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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

Maine Securities Act

 

Sections included on this page:


SHORT TITLE

This chapter may be known and cited as "the Maine Uniform Securities Act." 

DEFINITIONS

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings. 

      1. Administrator. "Administrator" means the Securities Administrator under section 16601.

      2. Agent. "Agent" means an individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities or represents an issuer in effecting or attempting to effect purchases or sales of the issuer's securities. A partner, officer or director of a broker-dealer or issuer or an individual having a similar status or performing similar functions is an agent only if the individual otherwise comes within the meaning of the term "agent." "Agent" does not include an individual excluded by rule adopted or order issued under this chapter. Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.[2005, c. 65, Pt. A, §2 (new).]

      3. Bank. "Bank" means:
   
A. A banking institution organized under the laws of the United States; [2005, c. 65, Pt. A, §2 (new).]    

B. A member bank of the Federal Reserve System; [2005, c. 65, Pt. A, §2 (new).]    

C. A banking institution, whether incorporated or not, doing business under the laws of a state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to be exercised by national banks under the authority of the Comptroller of the Currency pursuant to Section 1 of United States Public Law 87-722, 12 United States Code, Section 92a, and that is supervised and examined by a state or federal agency having supervision over banks and that is not operated for the purpose of evading this chapter; and [2005, c. 65, Pt. A, §2 (new).]    

D. A receiver, conservator or other liquidating agent of any institution or firm described in paragraph A, B or C. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      4. Broker-dealer. "Broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account. "Broker-dealer" does not include:
   
A. An agent; [2005, c. 65, Pt. A, §2 (new).]    

B. An issuer; [2005, c. 65, Pt. A, §2 (new).]    

C. A bank, credit union or savings institution if its activities as a broker-dealer are limited to those specified in Section 3(a)(4)(B)(i) to (vi) and (viii) to (x); Section 3(a)(5)(B); and Section 3(a)(5)(C) of the federal Securities Exchange Act of 1934, 15 United States Code, Sections 78c(a)(4) and (5); [2005, c. 65, Pt. A, §2 (new).]    

D. An international banking institution; or [2005, c. 65, Pt. A, §2 (new).]    

E. Any other person the administrator excludes, by rule or order, consistent with the public interest and protection of investors. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      5. Depository institution. "Depository institution" means:
   
A. A bank; or [2005, c. 65, Pt. A, §2 (new).]    

B. A savings institution, trust company, credit union or similar institution that is organized or chartered under the laws of a state or of the United States, authorized to receive deposits and supervised and examined by an official or agency of a state or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund or a successor authorized by federal law. [2005, c. 65, Pt. A, §2 (new).]
"Depository institution" does not include an insurance company or other organization primarily engaged in the business of insurance; a Morris Plan bank; or an industrial loan company.
[2005, c. 65, Pt. A, §2 (new).]

      6. Federal covered investment adviser. "Federal covered investment adviser" means a person registered under the federal Investment Advisers Act of 1940.[2005, c. 65, Pt. A, §2 (new).]

      7. Federal covered security. "Federal covered security" means a security that is, or upon completion of a transaction will be, a covered security under Section 18(b) of the federal Securities Act of 1933, 15 United States Code, Section 77r(b) or rules or regulations adopted pursuant to that provision.[2005, c. 65, Pt. A, §2 (new).]

      8. Filing. "Filing" means the receipt under this chapter of a record by the administrator or a designee of the administrator.[2005, c. 65, Pt. A, §2 (new).]

      9. Fraud; deceit; defraud. "Fraud," "deceit" and "defraud" are not limited to common law deceit.[2005, c. 65, Pt. A, §2 (new).]

      10. Guaranteed. "Guaranteed" means guaranteed as to payment of all or substantially all of principal and interest or dividends.[2005, c. 65, Pt. A, §2 (new).]

