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Public Act 099-0182 |
HB3429 Enrolled | LRB099 04381 JLS 29575 b |
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AN ACT concerning business.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Securities Law of 1953 is amended |
by changing Sections 4, 8, 11, 11a, 12, 13, and 18.1 and by |
adding Sections 2.34, 2.35, 2.36, and 8d as follows: |
(815 ILCS 5/2.34 new) |
Sec. 2.34. Accredited investor. "Accredited investor" has |
the
meaning given to that term in 17 CFR 230.501(a), as amended |
and in effect from time to time. |
(815 ILCS 5/2.35 new) |
Sec. 2.35. Qualified escrowee. "Qualified escrowee" means |
a person, firm, partnership, association, corporation, or |
other legal entity who: (a) falls under the definition of |
"title insurance company" under, and pursuant to the terms and |
requirements of, the Title Insurance Act; (b) is certified as |
an independent escrowee under, and pursuant to the terms and |
requirements of, the Title Insurance Act; or (c) is a bank, |
regulated trust company, savings bank, savings and loan |
association, or credit union which is authorized to do business |
in the State and which maintains at least one physical business |
location within the State. |
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(815 ILCS 5/2.36 new) |
Sec. 2.36. Registered Internet portal. "Registered |
Internet portal"
means an Internet portal maintained by a |
corporation or other legal
entity that is being used to offer |
or sell securities and
that meets the requirements of Section |
8d of this Act.
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(815 ILCS 5/4) (from Ch. 121 1/2, par. 137.4)
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Sec. 4. Exempt transactions. The provisions of Sections 2a, |
5, 6 and 7
of this Act shall not apply to any of the following |
transactions, except
where otherwise specified in this Section |
4:
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A. Any offer or sale, whether through a dealer or |
otherwise, of securities
by a person who is not an issuer, |
underwriter, dealer or controlling person
in respect of such |
securities, and who, being the bona fide owner of such
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securities, disposes thereof for his or her own account; |
provided, that
such offer or sale is not made directly or |
indirectly for the benefit of
the issuer or of an underwriter |
or controlling person.
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B. Any offer, sale, issuance or exchange of securities of |
the issuer
to or with security holders of the issuer except to |
or with persons who
are security holders solely by reason of |
holding transferable warrants,
transferable options, or |
similar transferable rights of the issuer, if
no commission or |
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other remuneration is paid or given directly or
indirectly for |
or on account of the procuring or soliciting of such sale
or |
exchange (other than a fee paid to underwriters based on their
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undertaking to purchase any securities not purchased by |
security holders
in connection with such sale or exchange).
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C. Any offer, sale or issuance of securities to any |
corporation, bank,
savings bank, savings institution, savings |
and loan association, trust company,
insurance company, |
building and loan association, or dealer; to a pension fund,
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pension trust, or employees' profit sharing trust, other |
financial institution
or institutional investor, any |
government or political subdivision or
instrumentality |
thereof, whether the
purchaser is acting for itself or in some |
fiduciary capacity; to any
partnership or other association |
engaged as a substantial part of its
business or operations in |
purchasing or holding securities; to any trust
in respect of |
which a bank or trust company is trustee or co-trustee; to
any |
entity in which at least 90% of the equity is owned by persons
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described under subsection C, H, or S of this Section 4; to any
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employee benefit plan within the meaning of Title I of the |
Federal ERISA
Act if (i) the investment decision is made by a |
plan fiduciary as defined
in Section 3(21) of the Federal ERISA |
Act and such plan fiduciary is either
a bank, savings and loan |
association, insurance company, registered
investment adviser |
or an investment adviser registered under the Federal
1940 |
Investment Advisers Act, or (ii) the plan has total assets in |
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excess
of $5,000,000, or (iii) in the case of a self-directed |
plan, investment
decisions are made solely by persons that are |
described under subsection C,
D, H or S of this Section 4; to |
any plan established and maintained by,
and for the benefit of |
the employees of, any state or political subdivision
or agency |
or instrumentality thereof if such plan has total assets in
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excess of $5,000,000; or to any organization described in |
Section 501(c)(3)
of the Internal Revenue Code of 1986, any |
Massachusetts or similar business
trust, or any partnership, if |
such organization, trust, or partnership has
total assets in |
excess of $5,000,000.
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D. The Secretary of State is granted authority to create by |
rule or
regulation a limited offering transactional exemption |
that furthers the
objectives of compatibility with federal |
exemptions and uniformity among the
states. The Secretary of |
State shall prescribe by rule or regulation the
amount of the |
fee for filing any report required under this subsection, but |
the
fee shall not be less than the minimum amount nor more than |
the maximum amount
established under Section 11a of this Act |
and shall not be returnable in any
event.
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E. Any offer or sale of securities by an executor, |
administrator,
guardian, receiver or trustee in insolvency or |
bankruptcy, or at any
judicial sale, or at a public sale by |
auction held at an advertised time
and place, or the offer or |
sale of securities in good faith and not for the
purpose of |
avoiding the provisions of this Act by a pledgee of securities
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pledged for a bona fide debt.
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F. Any offer or sale by a registered dealer, either as |
principal or
agent, of any securities (except face amount |
certificate contracts and
investment fund shares) at a price |
reasonably related to the current market
price of such |
securities, provided:
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(1) (a) the securities are issued and outstanding;
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(b) the issuer is required to file reports pursuant |
to Section 13 or
Section 15(d) of the Federal 1934 Act |
and has been subject to such
requirements during the 90 |
day period immediately preceding the date of the
offer |
or sale, or is an issuer of a security covered by |
Section 12(g)(2)(B)
or (G) of the Federal 1934 Act;
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(c) the dealer has a reasonable basis for believing |
that the issuer is
current in filing the reports |
required to be filed at regular intervals
pursuant to |
the provisions of Section 13 or Section 15(d), as the |
case may
be, of the Federal 1934 Act, or in the case of |
insurance companies exempted
from Section 12(g) of the |
Federal 1934 Act by subparagraph 12(g)(2)(G)
thereof, |
the annual statement referred to in Section |
12(g)(2)(G)(i) of the
Federal 1934 Act; and
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(d) the dealer has in its records, and makes |
reasonably available upon
request to any person |
expressing an interest in a proposed transaction in
the |
securities, the issuer's most recent annual report |
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filed pursuant to
Section 13 or 15(d), as the case may |
be, of the Federal 1934 Act or the annual
statement in |
the case of an insurance company exempted from Section |
12(g)
of the Federal 1934 Act by subparagraph |
12(g)(2)(G) thereof, together with
any other reports |
required to be filed at regular intervals under the
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Federal 1934 Act by the issuer after such annual report |
or annual
statement; provided that the making |
available of such reports pursuant to
this |
subparagraph, unless otherwise represented, shall not |
constitute a
representation by the dealer that the |
information is true and correct, but
shall constitute a |
representation by the dealer that the information is
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reasonably current; or
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(2) (a) prior to any offer or sale, an application for |
the authorization
thereof and a report as set forth |
under sub-paragraph (d) of this
paragraph (2) has been |
filed by any registered dealer with and approved by
the |
Secretary of State pursuant to such rules and |
regulations as the
Secretary of State may prescribe;
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(b) the Secretary of State shall have the power by |
order to refuse
to approve any application or report |
filed pursuant to this paragraph (2) if
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(i) the application or report does not comply |
with the provisions of
this paragraph (2), or
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(ii) the offer or sale of such securities would |
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work
or tend to work a fraud or deceit, or
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(iii) the issuer or the applicant has violated |
any of the
provisions of this Act;
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(c) each application and report filed pursuant to |
this paragraph (2)
shall be accompanied by a filing fee |
and an examination fee in the amount
established |
pursuant to Section 11a of this Act, which shall not be
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returnable in any event;
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(d) there shall be submitted to the Secretary of |
State no later than
120 days following the end of the |
issuer's fiscal year, each year
during the period of |
the authorization, one copy of a report which shall
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contain a balance sheet and income statement prepared |
as of the issuer's
most recent fiscal year end |
certified by an independent certified public
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accountant, together with such current information |
concerning the
securities and the issuer thereof as the |
Secretary of State may prescribe
by rule or regulation |
or order;
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(e) prior to any offer or sale of securities under |
the provisions of
this paragraph (2), each registered |
dealer participating in the offer or
sale of such |
securities shall provide upon request of prospective
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purchasers of such securities a copy of the most recent |
report required
under the provisions of sub-paragraph |
(d) of this paragraph (2);
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(f) approval of an application filed pursuant to |
this paragraph (2) of
subsection F shall expire 5 years |
after the date of the granting
of the approval, unless |
said approval is sooner terminated by (1) suspension or
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revocation by the Secretary of State in the same manner |
as is provided
for in subsections E, F and G of Section |
11 of this Act,
or (2) the applicant filing with the |
Secretary of State an affidavit to
the effect that (i) |
the subject securities have become exempt under |
Section
3 of this Act or (ii) the applicant no longer |
is capable of acting as
the applicant and stating the |
reasons therefor or (iii) the applicant no longer
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desires to act as the applicant. In the event of the |
filing of an
affidavit under either preceding |
sub-division (ii) or (iii) the
Secretary of State may |
authorize a substitution of applicant upon the
new |
applicant executing the application as originally |
filed. However,
the aforementioned substituted |
execution shall have no effect upon the
previously |
determined date of expiration of approval of the |
application.
Notwithstanding the provisions of this |
subparagraph (f), approvals granted
under this |
paragraph (2) of subsection F prior to the effective |
date of this
Act shall be governed by the provisions of |
this Act in effect on such
date of approval; and
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(g) no person shall be considered to have violated |
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Section 5 of this
Act by reason of any offer or sale |
effected in reliance upon an
approval granted under |
this paragraph (2) after a termination thereof under |
the
foregoing subparagraph (f) if official notice of |
such termination has not
been circulated generally to |
dealers by the Secretary of State and if
such person |
sustains the burden of proof that he or she did not |
know, and in
the exercise of reasonable care, could not |
have known, of the
termination; or
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(3) the securities, or securities of the same class, |
are the subject
of an existing registration under Section 5 |
of this Act.
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The exemption provided in this subsection F shall apply |
only if the offer
or sale is made in good faith and not for the |
purpose of avoiding any of
the provisions of this Act, and only |
if the offer or sale is not made for the
direct or indirect |
benefit of the issuer of the securities, or the
controlling |
person in respect of such issuer.
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G. (1) Any offer, sale or issuance of a security, whether |
to residents
or to non-residents of this State, where:
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(a) all sales of such security to residents of this |
State (including the
most recent such sale) within the |
immediately preceding 12-month period
have been made |
to not more than 35 persons or have involved an |
aggregate
sales price of not more than $1,000,000;
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(b) such security is not offered or sold by means |
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of any general
advertising or general solicitation in |
this State; and
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(c) no commission, discount, or other remuneration |
exceeding 20%
of the
sale price of such security, if |
sold to a resident of this State, is
paid or given |
directly or indirectly for
or on account of such sales.
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(2) In computing the number of resident purchasers or |
the aggregate sales
price under paragraph (1) (a) above, |
there shall be excluded any purchaser
or dollar amount of |
sales price, as the case may be, with respect to any
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security which at the time of its sale was exempt under |
Section 3 or was
registered under Section 5, 6 or 7 or was |
sold in a
transaction exempt under other subsections of |
this Section 4.
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(3) A prospectus or preliminary prospectus with |
respect to a security for
which a registration statement is |
pending or effective under the Federal
1933 Act shall not |
be deemed to constitute general advertising or general
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solicitation in this State as such terms are used in |
paragraph (1) (b)
above, provided that such prospectus or |
preliminary prospectus has not been
sent or otherwise |
delivered
to more than 150 residents of this State.
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(4) The Secretary of State shall by rule or regulation |
require the
filing of a report or reports of sales made in
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reliance upon the exemption provided by this subsection G |
and prescribe
the form of such report and the time within |
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which such report shall be filed.
Such report shall set |
forth the name and address of the issuer and of the
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controlling person, if the sale was for the direct or |
indirect benefit
of such person, and any other information |
deemed necessary by the Secretary
of State to enforce |
compliance with this subsection G. The Secretary of
State |
shall prescribe by rule or regulation the amount of the fee |
for
filing any such report, established pursuant to Section |
11a
of this Act, which shall not be returnable in any |
event. The
Secretary of
State may impose, in such cases as |
he or she may deem appropriate, a penalty
for failure to |
file any such report in a timely manner, but no such |
penalty
shall exceed an amount equal to five times the |
filing fee. The contents
of any such report or portion |
thereof may be deemed confidential
by the Secretary of |
State by rule or order and if so deemed shall not
be
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disclosed
to the public except by order of court or in |
court proceedings. The
failure to file any such report |
shall not affect the availability of such
exemption, but |
such failure to file any such report shall constitute a
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violation of subsection D of Section 12 of this Act, |
subject to the
penalties enumerated in Section 14 of this |
Act. The civil remedies
provided for in subsection A of |
Section 13 of this Act and the civil
remedies of rescission |
and appointment of a receiver, conservator,
ancillary |
receiver or ancillary conservator provided for in |
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subsection F of
Section 13 of this Act shall not be |
available against any person by
reason of the failure to |
file any such report or on account of the contents of
any |
such report.
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H. Any offer, sale or issuance of a security to an |
accredited investor provided that such security is not offered |
or sold by means of any general advertising or general |
solicitation, except as otherwise permitted in this Act. (1) |
any natural person
who has, or is reasonably believed by the |
person relying upon this subsection
H to have, a net worth or |
joint net worth with that person's spouse,
at the time of the |
offer, sale or issuance, in excess of
$1,000,000
excluding the |
value of a principal residence, or (2) any natural person who
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had, or is reasonably believed
by the person relying upon this |
subsection H to have had, an income or
joint income with that |
person's spouse, in excess of $200,000 in each of
the two most |
recent years and who reasonably expects, or is reasonably
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expected to have, an income in excess of $200,000 in the
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current year, or (3) any person that is not a natural person |
and in which
at least 90% of the equity interest is owned by |
persons who meet either of
the tests set forth in clauses (1) |
or (2) of this subsection H; provided
that such security is not |
offered or sold by means
of any general advertising or general |
solicitation in this State.
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I. Any offer, sale or issuance of securities to or for the |
benefit
of security holders of any person incident to a vote by |
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such security
holders pursuant to such person's organizational |
document or any applicable
statute of the jurisdiction of such |
person's organization, on a merger,
consolidation, |
reclassification of securities, or sale or transfer of
assets |
in consideration of or exchange for securities of the same or
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another person.
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J. Any offer, sale or issuance of securities in exchange |
for one
or more outstanding securities, claims or property |
interests, or partly
in such exchange and partly for cash, |
where such offer, sale or issuance
is incident to a |
reorganization, recapitalization, readjustment,
composition or |
settlement of a claim, as approved by a court of competent
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jurisdiction of the United States, or any state.
