HB-5008, As Passed Senate, December 18, 2008

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5008

     A bill to enact the uniform securities act (2002) relating to

the issuance, offer, sale, or purchase of securities; to prohibit

fraudulent practices in relation to securities; to establish civil

and criminal sanctions for violations of the act and civil

sanctions for violation of the rules promulgated pursuant to the

act; to require the registration of broker-dealers, agents,

investment advisers, and securities; to make uniform the law with

reference to securities; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

ARTICLE 1

GENERAL PROVISIONS

     Sec. 101. This act shall be known and may be cited as the

"uniform securities act (2002)".

     Sec. 102. As used in this act, unless the context otherwise

requires:

     (a) "Administrator" means the office of financial and

insurance regulation of the department of energy, labor, and

economic growth.

     (b) "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. The term does not include a partner, officer,

or director of a broker-dealer or issuer, or an individual having a

similar status or performing similar functions, unless the

individual otherwise comes within the term. The term does not

include an individual excluded by rule or order under this act. The

term does not include a person acting solely as a finder and

registered as a broker-dealer under this act or acting as a finder

in a transaction exempt under section 202(1)(r).

     (c) "Bank" means any of the following:

     (i) A banking institution organized under the laws of the

United States.

     (ii) A member bank of the federal reserve system.

     (iii) Any other banking institution that meets all of the

following:

     (A) It is doing business under the laws of a state or of the

United States.

     (B) A substantial portion of its business 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 USC 92a.

     (C) It is supervised and examined by a state or federal agency

having supervision over banks.

     (D) It is not operated for the purpose of evading this act.

     (iv) A receiver, conservator, or other liquidating agent of any

institution or firm included in subparagraph (i), (ii), or (iii).

     (d) "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 any of the

following:

     (i) An agent.

     (ii) An issuer.

     (iii) A bank or savings institution if its activities as a

broker-dealer are limited to those specified in section 3(a)(4) and

3(a)(5) of the securities exchange act of 1934, 15 USC 78c, or a

bank that satisfies the conditions described in section 3(a)(4)(E)

of the securities exchange act of 1934, 15 USC 78c.

     (iv) An international banking institution.

     (v) A person excluded by rule or order under this act.

     (e) "Depository institution" means a bank; or 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 federal statute by the federal deposit insurance

corporation, the national credit union share insurance fund, or a

successor authorized by federal law; or a bank that does not

receive deposits because of a limitation in its charter, articles

of incorporation, or articles of association. The term does not

include any of the following:

     (i) An insurance company or other organization primarily

engaged in the business of insurance.

     (ii) A Morris Plan bank.

     (iii) An industrial loan company that is not an insured

depository institution, as that term is defined in section 3(c)(2)

of the federal deposit insurance act, 12 USC 1813(c)(2).

     (f) "Federal covered investment adviser" means a person

registered under the investment advisers act of 1940.

     (g) "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 securities act of 1933, 15 USC 77r, or rules

or regulations adopted under that provision.

     (h) "Filing" means the receipt under this act of a record by

the administrator or a designee of the administrator.

     (i) "Finder" means a person who, for consideration,

participates in the offer to sell, sale, or purchase of securities

by locating, introducing, or referring potential purchasers or

sellers. Finder does not include a person whose actions are solely

incidental to a transaction exempt pursuant to section 202(1)(r).

The administrator may by rule or order exclude other persons from

this definition.

     (j) "Fraud," "deceit," and "defraud" include, but are not

limited to, common law deceit.

     (k) "Guaranteed" means guaranteed as to payment of all

principal and all interest.

     Sec. 102a. As used in this act, unless the context otherwise

requires:

     (a) "Institutional investor" means any of the following,

whether acting for itself or for others in a fiduciary capacity:

     (i) A depository institution or international banking

institution.

     (ii) An insurance company.

     (iii) A separate account of an insurance company.

     (iv) An investment company as defined in the investment company

act of 1940.

     (v) A broker-dealer registered under the securities exchange

act of 1934.

