§ 5102. Definitions
In this chapter, unless the context otherwise requires:
(1) “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. But 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 term. The term does not include an individual
excluded by rule adopted or order issued under this chapter.
(2) “Bank” means:
(A) a banking institution organized under the laws of the United States;
(B) a member bank of the Federal Reserve System;
(C) any other 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 12 U.S.C. § 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
(D) a receiver, conservator, or other liquidating agent of any institution or firm included
in subdivision (2)(A), (B), or (C) of this section.
(3) “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. The term does
not include:
(A) an agent;
(B) an issuer;
(C) a bank or savings institution if its activities as a broker-dealer are limited to
those specified in subdivisions 15 U.S.C. § 78c(a)(4)(B)(i) through (vi), (viii) through (x), and (xi) if limited to unsolicited transactions;
and 15 U.S.C. § 78c(a)(5)(B) and (C) or a bank that satisfies the conditions described in 15 U.S.C. § 78c(a)(4)(E);
(D) an international banking institution; or
(E) a person excluded by rule adopted or order issued under this chapter.
(4) “Commissioner” means the Commissioner of Financial Regulation.
(5) “Depository institution” means:
(A) a bank; or
(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. The term
does not include:
(i) an insurance company or other organization primarily engaged in the business of insurance;
(ii) a Morris Plan bank; or
(iii) an industrial loan company that is not an “insured depository institution” as defined
in section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. § 1813(c)(2), or any successor federal statute.
(6) “Federal covered investment adviser” means a person registered under 15 U.S.C. § 80b-1 et seq.
(7) “Federal covered security” means a security that is, or upon completion of a transaction
will be, a covered security under 15 U.S.C. § 77r(b) or rules or regulations adopted pursuant to that provision.
(8) “Filing” means the receipt under this chapter of a record by the Commissioner or a
designee of the Commissioner.
(9) “Fraud,” “deceit,” and “defraud” are not limited to common law deceit.
(10) “Guaranteed” means guaranteed as to payment of all principal and all interest.
(11) “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;
(B) an insurance company;
(C) a separate account of an insurance company;
(D) an investment company as defined in 15 U.S.C. § 80a-1 et seq.;
(E) a broker-dealer registered under 15 U.S.C. § 78a et seq.;
(F) an employee pension, profit-sharing, or benefit plan if the plan has total assets
in excess of $10,000,000.00 or its investment decisions are made by a named fiduciary,
as defined in 29 U.S.C. § 1001 et seq., that is a broker-dealer registered under 15 U.S.C. § 78a et seq., an investment adviser registered or exempt from registration under 15 U.S.C. § 80a-1 et seq., an investment adviser registered under this chapter, a depository institution,
or an insurance company;
(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 $10,000,000.00
or its investment decisions are made by a duly designated public official or by a
named fiduciary, as defined in 29 U.S.C. § 1001 et seq., that is a broker-dealer registered under 15 U.S.C. § 78a et seq., an investment adviser registered or exempt from registration under 15 U.S.C. § 80a-1 et seq., an investment adviser registered under this chapter, a depository institution,
or an insurance company;
(H) a trust, if it has total assets in excess of $10,000,000.00, its trustee is a depository
institution, and its participants are exclusively plans of the types identified in
subdivision (11)(F) or (G) of this section, regardless of the size of their assets,
except a trust that includes as participants self-directed individual retirement accounts
or similar self-directed plans;
(I) an organization described in 26 U.S.C. § 501(c)(3), corporation, Massachusetts trust or similar business trust, limited liability company,
or partnership, not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $10,000,000.00;
(J) a small business investment company licensed by the Small Business Administration
under 15 U.S.C. § 681(c) with total assets in excess of $10,000,000.00;
(K) a private business development company as defined in 15 U.S.C. § 80b-2(a)(22) with total assets in excess of $10,000,000.00;
(L) a federal covered investment adviser acting for its own account;
(M) a “qualified institutional buyer” as defined in 17 C.F.R. 230.144A(a)(1), other than subdivision 17 C.F.R. 230.144A(a)(1)(i)(H);
(N) a “major U.S. institutional investor” as defined in 17 C.F.R. 240.15a-6(b)(4)(i);
(O) any other person, other than an individual, of institutional character with total
assets in excess of $10,000,000.00 not organized for the specific purpose of evading
this chapter; or
(P) any other person specified by rule adopted or order issued under this chapter.
(12) “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 insurance commissioner or a similar official
or agency of a state.
(13) “Insured” means insured as to payment of all principal and all interest.
(14) “International banking institution” means an international financial institution of
which the United States is a member and whose securities are exempt from registration
under 15 U.S.C. § 77a et seq.
