Selected Sections of the
Louisianna Securities Act
Sections included on this page:
702. Definitions and rules of construction
As used in this Part, the term:
(1) "Affiliate" or "person affiliated with" means, when used with reference to a specified person, a person who directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with the person specified. Any beneficial owner of twenty percent or more of the combined voting power of all classes of voting securities of a person or any executive officer, director, trustee, or general partner of a person is an affiliate of such person unless the shareholder, executive officer, director, trustee, or general partner shall prove that he in fact does not control, is not controlled by, and is not under common control with such person.
(2) "Beneficial owner" means, with regard to any securities, any person who owns such securities or who enjoys benefits substantially equivalent to ownership. A person's beneficial ownership of securities shall be deemed to include, but shall not be limited to, any securities owned by:
(a) His spouse.
(b) His minor children.
(c) Any revocable trust of which he is a settlor.
(d) Any trust of which he, his spouse, and his minor children have an aggregate vested beneficial interest of twenty percent or more in the income or the corpus.
(e) Any partnership in which he is a general partner.
(f) Any corporation of which he is the beneficial owner of twenty percent or more of the outstanding voting securities or of which he is an executive officer if the corporation has no substantial business other than investment in securities.
(g) Any ancestor, sibling, or lineal descendant of his who resides in his home.
(3) "Commissioner" means the commissioner of financial institutions who is also the commissioner of securities.
(4) "Control", including "controlling", "controlled by", and "under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
(5)(a) "Dealer" means every person, other than a salesman registered under this Part, who engages, either for all or part of his time, directly or indirectly, as agent, broker, or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person but does not include:
(i) A bank chartered and issued a certificate of authority by the state of Louisiana and under the supervision of the commissioner of financial institutions, a national bank chartered by the government of the United States and under the supervision of the Comptroller of the Currency of the United States, a bank holding company organized under the laws of the state of Louisiana and under the supervision of the Board of Governors of the Federal Reserve, or the employees of such banks or bank holding companies acting in their official capacity.
(ii) Any person insofar as such person buys or sells securities for his own account, either individually or in some fiduciary capacity, other than as a part of a regular business.
(iii) Any general partner, or executive officer of any general partner, of an issuer or executive officer of an issuer offering or selling securities of such issuer unless he is paid a commission directly related to the sale of such securities.
(b) The commissioner may, by rule or regulation, for purposes not inconsistent with the protection of investors, limit, condition, or expand the group of persons associated with an "issuer" for purposes of the provisions of this Paragraph.
(6) "Executive officer" means the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.
(6.1) "Federal covered adviser" means a person who is registered under Section 203 of the Investment Advisers Act of 1940.
(6.2) "Federal covered security" means any security that is a covered security under Section 18(b) of the Securities Exchange Act of 1934 or rules or regulations promulgated thereunder.
(7) "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" does not include:
(a) A bank, savings institution, or trust company.
(b) A lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his or her profession.
(c) A broker whose performance of these services is solely incidental to the conduct of his or her business as a broker and who receives no special compensation for them.
(d) A publisher of any bona fide newspaper, news magazine, or business or financial publication of general, regular, and paid circulation.
(e) A person whose advice, analyses, or reports relate only to securities exempted by R.S. 51:708(1).
(f) A person whose only clients in this state are other investment advisers, dealers, banks, savings institutions, trust companies, insurance companies, investment companies, pension or profit sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees, or who, during any period of twelve consecutive months, has had fewer than fifteen clients in this state and who does not hold himself or herself out generally to the public as an investment adviser.
(g) Such other persons not within the intent of this Paragraph as the commissioner may by rule or order designate.
(7.1) "Investment adviser representative" means any partner, officer, director, or a person occupying a similar status or performing similar functions, or other individual, except clerical or ministerial personnel, who is employed by or associated with an investment adviser that is registered or required to be registered under this Part, and who does any of the following:
(a) Makes any recommendations or otherwise renders advice regarding securities.
(b) Manages accounts or portfolios of clients.
(c) Determines which recommendation or advice regarding securities should be given.
