 | | (iii) has failed reasonably to supervise the
| 22 | | implementation of compliance measures following notice by
| 23 | | the Secretary of State of noncompliance with the Act or
| 24 | | with the regulations promulgated thereunder or both or (iv) | 25 | | has failed to
maintain and enforce written procedures to | 26 | | supervise the types of
business in which it engages and to |
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| 1 | | supervise the activities of its
salespersons that are | 2 | | reasonably designed to achieve compliance with applicable
| 3 | | securities laws and regulations;
| 4 | | (f) in the case of an investment adviser, has failed | 5 | | reasonably to
supervise the advisory activities of any of | 6 | | its investment adviser
representatives or employees and | 7 | | the
failure has permitted or facilitated a violation of | 8 | | Section 12 of this Act;
| 9 | | (g) has violated any of the provisions of this Act;
| 10 | | (h) has made any material misrepresentation to the | 11 | | Secretary of State
in connection with any information | 12 | | deemed necessary by the Secretary of
State to determine a | 13 | | dealer's, limited Canadian dealer's, or investment
| 14 | | adviser's financial responsibility
or a dealer's, limited | 15 | | Canadian dealer's, investment adviser's,
salesperson's, or | 16 | | investment
adviser representative's business repute or
| 17 | | qualifications, or has refused to furnish any such | 18 | | information
requested by the Secretary of State;
| 19 | | (i) has had a license or registration under any Federal | 20 | | or State law
regulating securities, commodity futures
| 21 | | contracts,
or stock futures contracts refused, cancelled, | 22 | | suspended, withdrawn,
revoked, or otherwise
adversely | 23 | | affected in a similar manner;
| 24 | | (j) has had membership
in or
association with any | 25 | | self-regulatory
organization registered under the Federal | 26 | | 1934 Act or the Federal 1974 Act
suspended, revoked, |
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| 1 | | refused, expelled, cancelled, barred, limited in any
| 2 | | capacity, or
otherwise adversely affected in a similar | 3 | | manner
arising from any fraudulent or deceptive act or a | 4 | | practice in violation of
any rule, regulation or standard | 5 | | duly promulgated by the self-regulatory
organization;
| 6 | | (k) has had any order entered against it after notice | 7 | | and opportunity
for hearing by a securities agency of any | 8 | | state, any foreign government
or agency thereof, the | 9 | | Securities and Exchange Commission, or the Federal
| 10 | | Commodities Futures Trading Commission arising from any | 11 | | fraudulent or
deceptive act or a practice in violation of | 12 | | any statute, rule or regulation
administered or | 13 | | promulgated by the agency or commission;
| 14 | | (l) in the case of a dealer or limited Canadian dealer, | 15 | | fails to
maintain a minimum net capital
in an amount which | 16 | | the Secretary of State may by rule or regulation require;
| 17 | | (m) has conducted a continuing course of dealing of | 18 | | such
nature as to demonstrate an inability to properly | 19 | | conduct the business of
the dealer, limited Canadian | 20 | | dealer, salesperson, investment
adviser,
or investment | 21 | | adviser representative;
| 22 | | (n) has had, after notice and opportunity for hearing, | 23 | | any injunction or
order entered against it or license or | 24 | | registration refused, cancelled,
suspended, revoked, | 25 | | withdrawn, limited, or otherwise adversely
affected in a | 26 | | similar manner by any state or federal body,
agency or |
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| 1 | | commission regulating banking, insurance, finance or small | 2 | | loan
companies, real estate or mortgage brokers or | 3 | | companies, if the
action resulted from any act found by the | 4 | | body, agency or
commission to be a fraudulent or deceptive | 5 | | act or practice in violation of
any statute, rule or | 6 | | regulation administered or
promulgated by the body, agency | 7 | | or commission;
| 8 | | (o) has failed to file a return, or to pay the tax, | 9 | | penalty or interest
shown in a filed return, or to pay any | 10 | | final assessment of tax, penalty or
interest, as required | 11 | | by any tax Act administered by the Illinois
Department of | 12 | | Revenue, until such time as the requirements of
that tax | 13 | | Act are satisfied;