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K. Any offer, sale or issuance of securities for patronage,
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or as patronage refunds, or in connection with marketing |
agreements by
cooperative associations organized exclusively |
for agricultural, producer,
marketing, purchasing, or consumer |
purposes; and the sale of
subscriptions for or shares of stock |
of cooperative associations
organized exclusively for |
agricultural, producer, marketing, purchasing,
or consumer |
purposes, if no commission or other remuneration is paid or
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given directly or indirectly for or on account of such |
subscription,
sale or resale, and if any person does not own |
beneficially more than 5%
of the aggregate amount of issued and |
outstanding capital stock of such
cooperative association.
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L. Offers for sale or solicitations of offers to buy (but |
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not the
acceptance thereof), of securities which are the |
subject of a pending
registration statement filed under the |
Federal 1933 Act and which are the
subject of a pending |
application for registration under this Act.
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M. Any offer or sale of preorganization subscriptions for |
any securities
prior to the incorporation, organization or |
formation of any issuer
under the laws of the United States, or |
any state, or the issuance by
such issuer, after its |
incorporation, organization or formation, of
securities |
pursuant to such preorganization subscriptions, provided the
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number of subscribers does not exceed 25 and either (1) no |
commission
or other remuneration is paid or given directly or |
indirectly for or on
account of such sale or sales or issuance, |
or (2) if any commission or
other remuneration is paid or given |
directly or indirectly for or on account
of such sale or sales |
or issuance, the securities are not offered or sold
by any |
means of general advertising or general solicitation in this
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State.
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N. The execution of orders for purchase of securities by a |
registered
salesperson and dealer, provided such persons act as |
agent for the purchaser,
have made no solicitation of the order |
to purchase the securities, have no
direct interest in the sale |
or distribution of the securities ordered, receive
no |
commission, profit, or other compensation other than the |
commissions
involved in the purchase and sale of the securities |
and deliver to the
purchaser written confirmation of the order |
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which clearly identifies the
commissions paid to the registered |
dealer.
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O. Any offer, sale or issuance of securities, other than |
fractional
undivided interests in an oil, gas or other mineral |
lease, right or
royalty, for the direct or indirect benefit of |
the issuer thereof, or of a
controlling person, whether through |
a dealer (acting either as principal
or agent) or otherwise, if |
the securities sold, immediately following
the sale or sales, |
together with securities already owned by the
purchaser, would |
constitute 50% or more of the equity interest of any
one |
issuer, provided that the number of purchasers is not more than |
5 and
provided further that no commission, discount or other |
remuneration
exceeding 15% of the aggregate sale price of the |
securities is paid or
given directly or indirectly for or on |
account of the sale or sales.
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P. Any offer, sale or issuance of securities
(except face |
amount certificate contracts and investment fund shares)
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issued by and representing an interest in an issuer which is a |
business
corporation incorporated under the laws of this State,
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the purposes of which are to provide capital and supervision |
solely for
the redevelopment of blighted urban areas located in |
a municipality in
this State and whose assets are located |
entirely within that municipality,
provided: (1) no |
commission, discount or other remuneration
is paid or given |
directly or indirectly for or on account of the sale or
sales |
of such securities; (2) the aggregate amount of any securities |
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of
the issuer owned of record or beneficially by any one person |
will not exceed
the lesser of $5,000 or 4% of the equity |
capitalization of the issuer; (3) the
officers and directors of |
the
corporation have been bona fide residents of the |
municipality not less than
3 years immediately preceding the |
effectiveness of the offering sheet for
the securities under |
this subsection P; and (4) the issuer files with the
Secretary |
of State an offering sheet descriptive of the securities |
setting
forth:
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(a) the name and address of the issuer;
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(b) the title and total amount of securities to be |
offered;
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(c) the price at which the securities are to be |
offered; and
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(d) such additional information as the Secretary of |
State may prescribe
by rule and regulation.
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The Secretary of State shall within a reasonable time |
examine the
offering sheet so filed and, unless the Secretary |
of State shall make a
determination that the offering sheet so |
filed does not
conform to the requirements of this subsection |
P, shall declare the offering
sheet to be effective, which |
offering sheet shall continue effective for a
period of 12 |
months from the date it becomes effective. The fee for
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examining the offering sheet shall be as established pursuant |
to Section
11a of this Act, and shall not be returnable in any |
event. The Secretary
of State shall by rule or regulation |
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require the filing of a report or
reports of sales made to |
residents of this State in reliance upon the
exemption provided |
by this subsection P and prescribe the form of such
report and |
the time within which such report shall be filed. The Secretary
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of State shall prescribe by rule or regulation the amount of |
the fee for
filing any such report, but such fee shall not be |
less than the minimum
amount nor more than the maximum amount |
established pursuant to Section
11a of this Act, and shall not |
be returnable in any event. The Secretary
of State may impose, |
in such cases as he or she may deem appropriate, a penalty
for |
failure to file any such report in a timely manner, but no such |
penalty
shall exceed an amount equal to five times the filing |
fee. The contents
of any such report shall be deemed |
confidential and shall not be disclosed
to the public except by |
order of court or in court proceedings. The
failure to file any |
such report shall not affect the availability of such
|
exemption, but such failure to file any such report shall |
constitute a
violation of subsection D of Section 12 of this |
Act, subject to the
penalties enumerated in Section 14 of this |
Act. The civil remedies
provided for in subsection A of Section |
13 of this Act and the civil
remedies of rescission and |
appointment of a receiver, conservator,
ancillary receiver or |
ancillary conservator provided for in subsection F of
Section |
13 of this Act shall not be available against any person by |
reason
of the failure to file any such report or on account of |
the contents of any
such report.
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Q. Any isolated transaction, whether effected by a dealer |
or
not.
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R. Any offer, sale or issuance of a security to any person |
who purchases
at least $150,000 of the securities being |
offered, where the purchaser's
total purchase price does not, |
or it is reasonably believed by the person
relying upon this |
subsection R that said purchase price does not, exceed
20 |
percent of the purchaser's net worth at the time of sale, or if |
a
natural person a joint net worth with that person's spouse, |
for one
or any combination of the following: (i) cash, (ii) |
securities for which
market quotations are readily available, |
(iii) an unconditional obligation
to pay cash or securities for |
which quotations are readily available,
which obligation is to |
be discharged within five years of the sale of the
securities |
to the purchaser, or (iv) the cancellation of any indebtedness
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owed by the issuer to the purchaser; provided that such |
security is not
offered or sold by means of any general |
advertising or general solicitation
in this State.
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S. Any offer, sale or issuance of a security to any person |
who is, or
who is reasonably believed by the person relying |
upon this subsection S to
be, a director, executive officer, or |
general partner of the issuer of the
securities being offered |
or sold, or any director, executive officer, or
general partner |
of a general partner of that issuer. For purposes of this
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subsection S, "executive officer" shall mean the president, any |
vice
president in charge of a principal business unit, division |
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or function
(such as sales, administration or finance), any |
other officer who performs
a policy making function, or any |
other person who performs similar policy
making functions for |
the issuer. Executive officers of subsidiaries may be
deemed |
executive officers of the issuer if they perform such policy |
making
functions for the issuer.
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A document being filed pursuant to this Section 4 shall be |
deemed filed,
and any fee paid pursuant to this Section 4 shall |
be deemed paid, upon the date
of actual receipt thereof by the |
Secretary of State.
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T. An offer or sale of a security by an issuer that is |
organized
and, as of the time of the offer and the time of |
sale, in good standing under
the laws of the State of Illinois, |
made solely to persons or entities that are, as of the time of |
the offer and time of sale, residents of the State of Illinois, |
provided: |
(1) The offering meets all of the requirements of the
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federal exemption for intrastate offerings provided in |
Section
3(a)(11) of the Securities Act of 1933 (15 U.S.C. |
77c(a)(11)) and
Rule 147 adopted under the Securities Act |
of 1933 (17 CFR
230.147). |
(2) The aggregate purchase price of all securities sold |
by an issuer in reliance on the exemption under this |
subsection, within any 12-month period, does not exceed: |
(i) $1,000,000; or (ii) $4,000,000 if the issuer has |
undergone and made available (directly, or through a |
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registered Internet portal), to each prospective purchaser |
and the Secretary of State, copies of its most recent |
financial statements which have been audited by an |
independent auditor and certified by a senior officer of |
the issuer as fairly, completely, and accurately |
presenting the financial condition of the issuer, in all |
material respects, as of the dates indicated therein. |
Amounts received in connection with any offer or sale to |
any accredited investor or any of the following shall not |
count toward the calculation of the foregoing monetary |
limitations: |
(a) any entity (including, without limitation, any |
trust) in which all of the equity interests are owned |
by (or with respect to any trust, the primary |
beneficiaries are) persons who are accredited |
investors or who meet one or more of the criteria in |
subparagraphs (b) through (d) of this paragraph (2); |
(b) with respect to participating in an offering of |
a particular issuer, a natural person serving as an |
officer, director, partner, or trustee of, or |
otherwise occupying similar status or performing |
similar functions with respect to, such issuer; |
(c) with respect to participating in an offering of |
a particular issuer, a natural person or entity who |
owns 10% or more of the then aggregate outstanding |
voting capital securities of such issuer; or |
|
(d) such other person or entity as the Secretary of |
State may hereafter exempt by rule. |
The Secretary of State may hereafter cumulatively |
increase the dollar limitations provided in this |
paragraph. |
(3) The aggregate amount sold by an issuer to any |
purchaser (other than an accredited investor or a person or |
entity which meets one or more of the criteria in |
subparagraphs (a) through (d) of paragraph (2) of this |
subsection T) in an offering of securities made in reliance |
on the exemption provided in this subsection T, within any |
consecutive 12-month period, does not exceed $5,000. |
(4) The Secretary of State shall establish by rule the |
duties of the issuer including disclosure and filing |
requirements, treatment of escrow funds and agreements, |
production of financial statements, and other requirements |
as deemed necessary. |
(5) The issuer has made available, to each prospective |
purchaser and the Secretary of State, copies of its most |
recent financial statements personally certified by one or |
more senior officers of the issuer as fairly, completely, |
and accurately presenting the financial condition of the |
issuer, in all material respects, as of the dates indicated |
therein. |
(6) No commission or other remuneration is paid or |
given
directly or indirectly to any person or entity |
|
(including,
without limitation, any registered Internet |
portal) for
soliciting any person in this State, except to |
registered dealers
and registered salespersons licensed in |
this State. |
(7) Not less than 15 days before the earlier of
the |
first sale of securities made in reliance on the exemption |
provided in this subsection T,
or the use of any general |
solicitation with respect thereto
(other than a general |
announcement made by or on behalf of), an issuer shall file |
forms, materials, and fees as required by the Secretary of |
State by rule. |
The Secretary of State shall prescribe by rule the |
amount of the fee for filing the notice required in |
subparagraph (a), established pursuant to Section
11a of |
this Act. The
Secretary of State may impose, in such cases |
as he or she may
deem appropriate, a penalty for failure to |
file any such notice
in a timely manner, but no such |
penalty shall exceed an
amount equal to 5 times the filing |
fee. The contents of any
such notice or portion thereof may |
be deemed confidential by the
Secretary of State by rule or |
order and if so deemed shall not
be disclosed to the public |
except by order of court or in court
proceedings. The |
failure to file any such notice does not
affect the |
availability of such exemption, but such failure to
file |
any such report constitutes a violation of subsection
D of |
Section 12 of this Act and is subject to the penalties and |
|
remedies available in this Act and under the law. |
(8) All payments for purchase of securities offered
|
pursuant to the exemption provided under this subsection T |
are made directly to, and held by,
the qualified escrowee |
identified in the escrow agreement
required pursuant to |
subparagraph (c) of paragraph (4). |
(9) The issuer includes each of the following in one or |
more of the offering materials delivered to a prospective |
purchaser, or to which a prospective purchaser has been |
granted electronic access, in connection with the |
offering: |
(a) a description of the issuer, its type of |
entity, the address, and telephone number of its |
principal office; |
(b) a reasonably detailed description of the |
intended use of the offering proceeds, including any |
amounts to be paid, as compensation or otherwise, to |
any owner, executive officer, director, managing |
member, or other person occupying a similar status or |
performing similar functions on behalf of the issuer; |
(c) the identity of all persons owning more than |
10% of the voting capital securities of the issuer; |
(d) the identity of the executive officers, |
directors, managing members, and other persons |
occupying a similar status or performing similar |
functions in the name of and on behalf of the issuer, |
|
including their titles and a reasonably detailed |
description of their prior experience; |
(e) the identity of any person or entity who has |
been or will be retained by the issuer to assist the |
issuer in conducting the offering and sale of the |
securities (including all registered Internet portals |
but excluding persons acting solely as accountants or |
attorneys and employees whose primary job |
responsibilities involve the operating business of the |
issuer rather than assisting the issuer in raising |
capital) and a description of the consideration being |
paid to each such person or entity for such assistance; |
(f) any additional information material to the |
offering, including a description of significant |
factors that make the offering speculative or risky for |
the purchaser; |
(g) the information required pursuant to |
subparagraphs (a) and (b) of paragraph (4) of this |
subsection T; |
(h) such other information as the Secretary of |
State may hereafter require by rule. |
(10) The issuer (directly or through a registered |
Internet
portal) requires each purchaser to certify, in |
writing or
electronically, that the purchaser: |
(a) is a resident of the State of Illinois; |
(b) understands that he or she is investing in a |
|
high-risk, highly speculative, business venture, that |
he or she may lose all of his or her investment, and |
that he or she can afford such a loss of his or her |
investment; |
(c) understands that the securities being offered |
are highly illiquid, that there is no ready market for |
the sale of such securities, that it may be difficult |
or impossible for purchaser to sell or otherwise |
dispose of such securities, and (where applicable) |
that purchaser may be required to hold the securities |
for an indefinite period of time; and |
(d) understands that purchaser may be subject to |
the payment of certain taxes with respect to the |
securities being purchased whether or not purchaser |
has sold, or otherwise disposed of, such securities or |
whether purchaser has received any distributions or |
other amounts from the issuer. |
(11) The issuer (directly or through a registered |
Internet
portal) obtains from each purchaser of a security |
offered under
this subsection T evidence that the purchaser |
is a resident of
this State and, if applicable, is an |
accredited investor. Without limiting the generality of |
the
foregoing, and not to the exclusion of other reasonable |
methods
which may be used by the issuer in connection with |
the
foregoing, an issuer may rely. |
(12) The issuer (and to the extent a registered |
|
Internet
portal is used, such registered Internet portal) |
maintains
records of all offers and sales of securities |
made
pursuant to the exemption granted by this subsection T |
and provides ready access to such records to the Secretary |
of State,
upon notice from the Secretary of State. |
(13) The issuer is not, either before or as a result of
|
the offering: |
(a) an investment company, as defined in Section 3 |
of the Investment Company Act of 1940 (15 U.S.C. |
80a-3), as amended and in effect (unless the issuer |
qualifies for exclusion from such definition pursuant |
to one or more of the exceptions provided in Section |
3(c) of the Investment Company Act of 1940, any other |
provision of the Investment Company Act of 1940, or any |
administrative rule or regulation promulgated with |
respect to the Investment Company Act of 1940 or in |
connection therewith); or |
(b) subject to the reporting requirements of |
Section 13 or 15(d) of the Securities Exchange Act of |
1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d). |
(14) Neither the issuer, nor any person affiliated with
|
the issuer (either before or as a result of the offering), |
nor
the offering itself, nor the registered Internet portal |
(to the
extent used) is subject to disqualification |
established by the
Secretary of State by rule or contained |
in the Securities Act of 1933
(15 U.S.C. 77c(a)(11)) and |
|
Rule 147 adopted under the Securities Act of 1933 (17 CFR |
230.147), unless both of the following are
met: |
(a) on a showing of good cause and without
|
prejudice to any other action by the Secretary of |
State,
the Secretary of State determines that it is not |
necessary
under the circumstances that an exemption is |
denied; and |
(b) the issuer establishes that it made a factual
|
inquiry into whether any disqualification existed |
under
this paragraph (14), but did not know, and in the |
exercise of reasonable care could not have known, that |
a
disqualification existed under this paragraph (14); |
the nature
and scope of the requisite inquiry will vary |
based on the
circumstances of the issuer and the other |
offering
participants. |
(Source: P.A. 90-70, eff. 7-8-97; 91-809, eff. 1-1-01.)
