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Law Offices of Eric Norstedt, P.A.
2924 Davie Road, Suite 200
Davie, Florida, 33314
P: (954) 467-6263

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Securities Law
FEDERAL SECURITIES LAW
 - Securities Act of 1933
 - Securities Act of 1934
    - Rules Promulgated under
      the Securities Act of 1934

STATE SECURITIES LAW

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Selected Sections of the

Kansas Securities Act

 

Sections included on this page:

17-12a501 GENERAL FRAUD

It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly:
      (1)   To employ a device, scheme, or artifice to defraud;
      (2)   to make an untrue statement of a material fact, or omit to state a material fact necessary in order to make a statement made, in the light of the circumstances under which it is made, not misleading; or
      (3)   to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

17-12a502   PROHIBITED CONDUCT IN PROVIDING INVESTMENT ADVICE

It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as part of a regular business, issues or promulgates analyses or reports relating to securities:
      (1)   To employ a device, scheme, or artifice to defraud another person; or
      (2)   to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.
      (b)   Rules defining fraud. A rule adopted under this act may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative.
      (c)   Rules specifying contents of advisory contract. A rule adopted under this act may specify the contents of an investment advisory contract entered into, extended, or renewed by an investment adviser. 

17-12a505.   MISLEADING FILINGS; COERCION; OBSTRUCTION

(a) It is unlawful for a person to make or cause to be made, in a record that is used in an action or proceeding or filed under this act, a statement that, at the time and in the light of the circumstances under which it is made, is false or misleading in a material respect, or, in connection with the statement, to omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading.
      (b)   It is unlawful for any person to intentionally influence, coerce, manipulate or mislead any person in connection with financial statements or appraisals to be used in the offer, sale or purchase of securities for the purpose of rendering such financial statements or appraisals materially misleading.
      (c)   It is unlawful for any person to:
      (1)   Alter, destroy, shred, mutilate, conceal, cover up or falsify any record with the intent to impede, obstruct or influence any investigation by the administrator or the administrator's designee;
      (2)   alter, destroy, shred, mutilate or conceal a record with the intent to impair the object's integrity or availability for use in a proceeding before the administrator or a proceeding brought by the administrator; or
      (3)   take action harmful to a person with the intent to retaliate, including, but not limited to, interference with lawful employment of such person, for providing truthful information relating to a violation of this act.

