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Law Offices of Eric Norstedt, P.A.
2924 Davie Road, Suite 200
Davie, Florida, 33314
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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

Maryland Securities Act

 

Sections included on this page:

DEFINITIONS, GENERAL PROVISIONS

§11–101.  
(a)   In this title, unless the context requires otherwise, the following words have the meanings indicated.
(b)    (1)   “Agent” means an individual other than a broker–dealer who represents a broker–dealer or issuer in effecting or attempting to effect the purchase or sale of securities.
(2)   “Agent” includes a partner, officer, or director of a broker–dealer or issuer, or a person occupying a similar status or performing similar functions, only if the person otherwise comes within this definition.
(3)   “Agent” does not include an individual who represents:
(i)   An issuer in:
1.   Effecting a transaction in a security exempted by § 11–601(1), (2), (3), (9)(i), (10), (11), or (14)(i) of this title;
2.   Effecting a transaction exempted by § 11–602 of this title;
3.   Effecting a transaction with an existing employee, partner, or director of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting a person in this State; or
4.   Effecting a transaction in a federal covered security under § 18(b)(3) or § 18(b)(4)(D) of the Securities Act of 1933 if no commission or other remuneration is paid or given directly or indirectly for soliciting a person in this State; or
(ii)   A broker–dealer in effecting a transaction described in § 15(h)(2) of the Securities Exchange Act of 1934.
(c)    (1)   “Broker–dealer” means a person engaged in the business of effecting transactions in securities for the account of others or for his own account.
(2)   “Broker–dealer” does not include:
(i)   An agent;
(ii)   An issuer;
(iii)   A bank, savings institution, or trust company; or
(iv)   A person who has no place of business in this State if:
1.   He effects transactions in this State exclusively with or through the issuer of the securities involved in the transactions, another broker–dealer, or a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit–sharing trust, or other financial institution or institutional buyer, whether acting for itself or as trustee; or
2.   During any period of 12 consecutive months, he does not direct more than 15 offers to sell or buy into the State in any manner, other than to the persons specified in paragraph (2)(iv)1 of this subsection, whether or not the offeror or any offeree is then present in the State.
(d)   “Commissioner” means the Securities Commissioner of the Division of Securities.
(e)   “Federal covered adviser” means a person who is registered under § 203 of the Investment Advisers Act of 1940.
(f)   “Federal covered security” means a covered security under § 18(b) of the Securities Act of 1933.
(g)   “Guaranteed” means guaranteed as to payment of principal, interest, or dividends.
(h)    (1)   “Investment adviser” means a person who, for compensation:
(i)   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; or
(ii)    1.   Provides or offers to provide, directly or indirectly, financial and investment counseling or advice, on a group or individual basis;
2.   Gathers information relating to investments, establishes financial goals and objectives, processes and analyzes the information gathered, and recommends a financial plan; or
3.   Holds out as an investment adviser in any way, including indicating by advertisement, card, or letterhead, or in any other manner indicates that the person is, a financial or investment “planner”, “counselor”, “consultant”, or any other similar type of adviser or consultant.
(2)   “Investment adviser” does not include:
(i)   An investment adviser representative;
(ii)   A bank, savings institution, or trust company;
(iii)   A lawyer, certified public accountant, engineer, insurance producer, or teacher whose performance of investment advisory services is solely incidental to the practice of the profession, provided that the performance of such services is not solely incidental unless:
1.   The investment advisory services rendered are connected with and reasonably related to the other professional services rendered;
2.   The fee charged for the investment advisory services is based on the same factors as those used to determine the fee for other professional services; and
3.   The lawyer, certified public accountant, engineer, insurance producer, or teacher does not hold out as an investment adviser;
(iv)   A broker–dealer or its agent whose performance of these services is solely incidental to the conduct of business as a broker–dealer and who receives no special compensation for them;
(v)   A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service, whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;
(vi)   A federal covered adviser; or
(vii)   Any other person not within the intent of this subsection as the Commissioner by rule or order designates.
(i)    (1)   “Investment adviser representative” or “representative” means any partner, officer, director of (or a person occupying a similar status or performing similar functions) or other individual who is employed by or associated with an investment adviser, or who has a place of business located in this State and is employed by or associated with a federal covered adviser, and who:
(i)   Makes any recommendations or otherwise renders investment advice to clients;
(ii)   Represents an investment adviser in rendering the services described under subsection (h)(1) of this section;
(iii)   Manages accounts or portfolios of clients;
(iv)   Determines which recommendation or investment advice should be given with respect to a particular client account;
(v)   Solicits, offers or negotiates for the sale of or sells investment advisory services;
(vi)   Directly supervises employees who perform any of the foregoing; or
(vii)   Holds out as an investment adviser.
(2)   “Investment adviser representative” or “representative” does not include:
(i)   Any other person not within the intent of this subsection as the Commissioner designates by rule or order; or
(ii)   Clerical or ministerial personnel.
(j)   “Investment Company Act of 1940” and “Investment Advisers Act of 1940” mean the federal statutes of those names, as amended.
(k)   “Issuer” means any person who issues or proposes to issue a security, except that:
(1)   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 of the fixed, restricted management, or unit type, the term “issuer” means the person performing the acts and assuming the duties of depositor or manager under the provisions of the trust or other agreement or instrument under which the security is issued; and
(2)   With respect to certificates of interest or participation in oil, gas, or mining titles or leases or in payments out of production under the titles or leases, there is not considered to be any “issuer”.
(l)   “Nonissuer distribution” and “nonissuer transaction” mean a distribution or transaction, as the case may be, not directly or indirectly for the benefit of the issuer.
(m)   “Offer” or “offer to sell”, except as provided in § 11–102(a) of this subtitle, includes every attempt or offer to dispose of or solicitation of an offer to buy, a security or interest in a security for value.
(n)   “Person” means an individual, a corporation, a partnership, an association, a joint–stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government.
(o)   “Public Utility Holding Company Act of 1935” means the federal statute of that name, as amended.
(p)   “Sale” or “sell”, except as provided in § 11–102(a) of this subtitle, includes every contract of sale of, contract to sell, or disposition of a security or interest in a security for value.
(q)   “Securities Act of 1933” and “Securities Exchange Act of 1934” mean the federal statutes of those names, as amended.
(r)    (1)   “Security” means any:
(i)   Note;
(ii)   Stock;
(iii)   Treasury stock;
(iv)   Bond;
(v)   Debenture;
(vi)   Evidence of indebtedness;
(vii)   Certificate of interest or participation in any profit–sharing agreement;
(viii)   Collateral–trust certificate;
(ix)   Preorganization certificate or subscription;
(x)   Transferable share;
(xi)   Investment contract;
(xii)   Voting–trust certificate;
(xiii)   Certificate of deposit for a security;
(xiv)   Certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under the title or lease;
(xv)   In general, any interest or instrument commonly known as a “security”; or
(xvi)   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 preceding.
(2)   “Security” does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum, periodically for life, or some other specified period.
(s)   “State” means any state, territory, or possession of the United States, the District of Columbia, and Puerto Rico.