(15) “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. The term 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. The term
does not include:
(A) an investment adviser representative;
(B) a lawyer, accountant, engineer, or teacher whose performance of investment advice
is solely incidental to the practice of the person’s profession;
(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;
(D) a publisher of a bona fide newspaper, news magazine, or business or financial publication
of general and regular circulation;
(E) a federal covered investment adviser;
(F) a bank or savings institution;
(G) any other person that is excluded by 15 U.S.C. § 80b-1 et seq. from the definition of investment adviser; or
(H) any other person excluded by rule adopted or order issued under this chapter.
(16) “Investment adviser representative” means an individual employed by or associated
with an investment adviser or federal covered investment adviser and who makes any
recommendations or otherwise gives investment advice regarding securities, manages
accounts or portfolios of clients, determines which recommendation or advice regarding
securities should be given, provides investment advice or holds himself or herself
out as providing investment advice, receives compensation to solicit, offer, or negotiate
for the sale of or for selling investment advice, or supervises employees who perform
any of the foregoing. The term does not include an individual who:
(A) performs only clerical or ministerial acts;
(B) is an agent whose performance of investment advice is solely incidental to the individual
acting as an agent and who does not receive special compensation for investment advisory
services;
(C) is employed by or associated with a federal covered investment adviser, unless the
individual has a “place of business” in this State as that term is defined by rule
adopted under 15 U.S.C. § 80b-3a, and is:
(i) an “investment adviser representative” as that term is defined by rule adopted under
15 U.S.C. § 80b-3a; or
(ii) not a “supervised person” as that term is defined in 15 U.S.C. § 80b-2(a)(25); or
(D) is excluded by rule adopted or order issued under this chapter.
(17) “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.
(B) The issuer of an equipment trust certificate or similar security serving the same
purpose as 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 assuring payment of the certificate.
(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.
(18) “Nonissuer transaction” or “nonissuer distribution” means a transaction or distribution
not directly or indirectly for the benefit of the issuer.
(19) “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. The term does not include
a tender offer that is subject to 15 U.S.C. § 78n(d).
(20) “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.
(21) “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
(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.
(22) “Predecessor act” means chapter 131 of this title.
(23) “Price amendment” means the amendment to a registration statement filed under 15 U.S.C. § 77a et seq. or, if an amendment is not filed, the prospectus or prospectus supplement
filed under 15 U.S.C. § 77a et seq. 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.
(24) “Principal place of business” of a broker-dealer or an investment adviser means the
executive office of the broker-dealer or investment adviser from which the officers,
partners, or managers of the broker-dealer or investment adviser direct, control,
and coordinate the activities of the broker-dealer or investment adviser.
(25) “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.
(26) “Sale” includes every contract of sale, contract to sell, or disposition of a security
or interest in a security for value, and “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. Both terms 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;
(B) a gift of assessable stock involving an offer and sale; and
(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.
(27) “Securities and Exchange Commission” means the U.S. Securities and Exchange Commission.
(28) “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; voting trust certificate; certificate of
deposit for a security; fractional undivided interest in oil, gas, or other mineral
rights; 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. The term:
(A) includes both a certificated and an uncertificated security;
(B) does not include an insurance or endowment policy or annuity contract under which
an insurance company promises to pay a fixed sum of money either in a lump sum or
periodically for life or other specified period;
(C) does not include an interest in a contributory or noncontributory pension or welfare
plan subject to 29 U.S.C. § 1001 et seq.;
(D) includes 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 and a “common
enterprise” means an enterprise in which the fortunes of the investor are interwoven
with those of either the person offering the investment, a third party, or other investors;
and
(E) includes as an “investment contract” among other contracts an interest in a limited
partnership, a limited liability company, an investment in a viatical settlement,
or similar agreement.
(29) “Self-regulatory organization” means any national securities exchange, registered securities association, clearing agency registered under 15 U.S.C. § § 78a et seq., or, solely for purposes of sections 19(b), 19(c), and 23(b) of 15 U.S.C. § 78a et seq., the Municipal Securities Rulemaking Board established under 15 U.S.C. § 78a et seq.
(30) “Sign” means with present intent to authenticate or adopt a record:
(A) to execute or adopt a tangible symbol; or
(B) to attach or logically associate with the record an electronic symbol, sound, or process.
(31) “State” means a state of the United States, the District of Columbia, Puerto Rico,
the U.S. Virgin Islands, or any territory or insular possession subject to the jurisdiction
of the United States. (Added 2005, No. 11, § 1, eff. July 1, 2006; amended 2005, No. 122 (Adj. Sess.), §§ 9-12.)