     (vi) 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

the employee retirement income security act of 1974, that is a

broker-dealer registered under the securities exchange act of 1934,

an investment adviser registered or exempt from registration under

the investment advisers act of 1940, an investment adviser

registered under this act, a depository institution, or an

insurance company.

     (vii) 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 the employee

retirement income security act of 1974, that is a broker-dealer

registered under the securities exchange act of 1934, an investment

adviser registered or exempt from registration under the investment

advisers act of 1940, an investment adviser registered under this

act, a depository institution, or an insurance company.

     (viii) 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

subparagraph (vi) or (vii), regardless of size of their assets,

except a trust that includes as participants self-directed

individual retirement accounts or similar self-directed plans.

     (ix) An organization described in section 501(c)(3) of the

internal revenue code, 26 USC 501, a corporation, Massachusetts 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.

     (x) A small business investment company licensed by the small

business administration under section 301(c) of the small business

investment act of 1958, 15 USC 681, with total assets in excess of

$10,000,000.00.

     (xi) A private business development company as defined in

section 202(a)(22) of the investment advisers act of 1940, 15 USC

80b-2, with total assets in excess of $10,000,000.00.

     (xii) A federal covered investment adviser acting for its own

account.

     (xiii) A "qualified institutional buyer" as defined in rule

144A(a)(1), other than rule 144A(a)(1)(i)(H), adopted under the

securities act of 1933, 17 CFR 230.144A.

     (xiv) A "major U.S. institutional investor" as defined in rule

15a-6(b)(4)(i) adopted under the securities exchange act of 1934, 17

CFR 240.15a-6(b)(4)(i).

     (xv) 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 act.

     (xvi) Any other person specified by rule or order under this

act.

     (b) "Insurance company" means a company organized as an

insurance company whose primary business is writing insurance or

reinsuring risks underwritten by insurance companies and which is

subject to supervision by the insurance commissioner or a similar

official or agency of a state.

     (c) "Insured" means insured as to payment of all principal and

all interest.

     (d) "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 securities

act of 1933.

     (e) "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 any of the following:

     (i) An investment adviser representative.

     (ii) A lawyer, accountant, engineer, or teacher whose

performance of investment advice is solely incidental to the

practice of the person's profession.

     (iii) 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.

     (iv) A publisher of a bona fide newspaper, news magazine, or

business or financial publication of general and regular

circulation.

     (v) A federal covered investment adviser.

     (vi) A depository institution.

     (vii) Any other person that is excluded by the investment

advisers act of 1940 from the definition of investment adviser.

     (viii) Any other person excluded by rule or order under this

act.

     (ix) A finder registered as a broker-dealer under this act.

     (f) "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 meets any of the following:

     (i) Performs only clerical or ministerial acts.

     (ii) Is an agent whose performance of investment advice is

solely incidental to the individual acting as an agent and does not

receive special compensation for investment advisory services.

     (iii) Is employed by or associated with a federal covered

investment adviser, unless the individual meets any of the

following:

     (A) Has a "place of business" in this state as that term is

defined by rule adopted under section 203A of the investment

advisers act of 1940, 15 USC 80b-3a, and is an "investment adviser

representative" as that term is defined by rule adopted under

section 203A of the investment advisers act of 1940, 15 USC 80b-3a.

     (B) Has a "place of business" in this state as that term is

defined by rule adopted under section 203A of the investment

advisers act of 1940, 15 USC 80b-3a, and is not a "supervised

person" as that term is defined in section 202(a)(25) of the

investment advisers act of 1940, 15 USC 80b-2.

     (iv) Is excluded by rule or order under this act.

     (g) "Issuer" means a person that issues or proposes to issue a

security, subject to the following:

     (i) 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.

     (ii) 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 assuring payment of the certificate.

     (iii) 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.

     Sec. 102b. As used in this act, unless the context otherwise

requires:

     (a) "Nonissuer transaction" or "nonissuer distribution" means

a transaction or distribution not directly or indirectly for the

benefit of the issuer.