      11. Institutional investor. "Institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity:
   
            A. A depository institution or international banking institution; [2005, c. 65, Pt. A, §2 (new).]    
            B. An insurance company; [2005, c. 65, Pt. A, §2 (new).]    
           
            C. A separate account of an insurance company; [2005, c. 65, Pt. A, §2 (new).]    
           
            D. An investment company as defined in the federal Investment Company Act of 1940; [2005, c. 65, Pt. A, §2 (new).]    

            E. A broker-dealer registered under the federal Securities Exchange Act of 1934; [2005, c. 65, Pt. A, §2 (new).]    
           
            F. An employee pension, profit-sharing or benefit plan if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the federal Investment Advisers Act of 1940, an investment adviser registered under this chapter, a depository institution or an insurance company; [2005, c. 65, Pt. A, §2 (new).]    

            G. A plan established and maintained by a state, a political subdivision of a state or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees, if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the federal Investment Advisers Act of 1940, an investment adviser registered under this chapter, a depository institution or an insurance company; [2005, c. 65, Pt. A, §2 (new).]    
           
            H. A trust, if it has total assets in excess of $10,000,000, its trustee is a depository institution and its participants are exclusively plans of the types identified in paragraph F or G, regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans; [2005, c. 65, Pt. A, §2 (new).]    
           
            I. An organization described in Section 501(c)(3) of the Internal Revenue Code, 26 United States Code, Section 501(c)(3), a corporation, a Massachusetts trust or similar business trust, a limited liability company or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $10,000,000; [2005, c. 65, Pt. A, §2 (new).]    

            J. A small business investment company licensed by the United States Small Business Administration under Section 301(c) of the federal Small Business Investment Act of 1958, 15 United States Code, Section 681(c) with total assets in excess of $5,000,000; [2005, c. 65, Pt. A, §2 (new).]    

            K. A private business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940, 15 United States Code, Section 80b-2(a)(22) with total assets in excess of $5,000,000; [2005, c. 65, Pt. A, §2 (new).]    

            L. A federal covered investment adviser acting for its own account; [2005, c. 65, Pt. A, §2 (new).]    
           
            M. A qualified institutional buyer as defined in 17 Code of Federal Regulations, 230.144A(a)(1), except as defined in 17 Code of Federal Regulations 230.144A(a)(1)(i)(H); [2005, c. 65, Pt. A, §2 (new).]    

            N. A major U." Headnote="S. institutional investor as defined in 17 Code of Federal Regulations, 240.15a-6(b)(4)(i); [2005, c. 65, Pt. A, §2 (new).]    

            O. Any other person, other than an individual, of institutional character with total assets in excess of $10,000,000 not organized for the specific purpose of evading this chapter; or [2005, c. 65, Pt. A, §2 (new).]    

            P. Any other person specified by rule adopted or order issued under this chapter. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      12. Insurance company. "Insurance company" means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and that is subject to supervision by the Superintendent of Insurance or a similar official or agency of a state.[2005, c. 65, Pt. A, §2 (new).]

      13. Insured. "Insured" means insured as to payment of all or substantially all principal and interest or dividends.[2005, c. 65, Pt. A, §2 (new).]

      14. International banking institution. "International banking institution" means an international financial institution of which the United States is a member and whose securities are exempt from registration under the federal Securities Act of 1933.[2005, c. 65, Pt. A, §2 (new).]

      15. Investment adviser. "Investment adviser" means a person that, for compensation, engages in the business of advising others, either directly 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 a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" includes a financial planner or other person that, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or that holds itself out as providing investment advice to others for compensation. "Investment adviser" does not include:
   
A. An investment adviser representative; [2005, c. 65, Pt. A, §2 (new).]    

B. A lawyer, accountant, engineer or teacher whose performance of investment advice is solely incidental to the practice of the person's profession; [2005, c. 65, Pt. A, §2 (new).]    

C. A broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and that does not receive special compensation for the investment advice; [2005, c. 65, Pt. A, §2 (new).]    