|
(815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
|
Sec. 8. Registration of dealers, limited Canadian dealers, |
internet portals,
salespersons, investment advisers, and |
investment adviser representatives.
|
A. Except as otherwise provided in this subsection A, every |
dealer,
limited Canadian dealer, salesperson, investment |
adviser,
and investment adviser representative shall be |
registered as such with the
Secretary of State. No dealer or |
|
salesperson need be registered as such when
offering or selling |
securities in transactions
exempted by subsection A, B, C, D, |
E, G, H, I, J, K, M, O, P, Q, R or S of
Section 4 of this Act, |
provided that such dealer or salesperson is not
regularly |
engaged in the business of offering or selling securities
in |
reliance
upon the exemption set forth in subsection G or M of |
Section 4 of this Act. No
dealer, issuer or controlling person |
shall employ a salesperson unless such
salesperson is |
registered as such with the Secretary of State or is employed
|
for the purpose of offering or selling securities solely in
|
transactions exempted by subsection A, B, C,
D, E, G, H, I, J, |
K, L, M, O, P, Q, R or S of Section 4 of this Act;
provided that |
such salesperson need not be registered when
effecting |
transactions in this State limited to those transactions |
described
in Section 15(h)(2) of the Federal 1934 Act or |
engaging in the
offer or sale of securities in respect of which |
he or she has beneficial
ownership and is a controlling person. |
The Secretary of State may, by
rule, regulation or order and |
subject to such terms, conditions, and
fees as
may be |
prescribed in such rule, regulation or order, exempt from the
|
registration requirements of this Section 8 any investment |
adviser, if the
Secretary of State shall find that such |
registration is not necessary in
the public interest by reason |
of the small number of clients or otherwise
limited character |
of operation of such investment adviser.
|
|
B. An application for registration as a dealer or limited |
Canadian
dealer, executed, verified, or
authenticated by or on |
behalf of the applicant,
shall be filed with the Secretary of |
State, in such form as the Secretary of
State may by rule, |
regulation or order prescribe, setting forth or accompanied
by:
|
(1) The name and address of the applicant, the location |
of its principal
business office and all branch offices, if |
any, and the
date of its organization;
|
(2) A statement of any other Federal or state licenses |
or
registrations
which have been granted the applicant and |
whether any such licenses or
registrations have ever been |
refused, cancelled, suspended, revoked or
withdrawn;
|
(3) The assets and all liabilities, including |
contingent
liabilities of
the applicant, as of a date not |
more than 60 days prior to the filing of
the application;
|
(4) (a) A brief description of any civil or criminal
|
proceeding of which
fraud is an essential element pending |
against the applicant and whether the
applicant has ever |
been convicted of a felony, or of any misdemeanor of
which |
fraud is an essential element;
|
(b) A list setting forth the name, residence and |
business address and
a 10 year occupational statement of |
each principal of the applicant and a
statement describing |
briefly any civil or criminal proceedings of which
fraud is |
an essential element pending against any such principal and |
the
facts concerning any conviction of any such principal |
|
of a felony, or of
any misdemeanor of which fraud is an |
essential element;
|
(5) If the applicant is a corporation: a list
of its |
officers and directors
setting forth the residence and |
business address of each; a 10-year
occupational statement |
of each such officer or director; and a
statement |
describing briefly any civil or criminal proceedings of |
which
fraud is an essential element pending against each |
such officer or
director and the facts concerning any |
conviction of any officer or director
of a felony, or of |
any misdemeanor of which fraud is an essential element;
|
(6) If the applicant is a sole proprietorship, a |
partnership,
limited liability company, an unincorporated |
association or any similar
form of business organization:
|
the name, residence and business address of the proprietor |
or of each
partner, member, officer, director, trustee or |
manager; the limitations, if
any, of the liability of each |
such individual; a 10-year occupational
statement of each |
such individual; a statement describing briefly any civil
|
or criminal proceedings of which fraud is an essential |
element pending
against each such individual and the facts |
concerning any conviction of
any such individual of a |
felony, or of any misdemeanor of
which fraud is an |
essential element;
|
(7) Such additional information as the Secretary of
|
State may by rule or regulation prescribe as necessary to |
|
determine the
applicant's financial responsibility, |
business repute and qualification to
act as a dealer.
|
(8) (a) No applicant shall be registered or |
re-registered as a
dealer or limited Canadian dealer
under |
this Section unless and until each principal of the dealer |
has
passed an examination conducted by the Secretary of |
State or a
self-regulatory organization of securities |
dealers or similar person, which
examination has been |
designated by the Secretary of State by rule,
regulation or |
order to be satisfactory for purposes of determining |
whether
the applicant has sufficient knowledge of the |
securities business and laws
relating thereto to act as a |
registered dealer. Any dealer who was
registered on |
September 30, 1963, and has continued to be so registered;
|
and any principal of any registered dealer, who was acting |
in such capacity
on and continuously since September 30, |
1963; and any individual who has
previously passed a |
securities dealer examination administered by the
|
Secretary of State or any examination designated by the |
Secretary of State
to be satisfactory for purposes of |
determining whether the applicant has
sufficient knowledge |
of the securities business and laws relating thereto
to act |
as a registered dealer by rule, regulation or order, shall |
not be
required to pass an examination in order to continue |
to act in such
capacity. The Secretary of State may by |
order waive the examination
requirement for any principal |
|
of an applicant for registration under this
subsection B |
who has had such experience or education relating to the
|
securities business as may be determined by the Secretary |
of State to be
the equivalent of such examination. Any |
request for such a waiver shall be
filed with the Secretary |
of State in such form as may be prescribed by rule
or |
regulation.
|
(b) Unless an applicant is a member of the body |
corporate known as the
Securities Investor Protection |
Corporation established pursuant to the Act
of Congress of |
the United States known as the Securities Investor
|
Protection Act of 1970, as amended, a member of an |
association of
dealers registered as a national securities |
association pursuant to Section
15A of the Federal 1934 |
Act,
or a member of a self-regulatory organization or stock |
exchange in Canada
which the Secretary of State has |
designated by rule or order,
an applicant shall not be |
registered or
re-registered unless and until there is filed |
with the Secretary of State
evidence that such applicant |
has in effect insurance or other equivalent
protection for |
each client's cash or securities held by such applicant, |
and
an undertaking that such applicant will continually |
maintain such insurance
or other protection during the |
period of registration or re-registration.
Such insurance |
or other protection shall be in a form and amount |
reasonably
prescribed by the Secretary of State by rule or |
|
regulation.
|
(9) The application for the registration of a dealer or |
limited Canadian
dealer shall be
accompanied by a filing |
fee and a fee for each branch office in this State, in
each |
case in the amount established pursuant to Section 11a of |
this
Act, which fees shall not be returnable in any event.
|
(10) The Secretary of State shall notify the dealer or |
limited Canadian
dealer by written notice (which may be by |
electronic or
facsimile transmission) of the effectiveness |
of the registration as a dealer in
this State.
|
(11) Any change which renders no longer accurate any
|
information
contained in any application for registration |
or re-registration of a
dealer or limited Canadian dealer |
shall be reported to the Secretary of
State within 10 |
business days
after the occurrence of such change; but in |
respect to assets and
liabilities only materially adverse |
changes need be reported.
|
C. Any registered dealer, limited Canadian dealer, issuer, |
or
controlling person desiring to
register a salesperson shall |
file an application with the Secretary of
State, in such form |
as the Secretary of State may by rule or regulation
prescribe, |
which the salesperson is required by this Section to provide
to |
the dealer, issuer, or controlling person, executed, verified, |
or
authenticated by the salesperson setting forth or
|
accompanied by:
|
|
(1) the name, residence and business address of the |
salesperson;
|
(2) whether any federal or State license or |
registration as dealer,
limited Canadian dealer, or |
salesperson has ever been refused the salesperson
or |
cancelled, suspended, revoked, withdrawn, barred, limited, |
or
otherwise adversely affected in a similar manner or |
whether the salesperson has
ever been censured or expelled;
|
(3) the nature of employment with, and names and |
addresses of, employers
of the salesperson for the 10 years |
immediately preceding the date of
application;
|
(4) a brief description of any civil or criminal |
proceedings of which
fraud is an essential element pending |
against the salesperson, and whether
the salesperson has |
ever been convicted of a felony, or of any misdemeanor
of |
which fraud is an essential element;
|
(5) such additional information as the Secretary of |
State may by rule,
regulation or order prescribe as |
necessary to determine the salesperson's
business repute |
and qualification to act as a salesperson; and
|
(6) no individual shall be registered or re-registered |
as a
salesperson
under this Section unless and until such |
individual has passed an
examination conducted by the |
Secretary of State or a self-regulatory
organization of |
securities dealers or similar person, which examination |
has
been designated by the Secretary of State by rule, |
|
regulation or order to be
satisfactory for purposes of |
determining whether the applicant has
sufficient knowledge |
of the securities business and laws relating thereto
to act |
as a registered salesperson.
|
Any salesperson who was registered prior to September |
30, 1963, and has
continued to be so registered, and any |
individual who has passed a securities
salesperson
|
examination administered by the Secretary of State or an |
examination
designated by the Secretary of State by rule, |
regulation or order to be
satisfactory for purposes of |
determining whether the applicant has
sufficient knowledge |
of the securities business and laws relating thereto
to act |
as a registered salesperson, shall not be required to pass |
an
examination in order to continue to act as a |
salesperson. The Secretary of
State may by order waive the |
examination requirement for any applicant for
registration |
under this subsection C who has had such experience or
|
education relating to the securities business as may be |
determined by the
Secretary of State to be the equivalent |
of such examination. Any request
for such a waiver shall be |
filed with the Secretary of State in such form
as may be |
prescribed by rule, regulation or order.
|
(7) The application for registration of a salesperson |
shall be
accompanied
by a filing fee and a Securities Audit |
and Enforcement Fund fee, each
in the amount established |
pursuant to Section 11a of this Act, which shall
not be |
|
returnable in any event.
|
(8) Any change which renders no longer accurate any
|
information
contained in any application for registration |
or re-registration as a
salesperson shall be reported to |
the Secretary of State within 10 business
days after the |
occurrence of such change. If the activities are terminated
|
which rendered an individual a salesperson for the dealer, |
issuer or
controlling person, the dealer, issuer or |
controlling person, as the case
may be, shall notify the |
Secretary of State, in writing, within 30 days of
the |
salesperson's cessation of activities, using the |
appropriate termination
notice form.
|
(9) A registered salesperson may transfer his or her
|
registration
under this Section 8 for the unexpired term |
thereof from one registered
dealer or limited Canadian |
dealer to another by the giving of notice of the
transfer |
by the new
registered dealer or limited Canadian dealer to |
the Secretary of State in
such form and subject to
such |
conditions as the Secretary of State shall by rule or |
regulation
prescribe. The new registered dealer or limited |
Canadian dealer shall
promptly file an application
for |
registration of such salesperson as provided in this |
subsection C,
accompanied by the filing fee prescribed by |
paragraph (7) of this
subsection C.
|
C-5. Except with respect to federal covered investment |
|
advisers whose only
clients
are investment companies as defined |
in the Federal 1940 Act, other investment
advisers, federal |
covered investment advisers, or any similar person which the
|
Secretary of State may prescribe by rule or order, a federal |
covered investment
adviser shall file with the Secretary of |
State, prior to acting as a federal
covered investment adviser |
in this State, such documents as have been filed
with the |
Securities and Exchange Commission as the Secretary of State by |
rule
or order may prescribe. The notification of a federal |
covered investment
adviser shall be accompanied by a |
notification filing fee established pursuant
to Section 11a of |
this Act, which shall not be returnable in any event. Every
|
person acting as a federal covered investment adviser in this |
State shall file
a notification filing and pay an annual |
notification filing fee established
pursuant to Section 11a of |
this Act, which is not
returnable in any event. The failure to |
file any such notification shall
constitute a violation of |
subsection D of Section 12 of this Act, subject to
the |
penalties enumerated in Section 14 of this Act.
Until October |
10, 1999 or other date as may be legally permissible, a
federal |
covered investment adviser who fails to file the notification |
or
refuses to pay the fees as required by this subsection shall |
register as an
investment adviser with the Secretary of State |
under Section 8 of this
Act.