| 14 | | (p) (blank);
| 15 | | (q) has failed to maintain the books and records | 16 | | required under this Act
or rules or regulations promulgated | 17 | | under this Act or under any requirements
established by the | 18 | | Securities and Exchange Commission or a self-regulatory
| 19 | | organization;
| 20 | | (r) has refused to allow or otherwise impeded designees | 21 | | of the Secretary
of
State from conducting an audit, | 22 | | examination, inspection, or investigation
provided for | 23 | | under Section 8 or 11 of this Act;
| 24 | | (s) has failed to maintain any minimum net capital or | 25 | | bond requirement set
forth in this Act or any rule or | 26 | | regulation promulgated under this Act;
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| 1 | | (t) has refused the Secretary of State or his or her | 2 | | designee access to
any office or location within an office | 3 | | to conduct an investigation, audit,
examination, or | 4 | | inspection;
| 5 | | (u) has advised or caused a public pension fund or | 6 | | retirement system
established under the Illinois Pension | 7 | | Code to make an investment or engage in
a transaction not | 8 | | authorized by that Code;
| 9 | | (v) if a corporation, limited liability company, or | 10 | | limited liability
partnership has been suspended, | 11 | | canceled, revoked, or has failed to register as
a foreign
| 12 | | corporation, limited liability company, or limited | 13 | | liability partnership
with the Secretary
of State;
| 14 | | (w) is permanently or temporarily enjoined by any court | 15 | | of competent
jurisdiction, including any state, federal, | 16 | | or foreign government, from
engaging
in or continuing any | 17 | | conduct or practice involving any aspect of the securities
| 18 | | or commodities business or in any other business where the | 19 | | conduct or practice
enjoined involved investments, | 20 | | franchises, insurance, banking, or finance;
| 21 | | (2) If the Secretary of State finds that any registrant or | 22 | | applicant for
registration is no longer in existence or has | 23 | | ceased to do business as a
dealer, limited Canadian dealer, | 24 | | Internet portal, salesperson, investment
adviser, or | 25 | | investment adviser representative, or is subject to an
| 26 | | adjudication
as a person under legal disability or to the |
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| 1 | | control of a
guardian, or cannot be located after reasonable | 2 | | search, or has failed
after written notice to pay to the | 3 | | Secretary of State any additional fee
prescribed by this | 4 | | Section or specified by rule or regulation, the Secretary of | 5 | | State may by order cancel the
registration or application.
| 6 | | (3) Withdrawal of an application for registration or | 7 | | withdrawal from
registration as a dealer, limited Canadian | 8 | | dealer, salesperson,
investment adviser, or investment adviser | 9 | | representative becomes effective
30 days after receipt of an | 10 | | application to withdraw or within such
shorter period of time | 11 | | as the Secretary of State may determine, unless any
proceeding | 12 | | is pending under Section 11 of this Act when the application is
| 13 | | filed or a proceeding is instituted within 30 days after the | 14 | | application is
filed. If a proceeding is pending or instituted, | 15 | | withdrawal becomes effective
at such time and upon such | 16 | | conditions as the Secretary
of State by order determines. If no | 17 | | proceeding is pending or instituted and
withdrawal | 18 | | automatically becomes effective, the Secretary of State may
| 19 | | nevertheless institute a revocation or suspension proceeding | 20 | | within 2
years after withdrawal became effective and enter a | 21 | | revocation or suspension
order as of the last date on which | 22 | | registration was effective.
| 23 | | F. The Secretary of State shall make available upon request | 24 | | the date
that each dealer, investment adviser, salesperson, or | 25 | | investment
adviser representative was granted
registration, |
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| 1 | | together with the name and address of the dealer, limited
| 2 | | Canadian dealer, or issuer on
whose behalf the salesperson is | 3 | | registered, and all
orders of the Secretary of State denying or | 4 | | abandoning an application, or
suspending or revoking | 5 | | registration, or censuring the persons.