(d) Solicits, offers or negotiates for the sale or sells investment advisory services.
(e) Supervises employees who perform any of the foregoing.
(8) "Issuer" means every person who issues or proposes to issue any security, except that with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or in an unincorporated investment trust of the fixed, restricted management, or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued, except that:
(a) In the case of an unincorporated association which provides by its articles for limited liability of any or all of its members or in the case of a trust, committee, or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity.
(b) With respect to equipment-trust certificates or like securities, the term "issuer" means the person by whom the equipment or property is or is to be used.
(c) With respect to fractional undivided interests in oil, gas, or other mineral rights, the term "issuer" means the owner of any such right or of any interest in such right, whether whole or fractional, who creates fractional interests therein for the purpose of public offering.
(9) "Majority owned subsidiary" means a subsidiary more than fifty percent of whose outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors is owned by the subsidiary's parent, by one or more of the parent's other majority owned subsidiaries, or by the subsidiary's parent and one or more of the parent's other majority-owned subsidiaries.
(10) "Parent", when used with reference to a specified person, means an affiliate controlling such person directly, or indirectly through one or more intermediaries.
(11) "Person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interest of the beneficiaries is evidenced by a security, or any unincorporated organization.
(12) "Prospectus" means any notice, circular, advertisement, sales literature, letter, offering circular, offering sheet, or communication, written or by radio or television, which offers any security for sale or which is used in connection with any such offer or which confirms the sale of any security, except that:
(a) A confirmation of the sale of a security which is sent or given after the effective date of the registration statement shall not be deemed a prospectus if it is proved that prior to or at the same time with such confirmation a written prospectus, meeting the requirements of R.S. 51:705(B)(3), (E)(3), or (F)(4) as appropriate to form of registration under this Part, at the time of such confirmation, was sent or given to the person to whom the confirmation was sent or given.
(b) A notice, circular, advertisement, sales literature, letter, or communication in respect of a security, shall not be deemed to be a prospectus if it states from whom a written prospectus meeting the requirements of R.S. 51:705(B)(3), (E)(3), or (F)(4) may be obtained and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed, and such other information as the commissioner, by rules or regulations, deems necessary or appropriate in the public interest and for the protection of investors, and subject to such terms and conditions as may be prescribed therein, may permit.
(13) "Sale" or "sell" means and shall include every contract of sale or disposition of a security or interest in a security for value. The term "offer to sell", "offer for sale", or "offer" shall include every attempt or offer to dispose of or solicitation of an offer to buy a security or interest in a security for value. The terms defined in this Paragraph shall not include preliminary negotiations or agreements between an issuer or any person on whose behalf an offering is to be made and any underwriter or among underwriters who are or are to be in privity of contract with an issuer or any person on whose behalf an offering is to be made. Any security given or delivered with or as a bonus on account of any purchase of securities or any other thing shall be conclusively presumed to constitute a part of the subject of such purchase and to have been offered and sold for value. The issue or transfer of a right or privilege, when originally issued or transferred with a security, giving the holder of such security the right to convert such security into another security of the same issuer or of another person, or giving a right to subscribe to another security of the same issuer or of another person, which right cannot be exercised until some future date, shall not be deemed to be an offer or sale of such other security, but the issue or transfer of such other security upon the exercise of such right of conversion or subscription shall be deemed a sale of such other security.
(14) "Salesman" means an individual, other than a dealer registered under this Part, employed, appointed, or authorized by a dealer or by an issuer, to sell securities in this state, but does not include any person specified in R.S. 51:702(5)(a)(i) or (a)(iii).
(15)(a) "Security" means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral-trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting-trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof); or, in general, any interest or instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
(b) "Security" shall not mean:
(i) Any insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed number of dollars either in a lump sum or periodically for life or some other specified period nor any variable annuity contract as provided for and regulated under Title 22 of the Louisiana Revised Statutes of 1950 and issued by a life insurance company licensed to do business in the state of Louisiana.