The civil remedies
provided for in |
subsection A of Section 13 of this Act and the civil remedies
|
of rescission and appointment of receiver, conservator, |
|
ancillary receiver, or
ancillary conservator provided for in |
subsection F of Section 13 of this Act
shall not be available |
against any person by reason of the failure to file any
such |
notification or to pay the notification fee or on account of |
the contents
of any such notification.
|
D. An application for registration as an investment |
adviser,
executed, verified, or authenticated by or on behalf |
of the applicant, shall be
filed with
the Secretary of State, |
in such form
as the Secretary of State may by rule or |
regulation prescribe, setting
forth or accompanied by:
|
(1) The name and form of organization under which the |
investment adviser
engages or intends to engage in |
business; the state or country and date of
its |
organization; the location
of the adviser's principal |
business office and branch offices, if any; the
names and |
addresses of the adviser's principal, partners, officers,
|
directors, and persons performing similar functions or, if |
the
investment adviser is an individual, of the individual; |
and the
number of the adviser's employees who perform |
investment advisory functions;
|
(2) The education, the business affiliations for the |
past 10 years, and
the present business affiliations of the |
investment adviser and of
the adviser's principal, |
partners, officers, directors, and persons
performing |
similar functions and of any person controlling the
|
|
investment adviser;
|
(3) The nature of the business of the investment |
adviser,
including the manner of giving advice and |
rendering analyses or reports;
|
(4) The nature and scope of the authority of the |
investment
adviser with respect to clients' funds and |
accounts;
|
(5) The basis or bases upon which the investment |
adviser is
compensated;
|
(6) Whether the investment adviser or any principal,
|
partner, officer, director, person performing similar |
functions or person
controlling the investment adviser (i) |
within 10 years of the
filing of the application has been |
convicted of a felony, or of
any misdemeanor of which fraud |
is an essential element, or (ii) is
permanently or |
temporarily enjoined by order or judgment from acting as an
|
investment adviser, underwriter, dealer, principal or |
salesperson, or
from engaging in or continuing any conduct |
or practice in connection with
any such activity or in |
connection with the purchase or sale of any
security, and |
in each case the facts relating to the conviction,
order or |
judgment;
|
(7) (a) A statement as to whether the investment |
adviser is
engaged or is to engage primarily in the |
business of rendering investment
supervisory services; and
|
(b) A statement that the investment adviser will |
|
furnish his,
her, or its clients with such information as |
the Secretary of State
deems necessary in the form |
prescribed by the
Secretary of State by rule or regulation;
|
(8) Such additional information as the Secretary of |
State may, by rule,
regulation or order prescribe as |
necessary to determine the applicant's
financial |
responsibility, business repute and qualification to act |
as an
investment adviser.
|
(9) No applicant shall be registered or re-registered |
as an investment
adviser under this Section unless and |
until each principal of the applicant
who is actively |
engaged in the conduct and management of the applicant's
|
advisory business in this State has passed an examination |
or completed an
educational program conducted by the |
Secretary of State or an association
of investment advisers |
or similar person, which examination or educational
|
program has been designated by the Secretary of State by |
rule, regulation
or order to be satisfactory for purposes |
of determining whether the
applicant has sufficient |
knowledge of the securities business and laws
relating |
thereto to conduct the business of a registered investment |
adviser.
|
Any person who was a registered investment adviser |
prior to September 30,
1963, and has continued to be so |
registered, and any individual who has
passed an investment |
adviser examination administered by the Secretary of
|
|
State, or passed an examination or completed an educational |
program
designated by the Secretary of State by rule, |
regulation or order to be
satisfactory for purposes of |
determining whether the applicant has
sufficient knowledge |
of the securities business and laws relating thereto
to |
conduct the business of a registered investment adviser, |
shall not be
required to pass an examination or complete an |
educational program in
order to continue to act as an |
investment adviser. The Secretary of State
may by order |
waive the examination or educational program requirement |
for any
applicant for registration under this subsection D |
if the principal
of the applicant who is actively engaged |
in the conduct and management of the
applicant's advisory |
business in this State has had such experience
or education |
relating to the securities business as may be determined by |
the
Secretary of State to be the equivalent of the |
examination or
educational program. Any request for a |
waiver shall be filed
with the Secretary of State in such |
form as may be prescribed by
rule or regulation.
|
(10) No applicant shall be registered or re-registered |
as an
investment adviser under this Section 8 unless the |
application for
registration or re-registration is |
accompanied by an application for
registration or |
re-registration for each person
acting as an investment |
adviser representative on
behalf of the adviser and
a |
Securities Audit and Enforcement Fund fee that shall not be |
|
returnable in any
event is paid with respect to each |
investment adviser representative.
|
(11) The application for registration of an investment |
adviser shall be
accompanied by a filing fee and a fee for |
each branch office in this State, in
each case in the |
amount established pursuant to Section 11a of this
Act, |
which fees shall not be returnable in any event.
|
(12) The Secretary of State shall notify the investment |
adviser by written
notice (which may be by electronic or |
facsimile transmission)
of
the effectiveness of the |
registration as an investment adviser in this State.
|
(13) Any change which renders no longer accurate any |
information contained
in any application for registration |
or re-registration of an investment adviser
shall be |
reported to the Secretary of State within 10 business days |
after the
occurrence of the change. In respect to assets |
and liabilities of
an investment adviser that retains |
custody of clients' cash or
securities or accepts |
pre-payment of fees in excess of $500 per client and
6 or |
more months in advance only materially adverse changes need |
be reported by
written notice (which may be by electronic |
or facsimile
transmission) no later
than the close of |
business on the second business day following the discovery
|
thereof.
|
(14) Each application for registration as an |
investment adviser shall
become effective automatically on |
|
the 45th day following the filing of the
application, |
required documents or information, and payment of the |
required
fee unless (i) the Secretary of State has |
registered the investment adviser
prior to that date or |
(ii) an action with respect to the applicant is
pending |
under Section 11 of this Act.
|
D-5. A registered investment adviser or federal covered |
investment adviser
desiring to register an investment adviser |
representative shall file an
application with the Secretary of |
State, in the form as the Secretary of State
may by rule or |
order prescribe, which the investment adviser representative |
is
required by this Section to provide to the investment |
adviser, executed,
verified, or authenticated by the |
investment adviser representative and setting
forth or |
accompanied by:
|
(1) The name, residence, and business address of the |
investment
adviser representative;
|
(2) A statement whether any federal or state license or |
registration as a
dealer, salesperson, investment adviser, |
or investment adviser representative
has ever been |
refused, canceled, suspended, revoked or withdrawn;
|
(3) The nature of employment with, and names and |
addresses of,
employers of the investment adviser |
representative for the 10 years immediately
preceding the |
date of application;
|
|
(4) A brief description of any civil or criminal |
proceedings, of which
fraud is an essential element, |
pending against the investment adviser
representative and |
whether the investment adviser representative has ever |
been
convicted of a felony or of any misdemeanor of which |
fraud is an essential
element;
|
(5) Such additional information as the Secretary of |
State may by rule or
order prescribe as necessary to |
determine the investment adviser
representative's business |
repute or qualification to act as an investment
adviser |
representative;
|
(6) Documentation that the individual has passed an |
examination conducted
by the Secretary of State, an |
organization of investment advisers, or similar
person, |
which examination has been designated by the Secretary of |
State by rule
or order to be satisfactory for purposes of |
determining whether the
applicant has sufficient knowledge |
of the investment advisory or securities
business and laws |
relating to that business to act as a registered investment
|
adviser representative; and
|
(7) A Securities Audit and Enforcement Fund fee |
established under
Section 11a of this Act, which shall not |
be returnable in any event.
|
The Secretary of State may by order waive the examination |
requirement for an
applicant for registration under this |
subsection D-5 who has had the experience
or education relating |
|
to the investment advisory or securities business as may
be |
determined by the Secretary of State to be the equivalent of |
the
examination. A request for a waiver shall be filed with the |
Secretary of State
in the form as may be prescribed by rule or |
order.
|
A change that renders no longer accurate any information |
contained in any
application for registration or |
re-registration as an investment adviser
representative must |
be reported to the Secretary of State within 10 business
days |
after the occurrence of the change. If the activities that |
rendered an
individual an investment adviser representative |
for the investment adviser are
terminated, the investment |
adviser shall notify the Secretary of State in
writing (which |
may be by electronic or facsimile transmission), within 30 days
|
of the investment adviser representative's termination, using |
the
appropriate termination notice form as the Secretary of |
State may prescribe by
rule or order.
|
A registered investment adviser representative may |
transfer his or her
registration under this Section 8 for the |
unexpired term of the registration
from one registered |
investment adviser to another by the giving of notice of
the |
transfer by the new investment adviser to the Secretary of |
State in the
form and subject to the conditions as the |
Secretary of State shall prescribe.
The new registered |
investment adviser shall promptly file an application for
|
registration of the investment adviser representative as |
|
provided in this
subsection, accompanied by the Securities |
Audit and Enforcement Fund fee
prescribed by paragraph (7) of |
this
subsection D-5.
|
E. (1) Subject to the provisions of subsection F of Section |
11 of
this Act, the registration of a dealer, limited Canadian |
dealer,
salesperson, investment adviser, or investment adviser
|
representative may be denied, suspended or revoked if the |
Secretary of State
finds that the dealer, limited Canadian |
dealer, internet portal, salesperson,
investment adviser, or |
investment adviser representative or any
principal officer, |
director, partner, member, trustee, manager or any
person who |
performs a similar function of the dealer, limited Canadian
|
dealer, internet portal, or investment adviser:
|
(a) has been convicted of any felony
during the 10 year |
period preceding the date of filing of any application for
|
registration or at any time thereafter, or of any |
misdemeanor of
which fraud is an essential element;
|
(b) has engaged in any unethical practice in connection |
with any
security, or in any fraudulent business practice;
|
(c) has failed to account for any money or property, or |
has failed to
deliver any security, to any person entitled |
thereto when due or within
a reasonable time thereafter;
|
(d) in the case of a dealer, limited Canadian dealer, |
or investment
adviser, is insolvent;
|
(e) in the case of a dealer, limited Canadian dealer,
|
|
salesperson, or registered principal of a dealer or
limited |
Canadian dealer
(i) has
failed
reasonably to supervise the
|
securities activities of any of its salespersons or other |
employees and the
failure
has permitted or facilitated a |
violation of Section 12 of this Act or (ii) is
offering or |
selling or has offered or sold securities in this
State |
through a salesperson other than a registered salesperson, |
or, in
the case of a salesperson, is selling or has sold |
securities in this State
for a dealer, limited Canadian |
dealer, issuer or controlling person with
knowledge that |
the
dealer, limited Canadian dealer, issuer or controlling |
person has not
complied with the provisions of
this Act
or |
(iii) has failed reasonably to supervise the
|
implementation of compliance measures following notice by
|
the Secretary of State of noncompliance with the Act or
|
with the regulations promulgated thereunder or both or (iv) |
has failed to
maintain and enforce written procedures to |
supervise the types of
business in which it engages and to |
supervise the activities of its
salespersons that are |
reasonably designed to achieve compliance with applicable
|
securities laws and regulations;
|
(f) in the case of an investment adviser, has failed |
reasonably to
supervise the advisory activities of any of |
its investment adviser
representatives or employees and |
the
failure has permitted or facilitated a violation of |
Section 12 of this Act;
|
|
(g) has violated any of the provisions of this Act;
|
(h) has made any material misrepresentation to the |
Secretary of State
in connection with any information |
deemed necessary by the Secretary of
State to determine a |
dealer's, limited Canadian dealer's, or investment
|
adviser's financial responsibility
or a dealer's, limited |
Canadian dealer's, investment adviser's,
salesperson's, or |
investment
adviser representative's business repute or
|
qualifications, or has refused to furnish any such |
information
requested by the Secretary of State;
|
(i) has had a license or registration under any Federal |
or State law
regulating securities, commodity futures
|
contracts,
or stock futures contracts refused, cancelled, |
suspended, withdrawn,
revoked, or otherwise
adversely |
affected in a similar manner;
|
(j) has had membership
in or
association with any |
self-regulatory
organization registered under the Federal |
1934 Act or the Federal 1974 Act
suspended, revoked, |
refused, expelled, cancelled, barred, limited in any
|
capacity, or
otherwise adversely affected in a similar |
manner
arising from any fraudulent or deceptive act or a |
practice in violation of
any rule, regulation or standard |
duly promulgated by the self-regulatory
organization;
|
(k) has had any order entered against it after notice |
and opportunity
for hearing by a securities agency of any |
state, any foreign government
or agency thereof, the |
|
Securities and Exchange Commission, or the Federal
|
Commodities Futures Trading Commission arising from any |
fraudulent or
deceptive act or a practice in violation of |
any statute, rule or regulation
administered or |
promulgated by the agency or commission;
|
(l) in the case of a dealer or limited Canadian dealer, |
fails to
maintain a minimum net capital
in an amount which |
the Secretary of State may by rule or regulation require;
|
(m) has conducted a continuing course of dealing of |
such
nature as to demonstrate an inability to properly |
conduct the business of
the dealer, limited Canadian |
dealer, salesperson, investment
adviser,
or investment |
adviser representative;
|
(n) has had, after notice and opportunity for hearing, |
any injunction or
order entered against it or license or |
registration refused, cancelled,
suspended, revoked, |
withdrawn, limited, or otherwise adversely
affected in a |
similar manner by any state or federal body,
agency or |
commission regulating banking, insurance, finance or small |
loan
companies, real estate or mortgage brokers or |
companies, if the
action resulted from any act found by the |
body, agency or
commission to be a fraudulent or deceptive |
act or practice in violation of
any statute, rule or |
regulation administered or
promulgated by the body, agency |
or commission;
|
(o) has failed to file a return, or to pay the tax, |
|
penalty or interest
shown in a filed return, or to pay any |
final assessment of tax, penalty or
interest, as required |
by any tax Act administered by the Illinois
Department of |
Revenue, until such time as the requirements of
that tax |
Act are satisfied;
|
(p) in the case of a natural person who is a dealer, |
limited Canadian
dealer, salesperson,
investment adviser, |
or investment adviser representative, has defaulted on
an |
educational loan guaranteed by the
Illinois Student |
Assistance Commission, until the
natural person has |
established a satisfactory repayment record as determined |
by
the Illinois Student Assistance Commission;
|
(q) has failed to maintain the books and records |
required under this Act
or rules or regulations promulgated |
under this Act or under any requirements
established by the |
Securities and Exchange Commission or a self-regulatory
|
organization;
|
(r) has refused to allow or otherwise impeded designees |
of the Secretary
of
State from conducting an audit, |
examination, inspection, or investigation
provided for |
under Section 8 or 11 of this Act;
|
(s) has failed to maintain any minimum net capital or |
bond requirement set
forth in this Act or any rule or |
regulation promulgated under this Act;
|
(t) has refused the Secretary of State or his or her |
designee access to
any office or location within an office |
|
to conduct an investigation, audit,
examination, or |
inspection;
|
(u) has advised or caused a public pension fund or |
retirement system
established under the Illinois Pension |
Code to make an investment or engage in
a transaction not |
authorized by that Code;
|
(v) if a corporation, limited liability company, or |
limited liability
partnership has been suspended, |
canceled, revoked, or has failed to register as
a foreign
|
corporation, limited liability company, or limited |
liability partnership
with the Secretary
of State;
|
(w) is permanently or temporarily enjoined by any court |
of competent
jurisdiction, including any state, federal, |
or foreign government, from
engaging
in or continuing any |
conduct or practice involving any aspect of the securities
|
or commodities business or in any other business where the |
conduct or practice
enjoined involved investments, |
franchises, insurance, banking, or finance;
|
(2) If the Secretary of State finds that any registrant or |
applicant for
registration is no longer in existence or has |
ceased to do business as a
dealer, limited Canadian dealer, |
internet portal, salesperson, investment
adviser, or |
investment adviser representative, or is subject to an
|
adjudication
as a person under legal disability or to the |
control of a
guardian, or cannot be located after reasonable |
search, or has failed
after written notice to pay to the |
|
Secretary of State any additional fee
prescribed by this |
Section or specified by rule or regulation, or if a
natural |
person, has defaulted on an educational loan guaranteed by the |
Illinois
Student Assistance Commission, the Secretary of State |
may by order cancel the
registration or application.
|
(3) Withdrawal of an application for registration or |
withdrawal from
registration as a dealer, limited Canadian |
dealer, salesperson,
investment adviser, or investment adviser |
representative becomes effective
30 days after receipt of an |
application to withdraw or within such
shorter period of time |
as the Secretary of State may determine, unless any
proceeding |
is pending under Section 11 of this Act when the application is
|
filed or a proceeding is instituted within 30 days after the |
application is
filed. If a proceeding is pending or instituted, |
withdrawal becomes effective
at such time and upon such |
conditions as the Secretary
of State by order determines. If no |
proceeding is pending or instituted and
withdrawal |
automatically becomes effective, the Secretary of State may
|
nevertheless institute a revocation or suspension proceeding |
within 2
years after withdrawal became effective and enter a |
revocation or suspension
order as of the last date on which |
registration was effective.
|
F. The Secretary of State shall make available upon request |
the date
that each dealer, investment adviser, salesperson, or |
investment
adviser representative was granted
registration, |
|
together with the name and address of the dealer, limited
|
Canadian dealer, or issuer on
whose behalf the salesperson is |
registered, and all
orders of the Secretary of State denying or |
abandoning an application, or
suspending or revoking |
registration, or censuring the persons.