17-12a508 CRIMINAL PENALTIES; STATUTE OF LIMITATIONS

(a) Criminal penalties. (1) Except as provided in subsections (a)(2) through (a)(4), a conviction for an intentional violation of this act, or a rule adopted or order issued under this act, except K.S.A. 2005 Supp. 17-12a504, and amendments thereto, or the notice filing requirements of K.S.A. 2005 Supp. 17-12a302 or 17-12a405, and amendments thereto, is a severity level 7, nonperson felony. An individual convicted of violating a rule or order under this act may be fined, but may not be imprisoned, if the individual did not have knowledge of the rule or order.
      (2)   A conviction for an intentional violation of K.S.A. 2005 Supp. 17-12a501 or 17-12a502, and amendments thereto, is:
      (A)   A severity level 4, nonperson felony if the violation resulted in a loss of $100,000 or more;
      (B)   a severity level 5, nonperson felony if the violation resulted in a loss of at least $25,000 but less than $100,000; or
      (C)   a severity level 7, nonperson felony if the violation resulted in a loss of less than $25,000.
      (3)   A conviction for an intentional violation of K.S.A. 2005 Supp. 17-12a301, 17-12a401(a), 17-12a401(c), 17-12a402(a), 17-12a402(d), 17-12a403(a), 17-12a403(c), 17-12a403(d), 17-12a404(a), or 17-12a404(e), and amendments thereto, is:
      (A)   A severity level 5, nonperson felony if the violation resulted in a loss of $100,000 or more;
      (B)   a severity level 6, nonperson felony if the violation resulted in a loss of at least $25,000 but less than $100,000; or
      (C)   a severity level 7, nonperson felony if the violation resulted in a loss of less than $25,000.
      (4)   A conviction for an intentional violation of K.S.A. 2005 Supp. 17-12a505 or 17-12a506, and amendments thereto, is a severity level 8, nonperson felony.
      (5)   Any violation of K.S.A. 2005 Supp. 17-12a301, 17-12a401(a), 17-12a401(c), 17-12a402(a), 17-12a402(d), 17-12a403(a), 17-12a403(c), 17-12a403(d), 17-12a404(a), 17-12a404(e), 17-12a501 or 17-12a502, and amendments thereto, resulting in a loss of $25,000 or more shall have a presumptive sentence of imprisonment regardless of its location on the sentencing grid block.
      (b)   Statute of Limitations. Except as provided by subsection (9) of K.S.A. 21-3106, and amendments thereto, no prosecution for any crime under this act may be commenced more than 10 years after the alleged violation if the victim is the Kansas public employees retirement system and no prosecution for any other crime under this act may be commenced more than five years after the alleged violation. A prosecution is commenced when a complaint or information is filed, or an indictment returned, and a warrant thereon is delivered to the sheriff or other officer for execution, except that no prosecution shall be deemed to have been commenced if the warrant so issued is not executed without unreasonable delay.
      (c)   Criminal reference. The administrator may refer such evidence as may be available concerning violations of this act or of any rules and regulations or order hereunder to the attorney general or the proper county or district attorney, who may in the prosecutor's discretion, with or without such a reference, institute the appropriate criminal proceedings under this act. Upon receipt of such reference, the attorney general or the county attorney or district attorney may request that a duly employed attorney of the administrator prosecute or assist in the prosecution of such violation or violations on behalf of the state. Upon approval of the administrator, such employee shall be appointed a special prosecutor for the attorney general or the county attorney or district attorney to serve without compensation from the attorney general or the county attorney or district attorney. Such special prosecutor shall have all the powers and duties prescribed by law for assistant attorneys general or assistant county or district attorneys and such other powers and duties as are lawfully delegated to such special prosecutor by the attorney general or the county attorney or district attorney. If an attorney employed by the administrator acts as a special prosecutor, the administrator may pay extradition and witness expenses associated with the case.
      (d)   No limitation on other criminal enforcement. This act does not limit the power of this state to punish a person for conduct that constitutes a crime under other laws of this state.