The Secretary of State | 6 | | may designate by rule, regulation or order the
statements, | 7 | | information or reports submitted to or filed with him or
her | 8 | | pursuant to this Section 8 which the Secretary of State | 9 | | determines are
of a sensitive nature and therefore should be | 10 | | exempt from public
disclosure. Any such statement, information | 11 | | or report shall be
deemed confidential and shall not be | 12 | | disclosed to the public except upon the
consent of the person | 13 | | filing or submitting the statement,
information or report or by | 14 | | order of court or in court proceedings.
| 15 | | G. The registration or re-registration of a dealer or | 16 | | limited Canadian
dealer and of all salespersons
registered upon | 17 | | application of the dealer or limited Canadian dealer shall
| 18 | | expire on the next
succeeding anniversary date of the | 19 | | registration or re-registration of the
dealer; and the | 20 | | registration or re-registration of an investment
adviser and of | 21 | | all investment adviser representatives registered upon
| 22 | | application of the investment adviser shall expire on the next | 23 | | succeeding
anniversary date of the
registration of the | 24 | | investment adviser; provided, that the
Secretary of State may | 25 | | by rule or regulation prescribe an alternate date which
any |
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| 1 | | dealer registered under the Federal 1934 Act or a member of any
| 2 | | self-regulatory association approved pursuant thereto, a | 3 | | member of a
self-regulatory organization or stock exchange in | 4 | | Canada, or any investment
adviser may elect
as
the expiration | 5 | | date of its dealer or limited Canadian dealer and
salesperson | 6 | | registrations, or the expiration date of its investment adviser
| 7 | | registration, as the case may be. A
registration of a | 8 | | salesperson registered upon application of an issuer or
| 9 | | controlling person shall expire on the next succeeding | 10 | | anniversary date of
the registration, or upon termination or | 11 | | expiration of the
registration of the securities, if any, | 12 | | designated in the application for his
or her registration or | 13 | | the alternative date as the Secretary may prescribe by
rule or | 14 | | regulation. Subject to paragraph (9) of subsection C of this | 15 | | Section
8, a salesperson's registration also shall terminate | 16 | | upon cessation of his or
her employment, or termination of his | 17 | | or her appointment or authorization, in
each case by the person | 18 | | who applied for the salesperson's registration,
provided that | 19 | | the Secretary of State may by rule or regulation prescribe an
| 20 | | alternate date for the expiration of the registration.
| 21 | | H. Applications for re-registration of dealers, limited | 22 | | Canadian
dealers, Internet portals, salespersons, investment | 23 | | advisers, and investment
adviser representatives shall be | 24 | | filed with the Secretary of State prior
to the expiration of | 25 | | the then current registration and
shall
contain such |
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| 1 | | information as may be required by the Secretary of
State upon | 2 | | initial application with such omission therefrom or
addition | 3 | | thereto as the Secretary of State may authorize or prescribe. | 4 | | Each
application for re-registration of a dealer, limited | 5 | | Canadian dealer, Internet portal, or
investment adviser
shall | 6 | | be accompanied by a filing fee, each application for
| 7 | | re-registration as a salesperson shall be accompanied by a | 8 | | filing fee and a
Securities Audit and Enforcement Fund fee | 9 | | established pursuant to Section
11a of this Act, and
each | 10 | | application for re-registration as an investment adviser | 11 | | representative
shall be accompanied by a Securities Audit and | 12 | | Enforcement Fund fee
established under Section 11a of this Act,
| 13 | | which shall not be returnable in any event. Notwithstanding
the | 14 | | foregoing, applications for
re-registration of dealers, | 15 | | limited Canadian dealers, Internet portals, and investment
| 16 | | advisers may be filed within 30 days
following the expiration | 17 | | of the registration provided that the applicant pays
the annual | 18 | | registration fee together with an additional amount equal to
| 19 | | the annual registration fee and files any other information or | 20 | | documents that
the Secretary of State may prescribe by rule
or | 21 | | regulation or order. Any application filed within 30 days | 22 | | following the
expiration of the registration shall be | 23 | | automatically effective as of the
time of the earlier | 24 | | expiration provided that the proper fee has been paid
to the | 25 | | Secretary of State.