The Secretary of State |
may designate by rule, regulation or order the
statements, |
information or reports submitted to or filed with him or
her |
pursuant to this Section 8 which the Secretary of State |
determines are
of a sensitive nature and therefore should be |
exempt from public
disclosure. Any such statement, information |
or report shall be
deemed confidential and shall not be |
disclosed to the public except upon the
consent of the person |
filing or submitting the statement,
information or report or by |
order of court or in court proceedings.
|
G. The registration or re-registration of a dealer or |
limited Canadian
dealer and of all salespersons
registered upon |
application of the dealer or limited Canadian dealer shall
|
expire on the next
succeeding anniversary date of the |
registration or re-registration of the
dealer; and the |
registration or re-registration of an investment
adviser and of |
all investment adviser representatives registered upon
|
application of the investment adviser shall expire on the next |
succeeding
anniversary date of the
registration of the |
investment adviser; provided, that the
Secretary of State may |
by rule or regulation prescribe an alternate date which
any |
|
dealer registered under the Federal 1934 Act or a member of any
|
self-regulatory association approved pursuant thereto, a |
member of a
self-regulatory organization or stock exchange in |
Canada, or any investment
adviser may elect
as
the expiration |
date of its dealer or limited Canadian dealer and
salesperson |
registrations, or the expiration date of its investment adviser
|
registration, as the case may be. A
registration of a |
salesperson registered upon application of an issuer or
|
controlling person shall expire on the next succeeding |
anniversary date of
the registration, or upon termination or |
expiration of the
registration of the securities, if any, |
designated in the application for his
or her registration or |
the alternative date as the Secretary may prescribe by
rule or |
regulation. Subject to paragraph (9) of subsection C of this |
Section
8, a salesperson's registration also shall terminate |
upon cessation of his or
her employment, or termination of his |
or her appointment or authorization, in
each case by the person |
who applied for the salesperson's registration,
provided that |
the Secretary of State may by rule or regulation prescribe an
|
alternate date for the expiration of the registration.
|
H. Applications for re-registration of dealers, limited |
Canadian
dealers, internet portals, salespersons, investment |
advisers, and investment
adviser representatives shall be |
filed with the Secretary of State prior
to the expiration of |
the then current registration and
shall
contain such |
|
information as may be required by the Secretary of
State upon |
initial application with such omission therefrom or
addition |
thereto as the Secretary of State may authorize or prescribe. |
Each
application for re-registration of a dealer, limited |
Canadian dealer, internet portal, or
investment adviser
shall |
be accompanied by a filing fee, each application for
|
re-registration as a salesperson shall be accompanied by a |
filing fee and a
Securities Audit and Enforcement Fund fee |
established pursuant to Section
11a of this Act, and
each |
application for re-registration as an investment adviser |
representative
shall be accompanied by a Securities Audit and |
Enforcement Fund fee
established under Section 11a of this Act,
|
which shall not be returnable in any event. Notwithstanding
the |
foregoing, applications for
re-registration of dealers, |
limited Canadian dealers, internet portals, and investment
|
advisers may be filed within 30 days
following the expiration |
of the registration provided that the applicant pays
the annual |
registration fee together with an additional amount equal to
|
the annual registration fee and files any other information or |
documents that
the Secretary of State may prescribe by rule
or |
regulation or order. Any application filed within 30 days |
following the
expiration of the registration shall be |
automatically effective as of the
time of the earlier |
expiration provided that the proper fee has been paid
to the |
Secretary of State.
|
Each registered dealer, limited Canadian dealer, internet |
|
portal, or investment adviser
shall continue to be
registered |
if the registrant changes his, her, or its form of organization
|
provided that the dealer or investment adviser files an |
amendment to his,
her, or its application not later than 30 |
days following the occurrence of the
change and pays the |
Secretary of State a fee in the amount established under
|
Section 11a of this Act.
|
I. (1) Every registered dealer, limited Canadian dealer, |
internet portal, and investment
adviser shall make and keep
for |
such periods, such accounts, correspondence,
memoranda, |
papers, books and records as the Secretary of State may by rule |
or
regulation prescribe. All records so required shall be |
preserved for 3 years
unless the Secretary of State by rule, |
regulation or order prescribes otherwise
for particular types |
of records.
|
(2) Every registered dealer, limited Canadian dealer, |
internet portal, and investment
adviser shall file such |
financial reports as the Secretary of State may by rule
or |
regulation
prescribe.
|
(3) All the books and records referred to in paragraph (1) |
of this
subsection I are subject at any time or from time to |
time to such
reasonable periodic, special or other audits, |
examinations, or inspections by
representatives of the |
Secretary of State, within or without this State, as the
|
Secretary of State deems necessary or appropriate in the public |
|
interest or for
the protection of investors.
|
(4) At the time of an audit, examination, or inspection, |
the Secretary of
State, by his or her designees, may
conduct an |
interview of any person employed or appointed by or
affiliated |
with a registered dealer, limited Canadian dealer, internet |
portal, or investment
advisor, provided that the
dealer, |
limited Canadian dealer, internet portal, or investment |
advisor shall be given
reasonable
notice of the time and place |
for the interview. At the option of the dealer,
limited |
Canadian dealer, internet portal, or
investment advisor, a |
representative of the dealer or investment advisor with
|
supervisory responsibility over the individual being |
interviewed may be present
at the interview.
|
J. The Secretary of State may require by rule or regulation |
the
payment of an additional fee for the filing of information |
or documents
required to be filed by this Section which have |
not been filed in a timely
manner. The Secretary of State may |
also require by rule or regulation the
payment of an |
examination fee for administering any examination which it
may |
conduct pursuant to subsection B, C, D, or D-5 of this
Section |
8.
|
K. The Secretary of State may declare any application for
|
registration or limited registration
under this Section 8 |
abandoned by order if the applicant fails to pay any
fee or |
|
file any information or document required under this Section 8 |
or by
rule or regulation for more than 30 days after the |
required payment or
filing date. The applicant may petition the |
Secretary of State for a
hearing within 15 days after the |
applicant's receipt of the order of
abandonment, provided that |
the petition sets forth the grounds
upon which the applicant |
seeks a hearing.
|
L. Any document being filed pursuant to this Section 8 |
shall be deemed
filed, and any fee being paid pursuant to this |
Section 8 shall be deemed
paid, upon the date of actual receipt |
thereof by the Secretary of State or
his or her designee.
|
M. The Secretary of State shall provide to the Illinois |
Student
Assistance
Commission annually or at mutually agreed |
periodic intervals the names and
social security numbers of |
natural persons registered under subsections B, C,
D, and D-5 |
of this Section. The Illinois Student Assistance Commission |
shall
determine if any student loan defaulter is registered as |
a dealer, limited
Canadian dealer, internet portal |
salesperson, or investment adviser under this Act and report
|
its determination to the Secretary of State or his or her |
designee.
|
(Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
|
(815 ILCS 5/8d new) |
|
Sec. 8d. Offerings made through
registered Internet |
portals. |
(a) An issuer shall make an offering or
sale of securities |
pursuant to subsection T of Section 4 of this Act
through the |
use of one or more registered Internet portals. |
(b) The Internet portal: |
(1) shall be a registered broker-dealer under the
|
Securities Exchange Act of 1934 (15 U.S.C. 78o); |
(2) shall be a funding portal registered under the
|
Securities Act of 1933 (15 U.S.C. 77d-1) and the
Securities |
and Exchange Commission has adopted rules
under authority |
of Section 3(h) of the Securities
Exchange Act of 1934 (15 |
U.S.C. 78c) and Section
304 of the Jumpstart Our Business |
Startups
Act (P.L. 112-106) governing funding portals; |
(3) shall be a dealer registered under this Act as of
|
the date of any offer or sale of securities made
through |
the Internet portal; or |
(4) shall, to the extent it meets
the qualifications |
for exemption from registration
pursuant to subsection (d) |
of this Section: |
(A) file, not later than 30 days
before the date of |
the first offer or sale of
securities made within this |
State, an
application for registration (or renewal of
|
registration, as applicable) as a registered
Internet |
portal with the Secretary of State, in
writing or in |
electronic form as prescribed by
the Secretary of |
|
State, which the Secretary of
State shall make |
available as an electronic
document on the Secretary of |
State's Internet
website, containing such information |
and
required deliveries as specified therein; and |
(B) pay the application filing fee
established |
under Section 11a of this Act; the Secretary of State |
shall, within a reasonable
time, examine the filed |
application and other
materials filed and, approve or |
deny the application. |
(c) If any change occurs in the information submitted by,
|
or on behalf of, an Internet portal to the Secretary of State,
|
the Internet portal shall notify the Secretary of State within |
10
days after such change occurs and shall provide the |
Secretary of
State with such additional information (if any) |
requested by the
Secretary of State in connection therewith. |
(d) Notwithstanding anything contained in this Act to the
|
contrary, neither an Internet portal nor its owning or |
operating
entity is required to register as a dealer or an
|
investment advisor under this Act if each of the following |
applies
with respect to the Internet portal and its owning or |
operating
entity: |
(1) It does not solicit purchases, sales, or offers
to |
buy the securities offered or displayed on the
Internet |
portal. |
(2) It does not collect or hold funds in
connection |
with any purchase, sale, or offer to buy any
securities |
|
offered or displayed on the Internet portal. |
(3) It does not compensate employees, agents, or
other |
persons for the solicitation or based on the sale
of |
securities displayed or referenced on the Internet
portal. |
(4) It is not compensated based on the amount of
|
securities sold. |
(5) The fee it charges an issuer for an offering of |
securities on the Internet portal is a fixed amount for |
each offering, a variable amount based on the length of |
time that the securities are offered on the Internet |
portal, a variable amount based on the total proposed |
offering amount, or any combination of such fixed and |
variable amounts. |
(6) It does not offer investment advice or
|
recommendations; however, an Internet portal
is not deemed |
to be offering investment advice or
recommendations simply |
by virtue of: |
(A) selecting transactions in which the
Internet |
portal shall serve as an intermediary; |
(B) establishing reasonable selection criteria
for |
an issuer to meet in order to establish an offer or
|
sale of securities through the Internet portal; |
(C) establishing reasonable selection criteria
for |
a potential purchaser to meet in order to
participate |
in an offer or sale of securities made
through the |
Internet portal; or |
|
(D) terminating an issuer transaction at any
time |
before the first sale of the securities of such
issuer |
if the Internet portal determines such action
is |
appropriate, after reasonable due diligence, to
|
protect potential purchasers, and the Internet portal
|
is able to direct the qualified escrowee to return all |
funds then provided by potential purchasers, if
any. |
(7) It does not engage in such other
activities as the |
Secretary of State, by rule, determines
are prohibited. |
(e) Upon completion of an offering made pursuant to |
subsection T of Section 4, each registered Internet portal |
involved with the transactions (and the issuer, to the extent |
applicable) shall store any and all electronic materials |
related to the completed offering (including copies of all |
offering documents, all offering materials, and all purchaser |
information) on a secure, non-public, server or in such other |
manner as the Secretary of State may hereafter deem acceptable |
by rule.
|
(815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
|
Sec. 11. Duties and powers of the Secretary of State.
|
A. (1) The administration of this Act is vested in the |
Secretary of State,
who may from time to time make, amend and |
rescind such rules and
regulations as may be necessary to carry |
out this Act, including rules and
regulations governing |
procedures of registration, statements, applications and
|
|
reports for various classes of securities, persons and matters |
within his or
her jurisdiction and defining any terms, whether |
or not used in this Act,
insofar as the definitions are not |
inconsistent with this Act. The rules and
regulations adopted |
by the Secretary of State under this Act shall be effective
in |
the manner provided for in the Illinois Administrative |
Procedure Act.
|
(2) Among other things, the Secretary of State shall have |
authority, for
the purposes of this Act, to prescribe the form |
or forms in which required
information shall be set forth, |
accounting practices, the items or
details to be shown in |
balance sheets and earning statements, and the
methods to be |
followed in the preparation of accounts, in the appraisal
or |
valuation of assets and liabilities, in the determination of
|
depreciation and depletion, in the differentiation of |
recurring and
non-recurring income, in the differentiation of |
investment and operating
income, and in the preparation of |
consolidated balance sheets or income
accounts of any person, |
directly or indirectly, controlling or
controlled by the |
issuer, or any person under direct or indirect common
control |
with the issuer.
|
(3) No provision of this Act imposing any liability shall |
apply to any act
done or omitted in good faith in conformity |
with any rule or regulation of the
Secretary of State under |
this Act, notwithstanding that the rule
or regulation may, |
after the act or omission, be amended or
rescinded or be |
|
determined by judicial or other authority to be invalid for any
|
reason.
|
(4) The Securities Department of the Office of the |
Secretary of State shall
be deemed a criminal justice agency |
for purposes of all federal and state laws
and regulations and, |
in that capacity, shall be entitled to access to any
|
information available to criminal justice agencies
and has the |
power to
appoint special agents to conduct all investigations, |
searches, seizures,
arrests, and other duties imposed under the |
provisions of any law
administered by the Department. The |
special agents have and may
exercise all the powers of peace |
officers solely for the purpose of
enforcing provisions of this |
Act.
|
The Director must authorize to each special agent employed |
under
this Section a distinct badge that, on its face, (i) |
clearly states that
the badge is authorized by the Department |
and (ii) contains a
unique and identifying number.
|
Special agents shall comply with all training requirements
|
established for law enforcement officers by provisions of the
|
Illinois Police Training Act.
|
(5) The Secretary of State, by rule, may conditionally or |
unconditionally
exempt any person, security, or transaction, |
or any class or classes of
persons, securities,
or transactions |
from any provision of Section 5, 6, 7, 8, 8a, or 9 of this
Act |
or of any rule promulgated under these Sections, to the extent |
that
such
exemption is
necessary or appropriate in the public |
|
interest, and is consistent with the
protection of investors.
|
B. The Secretary of State may, anything in this Act to the |
contrary
notwithstanding, require financial statements and |
reports of the issuer,
dealer, internet portal, salesperson, |
investment adviser, or investment adviser
representative as |
often as circumstances may
warrant. In addition, the Secretary |
of
State may secure information or books and records from or |
through others
and may make or cause to be made investigations |
respecting the business,
affairs, and property of the issuer of |
securities, any person involved in the
sale or offer for sale, |
purchase or offer to purchase of any mineral investment
|
contract, mineral deferred delivery contract, or security and |
of dealers, internet portals,
salespersons, investment |
advisers, and investment adviser
representatives that are |
registered or are the
subject of an application for |
registration under this Act. The
costs of an investigation |
shall be borne by the registrant or
the applicant, provided |
that the registrant or applicant shall not
be obligated to pay |
the costs without his, her or its consent in
advance.