17-12a509 CIVIL LIABILITY

(a) Securities litigation uniform standards act. Enforcement of civil liability under this section is subject to the securities litigation uniform standards act of 1998.
      (b)   Liability of seller to purchaser. A person is liable to the purchaser if the person sells a security in violation of K.S.A. 2005 Supp. 17-12a301, and amendments thereto, or by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make a statement made, in light of the circumstances under which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action under this subsection is governed by the following:
      (1)   The purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest from the date of the purchase at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto, costs, and reasonable attorneys' fees determined by the court, upon the tender of the security, or for actual damages as provided in paragraph (3).
      (2)   The tender referred to in paragraph (1) may be made any time before entry of judgment. Tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified. A purchaser that no longer owns the security may recover actual damages as provided in paragraph (3).
      (3)   Actual damages in an action arising under this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest from the date of the purchase at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto, costs, and reasonable attorneys' fees determined by the court.
      (c)   Liability of purchaser to seller. A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know, and in the exercise of reasonable care, could not have known of the untruth or omission. An action under this subsection is governed by the following:
      (1)   The seller may maintain an action to recover the security, and any income received on the security, costs, and reasonable attorneys' fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in paragraph (3).
      (2)   The tender referred to in paragraph (1) may be made any time before entry of judgment. Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified. If the purchaser no longer owns the security, the seller may recover actual damages as provided in paragraph (3).
      (3)   Actual damages in an action arising under this subsection are the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser's conduct causing liability, and interest from the date of the sale of the security at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto, costs, and reasonable attorneys' fees determined by the court.
      (d)   Liability of unregistered broker-dealer and agent. A person acting as a broker-dealer or agent that sells or buys a security in violation of K.S.A. 2005 Supp. 17-12a401(a), 17-12a402(a), or 17-12a506, and amendments thereto, is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in subsections (b)(1) through (3), or, if a seller, for a remedy as specified in subsections (c)(1) through (3).
      (e)   Liability of unregistered investment adviser and investment adviser representative. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of K.S.A. 2005 Supp. 17-12a403(a), 17-12a404(a), or 17-12a506, and amendments thereto, is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest from the date of payment at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto, costs, and reasonable attorneys' fees determined by the court.
      (f)   Liability for investment advice. A person that receives directly or indirectly any consideration for providing investment advice to another person and that employs a device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business that operates or would operate as a fraud or deceit on the other person, is liable to the other person. An action under this subsection is governed by the following:
      (1)   The person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest from the date of the fraudulent conduct at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto, costs, and reasonable attorneys' fees determined by the court, less the amount of any income received as a result of the fraudulent conduct.
      (2)   This subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.
      (g)   Joint and several liability. The following persons are liable jointly and severally with and to the same extent as persons liable under subsections (b) through (f):
      (1)   A person that directly or indirectly controls a person liable under subsections (b) through (f), unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;
      (2)   an individual who is a managing partner, executive officer, or director of a person liable under subsections (b) through (f), including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;
      (3)   an individual who is an employee of or associated with a person liable under subsections (b) through (f) and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist; and
      (4)   a person that is a broker-dealer, agent, investment adviser, or investment adviser representative that materially aids the conduct giving rise to the liability under subsections (b) through (f), unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.
      (h)   Right of contribution. A person liable under this section has a right of contribution as in cases of contract against any other person liable under this section for the same conduct.
      (i)   Survival of cause of action. A cause of action under this section survives the death of an individual who might have been a plaintiff or defendant.
      (j)   Statute of limitations. A person may not obtain relief:
      (1)   Under subsection (b) for violation of K.S.A. 2005 Supp. 17-12a301, and amendments thereto, or under subsection (d) or (e), unless the action is instituted within one year after the violation occurred; or
      (2)   under subsection (b), other than for violation of K.S.A. 2005 Supp. 17-12a301, and amendments thereto, or under subsection (c) or (f), unless the action is instituted within the earlier of two years after discovery of the facts constituting the violation or five years after the violation.
      (k)   No enforcement of violative contract. A person that has made, or has engaged in the performance of, a contract in violation of this act or a rule adopted or order issued under this act, or that has acquired a purported right under the contract with knowledge of conduct by reason of which its making or performance was in violation of this act, may not base an action on the contract.
      (l)   No contractual waiver. A condition, stipulation, or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with this act or a rule adopted or order issued under this act is void.
      (m)   Survival of other rights or remedies. The rights and remedies provided by this act are in addition to any other rights or remedies that may exist, but this act does not create a cause of action not specified in this section or K.S.A. 2005 Supp. 17-12a411(e), and amendments thereto.  

17-12a603 CIVIL ENFORCEMENT

 (a) Civil action instituted by administrator. If the administrator believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this act or a rule adopted or order issued under this act or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this act or a rule adopted or order issued under this act, the administrator may maintain an action in any court of competent jurisdiction to enjoin the act, practice, or course of business and to enforce compliance with this act or a rule adopted or order issued under this act.
      (b)   Relief available. In an action under this section and on a proper showing, the court may:
      (1)   Issue a permanent or temporary injunction, restraining order, or declaratory judgment;
      (2)   order other appropriate or ancillary relief, which may include:
      (A)   An asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator, that may be the administrator, for the defendant or the defendant's assets;
      (B)   ordering the administrator to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property;
      (C)   imposing a civil penalty up to $25,000 for each violation. If any person is found to have violated any provision of this act, and such violation is committed against elder or disabled persons, as defined in K.S.A. 50-676, and amendments thereto, in addition to any civil penalty otherwise provided by law, the court may impose an additional penalty not to exceed $15,000 for each such violation. The total penalty against a person shall not exceed $1,000,000;
      (D)   an order of rescission, restitution, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this act or the predecessor act or a rule adopted or order issued under this act or the predecessor act; and
      (E)   ordering the payment of prejudgment and postjudgment interest; or
      (3)   order such other relief as the court considers appropriate.

      (c)   No bond required. The administrator may not be required to post a bond in an action or proceeding under this act.

 


USinvestorlaw.com Disclaimer
The above is not the complete act. This page contains only certain sections of the statute which we believe you may find informative. We do not and cannot guarantee the above sections are current law in this state. Legislatures may enact revised statutes at any time. Moreover these sections are presented for informational purposes only and are presented “as is” with all faults and with no warranties or guarantees as to the accuracy. Further, The content on these pages are not offered or intended to be legal advice by this firm for any purpose or manner whatsoever. If you require the current and complete version of the Law in your state, you should visit the Legislature home page of the particular state for more information or contact an attorney for advice on obtaining such information.

 
 
 
 

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