D. A publisher of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation; [2005, c. 65, Pt. A, §2 (new).]    

E. A federal covered investment adviser; [2005, c. 65, Pt. A, §2 (new).]    

F. A bank or savings institution; [2005, c. 65, Pt. A, §2 (new).]    

G. Any other person that is excluded by the federal Investment Advisers Act of 1940 from the definition of investment adviser; or [2005, c. 65, Pt. A, §2 (new).]    

H. Any other person excluded by rule adopted or order issued under this chapter. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      16. Investment adviser representatives. "Investment adviser representatives" means individuals employed by or associated with an investment adviser or federal covered investment adviser and who make any recommendations or otherwise give investment advice regarding securities, manage accounts or portfolios of clients, determine which recommendation or advice regarding securities should be given, provide investment advice or hold themselves out as providing investment advice, receive compensation to solicit, offer or negotiate for the sale of or for selling investment advice or supervise employees who perform any of the foregoing. "Investment adviser representatives" does not include individuals who:
   
A. Perform only clerical or ministerial acts; [2005, c. 65, Pt. A, §2 (new).]    

B. Are agents whose performance of investment advice is solely incidental to the individuals acting as agents and who do not receive special compensation for investment advisory services; [2005, c. 65, Pt. A, §2 (new).]    

C. Are employed by or associated with a federal covered investment adviser, unless the individuals have a "place of business" in this State as that term is defined by rule adopted under Section 203A of the federal Investment Advisers Act of 1940, 15 United States Code, Section 80b-3a, and are:   

(1) "Investment adviser representatives" as that term is defined by rule adopted under Section 203A of the federal Investment Advisers Act of 1940, 15 United States Code, Section 80b-3a; or  
(2) Not "supervised persons" as that term is defined in Section 202(a)(25) of the federal Investment Advisers Act of 1940, 15 United States Code, Section 80b-2(a)(25); or [2005, c. 65, Pt. A, §2 (new).]    

D. Are excluded by rule adopted or order issued under this chapter. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]
      17. Issuer. "Issuer" means a person that issues or proposes to issue a security, subject to the following:
   

A. The issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued; [2005, c. 65, Pt. A, §2 (new).]    

B. The issuer of an equipment trust certificate or similar security serving the same purpose is the person by which the property is or will be used or to which the property or equipment is or will be leased or conditionally sold or that is otherwise contractually responsible for ensuring payment of the certificate; [2005, c. 65, Pt. A, §2 (new).]    

C. The issuer of a fractional undivided interest in an oil, gas or other mineral lease or in payments out of production under a lease, right or royalty is the owner of an interest in the lease or in payments out of production under a lease, right or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale; or [2005, c. 65, Pt. A, §2 (new).]    

D. The issuer of a fractional or pooled interest in a viatical or life settlement contract is the person who creates, for the purpose of sale, the fractional or pooled interest. The issuer of a viatical or life settlement contract that is not fractionalized or pooled is the person effecting the transaction with the investor in such a contract but does not include a broker-dealer or sales representative. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      18. Nonissuer transaction; nonissuer distribution. "Nonissuer transaction" or "nonissuer distribution" means a transaction or distribution not directly or indirectly for the benefit of the
issuer.[2005, c. 65, Pt. A, §2 (new).]

      19. Offer to purchase. "Offer to purchase" includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value. "Offer to purchase" does not include a tender offer that is subject to Section 14(d) of the federal Securities Exchange Act of 1934, 15 United States Code, Section 78n(d).[2005, c. 65, Pt. A, §2 (new).]

      20. Person. "Person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity.[2005, c. 65, Pt. A, §2 (new).]

      21. Place of business. "Place of business" of a broker-dealer, an investment adviser or a federal covered investment adviser means:
   
A. An office at which the broker-dealer, investment adviser or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients; or [2005, c. 65, Pt. A, §2 (new).]    