|
C. Whenever it shall appear to the Secretary of State, |
either upon
complaint or otherwise, that this Act, or any rule |
or regulation
prescribed under authority thereof, has been or |
is about to be violated,
he or she may, in his or her |
discretion, do one or more of the
following:
|
(1) require or permit the person to file with the |
Secretary
of State a statement in writing under oath, or |
|
otherwise, as to all the facts
and circumstances concerning |
the subject matter which the Secretary of State
believes to |
be in the public interest to investigate, audit, examine, |
or
inspect;
|
(2) conduct an investigation, audit, examination, or |
inspection as
necessary or advisable for the protection of |
the interests of the
public; and
|
(3) appoint investigators to conduct all |
investigations, searches,
seizures,
arrests, and other |
duties imposed under the provisions of any law
administered |
by the Department. The Director must authorize to each
|
investigator employed under this Section a distinct badge
|
that,
on its face,
(i) clearly states that the badge is |
authorized by the Department and
(ii) contains a unique and |
identifying number.
|
D. (1) For the purpose of all investigations, audits, |
examinations, or
inspections which in the opinion
of the |
Secretary of State are necessary and proper for the enforcement
|
of this Act, the Secretary of State or a person designated by |
him or
her is empowered to administer oaths and affirmations, |
subpoena witnesses,
take evidence, and require, by subpoena or |
other lawful means provided by
this Act or the rules adopted by |
the Secretary of State,
the production of any books and |
records, papers,
or other
documents which the Secretary of |
State or a person designated by him
or her deems relevant or |
material to the inquiry.
|
|
(2) The Secretary of
State or a person designated by him or |
her is further empowered to
administer oaths and affirmations, |
subpoena witnesses, take evidence, and
require the production |
of any books and records, papers, or other documents
in this
|
State at the request of a securities agency of another state, |
if the
activities constituting the alleged violation for which |
the information is
sought would be in violation of Section 12 |
of this Act if the activities
had occurred in this State.
|
(3) The Circuit Court of any County of this State, upon |
application of the
Secretary of State or a person designated by |
him or her may order the
attendance of witnesses, the |
production of books and records, papers, accounts
and documents |
and the giving of testimony before the Secretary of State or a
|
person designated by him or her; and any failure to obey the |
order
may be punished by the Circuit Court as a contempt |
thereof.
|
(4) The fees of subpoenaed witnesses under this Act for
|
attendance and travel shall be the same as fees of witnesses |
before the
Circuit Courts of this State, to be paid when the |
witness
is excused from further attendance, provided, the |
witness is
subpoenaed at the instance of the Secretary of |
State; and payment of the fees shall be made and audited in the |
same manner as other expenses of
the Secretary of State.
|
(5) Whenever a subpoena is issued at the request of a |
complainant or
respondent as the case may be, the Secretary of |
State may require that the cost
of service and the fee of the |
|
witness shall be borne by the party at whose
instance the |
witness is summoned.
|
(6) The Secretary of State shall have power at his or her |
discretion, to
require a deposit to cover the cost of the |
service and
witness fees and the payment of the legal witness |
fee and mileage to the
witness served with subpoena.
|
(7) A subpoena issued under this Act shall be served in the |
same manner
as a subpoena issued out of a circuit court.
|
(8) The Secretary of State may in any investigation, |
audits, examinations,
or inspections cause the taking of |
depositions of persons residing within or
without this State in |
the manner provided in civil actions under the laws of
this |
State.
|
E. Anything in this Act to the contrary notwithstanding:
|
(1) If the Secretary of State shall find that the offer |
or sale or
proposed offer or sale or method of offer or |
sale of any securities by any
person, whether exempt or |
not, in this State, is fraudulent, or would
work or tend to |
work a fraud or deceit, or is being offered or sold in
|
violation of Section 12,
or there has been a failure or |
refusal to submit any notification filing or
fee required |
under this Act,
the Secretary of State may by written order |
prohibit
or suspend the offer or sale of securities by that |
person or deny or revoke the
registration of the securities |
or the exemption from registration
for the securities.
|
(2) If the Secretary of State shall find that any |
|
person has violated
subsection C, D, E, F, G, H, I, J, or K |
of Section 12 of
this Act, the Secretary of State may by |
written order temporarily or
permanently prohibit or |
suspend the person from offering or
selling any securities, |
any mineral
investment contract, or any mineral deferred |
delivery contract in this
State, provided that any person |
who is the subject of an order of
permanent prohibition may |
petition the Secretary of State for a hearing to
present |
evidence of rehabilitation or change in circumstances |
justifying
the amendment or termination of the order of |
permanent prohibition.
|
(3) If the Secretary of State shall find that any |
person is engaging or
has engaged in the business of |
selling or offering for sale securities as a
dealer , |
internet portal, or salesperson or is acting or has acted |
as an investment adviser,
investment adviser |
representative, or
federal covered investment adviser,
|
without prior thereto and at the time thereof having |
complied with the
registration or notice filing |
requirements of this Act, the Secretary of
State may by
|
written order prohibit or suspend the person from engaging |
in the
business of selling or offering for sale securities, |
or acting as an investment
adviser, investment adviser |
representative, or federal covered investment
adviser, in |
this State.
|
(4) In addition to any other sanction or remedy |
|
contained in this
subsection E, the Secretary of State, |
after finding that any provision of
this Act has been |
violated, may impose a fine as provided by rule,
regulation |
or order not to exceed $10,000 for each
violation of this |
Act, may
issue an order of public censure against the |
violator, and may charge as
costs of investigation all |
reasonable expenses, including attorney's fees and
witness |
fees.
|
F. (1) The Secretary of State shall not deny, suspend or |
revoke the
registration of securities, suspend or revoke the |
registration of a
dealer, internet portal, salesperson, |
investment adviser, or investment adviser
representative, |
prohibit or suspend the
offer or sale of any securities, |
prohibit or suspend any person from
offering or selling any |
securities in this State, prohibit or
suspend a dealer or |
salesperson from engaging in the business of selling or
|
offering for sale securities, prohibit or suspend a person from |
acting as
an investment adviser or federal covered investment |
adviser, or investment
adviser representative, impose any
fine |
for violation of this Act, issue an
order of public censure, or |
enter into an agreed settlement except after an
opportunity for |
hearing upon not less than 10 days notice given by personal
|
service or registered mail or certified mail, return receipt |
requested, to
the person or persons concerned. Such notice |
shall state the date and time
and place of the hearing and |
shall contain a brief statement of
the proposed action of the |
|
Secretary of State and the grounds for
the proposed action. A |
failure to appear at the hearing or
otherwise respond to the |
allegations set forth in the notice of
hearing shall constitute |
an admission of any facts alleged therein and shall
constitute |
sufficient basis to enter an order.
|
(2) Anything herein contained to the contrary |
notwithstanding, the Secretary
of State may temporarily |
prohibit or suspend, for a maximum period of 90 days,
by an |
order effective immediately, the offer or sale or registration |
of
securities, the registration of a dealer, internet portal, |
salesperson, investment
adviser, or investment adviser |
representative, or
the offer or sale of securities by any |
person, or the business of rendering
investment advice, without |
the notice and prior hearing in this subsection
prescribed, if |
the Secretary of State shall in his or her opinion, based on
|
credible evidence, deem it necessary to prevent an imminent |
violation of this
Act or to prevent losses to investors which |
the Secretary of State reasonably
believes will occur as a |
result of a prior violation of this Act. Immediately
after |
taking action without such notice and hearing, the Secretary
of |
State shall deliver a copy of the
temporary order to the |
respondent named therein by personal service or
registered mail |
or certified mail, return receipt requested. The temporary
|
order shall set forth the grounds for the action and shall |
advise that the
respondent may request a hearing, that
the |
request for a hearing will not stop the effectiveness of the |
|
temporary
order and that respondent's failure to request a |
hearing within 30 days
after the date of the entry of the |
temporary order shall constitute an
admission of any facts |
alleged therein and shall constitute sufficient
basis to make |
the temporary order final. Any provision of this paragraph
(2) |
to the contrary notwithstanding, the Secretary of State may not
|
pursuant to the provisions of this paragraph (2) suspend the |
registration
of a dealer, limited Canadian dealer, |
salesperson, investment
adviser, or investment adviser |
representative based upon sub-paragraph (n)
of paragraph (l) of |
subsection E of Section 8 of this Act or revoke
the |
registration of securities or revoke the registration of any
|
dealer, salesperson, investment adviser representative, or |
investment
adviser.
|
(3) The Secretary of State may issue a temporary order |
suspending or
delaying the effectiveness of any registration of |
securities under
subsection A or B of Section 5, 6 or 7 of this |
Act subsequent to and upon
the basis of the issuance of any |
stop, suspension or similar order by the
Securities and |
Exchange Commission with respect to the securities which are
|
the subject of the registration under subsection A or B of |
Section 5, 6 or
7 of this Act, and the order shall become |
effective as of the date
and time of effectiveness of the |
Securities and Exchange Commission order and
shall be vacated |
automatically at such time as the order of the
Securities and |
Exchange Commission is no longer in effect.
|
|
(4) When the Secretary of State finds that an application |
for registration
as a dealer, internet portal, salesperson, |
investment adviser, or investment
adviser representative |
should be denied, the Secretary
of State may enter an order |
denying the registration. Immediately
after taking such |
action, the Secretary of State shall deliver a
copy of the |
order to the respondent named therein by personal service or
|
registered mail or certified mail, return receipt requested. |
The order shall
state the grounds for the action and that the |
matter will be set
for hearing upon written request filed with |
the Secretary of State within 30
days after the receipt of the |
request by the respondent. The
respondent's failure to request |
a hearing within 30 days after receipt of
the order shall |
constitute an admission of any facts alleged
therein and shall |
make the order final. If a hearing is held, the
Secretary of |
State shall affirm, vacate, or modify the order.
|
(5) The findings and decision of the Secretary of State |
upon the
conclusion of each final hearing held pursuant to this |
subsection shall
be set forth in a written order signed on |
behalf of the Secretary of
State by his or her designee and |
shall be filed as a public record. All
hearings shall be held |
before a person designated by the Secretary of State,
and |
appropriate records thereof shall be kept.
|
(6) Notwithstanding the foregoing, the Secretary of State, |
after
notice and opportunity for hearing, may at his or her |
discretion enter into
an agreed settlement, stipulation or |
|
consent order with a respondent in
accordance with the |
provisions of the Illinois Administrative
Procedure Act. The |
provisions of the agreed settlement, stipulation or
consent |
order shall have the full force and effect of an order issued |
by the
Secretary of State.
|
(7) Anything in this Act to the contrary notwithstanding, |
whenever
the Secretary of State finds that a person is |
currently expelled from, refused
membership in or association |
with, or limited in any material capacity by a
self-regulatory |
organization registered under the Federal 1934 Act or the
|
Federal 1974 Act because of a fraudulent or deceptive act or a |
practice in
violation of a rule, regulation, or standard duly |
promulgated by the
self-regulatory organization, the Secretary |
of State may, at his or her
discretion, enter a Summary Order |
of Prohibition, which shall prohibit the
offer
or sale of any |
securities, mineral investment contract, or mineral deferred
|
delivery contract by the person in this State. The order shall |
take effect
immediately upon its entry. Immediately after |
taking the action the Secretary
of State shall deliver a copy |
of the order to the named Respondent by
personal service or |
registered mail or certified mail, return receipt
requested. A |
person who is the subject of an Order of Prohibition may
|
petition the Secretary of State for a hearing to present |
evidence of
rehabilitation or change in circumstances |
justifying the
amendment or termination of the Order of |
Prohibition.
|
|
G. No administrative action shall be brought by the |
Secretary of State
for relief under this Act or upon or because |
of any of the matters for
which relief is granted by this Act |
after the earlier to occur of (i) 3
years from the date upon |
which the Secretary of State had notice of facts
which in the |
exercise of reasonable diligence would lead to actual
knowledge |
of the alleged violation of the Act, or (ii) 5 years from the
|
date on which the alleged violation occurred.
|
H. The action of the Secretary of State in denying, |
suspending, or revoking
the registration of a dealer, internet |
portal, limited Canadian dealer, salesperson, investment |
adviser, or investment adviser representative, in
prohibiting
|
any person from engaging in the business of offering or selling |
securities as a
dealer, limited Canadian dealer, or |
salesperson, in prohibiting or
suspending the offer or sale of
|
securities by any person, in prohibiting a person from acting |
as an investment
adviser, federal covered investment adviser, |
or investment adviser
representative, in denying, suspending, |
or
revoking the registration of securities, in
prohibiting or |
suspending the offer or sale or proposed offer or sale of
|
securities, in imposing any fine for violation of this Act, or |
in issuing any
order shall be subject to judicial review in the |
Circuit Courts
of
Cook or Sangamon Counties in this State. The
|
Administrative Review
Law shall apply to and
govern every |
action for the judicial review of final actions or decisions
of |
the Secretary of State under this Act.
|
|
I. Notwithstanding any other provisions of this Act to the |
contrary,
whenever it shall appear to the Secretary of State |
that any
person is engaged or about to engage in any acts or |
practices which
constitute or will constitute a violation of |
this Act or of any rule or
regulation prescribed under |
authority of this Act, the Secretary of State
may at his or her |
discretion, through the Attorney General take any of the
|
following actions:
|
(1) File a complaint and apply for a temporary |
restraining order without
notice, and upon a proper showing |
the court may enter a temporary
restraining order without |
bond, to enforce this Act.
|
(2) File a complaint and apply for a preliminary or |
permanent
injunction, and, after notice and a hearing and |
upon a proper showing,
the court may grant a preliminary or |
permanent injunction and may order the
defendant to make an |
offer of rescission with respect to any sales or
purchases |
of securities, mineral investment contracts, or mineral
|
deferred delivery contracts determined by the court to be |
unlawful under
this Act.
|
(3) Seek the seizure of assets when probable cause |
exists that the
assets
were
obtained by a defendant through |
conduct in violation of Section 12,
paragraph F, G, I, J, |
K, or L of this Act, and thereby subject to a judicial
|
forfeiture hearing as required under this Act.
|
(a) In the event that such probable cause exists |
|
that the subject of an
investigation who is alleged to |
have committed one of the relevant
violations of this |
Act has in his possession assets obtained as a
result |
of the conduct giving rise to the violation, the |
Secretary of
State may seek a seizure warrant in any |
circuit court in Illinois.
|
(b) In seeking a seizure warrant, the Secretary of |
State, or his
or her designee, shall submit to the |
court a sworn affidavit detailing the
probable cause |
evidence for the seizure, the location of the assets
to |
be seized, the relevant violation under Section 12 of |
this Act, and
a statement detailing any known owners or |
interest holders in the
assets.
|
(c) Seizure of the assets shall be made by any |
peace officer upon
process of the seizure warrant |
issued by the court. Following the
seizure of assets |
under this Act and pursuant to a seizure warrant,
|
notice of seizure, including a description of the |
seized assets, shall
immediately be returned to the |
issuing court. Seized assets shall be
maintained |
pending a judicial forfeiture hearing in accordance |
with
the instructions of the court.