FRAUDULENT AND OTHER PROHIBITED PRACTICES

§11–301.  
It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly to:
 (1)   Employ any device, scheme, or artifice to defraud;
(2)   Make any untrue statement of a material fact or omit 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; or
(3)   Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on any person.

REQUIREMENTS OF BROKER-DEALERS, AGENTS, INVESTMENT ADVISER REPRESENTATIVES, AND FEDERAL COVERED ADVISERS

§11–401.  
(a)   A person may not transact business in this State as a broker-dealer or agent unless the person is registered under this subtitle.
(b)   A person may not transact business in this State as an investment adviser or as an investment adviser representative unless:
(1)   The person is registered as an investment adviser or an investment adviser representative under this subtitle; or
(2)   The person’s only clients in this State are investment companies as defined in the Investment Company Act of 1940, or insurance companies; or
(3)   The person has no place of business in this State; and
(i)   The person’s only clients in this State are investment companies as defined in the Investment Company Act of 1940, other investment advisers, federal covered advisers, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets of not less than $1,000,000, and governmental agencies or instrumentalities, whether acting for themselves or as trustees or fiduciaries with investment control, or other institutional investors as are designated by rule or order of the Commissioner; or
(ii)   During the preceding 12-month period, the person has had no more than five clients who:
1.   Are residents of the State; and
2.   Are not the types of clients described in item (i) of this paragraph.
(c)   A federal covered adviser may not conduct advisory business in this State unless the federal covered adviser conducts the advisory business in accordance with § 11-405(b) of this subtitle or subsection (b)(2) or (3) of this section.
(d)   By rule or order, the Commissioner may modify the requirements of this section or exempt any broker-dealer, investment adviser, or federal covered adviser from the requirements of this section if the Commissioner determines that:
(1)   Compliance with this section is not necessary or appropriate for the protection of investors; and
(2)   The exemption is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.
 