B. Any other location that is held out to the general public as a location at which the broker-dealer, investment adviser or federal covered investment adviser provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      22. Predecessor act. "Predecessor act" means the former Revised Maine Securities Act.[2005, c. 65, Pt. A, §2 (new).]
      23. Price amendment. "Price amendment" means the amendment to a registration statement filed under the federal Securities Act of 1933 or, if an amendment is not filed, the prospectus or prospectus supplement filed under the federal Securities Act of 1933 that includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices and other matters dependent upon the offering price.[2005, c. 65, Pt. A, §2 (new).]

      24. Principal place of business. "Principal place of business" of a broker-dealer, an investment adviser or an issuer means the executive office of the broker-dealer, investment adviser or issuer from which the officers, partners or managers of the broker-dealer, investment adviser or issuer direct, control and coordinate the activities of the broker-dealer, investment adviser or issuer.[2005, c. 65, Pt. A, §2 (new).]

      25. Record. "Record," except in the phrases "of record," "official record" and "public record," means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.[2005, c. 65, Pt. A, §2 (new).]

      26. Sale; offer to sell. "Sale" includes every contract of sale of, contract to sell or disposition of a security or interest in a security for value. "Offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. "Sale" and "offer to sell" include:
   
A. A security given or delivered with, or as a bonus on account of, a purchase of securities or any other thing constituting part of the subject of the purchase and having been offered and sold for value; [2005, c. 65, Pt. A, §2 (new).]    

B. A gift of assessable stock involving an offer and sale; and [2005, c. 65, Pt. A, §2 (new).]    

C. A sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and a sale or offer of a security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, including an offer of the other security. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      27. Securities and Exchange Commission. "Securities and Exchange Commission" means the United States Securities and Exchange Commission.[2005, c. 65, Pt. A, §2 (new).]

      28. Security. "Security" means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; investment in a viatical or life settlement contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas or other mineral rights; documents of title to or certificates of interest or participation in an oil, gas or other mineral title or lease or in payments out of production under any title, lease, right or royalty; put, call, straddle, option or privilege on a security, certificate of deposit or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a 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. "Security":
   
A. Includes both a certificated and an uncertificated security; [2005, c. 65, Pt. A, §2 (new).]    

B. Does not include an insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed or variable sum of money either in a lump sum or periodically for life or other specified period; [2005, c. 65, Pt. A, §2 (new).]    

C. Does not include an interest in a contributory or noncontributory pension or welfare plan subject to the federal Employee Retirement Income Security Act of 1974; [2005, c. 65, Pt. A, §2 (new).]    

D. Includes as an investment contract an investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor. For purposes of this paragraph, "common enterprise" means an enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a 3rd party or other investors; and [2005, c. 65, Pt. A, §2 (new).]    

E. Includes as an investment contract, among other contracts, an interest in a limited partnership and a limited liability company. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      29. Self-regulatory organization. "Self-regulatory organization" means a national securities exchange registered under the federal Securities Exchange Act of 1934, a national securities association of broker-dealers registered under the federal Securities Exchange Act of 1934, a clearing agency registered under the federal Securities Exchange Act of 1934 or the Municipal Securities Rulemaking Board established under the federal Securities Exchange Act of 1934.[2005, c. 65, Pt. A, §2 (new).]

      30. Sign. "Sign" means, with present intent to authenticate or adopt a record:
   
A. To execute or adopt a tangible symbol; or [2005, c. 65, Pt. A, §2 (new).]    

B. To attach or logically associate with the record an electronic symbol, sound or process. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      31. State. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States.[2005, c. 65, Pt. A, §2 (new).]

      32. Viatical or life settlement contract. "Viatical or life settlement contract" means a written agreement establishing the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of an insurance policy or certificate of insurance. "Viatical or life settlement contract":
   
A. Includes a contract for a loan or other financing transaction secured primarily by an individual or group life insurance policy other than a loan by a life insurance company pursuant to the terms of the life insurance contract or a loan secured by the cash value of a policy; [2005, c. 65, Pt. A, §2 (new).]    