|
(d) In the event that management of seized assets |
becomes necessary
to prevent the devaluation, |
dissipation, or otherwise to preserve the
property, |
the court shall have jurisdiction to appoint a |
|
receiver,
conservator, ancillary receiver, or |
ancillary conservator for that
purpose, as provided in |
item (2) of this subsection.
|
(4) Seek the forfeiture of assets obtained through |
conduct in violation of
Section 12, paragraph F, G, H, I, |
J, K, or L when authorized by law. A
forfeiture must be |
ordered by a circuit court or an action brought by the
|
Secretary of State as provided for in this Act, under a |
verified complaint
for forfeiture.
|
(a) In the event assets have been seized pursuant |
to this Act,
forfeiture
proceedings shall be |
instituted by the Attorney General within 45
days of |
seizure.
|
(b) Service of the complaint filed under the |
provisions of this Act
shall
be made in the manner as |
provided in civil actions in this State.
|
(c) Only an owner of or interest holder in the |
property may file an
answer asserting a claim against |
the property. For purposes of this Section,
the owner |
or interest holder shall be
referred to as claimant.
|
(d) The answer must be signed by the owner or |
interest holder under
penalty of perjury and must set |
forth:
|
(i) the caption of the proceedings as set forth |
on the notice of
pending forfeiture and the name of |
the claimant;
|
|
(ii) the address at which the claimant will |
accept mail;
|
(iii) the nature and extent of the claimant's |
interest in the
property;
|
(iv) the date, identity of the transferor, and |
circumstances of the
claimant's acquisition of the |
interest in the property;
|
(v) the name and address of all other persons |
known to have an
interest in the property;
|
(vi) the specific provisions of this Act |
relied on in asserting that
the
property is not |
subject to forfeiture;
|
(vii) all essential facts supporting each |
assertion; and
|
(viii) the precise relief sought.
|
(e) The answer must be filed with the court within |
45 days after service
of the complaint.
|
(f) A property interest is exempt from forfeiture |
under this Act if its
owner or interest holder |
establishes by a preponderance of
evidence that the |
owner or interest holder:
|
(i) is not legally accountable for the conduct |
giving rise to
the forfeiture, did not acquiesce in |
it, and did not know
and could not reasonably have |
known of the conduct or
that the conduct was likely |
to occur;
|
|
(ii) with respect to conveyances, did not hold |
the property
jointly or in common with a person |
whose conduct gave
rise to the forfeiture;
|
(iii) does not hold the property for the |
benefit of or as a
nominee for any person whose |
conduct gave rise to its
forfeiture and the owner |
or interest holder acquires it
as a bona fide |
purchaser for value without knowingly
taking part |
in the conduct giving rise to the forfeiture; or
|
(iv) acquired the interest after the
|
commencement of the conduct giving rise to its |
forfeiture
and the owner or interest holder |
acquired the interest as a
mortgagee, secured |
creditor, lienholder, or bona fide
purchaser for |
value without knowledge of the conduct
that gave |
rise to the forfeiture.
|
(g) The hearing must be held within 60 days after |
the answer is filed
unless continued for good cause.
|
(h) During the probable cause portion of the |
judicial in rem proceeding
wherein the Secretary of |
State presents its case-in-chief, the court
must |
receive and consider, among other things, any relevant
|
hearsay evidence and information. The laws of evidence |
relating
to civil actions shall apply to all other |
portions of the judicial in
rem proceeding.
|
(i) The Secretary of State shall show the existence |
|
of probable cause
for forfeiture of the property. If |
the Secretary of State shows
probable cause, the |
claimant has the burden of showing by a
preponderance |
of the evidence that the claimant's interest in the
|
property is not subject to forfeiture.
|
(j) If the Secretary of State does not show the |
existence of probable
cause or a claimant has an |
interest that is exempt under
subdivision I (4)(d) of |
this Section, the court shall order the interest in the
|
property returned
or conveyed to the claimant and shall |
order all other property
forfeited to the Secretary of |
State pursuant to all provisions of this Act. If
the |
Secretary of State does show the existence of probable
|
cause and the claimant does not establish by a |
preponderance of
the evidence that the claimant has an |
interest that is exempt under
subsection D herein, the |
court shall order all the property forfeited
to the |
Secretary of State pursuant to the provisions of the |
Section.
|
(k) A defendant convicted in any criminal |
proceeding is precluded
from later denying the |
essential allegations of the criminal offense
of which |
the defendant was convicted in any proceeding for
|
violations of the Act giving rise to forfeiture of |
property herein
regardless of the pendency of an appeal |
from that conviction.
However, evidence of the |
|
pendency of an appeal is admissible.
|
(l) An acquittal or dismissal in a criminal |
proceeding for violations of
the Act giving rise to the |
forfeiture of property herein shall not
preclude civil |
proceedings under this provision; however, for good
|
cause shown, on a motion by the Secretary of State, the |
court may
stay civil forfeiture proceedings during the |
criminal trial for a
related criminal indictment or |
information alleging violation of the
provisions of |
Section 12 of the Illinois Securities Law of 1953.
|
Property subject to forfeiture under this Section |
shall not be subject
to return or release by a court |
exercising jurisdiction over a
criminal case involving |
the seizure of the property unless the return
or |
release is consented to by the Secretary of State.
|
(m) All property declared forfeited under this Act |
vests in the State on
the commission of the conduct |
giving rise to forfeiture together
with the proceeds of |
the property after that time. Any such
property or |
proceeds subsequently transferred to any person remain
|
subject to forfeiture and thereafter shall be ordered |
forfeited unless
the transferee claims and establishes |
in a hearing under the
provisions of this Act that the |
transferee's interest is exempt under
the Act. Any |
assets forfeited to the State shall be disposed of in
|
following manner:
|
|
(i) all forfeited property and assets shall be |
liquidated by the
Secretary of State in accordance |
with all laws and
rules governing the disposition |
of such property;
|
(ii) the Secretary of State shall provide the |
court at the time the
property and assets are |
declared forfeited a verified
statement of |
investors subject to the conduct giving rise to the
|
forfeiture;
|
(iii) after payment of any costs of sale, |
receivership, storage, or
expenses for |
preservation of the property seized, other costs
|
to the State, and payment to claimants for any |
amount
deemed exempt from forfeiture, the proceeds |
from
liquidation shall be distributed pro rata to |
investors subject to the
conduct giving rise to the |
forfeiture; and
|
(iv) any proceeds remaining after all verified |
investors have
been made whole shall be |
distributed 25% to the
Securities Investors |
Education Fund, 25%
to the Securities Audit and
|
Enforcement Fund, 25% to the Attorney General or |
any
State's Attorney bringing criminal charges for |
the conduct
giving rise to the forfeiture, and 25% |
to other law
enforcement agencies participating in |
the investigation of
the criminal charges for the |
|
conduct giving rise to the
forfeiture. In the event |
that no other law enforcement
agencies are |
involved in the investigation of the conduct
|
giving rise to the forfeiture, then the portion to |
other law
enforcement agencies shall be |
distributed to the
Securities Investors Education |
Fund.
|
(n) The Secretary of State shall notify by |
certified mail, return
receipt
requested, all known |
investors in the matter giving rise to the forfeiture
|
of the forfeiture proceeding and sale of assets |
forfeited arising from the
violations of this Act, and |
shall further publish notice in a paper of
general |
circulation in the district in which the violations |
were prosecuted.
The notice to investors shall |
identify the name, address, and other
identifying |
information about any defendant prosecuted for |
violations
of this Act that resulted in forfeiture and |
sale of property, the offense
for which the defendant |
was convicted, and that the court has ordered
|
forfeiture and sale of property for claims of investors |
who incurred losses
or damages as a result of the |
violations. Investors may then file a claim
in a form |
prescribed by the Secretary of State in order to share |
in
disbursement of the proceeds from sale of the |
forfeited property.
Investor claims must be filed with |
|
the Secretary of State within 30 days
after receipt of |
the certified mail return receipt, or within 30 days |
after the
last
date of publication of the general |
notice in a paper of general circulation
in the |
district in which the violations were prosecuted, |
whichever occurs
last.
|
(o) A civil action under this subsection must be |
commenced within 5
years
after
the last conduct giving |
rise to the forfeiture became known or should
have |
become known or 5 years after the forfeitable property |
is
discovered, whichever is later, excluding time |
during which either the
property or claimant is out of |
this State or in confinement or during which
criminal |
proceedings relating to the same conduct are in |
progress.
|
(p) If property is seized for evidence and for |
forfeiture, the time
periods
for
instituting judicial |
forfeiture proceedings shall not begin until the
|
property is no longer necessary for evidence.
|
(q) Notwithstanding other provisions of this Act, |
the Secretary of State
and
a
claimant of forfeitable |
property may enter into an agreed-upon settlement
|
concerning the forfeitable property in such an amount |
and upon such
terms as are set out in writing in a |
settlement agreement.
|
(r) Nothing in this Act shall apply to property |
|
that constitutes
reasonable
bona
fide attorney's fees |
paid to an attorney for services rendered or to be
|
rendered in the forfeiture proceeding or criminal |
proceeding relating
directly thereto when the property |
was paid before its seizure and before
the issuance of |
any seizure warrant or court order prohibiting |
transfer of
the property and when the attorney, at the |
time he or she received the
property, did not know that |
it was property subject to forfeiture under
this Act.
|
The court shall further have jurisdiction and authority, in |
addition to the
penalties and other remedies in this Act |
provided, to enter an order for
the appointment of the court or |
a person as a receiver, conservator,
ancillary receiver or |
ancillary conservator for the defendant or the
defendant's |
assets located in this State, or to require restitution,
|
damages or disgorgement of profits on behalf of the person or |
persons
injured by the act or practice constituting the subject |
matter of the
action, and may assess costs against the |
defendant for the use of the
State; provided, however, that the |
civil remedies of rescission and
appointment of a receiver, |
conservator, ancillary receiver
or ancillary conservator shall |
not be available against any person by
reason of the failure to |
file with the Secretary of State, or on account of
the contents |
of, any report of sale provided for in subsection G or P of
|
Section 4, paragraph (2) of subsection D of Sections 5 and 6, |
or paragraph
(2) of subsection F of Section 7 of this Act. |
|
Appeals may be
taken as in other civil cases.
|
J. In no case shall the Secretary of State, or any of his |
or her
employees or agents, in the administration of this Act, |
incur any official or
personal liability by instituting an |
injunction or other proceeding or
by denying, suspending or |
revoking the registration of a dealer or
salesperson, or by |
denying, suspending or revoking the registration of
securities |
or prohibiting the offer or sale of securities, or by |
suspending or
prohibiting any person from acting as a dealer, |
limited Canadian dealer,
salesperson, investment adviser, or |
investment adviser
representative or from offering or selling |
securities.
|
K. No provision of this Act shall be construed to require |
or to
authorize the Secretary of State to require any |
investment adviser
or federal covered investment adviser |
engaged in rendering investment
supervisory services to |
disclose the
identity, investments, or affairs of any client of |
the investment
adviser or federal covered investment adviser, |
except insofar as the
disclosure may be necessary or
|
appropriate in a particular proceeding or investigation having |
as its
object the enforcement of this Act.
|
L. Whenever, after an examination, investigation or
|
hearing, the Secretary of State deems it of public interest or |
advantage,
he or she may certify a record to the State's |
Attorney of the county in
which the act complained of, examined |
or investigated occurred. The
State's Attorney of that county |
|
within 90 days after receipt of the record
shall file a written |
statement at the Office of the Secretary of State,
which |
statement shall set forth the action taken upon the record, or |
if no
action has been taken upon the record that fact, together |
with the reasons
therefor, shall be stated.
|
M. The Secretary of State may initiate, take, pursue, or |
prosecute any
action authorized or permitted under Section 6d |
of the Federal 1974 Act.
|
N. (1) Notwithstanding any provision of this Act to the |
contrary, to
encourage uniform interpretation, administration, |
and enforcement of the
provisions of this Act, the Secretary of |
State may cooperate with the
securities agencies or |
administrators of one or more states, Canadian provinces
or |
territories, or another country, the Securities and Exchange |
Commission, the
Commodity Futures Trading Commission, the |
Securities Investor Protection
Corporation, any |
self-regulatory organization, and any governmental law
|
enforcement or regulatory agency.
|
(2) The cooperation authorized by paragraph (1) of this |
subsection includes,
but is not limited to, the following:
|
(a) establishing or participating in a central |
depository or depositories
for registration under this Act |
and for documents or records required under
this Act;
|
(b) making a joint audit, inspection, examination, or |
investigation;
|
(c) holding a joint administrative hearing;
|
|
(d) filing and prosecuting a joint civil or criminal |
proceeding;
|
(e) sharing and exchanging personnel;
|
(f) sharing and exchanging information and documents; |
or
|
(g) issuing any joint statement or policy.
|
(Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
|
(815 ILCS 5/11a) (from Ch. 121 1/2, par. 137.11a)
|
Sec. 11a. Fees.