     (b) "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 section 14(d) of title I of the securities

exchange act of 1934, 15 USC 78n.

     (c) "Person" means an individual, corporation, business trust,

estate, trust, partnership, limited liability company, limited

liability partnership, association, joint venture, or government; a

governmental subdivision, agency, or instrumentality; a public

corporation; or any other legal or commercial entity.

     (d) "Place of business" of a broker-dealer, an investment

adviser, or a federal covered investment adviser means any of the

following:

     (i) 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.

     (ii) 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.

     (e) "Predecessor act" means former 1964 PA 265.

     (f) "Price amendment" means the amendment to a registration

statement filed under the securities act of 1933 or, if an

amendment is not filed, the prospectus or prospectus supplement

filed under the 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.

     (g) "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.

     (h) "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.

     Sec. 102c. As used in this act, unless the context otherwise

requires:

     (a) "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 any of the following:

     (i) A security given or delivered with, or as a bonus on

account of, any purchase of securities or any other thing

constituting part of the subject of the purchase and having been

offered and sold for value.

     (ii) A gift of assessable stock involving an offer and sale.

     (iii) 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.

     (b) "Securities and exchange commission" means the United

States securities and exchange commission.

     (c) "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 in or based on

the value of that put, call, straddle, option, or privilege on that

security, certificate of deposit, or group or index of securities;

put, call, straddle, option, or privilege entered into on a

national securities exchange relating to foreign currency; an

investment in a viatical or life settlement agreement; 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. All of the

following apply to the term security:

     (i) The term includes a contractual or quasi-contractual

arrangement that meets all of the following:

     (A) A person furnishes capital, other than services, to an

issuer under the arrangement.

     (B) A portion of the capital furnished under sub-subparagraph

(A) is subjected to the risks of the issuer's enterprise.

     (C) The furnishing of capital under sub-subparagraph (A) is

induced by representations made by an issuer, promoter, or the

issuer's or promoter's affiliates which give rise to a reasonable

understanding that a valuable tangible benefit will accrue to the

person furnishing the capital as a result of the operation of the

enterprise.

     (D) The person furnishing the capital under sub-subparagraph

(A) does not intend to be actively involved in the management of

the enterprise in a meaningful way.

     (E) At the time the capital is furnished, a promoter or its

affiliates anticipate that financial gain may be realized as a

result of the furnishing.

     (ii) The term includes both a certificated and an

uncertificated security.

     (iii) The term 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.

     (iv) The term does not include an interest in a contributory or

noncontributory pension or welfare plan subject to the employee

retirement income security act of 1974.

     (v) The term 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. As used in this

subparagraph, 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.

     (vi) The term may include, as an investment contract, an

interest in a limited partnership, a limited liability company, or

a limited liability partnership.

     (d) "Self-regulatory organization" means a national securities

exchange registered under the securities exchange act of 1934, a

national securities association of broker-dealers registered under

the securities exchange act of 1934, a clearing agency registered

under the securities exchange act of 1934, or the municipal

securities rule-making board established under the securities

exchange act of 1934.

     (e) "Sign" means, with present intent to authenticate or adopt

a record, either of the following:

     (i) To execute or adopt a tangible symbol.

     (ii) To attach or logically associate with the record an

electronic symbol, sound, or process.

     (f) "State" means a state of the United States, the District

of Columbia, the Commonwealth of Puerto Rico, the United States

Virgin Islands, or any territory or insular possession subject to

the jurisdiction of the United States.

     Sec. 103. (1) Subject to subsection (2), as used in this act:

     (a) "Commodity exchange act" means the commodity exchange act,

7 USC 1 to 27f.

     (b) "Electronic signatures in global and national commerce

act" means the electronic signatures in global and national

commerce act, 15 USC 7001 to 7031.

     (c) "Employee retirement income security act of 1974" means

the employee retirement income security act of 1974, Public Law 93-

406.

     (d) "Internal revenue code" means the internal revenue code of

1986, 26 USC 1 to 9833.