B. Includes an agreement to transfer ownership or change the beneficiary designation of an insurance policy at a later date regardless of the date that compensation for the transfer or change is paid; and [2005, c. 65, Pt. A, §2 (new).]    

C. Does not include:   

(1) The assignment, transfer, sale, devise or bequest of a death benefit, life insurance policy or certificate of insurance by the viator to the viatical settlement provider pursuant to the Viatical and Life Settlements Act;  

(2) The assignment, transfer, sale, devise or bequest of a life insurance policy, for any value less than the expected death benefit, by the viator to a friend or family member who enters into no more than one such agreement in a calendar year;  

(3) An assignment of a life insurance policy to a supervised lender, as defined in Title 9-A, section 1-301, subsection 39, as collateral for a loan; or  

(4) The exercise of accelerated benefits pursuant to the terms of the Maine Insurance Code and of a life insurance policy. [2005, c. 65, Pt. A, §2 (new).]
For purposes of this chapter, the individual insured who is the subject of the insurance policy or certificate of insurance does not have to be diagnosed as terminally ill or chronically ill at the time a settlement contract is executed.
[2005, c. 65, Pt. A, §2 (new).]

GENERAL FRAUD

 It is unlawful for a person, in connection with the offer, sale or purchase of a security, directly or indirectly: [2005, c. 65, Pt. A, §2 (new).]

      1. Device, scheme, artifice. To employ a device, scheme or artifice to defraud;[2005, c. 65, Pt. A, §2 (new).]

      2. Untrue statement of or omission of material fact. To make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or[2005, c. 65, Pt. A, §2 (new).]

      3. Fraud, deceit. To engage in an act, practice or course of business that operates or would operate as a fraud or deceit upon another person.[2005, c. 65, Pt. A, §2 (new).]

PROHIBITED CONDUCT IN PROVIDING INVESTMENT ADVICE

1. Fraud 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:
   
A. To employ a device, scheme or artifice to defraud another person; or [2005, c. 65, Pt. A, §2 (new).]    

B. To engage in an act, practice or course of business that operates or would operate as a fraud or deceit upon another person. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      2. Rules defining fraud. A rule adopted under this chapter may define an act, practice or course of business of a person described in subsection 1 as fraudulent, deceptive or manipulative and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives from engaging in acts, practices and courses of business defined as fraudulent, deceptive or manipulative.[2005, c. 65, Pt. A, §2 (new).]

      3. Rules specifying contents of advisory contract. A rule adopted under this chapter may specify the contents of an investment advisory contract entered into, extended or renewed by an investment adviser.[2005, c. 65, Pt. A, §2 (new).]

      4. Rulemaking. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.[2005, c. 65, Pt. A, §2 (new).]

EVIDENTIARY BURDEN

1. Civil. In a civil action or administrative proceeding under this chapter, a person claiming an exemption, exception, preemption or exclusion has the burden to prove the applicability of the exemption, exception, preemption or exclusion.[2005, c. 65, Pt. A, §2 (new).]

     2. Criminal. In a criminal proceeding under this chapter, a person claiming an exemption, exception, preemption or exclusion has the burden to prove by a preponderance of the evidence any such affirmative defense.[2005, c. 65, Pt. A, §2 (new).]

FILING OF SALES AND ADVERTISING LITERATURE

 
1. Filing requirement. A rule adopted or order issued under this chapter may require the filing of a prospectus, a pamphlet, a circular, a form letter, an advertisement, sales literature, some other advertising record relating to a security or investment advice or a business plan addressed or intended for distribution to prospective investors, including clients or prospective clients of a person licensed or required to be licensed as an investment adviser under this chapter. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.[2005, c. 65, Pt. A, §2 (new).]
      2. Excluded communications. This section does not apply to sales and advertising literature specified in subsection 1 that relates to a federal covered security, a federal covered investment adviser or a security or transaction exempted by section 16201, 16202 or 16203 except as required pursuant to section 16201, subsection 7 and section 16202, subsections 15 and 24.[2005, c. 65, Pt. A, §2 (new).]