|
(1) The Secretary of State shall by rule or
regulation |
impose and shall collect reasonable fees necessary for
the |
administration of this Act including, but not limited to, fees |
for
the following purposes:
|
(a) filing an application pursuant to paragraph (2) of |
subsection F of
Section 4 of this Act;
|
(b) examining an application and report pursuant to |
paragraph (2) of
subsection F of Section 4 of this Act;
|
(c) filing a report pursuant to subsection G of Section |
4 of this Act,
determined
in accordance with paragraph (4) |
of subsection G of Section 4 of this Act;
|
(d) examining an offering sheet pursuant to subsection |
P of Section 4 of
this Act;
|
(e) filing a report pursuant to subsection P of Section |
4, determined
in accordance with subsection P of Section 4 |
of this Act;
|
|
(f) examining an application to register securities |
under
subsection B of Section 5 of this Act;
|
(g) examining an amended or supplemental prospectus |
filed
pursuant to the undertaking required by |
sub-paragraph (i) of paragraph (2)
of subsection B of |
Section 5 of this Act;
|
(h) registering or renewing registration of securities |
under Section 5,
determined in accordance with subsection C |
of Section 5 of this Act;
|
(i) registering securities in excess of the amount |
initially registered,
determined in accordance with |
paragraph (2) of subsection C of Section 5 of
this Act;
|
(j) failure to file timely an application for renewal |
under subsection E
of Section 5 of this Act;
|
(k) failure to file timely any document or information |
required
under Section 5 of this Act;
|
(l) examining an application to register face amount
|
certificate contracts under subsection B of Section 6 of |
this Act;
|
(m) examining an amended or supplemental prospectus |
filed
pursuant to the undertaking required by |
sub-paragraph (f) of paragraph (2)
of subsection B of |
Section 6 of this Act;
|
(n) registering or renewing registration
of face |
amount certificate contracts under Section 6 of this Act;
|
(o) amending a registration of face amount certificate
|
|
contracts pursuant to subsection E of Section 6 of this Act |
to add any
additional
series, type or class of contract;
|
(p) failure to file timely an application for renewal |
under subsection
F of Section 6 of this Act;
|
(q) adding to or withdrawing from deposits with respect |
to
face amount certificate contracts pursuant to |
subsection H of Section 6, a
transaction charge payable at |
the times and in the manner specified in
subsection H of |
Section 6 (which transaction charge shall be in addition to
|
the annual fee called for by subsection H of Section 6 of |
this Act);
|
(r) failure to file timely any document or information |
required
under Section 6 of this Act;
|
(s) examining an application to register investment |
fund
shares under subsection B of Section 7 of this Act;
|
(t) examining an amended or supplemental prospectus |
filed
pursuant to the undertaking required by |
sub-paragraph (f) of paragraph (2)
of subsection B of |
Section 7 of this Act;
|
(u) registering or renewing registration of investment |
fund shares
under Section 7 of this Act;
|
(v) amending a registration of investment fund shares
|
pursuant to subsection D of Section 7 of this Act to |
register an additional
class or
classes of investment fund |
shares;
|
(w) failure to file timely an application for renewal |
|
under paragraph
(l) of subsection G of Section 7 of this |
Act;
|
(x) examining an application for renewal of |
registration of
investment fund shares under paragraph (2) |
of subsection G of Section 7 of
this Act;
|
(y) failure to file timely any document or information |
required under
Section 7 of this Act;
|
(z) filing an application for registration or |
re-registration of a
dealer or limited Canadian dealer |
under Section 8 of this Act for each
office in this State;
|
(aa) in connection with an application for the |
registration or
re-registration of a salesperson under |
Section 8 of or this Act, for the
following purposes:
|
(i) filing an application;
|
(ii) a Securities Audit and Enforcement Fund fee; |
and
|
(iii) a notification filing of federal covered |
investment
advisers;
|
(bb) in connection with an application for the |
registration or
re-registration of an investment adviser |
under Section 8 of this Act;
|
(cc) failure to file timely any document or information |
required
under Section 8 of this Act;
|
(dd) filing a consent to service of process under |
Section 10 of this
Act;
|
(ee) issuing a certificate pursuant to subsection B of |
|
Section 15 of
this Act;
|
(ff) issuing a certified copy pursuant to subsection C |
of Section 15
of
this Act;
|
(gg) issuing a non-binding statement pursuant to |
Section 15a of this
Act;
|
(hh) filings by Notification under Section 2a;
|
(ii) notification filing of federal Regulation D, |
Section 506 offering
under the
Federal 1933 Act;
|
(jj) notification filing of securities and closed-end |
investment company
securities;
|
(kk) notification filing of face amount certificate |
contracts;
|
(ll) notification filing of open-end investment |
company securities;
|
(mm) filing a report pursuant to subsection D of |
Section 4 of this Act;
|
(nn) in connection with the filing of an application |
for registration or
re-registration of an investment |
adviser representative under subsection D of
Section 8 of |
this Act ; .
|
(oo) filing a notice pursuant to paragraph (6) of |
subsection T
of Section 4 of this Act; and |
(pp) applying for registration, or renewing |
registration, as a
registered Internet portal pursuant to |
Section 8d of this Act. |
(2) The Secretary of State may, by rule or regulation, |
|
raise or lower
any fee imposed by, and which he or she is |
authorized by law to collect
under, this Act.
|
(Source: P.A. 90-70, eff. 7-8-97; 91-357, eff. 7-29-99; revised |
12-11-14.)
|
(815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)
|
Sec. 12. Violation. It shall be a violation of the |
provisions of
this Act for any person:
|
A. To offer or sell any security except in accordance with |
the provisions
of this Act.
|
B. To deliver to a purchaser any security required to be |
registered
under Section 5, Section 6 or Section 7 hereof |
unless accompanied or preceded
by a prospectus that meets the |
requirements of the pertinent subsection of
Section 5 or of |
Section 6 or of Section 7.
|
C. To act as a dealer, internet portal, salesperson, |
investment adviser, or
investment adviser representative, |
unless
registered as such, where such registration is required, |
under the
provisions of this Act.
|
D. To fail to file with the Secretary of State any |
application,
report or document required to be filed under the |
provisions of this Act
or any rule or regulation made by the |
Secretary of State pursuant to
this Act or to fail to comply |
with the terms of any order of the
Secretary of State issued |
pursuant to Section 11 hereof.
|
E. To make, or cause to be made, (1) in any application, |
|
report or
document filed under this Act or any rule or |
regulation made by the
Secretary of State pursuant to this Act, |
any statement which was false
or misleading with respect to any |
material fact or (2) any statement to
the effect that a |
security (other than a security issued by the State of
|
Illinois) has been in any way endorsed or approved by the |
Secretary of
State or the State of Illinois.
|
F. To engage in any transaction, practice or course of |
business in
connection with the sale or purchase of securities |
which works or tends
to work a fraud or deceit upon the |
purchaser or seller thereof.
|
G. To obtain money or property through the sale of |
securities by
means of any untrue statement of a material fact |
or any omission to
state a material fact necessary in order to |
make the statements made, in
the light of the circumstances |
under which they were made, not
misleading.
|
H. To sign or circulate any statement, prospectus, or other |
paper or
document required by any provision of this Act or |
pertaining to any
security knowing or having
reasonable grounds |
to know any material representation therein contained
to be |
false or untrue.
|
I. To employ any device, scheme or artifice to defraud in |
connection
with the sale or purchase of any security, directly |
or indirectly.
|
J. When acting as an investment adviser, investment adviser
|
representative, or federal covered investment adviser, by any |
|
means or
instrumentality, directly or indirectly:
|
(1) To employ any device, scheme or artifice to defraud |
any client
or prospective client;
|
(2) To engage in any transaction, practice, or course |
of business
which operates as a fraud or deceit upon any |
client or prospective
client; or
|
(3) To engage in any act, practice, or course of |
business which is
fraudulent, deceptive or manipulative. |
The Secretary of State shall for
the purposes of this |
paragraph (3), by rules and regulations, define and
|
prescribe means reasonably designed to prevent such acts, |
practices,
and courses of business as are fraudulent, |
deceptive, or manipulative.
|
K. When offering or selling any mineral investment contract |
or mineral
deferred delivery contract:
|
(1) To employ any device, scheme, or artifice to |
defraud any customer,
prospective customer, or offeree;
|
(2) To engage in any transaction, practice, or course |
of business that
operates as a fraud or deceit upon any |
customer, prospective customer, or
offeree; or
|
(3) To engage in any act, practice, or course of |
business that is
fraudulent, deceptive, or manipulative. |
The Secretary of State shall for
the purposes of this |
paragraph (3), by rules and regulations, define and
|
prescribe means reasonably designed to prevent acts, |
practices, and
courses of business as are fraudulent, |
|
deceptive, or manipulative.
|
L. To knowingly influence, coerce, manipulate, or mislead |
any person
engaged
in
the
preparation or audit of financial |
statements or appraisals to be used in the
offer or
sale of |
securities for the purpose of rendering such financial |
statements or
appraisals materially misleading.
|
(Source: P.A. 93-580, eff. 8-21-03.)
|
(815 ILCS 5/13) (from Ch. 121 1/2, par. 137.13)
|
Sec. 13. Private and other civil remedies; securities.
|
A. Every sale of a security made in
violation of the |
provisions of this Act shall be voidable at the
election of the |
purchaser exercised as provided in subsection B of this
|
Section; and the issuer, controlling person, underwriter,
|
dealer or other person by or on behalf of whom said sale was |
made, and
each underwriter, dealer , internet portal, or |
salesperson who shall have participated or
aided in any way in |
making the sale, and in case the
issuer, controlling person, |
underwriter , or dealer , or internet portal is a corporation or
|
unincorporated association or organization, each of its |
officers and
directors (or persons performing similar |
functions) who shall have
participated or aided in making the |
sale, shall be jointly and
severally liable to the purchaser as |
follows:
|
(1) for the full amount paid,
together with interest |
from the date of payment for the securities sold
at the |
|
rate of the interest or dividend stipulated in the |
securities
sold (or if no rate is stipulated, then at the |
rate of 10%
per annum) less any income or other amounts |
received by the
purchaser on the securities, upon offer to |
tender to the seller or
tender into court of
the securities |
sold or, where the securities were not received, of any
|
contract made in respect of the sale; or
|
(2) if the purchaser no longer
owns the securities, for |
the amounts set forth in clause (1) of this
subsection A |
less any amounts received by the purchaser for or on |
account
of the disposition of the securities.
|
If the purchaser shall
prevail in any action brought to |
enforce any of the remedies provided in
this subsection, the |
court shall assess costs together with the
reasonable fees and |
expenses of the purchaser's attorney against the defendant.
Any |
provision of this subsection A to the contrary
notwithstanding, |
the civil remedies provided in this subsection A shall not
be |
available against any person by reason of the failure to file |
with the
Secretary of State, or on account of the content of, |
any report of sale
provided for in subsection G or P of Section |
4, paragraph (2) of
subsection D of Sections 5 and 6, or |
paragraph (2) of subsection F of
Section 7 of this Act.
|
B. Notice of any election provided for in subsection A of |
this
Section shall be given by the purchaser within 6
months |
after the purchaser shall have knowledge that the sale of the
|
securities to him or her is
voidable, to each person from whom |
|
recovery will be sought, by
registered mail or certified mail, |
return receipt requested,
addressed to the person to be |
notified at his or her last
known address with proper postage |
affixed, or by personal service.
|
C. No purchaser shall have any right or remedy under this |
Section who shall
fail, within 15 days from the date of receipt |
thereof, to accept an offer to
repurchase the securities |
purchased by him or her for a price equal to the full
amount |
paid therefor plus interest thereon and less any income thereon |
as set
forth in subsection A of this Section. Every offer of |
repurchase provided for
in this subsection shall be in writing, |
shall be delivered to the purchaser or
sent by registered mail |
or certified mail, return receipt requested, addressed
to the |
purchaser at his or her last known address, and shall offer to
|
repurchase the securities sold for a price equal to the full |
amount paid
therefor plus interest thereon and less any income |
thereon as set forth in
subsection A of this Section. Such |
offer shall continue in force for 15 days
from the date on |
which it was received by the purchaser, shall advise the
|
purchaser of his or her rights and the period of time limited |
for
acceptance thereof, and shall contain such further |
information, if
any, as the Secretary of State may prescribe. |
Any agreement not to accept or
refusing or waiving any such |
offer made during or prior to said 15
days shall be void.
|
D. No action shall be brought for relief under this Section
|
or upon or because of any of the matters for which relief is |
|
granted by
this Section after 3 years from the date of sale; |
provided, that if the
party bringing the action neither knew |
nor in the exercise of reasonable
diligence should have known |
of any alleged violation of subsection E, F, G,
H, I or J of |
Section 12 of this Act which is the basis for the action, the 3
|
year period provided herein shall begin to run upon the earlier |
of:
|
(1) the date upon which the party bringing the
action |
has actual knowledge of the alleged violation of this Act; |
or
|
(2) the date upon which the party bringing the action |
has
notice of facts
which in the exercise of reasonable |
diligence would lead to actual
knowledge of the alleged |
violation of this Act.
|
E. The term purchaser as used in this Section shall include |
the
personal representative or representatives of the |
purchaser.
|
F. Anything in this Act to the contrary notwithstanding and |
in addition
to all other
remedies, the Secretary of State |
through
the Office of the Attorney General may bring an action |
in any circuit
court of the State of Illinois in the name and |
on behalf of the State of
Illinois against any person or |
persons participating in or about to
participate in a violation |
of this Act to enjoin those persons who are
continuing or doing |
any act in violation of this Act or to enforce
compliance with |
this Act. Upon a proper showing the court may grant a
permanent |
|
or preliminary injunction or temporary restraining order
|
without bond, and may order the defendant to make an offer
of |
rescission of any sales or purchases of securities determined |
by the
court to be unlawful under this Act. The court shall |
further have
jurisdiction and authority, in addition to the |
other penalties and remedies
in this Act provided, to act or |
appoint another person as a receiver,
conservator, ancillary |
receiver or ancillary conservator for the defendant
or the |
defendant's assets located in this State and may assess costs
|
against the defendant for the use of the State.
|
G. (1) Whenever any person has engaged or is about to |
engage in any
act or practice constituting a violation of this |
Act, any party in
interest may bring an action in the circuit |
court of the county in which
the party in interest resides, or |
where the person has his, her or its
principal office or |
registered office or where any part of the transaction
has or |
will take place, to enjoin that person from continuing or doing |
any
act in violation of or to enforce compliance with this Act. |
Upon a proper
showing, the court shall grant a permanent or |
preliminary injunction or
temporary restraining order or |
rescission of any sales or purchases of
securities determined |
to be unlawful under this Act, and may assess costs
of the |
proceedings against the defendant.
|
(2) A copy of the complaint shall be served upon the
|
Secretary of State within one business day of filing in
the |
form and manner prescribed by the Secretary of State by rule or
|
|
regulation; provided, that the failure to comply with this |
provision shall
not invalidate the action which is the subject |
of the complaint.
|
H. Any provision of this Section 13 to the contrary |
notwithstanding,
neither the civil remedies provided in |
subsection A of this Section 13 nor the
remedies of rescission |
and appointment of a receiver, conservator,
ancillary receiver |
or ancillary conservator provided in subsection I of
Section 11 |
of this Act and in subsections F and G
of this Section 13 of |
this Act nor the remedies of restitution, damages
or |
disgorgement of profits provided in subsection I of Section 11 |
of this
Act shall be available against any person
by reason of |
the failure to file with the Secretary of State, or on account
|
of the contents of, any notice filing under Section 2a of this |
Act or
subsection C-5 of Section 8 of this Act or any report of |
sale provided for in
subsection G or P of
Section 4, paragraph |
(2) of subsection D of Sections 5 and 6, or paragraph
(2) of |
subsection F of Section 7 of this Act.
|
(Source: P.A. 98-174, eff. 8-5-13.)
|
(815 ILCS 5/18.1)
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Sec. 18.1. Additional fees. In addition to any other fee |
that the
Secretary of State may impose and collect pursuant to |
the authority contained
in Sections 4, 8, and 11a of this Act, |
beginning on
July 1, 2003 the Secretary of State shall also |
collect the following additional
fees:
|
|
|
Securities offered or sold under the Uniform |
|
|
Limited Offering Exemption Pursuant to |
|
|
Section 4.D of the Act ............................ |
$100 |
|
Securities offered or sold under the Uniform | Limited Offering Exemption pursuant to subsection | T of Section 4 of this Act . | $100 |
|
Registration and renewal of a dealer .............. |
$300 |
|
Registration and renewal of a registered Internet | portal . | $300 |
|
Registration and renewal of an investment adviser . |
$200 |
|
Federal covered investment adviser notification |
|
|
filing and annual notification filing ............. |
$200 |
|
Registration and renewal of a salesperson ......... |
$75 |
|
Registration and renewal of an investment adviser |
|
|
representative and a federal covered |
|
|
investment adviser representative ................. |
$75 |
|
Investment fund shares notification filing and annual |
notification filing:
$800 plus $80 for each series, class, or |
portfolio.
|
All fees collected by the Secretary of State pursuant to |
this amendatory Act
of the 93rd General Assembly shall be |
deposited into the General Revenue Fund
in the State treasury.
|
(Source: P.A. 93-32, eff. 7-1-03 .)
|