(ii) Currency, or any note, draft, bill of exchange, loan participation or bankers acceptance, or any other evidence of indebtedness issued by a bank or limited function financial institution other than the shares of such institutions as defined in R.S. 6:251 et seq. for state banks and the preferred and common stock of national banks as defined in 12 U.S.C.A. Sections 51(a) and 51(c).
(iii) Any right, interest, or instrument or class or type of right, interest, or instrument which the commissioner, by rule or regulation adopted pursuant to R.S. 51:710(D) of this Part, excludes from the definition set forth in this Paragraph.
(16) "Securities of the same class" means:
(a) All common stock of an issuer, regardless of varying series or designations, and all securities convertible into common stock or conferring the right to acquire common stock.
(b) All preferred stock of an issuer, regardless of varying preferences, series, or designations, and all securities convertible into preferred stock or conferring the right to acquire preferred stock.
(17) "Significant subsidiary" means a subsidiary meeting any one of the following conditions:
(a) The assets of the subsidiary or the investments in and advances to the subsidiary by its parent and the parent's other subsidiaries, if any, exceed ten percent of the assets of the parent and its subsidiaries on a consolidated basis.
(b) The sales and operating revenues of the subsidiary exceed ten percent of the sales and operating revenues of its parent and the parent's subsidiaries on a consolidated basis.
(c) The subsidiary is the parent of one or more subsidiaries and, together with such subsidiaries, would, if considered in the aggregate, constitute a significant subsidiary.
(18) "State" means any state (or a designated state), territory, or possession of the United States, the District of Columbia, Puerto Rico and the Virgin Islands.
(19) "Subsidiary", when used with reference to a specified person, means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.
(20) "Underwriter" means any person who has purchased from an issuer or an affiliate of an issuer with a view to the distribution or offers or sells for an issuer or an affiliate of an issuer in connection with the distribution of any security or participates or has a direct or indirect participation in any such undertaking or participates or has a participation in the direct or indirect underwriting of any such undertaking, provided that:
(a) A person shall be presumed not to be an underwriter with respect to any securities which he has owned beneficially for at least one year.
(b) Such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission.
(c) In the case of securities acquired on the conversion of another security without payment of additional consideration, the length of time such securities have been beneficially owned by a person shall include the period during which the convertible security was beneficially owned and the period during which the security acquired on conversion has been beneficially owned.
712. Unlawful practices
A. It shall be unlawful for any person:
(1) To offer to sell or to sell any security in violation of R.S. 51:703, 705, or any rule, regulation or order promulgated or issued by the commissioner under this Part.
(2) To offer to sell or to sell a security by means of any oral or written 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 are made, not misleading, the buyer not knowing of the untruth or omission, if such person in the exercise of reasonable care could not have known of the untruth or omission.
(3) To offer or sell any security:
(a) Registered under R.S. 51:705(B) by means of any prospectus except a prospectus which complies with R.S. 51:705(B)(3).
(b) Registered under R.S. 51:705(E) by means of any prospectus except a prospectus which complies with R.S. 51:705(E)(3).
(c) Registered under R.S. 51:705(F) by means of any prospectus except a prospectus which complies with R.S. 51:705(F)(4).
B. It shall be unlawful for any person to make to any prospective purchaser, customer, or client any representation that the filing or effectiveness of a registration statement or the registration of any security under R.S. 51:705, or the existence of any exemption for any security or transaction means that the commissioner has passed in any way upon the truth, completeness, or accuracy of such registration statement or the merits of such security or has recommended or given approval to such security or transaction.
C. It shall be unlawful for any person who:
(1) Is a dealer, salesman, or investment adviser under this Part.
(2) Is making an application for registration as a dealer, salesman or investment adviser under this Part.
(3) Is an issuer which has filed a registration statement with respect to securities it intends to issue.
(4) Is an affiliate of any of the persons described in Paragraph (1), (2), or (3) of this Subsection knowingly to cause to be made, in any document filed with the commissioner or in any proceeding under this Part, any statement which is, at the time it is made and in light of the circumstances under which it is made, false or misleading in any material respect.