| 26 | | Each registered dealer, limited Canadian dealer, Internet |
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| 1 | | portal, or investment adviser
shall continue to be
registered | 2 | | if the registrant changes his, her, or its form of organization
| 3 | | provided that the dealer or investment adviser files an | 4 | | amendment to his,
her, or its application not later than 30 | 5 | | days following the occurrence of the
change and pays the | 6 | | Secretary of State a fee in the amount established under
| 7 | | Section 11a of this Act.
| 8 | | I. (1) (a) Every registered dealer, limited Canadian | 9 | | dealer, Internet portal, and investment
adviser shall make and | 10 | | keep
for such periods, such accounts, correspondence,
| 11 | | memoranda, papers, books and records as the Secretary of State | 12 | | may by rule or
regulation prescribe. All records so required | 13 | | shall be preserved for 3 years
unless the Secretary of State by | 14 | | rule, regulation or order prescribes otherwise
for particular | 15 | | types of records.
| 16 | | (b) Every registered dealer, limited Canadian dealer, | 17 | | Internet portal, and investment adviser shall provide to the | 18 | | Secretary of State, upon request, such accounts, | 19 | | correspondence, memoranda, papers, books, and records as the | 20 | | Secretary of State may by rule or regulation prescribe, that it | 21 | | possesses and that it preserves for periods of longer than 3 | 22 | | years. | 23 | | (2) Every registered dealer, limited Canadian dealer, | 24 | | Internet portal, and investment
adviser shall file such | 25 | | financial reports as the Secretary of State may by rule
or |
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| 1 | | regulation
prescribe.
| 2 | | (3) All the books and records referred to in paragraph (1) | 3 | | of this
subsection I are subject at any time or from time to | 4 | | time to such
reasonable periodic, special or other audits, | 5 | | examinations, or inspections by
representatives of the | 6 | | Secretary of State, within or without this State, as the
| 7 | | Secretary of State deems necessary or appropriate in the public | 8 | | interest or for
the protection of investors.
| 9 | | (4) At the time of an audit, examination, or inspection, | 10 | | the Secretary of
State, by his or her designees, may
conduct an | 11 | | interview of any person employed or appointed by or
affiliated | 12 | | with a registered dealer, limited Canadian dealer, Internet | 13 | | portal, or investment
advisor, provided that the
dealer, | 14 | | limited Canadian dealer, Internet portal, or investment | 15 | | advisor shall be given
reasonable
notice of the time and place | 16 | | for the interview. At the option of the dealer,
limited | 17 | | Canadian dealer, Internet portal, or
investment advisor, a | 18 | | representative of the dealer or investment advisor with
| 19 | | supervisory responsibility over the individual being | 20 | | interviewed may be present
at the interview.
| 21 | | J. The Secretary of State may require by rule or regulation | 22 | | the
payment of an additional fee for the filing of information | 23 | | or documents
required to be filed by this Section which have | 24 | | not been filed in a timely
manner. The Secretary of State may | 25 | | also require by rule or regulation the
payment of an |
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| 1 | | examination fee for administering any examination which it
may | 2 | | conduct pursuant to subsection B, C, D, or D-5 of this
Section | 3 | | 8.
| 4 | | K. The Secretary of State may declare any application for
| 5 | | registration or limited registration
under this Section 8 | 6 | | abandoned by order if the applicant fails to pay any
fee or | 7 | | file any information or document required under this Section 8 | 8 | | or by
rule or regulation for more than 30 days after the | 9 | | required payment or
filing date. The applicant may petition the | 10 | | Secretary of State for a
hearing within 15 days after the | 11 | | applicant's receipt of the order of
abandonment, provided that | 12 | | the petition sets forth the grounds
upon which the applicant | 13 | | seeks a hearing.
| 14 | | L. Any document being filed pursuant to this Section 8 | 15 | | shall be deemed
filed, and any fee being paid pursuant to this | 16 | | Section 8 shall be deemed
paid, upon the date of actual receipt | 17 | | thereof by the Secretary of State or
his or her designee.
| 18 | | M. (Blank).
| 19 | | (Source: P.A. 99-182, eff. 1-1-16; 100-872, eff. 8-14-18.)
