§ 4301. Definitions
The term “equity security” when used in this chapter means any stock or similar security;
or any security convertible, with or without consideration, into such a security,
or carrying any warrant or right to subscribe to or purchase such a security; or any
such warrant or right; or any other security that the Commissioner of Financial Regulation
shall consider to be of similar nature and consider necessary or appropriate, by such
rules and regulations as he or she may prescribe in the public interest or for the
protection of investors, to treat as an equity security. (Added 1965, No. 88, § 6.)
§ 4302. Officers and stockholders; disclosure
Every person who is directly or indirectly the beneficial owner of more than ten percent
of any class of any equity security of a domestic stock insurance company, or who
is a director or an officer thereof, shall file in the office of the Commissioner
of Financial Regulation on or before the first day of July, 1965, or within 10 days
after the person becomes the beneficial owner, director, or officer, a statement in
such form as the Commissioner may prescribe, of the amount of all equity securities
of the company of which the person is the beneficial owner, and within 10 days after
the close of each calendar month thereafter, if there has been a change in his or
her ownership during the month, shall file in the office of the Commissioner a statement,
in such form as the Commissioner may prescribe, indicating his or her ownership at
the close of the calendar month and such changes in his or her ownership as have occurred
during the calendar month. (Added 1965, No. 88, § 1; amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a).)
§ 4303. Penalty
To prevent the unfair use of information that may have been obtained by the beneficial
owner, director, or officer by reason of his or her relationship to the company, any
profit realized by him or her from any purchase and sale, or any sale and purchase,
of any equity security of the company within any period of less than six months, unless
the security was acquired in good faith in connection with a debt previously contracted,
shall inure to and be recoverable by the company, irrespective of any intention on
the part of the beneficial owner, director, or officer in entering into the transaction
of holding the security purchased or of not repurchasing the security sold for a period
exceeding six months. Suit to recover the profit may be instituted in any court of
competent jurisdiction by the company, or by the owner of any security of the company
in the name and in behalf of the company if the company fails or refuses to bring
suit within 60 days after request or fails diligently to prosecute it thereafter;
but no such suit may be brought more than two years after the date the profit was
realized. This section shall not be construed to cover any transaction where the
beneficial owner was not such both at the time of the purchase and sale, or the sale
and purchase, of the security involved, or any transaction or transactions that the
Commissioner by rules and regulations may exempt as not comprehended within the purpose
of this section. (Added 1965, No. 88, § 2.)
§ 4304. Unlawful sales; delivery
It shall be unlawful for any such beneficial owner, director, or officer, directly,
or indirectly, to sell any equity security of the company if the person selling the
security or his or her principal does not own the security sold, or if owning the
security, does not deliver it against the sale within 20 days thereafter, or does
not within five days after the sale deposit it in the mails or other usual channels
of transportation; but no person may be considered to have violated this section if
he or she proves that notwithstanding the exercise of good faith he or she was unable
to make delivery or deposit within that time, or that to do so would cause undue inconvenience
or expense. (Added 1965, No. 88, § 3.)
§ 4305. Exceptions
The provisions of section 4303 of this title shall not apply to any purchase and sale, or sale and purchase, and the provisions
of section 4303 of this title shall not apply to any sale, of an equity security of a domestic stock insurance
company not then or theretofore held by him or her in an investment account, by a
dealer in the ordinary course of his or her business and incident to the establishment
or maintenance by him or her of a primary or secondary market otherwise than on an
exchange as defined in the Securities Exchange Act of 1934 for the security. The
Commissioner may, by such rules and regulations as he or she considers necessary or
appropriate in the public interest, define and prescribe terms and conditions with
respect to securities held in an investment account and transactions made in the ordinary
course of business and incident to the establishment or maintenance of a primary or
secondary market. (Added 1965, No. 88, § 4.)
§ 4306. Arbitrage transactions
The provisions of sections 4302-4304 of this title shall not apply to foreign or domestic arbitrage transactions unless made in contravention
of such rules and regulations as the Commissioner may adopt in order to carry out
the purposes of this chapter. (Added 1965, No. 88, § 5.)
§ 4307. Federally registered and small companies excepted
The provisions of sections 4302-4304 of this title shall not apply to equity securities of a domestic stock insurance company if (1)
the securities are registered, or required to be registered under section 12 of the
Securities Exchange Act of 1934, as amended, or if (2) the domestic stock insurance
company does not have any class of its equity securities held of record by 100 or
more persons on the last business day of the year next preceding the year in which
equity securities of the company would be subject to the provisions of sections 4302-4304 of this title except for the provisions of this section. (Added 1965, No. 88, § 7.)
§ 4308. Rules and regulations of Commissioner
The Commissioner may make such rules and regulations as may be necessary for the execution
of the functions vested in him or her by sections 4302-4307 of this title and may for that purpose classify domestic stock insurance companies, securities,
and other persons or matters within his or her jurisdiction. No provision of sections
4302-4304 of this title imposing any liability applies to any act done or omitted in good faith in conformity
with any rule or regulation of the Commissioner, notwithstanding that the rule or
regulation may, after the act or omission, be amended or rescinded, or determined
by judicial or other authority to be invalid for any reason. (Added 1965, No. 88, § 8.)