D. It shall be unlawful for any person in connection with the offer, sale, or purchase of any security, directly or indirectly:
(1) To employ any device, scheme, or artifice to defraud.
(2) To engage in any transaction, act, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser or seller.
E.(1) For purposes of this Subsection, the following terms shall have the meanings set forth below:
(a) "Allocated share" shall mean any plan security held by a trustee, beneficially or of record, that is allocated to the account of a participant.
(b) "Investment plan" shall mean any plan, trust or similar arrangement that invests in securities and that satisfies each of the following requirements:
(i) At least ten percent of the total number of participants are residents of or domiciled in this state.
(ii) The trustee or a majority of the trustees are residents of or domiciled in this state.
(c) "Issuing corporation" shall mean the issuer of a particular plan security.
(d) "Participants" shall mean all persons who have accounts in an investment plan.
(e) "Plan documents" shall mean the documents and other instruments pursuant to which an investment plan is established and governed.
(f) "Plan security" shall mean any security that is held beneficially or of record by a trustee, whether such security is at the time an allocated share, unallocated share or uninstructed share.
(g) "Trustee" shall mean the natural person, natural persons, entity or entities named as trustee or trustees under the terms of an investment plan, in the capacity as such.
(h) "Unallocated share" shall mean any plan security held by a trustee, beneficially or of record, that is not allocated to the account of a participant.
(i) "Uninstructed share" shall mean any allocated share as to which the trustee has not received, from the participant to whose account such share is allocated, instructions as to how to vote such allocated share in a matter properly submitted to the vote of the shareholders of the issuing corporation.
(2) If, with respect to any investment plan:
(a) The plan documents provide that participants have the right to direct in a confidential manner:
(i) Whether any plan securities will be tendered in response to a tender or exchange offer for such plan securities.
(ii) How any plan securities shall be voted on any particular matter to come before a vote of shareholders of the issuing corporation; and
(b) A valid tender or exchange offer has been made for plan securities or a matter has come before the vote of the shareholders of an issuing corporation relating, directly or indirectly, to the possible offer or sale of plan securities, whether pursuant to:
(i) A merger or consolidation of the issuing corporation with or into any other person.
(ii) The sale of all or substantially all of the assets of the issuing corporation.
(iii) The liquidation or dissolution of the issuing corporation.
(iv) A contested election of directors of the issuing corporation.
(v) The removal or adoption of any defensive devices by the issuing corporation, or otherwise, then, it shall be unlawful for the trustee not to permit participants to tender or direct the voting of the plan securities in the manner set forth in the plan documents, and the trustee shall have no authority or discretion whatsoever to tender or vote, as the case may be, any plan securities in any manner inconsistent with or contrary to the specific instructions of the participants relating to such plan securities.
§714. Civil liability from sales of securities
A. Any person who violates R.S. 51:712(A) shall be liable to the person buying such security, and such buyer may sue in any court to recover the consideration paid in cash or, if such consideration was not paid in cash, the fair value thereof at the time such consideration was paid for the security with interest thereon from the date of payment down to the date of repayment as computed in R.S. 51:714(C)(1), less the amount of any income received thereon, together with all taxable court costs and reasonable attorney's fees, upon the tender, where practicable, of the security at any time before the entry of judgment, or for damages if he no longer owns the security. Damages are the amount which equals the difference between the fair value of the consideration the buyer gave for the security and the fair value of the security at the time the buyer disposed of it, plus interest thereon from the date of payment to the date of repayment as computed in R.S. 51:714(C)(2).
B. Every person who directly or indirectly controls a person liable under Subsection A of this Section, every general partner, executive officer, or director of such person liable under Subsection A of this Section, every person occupying a similar status or performing similar functions, and every dealer or salesman who participates in any material way in the sale is liable jointly and severally with and to the same extent as the person liable under Subsection A of this Section unless the person whose liability arises under this Subsection sustains the burden of proof that he did not know and in the exercise of reasonable care could not have known of the existence of the facts by reason of which liability is alleged to exist. There is contribution as in the case of contract among several persons so liable.