MISLEADING FILINGS

 

 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 chapter 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. [2005, c. 65, Pt. A, §2 (new).]

 
 

CRIMINAL PENALTIES

 
1. Criminal penalties. A person that intentionally or knowingly violates this chapter, or a rule adopted or order issued under this chapter, except section 16504 or the notice filing requirements of section 16302 or 16405, or that intentionally or knowingly violates section 16505 knowing the statement made to be false or misleading in a material respect, upon conviction, commits a Class C crime. An individual convicted of violating a rule or order under this chapter may be fined, but may not be imprisoned, if the individual did not have knowledge of the rule or order.[2005, c. 65, Pt. A, §2 (new).]
      2. Referral to Attorney General. The administrator may refer such evidence as is available concerning violations of this chapter or any rule or order issued under this chapter to the Attorney General, who may, with or without such a reference from the administrator, institute the appropriate criminal proceedings under this chapter. The Attorney General may request assistance from the administrator or employees of the administrator.[2005, c. 65, Pt. A, §2 (new).]
      3. No limitation on other criminal enforcement. This chapter does not limit the power of this State to punish a person for conduct that constitutes a crime under other laws of this State.[2005, c. 65, Pt. A, §2 (new).]
      4. Venue. When a person pursuant to one scheme or course of conduct, whether upon the same person or several persons, engages in fraudulent or other prohibited practices, engages in unlawful transactions of business or other unlawful conduct or engages in unlawful offers to sell or purchase or unlawful sales or purchases under this chapter, the State may opt for a single Class C count, and, in that circumstance, prosecution may be brought in any venue in which one or more of the unlawful acts were committed.[2005, c. 65, Pt. A, §2 (new).]

 

CIVIL LIABILITY

      1. Securities Litigation Uniform Standards Act. Enforcement of civil liability under this section is subject to the federal Securities Litigation Uniform Standards Act of 1998.[2005, c. 65, Pt. A, §2 (new).]

      2. Liability of seller to purchaser. A person is liable to the purchaser if the person sells a security in violation of section 16301; section 16303, subsection 6; section 16304, subsection 5; or section 16305, subsection 6 or by means of an untrue statement of a material fact or an 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 purchaser not knowing of 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.
   

A. 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 the interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney's fees determined by the court, upon the tender of the security, or for actual damages as provided in paragraph C. [2005, c. 65, Pt. A, §2 (new).]    

B. The tender referred to in paragraph A 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 C. [2005, c. 65, Pt. A, §2 (new).]    
C. 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 the interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney's fees determined by the court. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      3. 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.

   
A. The seller may maintain an action to recover the security and any income received on the security, costs and reasonable attorney's fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in paragraph C. [2005, c. 65, Pt. A, §2 (new).]    

B. The tender referred to in paragraph A 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 C. [2005, c. 65, Pt. A, §2 (new).]    

C. 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 the interest at the legal rate of interest from the date of the sale of the security, costs and reasonable attorney's fees determined by the court. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      4. Liability of unlicensed broker-dealer and agent. A person acting as a broker-dealer or agent that sells or buys a security in violation of section 16401, subsection 1; section 16402, subsection 1; or section 16506 is liable to the customer. The customer, if a purchaser, may maintain an action for a remedy as specified in subsection 2, paragraphs A to C or, if a seller, for a remedy as specified in subsection 3, paragraphs A to C.[2005, c. 65, Pt. A, §2 (new).]