| 20 | | (815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)
| 21 | | Sec. 12. Violation. It shall be a violation of the | 22 | | provisions of
this Act for any person:
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| 1 | | A. To offer or sell any security except in accordance | 2 | | with the provisions
of this Act.
| 3 | | B. To deliver to a purchaser any security required to | 4 | | be registered
under Section 5, Section 6 or Section 7 | 5 | | hereof unless accompanied or preceded
by a prospectus that | 6 | | meets the requirements of the pertinent subsection of
| 7 | | Section 5 or of Section 6 or of Section 7.
| 8 | | C. To act as a dealer, Internet portal, salesperson, | 9 | | investment adviser, or
investment adviser representative, | 10 | | unless
registered as such, where such registration is | 11 | | required, under the
provisions of this Act.
| 12 | | D. To fail to file with the Secretary of State any | 13 | | application,
report or document required to be filed under | 14 | | the provisions of this Act
or any rule or regulation made | 15 | | by the Secretary of State pursuant to
this Act or to fail | 16 | | to comply with the terms of any order of the
Secretary of | 17 | | State issued pursuant to Section 11 hereof.
| 18 | | E. To make, or cause to be made, (1) in any sworn | 19 | | testimony before the Secretary of State or the Illinois | 20 | | Securities Department within the Office of the Secretary, | 21 | | or application, report or
document filed under this Act or | 22 | | any rule or regulation made by the
Secretary of State | 23 | | pursuant to this Act, any statement which was false
or | 24 | | misleading with respect to any material fact or (2) any | 25 | | statement to
the effect that a security (other than a | 26 | | security issued by the State of
Illinois) has been in any |
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| 1 | | way endorsed or approved by the Secretary of
State or the | 2 | | State of Illinois.
| 3 | | F. To engage in any transaction, practice or course of | 4 | | business in
connection with the sale or purchase of | 5 | | securities which works or tends
to work a fraud or deceit | 6 | | upon the purchaser or seller thereof.
| 7 | | G. To obtain money or property through the sale of | 8 | | securities by
means of any untrue statement of a material | 9 | | fact or any omission to
state a material fact necessary in | 10 | | order to make the statements made, in
the light of the | 11 | | circumstances under which they were made, not
misleading.
| 12 | | H. To sign or circulate any statement, prospectus, or | 13 | | other paper or
document required by any provision of this | 14 | | Act or pertaining to any
security knowing or having
| 15 | | reasonable grounds to know any material representation | 16 | | therein contained
to be false or untrue.
| 17 | | I. To employ any device, scheme or artifice to defraud | 18 | | in connection
with the sale or purchase of any security, | 19 | | directly or indirectly.
| 20 | | J. When acting as an investment adviser, investment | 21 | | adviser
representative, or federal covered investment | 22 | | adviser, by any means or
instrumentality, directly or | 23 | | indirectly:
| 24 | | (1) To employ any device, scheme or artifice to defraud | 25 | | any client
or prospective client;
| 26 | | (2) To engage in any transaction, practice, or |
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| 1 | | course of business
which operates as a fraud or deceit | 2 | | upon any client or prospective
client; or
| 3 | | (3) To engage in any act, practice, or course of | 4 | | business which is
fraudulent, deceptive or | 5 | | manipulative. The Secretary of State shall for
the | 6 | | purposes of this paragraph (3), by rules and | 7 | | regulations, define and
prescribe means reasonably | 8 | | designed to prevent such acts, practices,
and courses | 9 | | of business as are fraudulent, deceptive, or | 10 | | manipulative.
| 11 | | K. When offering or selling any mineral investment | 12 | | contract or mineral
deferred delivery contract:
| 13 | | (1) To employ any device, scheme, or artifice to | 14 | | defraud any customer,
prospective customer, or | 15 | | offeree;
| 16 | | (2) To engage in any transaction, practice, or course | 17 | | of business that
operates as a fraud or deceit upon any | 18 | | customer, prospective customer, or
offeree; or
| 19 | | (3) To engage in any act, practice, or course of | 20 | | business that is
fraudulent, deceptive, or | 21 | | manipulative. The Secretary of State shall for
the | 22 | | purposes of this paragraph (3), by rules and | 23 | | regulations, define and
prescribe means reasonably | 24 | | designed to prevent acts, practices, and
courses of | 25 | | business as are fraudulent, deceptive, or | 26 | | manipulative.