ENFORCEMENT AND PENALTIES

§11–701.  
(a)   In his discretion, the Commissioner may:
(1)   Make public or private investigations within or outside of this State as he considers necessary to:
(i)   Determine whether any person has violated or is about to violate any provision of this title or any rule or order under this title; or
(ii)   Aid in the enforcement of this title or in the prescribing of rules and forms under this title;
(2)   Require or permit any person to file a statement in writing, under oath or otherwise as the Commissioner determines, as to all the facts and circumstances concerning the matter to be investigated; and
(3)   Publish information concerning any violation of this title or any rule or order under this title.
(b)   For the purpose of any investigation or proceeding under this title, the Commissioner or any officer designated by him may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the Commissioner considers relevant or material to the inquiry.
(c)    (1)   In case of contumacy by or refusal to obey a subpoena issued to any person, the circuit court of the county in which the person resides or transacts business, on application by the Commissioner, may issue to the person an order requiring him to appear before the Commissioner or the officer designated by him to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question.
(2)   Failure to obey the order of the court may be punished by the court as a contempt of court.
(d)   A person is not excused from attending and testifying or from producing any document or record before the Commissioner, or in obedience to the subpoena of the Commissioner or any officer designated by him, or in any proceeding instituted by the Commissioner, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty or forfeiture. However, an individual may not be prosecuted or subjected to any penalty or forfeiture for or on account of any specific subject concerning which he is compelled, after claiming his privilege against self-incrimination as to that specific subject, to testify or produce evidence, documentary or otherwise, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

MISCELLANEOUS PROVISIONS

§11–801.  
(a)   Sections 11-301, 11-302, 11-303, 11-304, 11-401, 11-501, and 11-703 of this title apply to any person who:
(1)   Sells or offers to sell if:
(i)   The offer to sell is made in this State; or
(ii)   The offer to buy is made and accepted in this State; or
(2)   Offers or provides investment advisory services if:
(i)   The contract for the investment advisory services is executed in this State;
(ii)   The investment advisory services are rendered in this State; or
(iii)   Any action instrumental in effecting prohibited conduct is taken in this State, whether or not either party is then present in this State.
(b)   Sections 11-301, 11-302, 11-303, 11-304, 11-401, and 11-703 of this title apply to any person who:
(1)   Buys or offers to buy if:
(i)   The offer to buy is made in this State; or
(ii)   The offer to sell is made and accepted in this State; or
(2)   Offers or provides investment advisory services if:
(i)   The contract for the investment advisory services is executed in this State;
(ii)   The investment advisory services are rendered in this State; or
(iii)   Any action instrumental in effecting prohibited conduct is taken in this State, whether or not either party is then present in this State.
(c)   For the purpose of this section, an offer to sell or to buy is made in this State, whether or not either party is then present in this State, if the offer:
(1)   Originates from this State; or
(2)   Is directed by the offeror to this State and received at the place to which it is directed or, in the case of a mailed offer, at any post office in this State.
(d)    (1)   For the purpose of this section, an offer to buy or to sell is accepted in this State if acceptance:
(i)   Is communicated to the offeror in this State; and
(ii)   Has not been communicated previously to the offeror, orally or in writing, outside this State.
(2)   For purposes of this section, acceptance is communicated to the offeror in this State, whether or not either party is then present in this State, if the offeree directs it to the offeror in this State reasonably believing the offeror to be in this State and it is received at the place to which it is directed or, in the case of a mailed acceptance, at any post office in this State.
(e)   An offer to sell or to buy, or to provide investment advisory services, is not made in this State if:
(1)   The publisher circulates or there is circulated on his behalf in this State any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in this State, or which is published in this State but has had more than two thirds of its circulation outside this State during the past 12 months; or
(2)   A radio or television program originating outside this State is received in this State.
(f)   Sections 11-302 and 11-401(b) of this title, as well as § 11-304 of this title so far as investment advisers and investment adviser representatives are concerned, apply if any act instrumental in effecting prohibited conduct is done in this State, whether or not either party is then present in this State


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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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