      5. Liability of unlicensed 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 section 16403, subsection 1; section 16404, subsection 1; or section 16506 is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate of interest from the date of payment, costs and reasonable attorney's fees determined by the court.[2005, c. 65, Pt. A, §2 (new).]

      6. 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.
   

A. 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 at the legal rate of interest from the date of the fraudulent conduct, costs and reasonable attorney's fees determined by the court, less the amount of any income received as a result of the fraudulent conduct. [2005, c. 65, Pt. A, §2 (new).]    

B. 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. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      7. Joint and several liability. The following persons are liable jointly and severally with and to the same extent as persons liable under subsections 2 to 6:
   

A. A person that directly or indirectly controls a person liable under subsections 2 to 6, 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; [2005, c. 65, Pt. A, §2 (new).]    

B. An individual who is a managing partner, executive officer or director of a person liable under subsections 2 to 6, 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; [2005, c. 65, Pt. A, §2 (new).]    

C. An individual who is an employee of or associated with a person liable under subsections 2 to 6 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 [2005, c. 65, Pt. A, §2 (new).]    

D. 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 2 to
6, 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 the liability is alleged to exist. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      8. 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.[2005, c. 65, Pt. A, §2 (new).]

      9. 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.[2005, c. 65, Pt. A, §2 (new).]

      10. Statute of limitations. A person may not obtain relief:
   
A. Under subsection 2 for violation of section 16301 or under subsection 4 or 5, unless the action is instituted within 2 years after the violation occurred; or [2005, c. 65, Pt. A, §2 (new).]    

B. Under subsection 2, other than for violation of section 16301, or under subsection 3 or 6, unless the action is instituted within the earlier of 2 years after discovery of the facts constituting the violation or 5 years after the violation. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      11. No enforcement of violative contract. A person that has made, or has engaged in the performance of, a contract in violation of this chapter or a rule adopted or order issued under this chapter, 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 chapter, may not base an action on the contract.[2005, c. 65, Pt. A, §2 (new).]

      12. 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 chapter or a rule adopted or order issued under this chapter is void.[2005, c. 65, Pt. A, §2 (new).]

      13. Survival of other rights or remedies. The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist, but this chapter does not create a cause of action not specified in this section or section 16411, subsection 5.[2005, c. 65, Pt. A, §2 (new).]

 

RESCISSION OFFERS

1. Requirements. A purchaser, seller or recipient of investment advice may not maintain an action under section 16509 if:
   
A. The purchaser, seller or recipient of investment advice receives in a record, before the action is instituted:   

(1) An offer stating the respect in which liability under section 16509 may have arisen and fairly advising the purchaser, seller or recipient of investment advice of that person's rights in connection with the offer and any financial or other information necessary to correct all material misrepresentations or omissions in the information that was required by this chapter to be furnished to that person at the time of the purchase, sale or investment advice;  

(2) If the basis for relief under this section may have been a violation of section 16509, subsection 2, an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid and interest at the legal rate of interest from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it and interest at the legal rate of interest from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection;  

(3) If the basis for relief under this section may have been a violation of section 16509, subsection 3, an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at the legal rate of interest from the date of the sale, or, if the purchaser no longer owns the security, an offer to pay the seller upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser's conduct that may have caused liability and interest at the legal rate of interest from the date of the sale;  

(4) If the basis for relief under this section may have been a violation of section 16509, subsection 4, an offer to pay as specified in subparagraph (2) if the customer is a purchaser or an offer to tender or to pay as specified in subparagraph (3) if the customer is a seller;  

(5) If the basis for relief under this section may have been a violation of section 16509, subsection 5, an offer to reimburse in cash the consideration paid for the advice and interest at the legal rate of interest from the date of payment; or  

(6) If the basis for relief under this section may have been a violation of section 16509, subsection 6, an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct and interest at the legal rate of interest from the date of the violation causing the loss; [2005, c. 65, Pt. A, §2 (new).]    