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| 1 | | L. To knowingly influence, coerce, manipulate, or | 2 | | mislead any person
engaged
in
the
preparation or audit of | 3 | | financial statements or appraisals to be used in the
offer | 4 | | or
sale of securities for the purpose of rendering such | 5 | | financial statements or
appraisals materially misleading.
| 6 | | (Source: P.A. 99-182, eff. 1-1-16 .)
| 7 | | Section 15. The Payday Loan Reform Act is amended by | 8 | | changing Section 2-5 as follows: | 9 | | (815 ILCS 122/2-5)
| 10 | | Sec. 2-5. Loan terms. | 11 | | (a) Without affecting the right of a consumer to prepay at | 12 | | any time without cost or penalty, no payday loan may have a | 13 | | minimum term of less than 13 days. | 14 | | (b) Except for an installment payday loan as defined in | 15 | | this Section,
no payday loan may be made to a consumer if the | 16 | | loan would result in the consumer being indebted to one or more | 17 | | payday lenders for a period in excess of 45 consecutive days. | 18 | | Except as provided under subsection (c) of this Section and | 19 | | Section 2-40, if a consumer has or has had loans outstanding | 20 | | for a period in excess of 45 consecutive days, no payday lender | 21 | | may offer or make a loan to the consumer for at least 7 | 22 | | calendar days after the date on which the outstanding balance | 23 | | of all payday loans made during the 45 consecutive day period | 24 | | is paid in full. For purposes of this subsection, the term |
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| 1 | | "consecutive days" means a series of continuous calendar days | 2 | | in which the consumer has an outstanding balance on one or more | 3 | | payday loans; however, if a payday loan is made to a consumer | 4 | | within 6 days or less after the outstanding balance of all | 5 | | loans is paid in full, those days are counted as "consecutive | 6 | | days" for purposes of this subsection. | 7 | | (c) Notwithstanding anything in this Act to the contrary, a | 8 | | payday loan
shall also include any installment loan otherwise | 9 | | meeting the definition of
payday loan contained in Section | 10 | | 1-10, but that has a term agreed by the
parties of not less | 11 | | than 112 days and not exceeding 180 days; hereinafter an
| 12 | | "installment payday loan". The following provisions shall | 13 | | apply:
| 14 | | (i) Any installment payday loan must be fully | 15 | | amortizing, with a finance
charge calculated on the | 16 | | principal balances scheduled to be outstanding and
be | 17 | | repayable in substantially equal and consecutive | 18 | | installments, according
to a payment schedule agreed by the | 19 | | parties with not less than 13 days and
not more than one | 20 | | month between payments; except that the first installment
| 21 | | period may be longer than the remaining installment periods | 22 | | by not more than
15 days, and the first installment payment | 23 | | may be larger than the remaining
installment payments by | 24 | | the amount of finance charges applicable to the
extra days. | 25 | | In calculating finance charges under this subsection, when | 26 | | the first installment period is longer than the remaining |
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| 1 | | installment periods, the amount of the finance charges | 2 | | applicable to the extra days shall not be greater than | 3 | | $15.50 per $100 of the original principal balance divided | 4 | | by the number of days in a regularly scheduled installment | 5 | | period and multiplied by the number of extra days | 6 | | determined by subtracting the number of days in a regularly | 7 | | scheduled installment period from the number of days in the | 8 | | first installment period. | 9 | | (ii) An installment payday loan may be refinanced by a | 10 | | new installment
payday loan one time during the term of the | 11 | | initial loan; provided that the
total duration of | 12 | | indebtedness on the initial installment payday loan | 13 | | combined
with the total term of indebtedness of the new | 14 | | loan refinancing that initial
loan, shall not exceed 180 | 15 | | days. For purposes of this Act, a refinancing
occurs when | 16 | | an existing installment payday loan is paid from the | 17 | | proceeds of
a new installment payday loan. | 18 | | (iii) In the event an installment payday loan is paid | 19 | | in full prior to