C.(1) No person may sue under this Section more than two years from the date of the contract for sale or sale, if there is no contract for sale. No person may sue under this Section:
(a) If the buyer received a written offer, before suit and at a time when he owned the security, to repay in cash or by certified or official bank check, within thirty days from the date of acceptance of such offer in exchange for the securities, the fair value of the consideration paid, determined as of the date such payment was originally paid by the buyer, together with interest on such amount for the period from the date of payment to the date of repayment, such interest to be computed in case the security consists of an interest-bearing obligation, at the same rate as provided in the security or, in case the security consists of other than an interest-bearing obligation, at the applicable rate of legal interest, less, in every case, the amount of any income received on the security, and:
(i) Such offeree does not accept the offer within thirty days of its receipt or
(ii) If such offer was accepted, the terms thereof were complied with by the offeror;
(b) If the buyer received a written offer before suit and at a time when he did not own the security to repay in cash or by certified or official bank check, within thirty days from the date of acceptance of such offer, an amount equal to the difference between the fair value of the consideration the buyer gave for the security and the fair value of the security at the time the buyer disposed of it, together with interest on such amount for the period from the date of payment down to the date of repayment, such interest to be computed in case the security consists of an interest-bearing obligation at the same rate as provided in the security, or, in case the security consists of other than an interest-bearing obligation, at the applicable rate of legal interest, less, in every case, the amount of any income received on the security, and:
(i) Such offeree does not accept the offer within thirty days of its receipt or
(ii) If such offer was accepted, the terms thereof were complied with by the offeror;
(2) Provided, that no written offer shall be effective within the meaning of this Subsection unless, if it were an offer to sell securities, it would be exempt under R.S. 51:709 or, if registration would have been required, then unless such rescission offer has been registered and effected under R.S. 51:705. Any person who is paid for his security in the amount provided by this Subsection shall be foreclosed from asserting any remedies under this Part, regardless of whether the other requirements of this Subsection have been complied with.
D. Every cause of action under this Part survives the death of any person who might have been a plaintiff or defendant.
E. Nothing in this Part shall limit any statutory or civil right of any person to bring action in any court for any act involved in the sale of securities or the right of this state to punish any person for any violation of any law. The attorney general and each of the district attorneys throughout this state, with regard to violation of this Part in their respective districts, shall lend full assistance to the commissioner in any investigations or prosecutions that the commissioner may deem necessary under the provisions of this Part.
§719. Waiver of rights under chapter or rules and regulations void
Any condition, stipulation, or provision binding any person acquiring any security to waive:
(1) Compliance with any provision of this Part or of the rules and regulations promulgated under this Part;
(2) Any rights provided by this Part or by the rules and regulations promulgated under this Part; or
(3) Any defenses arising under this Part or under the rules and regulations promulgated under this Part shall be void.
§723. Violations; penalties; institution of criminal proceedings
A. Any person who willfully violates any provision of this Part shall be guilty of a felony and upon conviction shall be punished by a fine of not more than five thousand dollars or by imprisonment in the state penitentiary for not more than three years, or by both fine and imprisonment.
B. Any person who willfully violates any rule or order of the commissioner, authorized under this Part, shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not more than five hundred dollars, or by imprisonment for not more than six months or by both such fine and imprisonment, but no person may be imprisoned for violation of any rule or order of which that person did not have actual knowledge.
C. No dealer or salesman shall make any statement or representation not authorized by the issuer, or any statement or representation at variance with or not reasonably predicated upon the statements and documents filed by the issuer in the office of the commissioner.
D. No person shall sign any statement, list, inventory, balance sheet, or other paper or document required by any provision of this Part to be verified or sworn to, knowing any representation therein contained to be false, misleading, or untrue, and the depositing of any such statement or document in the office of the commissioner shall be deemed prima facie evidence of knowledge of the falsity thereof or of any representation therein contained and of the willful signing of such statement or document.
E. The commissioner may refer such evidence as is available concerning violations of this Part or of any rule or order hereunder to the appropriate prosecuting attorney, who may, with or without such a reference, institute the appropriate criminal proceedings under this Part.
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.