B. The offer under paragraph A states that it must be accepted by the purchaser, seller or recipient of investment advice within 30 days after the date of its receipt by the purchaser, seller or recipient of investment advice or any shorter period, of not less than 3 days, that the administrator, by order, specifies; [2005, c. 65, Pt. A, §2 (new).]    

C. The offeror has the present ability to pay the amount offered or to tender the security under paragraph A; [2005, c. 65, Pt. A, §2 (new).]    

D. The offer under paragraph A is delivered to the purchaser, seller or recipient of investment advice or sent in a manner that ensures receipt by the purchaser, seller or recipient of investment advice; and [2005, c. 65, Pt. A, §2 (new).]    

E. The purchaser, seller or recipient of investment advice that accepts the offer under paragraph A in a record within the period specified under paragraph B is paid in accordance with the terms of the offer. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      2. Form of offer. The administrator, by rule or order, may prescribe the form in which the information specified in subsection 1 must be contained in any offer made under subsection 1. Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.[2005, c. 65, Pt. A, §2 (new).]

      3. Statute of limitation tolled. If an offer is not performed in accordance with its terms, suit by the offeree under section 16509 is permitted without regard to this section, and the statute of limitations tolls from the time of receipt of the offer until 120 days after the rescission or settlement offer was to have been performed.[2005, c. 65, Pt. A, §2 (new).]

CIVIL ENFORCEMENT

1. 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 chapter or a rule adopted or order issued under this chapter 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 chapter or a rule adopted or order issued under this chapter, the administrator may request that the Attorney General bring an action in the Superior Court of the county in which the person resides or has the principal place of business or in the Superior Court of Kennebec County to enjoin the act, practice or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter.[2005, c. 65, Pt. A, §2 (new).]

      2. Relief available. In an action under this section and on a proper showing, the court may:
   
A. Issue a permanent or temporary injunction, restraining order or declaratory judgment; [2005, c. 65, Pt. A, §2 (new).]    

B. Order other appropriate or ancillary relief, which may include:   

(1) An asset freeze, accounting, writ of attachment, writ of general or specific execution and appointment of a receiver or conservator, which may be the administrator, for the defendant or the defendant's assets;  

(2) 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;  

(3) Imposing a civil fine not to exceed $10,000 per violation or 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 chapter or the predecessor act or a rule adopted or order issued under this chapter or the predecessor act; and  

(4) Ordering the payment of prejudgment and postjudgment interest; or [2005, c. 65, Pt. A, §2 (new).]     C. Order such other relief as the court considers appropriate. [2005, c. 65, Pt. A, §2 (new).] [2005, c. 65, Pt. A, §2 (new).]

      3. No bond required. The administrator is not required to post a bond in an action or proceeding under this chapter.[2005, c. 65, Pt. A, §2 (new).]

      4. Securities agency of another state. Upon a showing by the administrator or securities agency of another state that a person has violated any provision of the securities act of that state or any rule or order of the administrator or securities agency of that state, the Superior Court may grant appropriate legal and equitable remedies.[2005, c. 65, Pt. A, §2 (new).]

LIABILITY OF CONTROL PERSONS

In an administrative action brought by the administrator, or a civil action brought by the Attorney General for a violation of any provision of this chapter or any rule or order adopted or issued by the administrator pursuant to this chapter, every person who directly or indirectly controls another person liable for the violation, every partner, officer or director of that other person, every person occupying a similar status or performing similar functions, every employee of that other person who materially aids in the act or transaction constituting the violation and every broker-dealer, agent, investment adviser or investment adviser representative who materially aids in the act or transaction constituting the violation is liable to the same extent as that other person, unless the person otherwise secondarily liable under this chapter proves that the person did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. Any of the remedies authorized by section 16603, subsection 2 may be granted with respect to a person secondarily liable under this section. This section is not intended to abrogate any right to contribution that may exist at common law with respect to an award of restitution. [2005, c. 65, Pt. A, §2 (new).]


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