the date on which the last scheduled | 20 | | installment payment before maturity is
due, other than | 21 | | through a refinancing, no licensee may offer or make a | 22 | | payday
loan to the consumer for at least 2 calendar days | 23 | | thereafter. | 24 | | (iv) No installment payday loan may be made to a | 25 | | consumer if the loan would
result in the consumer being | 26 | | indebted to one or more payday lenders for a
period in |
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| 1 | | excess of 180 consecutive days. The term "consecutive days" | 2 | | does not include the date on which a consumer makes the | 3 | | final installment payment. | 4 | | (d) (Blank). | 5 | | (e) No lender may make a payday loan to a consumer if the | 6 | | total of all payday loan payments coming due within the first | 7 | | calendar month of the loan, when combined with the payment | 8 | | amount of all of the consumer's other outstanding payday loans | 9 | | coming due within the same month, exceeds the lesser of: | 10 | | (1) $1,000; or | 11 | | (2) in the case of one or more payday loans, 25% of the | 12 | | consumer's gross monthly income; or | 13 | | (3) in the case of one or more installment payday | 14 | | loans, 22.5% of the consumer's gross monthly income; or | 15 | | (4) in the case of a payday loan and an installment | 16 | | payday loan, 22.5% of the consumer's gross monthly income. | 17 | | No loan shall be made to a consumer who has an outstanding | 18 | | balance on 2 payday loans, except that, for a period of 12 | 19 | | months after March 21, 2011 (the effective date of Public Act | 20 | | 96-936), consumers with an existing CILA loan may be issued an | 21 | | installment loan issued under this Act from the company from | 22 | | which their CILA loan was issued. | 23 | | (e-5) Except as provided in subsection (c)(i), no lender | 24 | | may charge more than $15.50 per $100 loaned on any payday loan, | 25 | | or more than $15.50 per $100 on the initial principal balance | 26 | | and on the principal balances scheduled to be outstanding |
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| 1 | | during any installment period on any installment payday loan. | 2 | | Except for installment payday loans and except as provided in | 3 | | Section 2-25, this charge is considered fully earned as of the | 4 | | date on which the loan is made. For purposes of determining the | 5 | | finance charge earned on an installment payday loan, the | 6 | | disclosed annual percentage rate shall be applied to the | 7 | | principal balances outstanding from time to time until the loan | 8 | | is paid in full, or until the maturity date, whichever occurs | 9 | | first. No finance charge may be imposed after the final | 10 | | scheduled maturity date. | 11 | | When any loan contract is paid in full, the licensee shall | 12 | | refund any unearned finance charge. The unearned finance charge | 13 | | that is refunded shall be calculated based on a method that is | 14 | | at least as favorable to the consumer as the actuarial method, | 15 | | as defined by the federal Truth in Lending Act. The sum of the | 16 | | digits or rule of 78ths method of calculating prepaid interest | 17 | | refunds is prohibited. | 18 | | (f) A lender may not take or attempt to take an interest in | 19 | | any of the consumer's personal property to secure a payday | 20 | | loan. | 21 | | (g) A consumer has the right to redeem a check or any other | 22 | | item described in the definition of payday loan under Section | 23 | | 1-10 issued in connection with a payday loan from the lender | 24 | | holding the check or other item at any time before the payday | 25 | | loan becomes payable by paying the full amount of the check or | 26 | | other item.
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| 1 | | (h) For the purpose of this Section, "substantially equal | 2 | | installment" includes a last regularly scheduled payment that | 3 | | may be less than, but no more than 5% larger than, the previous | 4 | | scheduled payment according to a disclosed payment schedule | 5 | | agreed to by the parties. | 6 | | (Source: P.A. 100-201, eff. 8-18-17.)
| 7 | | (815 ILCS 5/2.10a rep.) | 8 | | Section 20. The Illinois Securities Law of 1953 is amended | 9 | | by repealing Section 2.10a. | 10 | | Section 99. Effective date. This Act takes effect upon | 11 | | becoming law.".
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