     (e) "Investment advisers act of 1940" means the investment

advisers act of 1940, 15 USC 80b-1 to 80b-21.

     (f) "Investment company act of 1940" means the investment

company act of 1940, 15 USC 80a-1 to 80a-64.

     (g) "National housing act" means the national housing act, 12

USC 1701 to 1750g.

     (h) "Public utility holding company act of 1935" means the

public utility holding company act of 1935, 15 USC 79 to 79z-6.

     (i) "Securities act of 1933" means the securities act of 1933,

15 USC 77a to 77aa.

     (j) "Securities exchange act of 1934" means the securities

exchange act of 1934, 15 USC 78a to 78nn.

     (k) "Securities investor protection act of 1970" means the

securities investor protection act of 1970, 15 USC 78aaa to 78lll.

     (l) "Securities litigation uniform standards act of 1998" means

the securities litigation uniform standards act of 1998, Public Law

105-353, 112 Stat. 3227.

     (m) "Small business investment act of 1958" means the small

business investment act of 1958, Public Law 85-699.

     (2) A reference in this act to a federal statute defined in

subsection (1) includes that statute and the rules and regulations

adopted under that statute. The administrator may, by rule or

order, adopt an amendment or successor to a federal statute defined

in subsection (1) or rules and regulations adopted under a federal

statute defined in subsection (1), a federal statute that is

similar to a federal statute defined in subsection (1), or a rule

or regulation that is similar to a rule or regulation adopted under

a federal statute defined in subsection (1).

     Sec. 104. Any reference in this act to an agency or department

of the United States is also a reference to any successor agency,

department, or entity of that agency or department.

     Sec. 105. This act modifies, limits, and supersedes the

electronic signatures in global and national commerce act, but does

not modify, limit, or supersede section 101(c) of that act, 15 USC

7001, or authorize electronic delivery of any of the notices

described in section 103(b) of that act, 15 USC 7003. This act

authorizes the filing of records and signatures, when specified by

provisions of this act or by a rule or order under this act, in a

manner consistent with section 104(a) of that act, 15 USC 7004.

ARTICLE 2

EXEMPTIONS FROM REGISTRATION OF SECURITIES

     Sec. 201. The following securities are exempt from the

requirements of sections 301 to 306 and 504:

     (a) A security, including a revenue obligation or a separate

security as defined in rule 131 adopted under the securities act of

1933, 17 CFR 230.131, issued, insured, or guaranteed by the United

States; by a state; by a political subdivision of a state; by a

public authority, agency, or instrumentality of 1 or more states;

by a political subdivision of 1 or more states; or by a person

controlled or supervised by and acting as an instrumentality of the

United States under authority granted by the Congress; or a

certificate of deposit for any of the foregoing.

     (b) A security issued, insured, or guaranteed by a foreign

government with which the United States maintains diplomatic

relations, or any of its political subdivisions, if the security is

recognized as a valid obligation by the issuer, insurer, or

guarantor.

     (c) A security issued by and representing, or that will

represent an interest in or a direct obligation of, or be

guaranteed by, any of the following:

     (i) An international banking institution.

     (ii) A banking institution organized under the laws of the

United States; a member bank of the federal reserve system; or a

depository institution a substantial portion of the business of

which consists or will consist of either receiving deposits or

share accounts that 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 or exercising fiduciary powers that are similar to

those permitted for national banks under the authority of the

comptroller of currency pursuant to 12 USC 92a.

     (iii) Any other depository institution, unless by rule or order

the administrator proceeds under section 204.

     (d) A security issued by and representing an interest in, or a

debt of, or insured or guaranteed by, an insurance company

authorized to do business in this state.

     (e) A security issued or guaranteed by a railroad, other

common carrier, public utility, or public utility holding company

that is any of the following:

     (i) Regulated in respect to its rates and charges by the United

States or a state.

     (ii) Regulated in respect to the issuance or guarantee of the

security by the United States, a state, Canada, or a Canadian

province or territory.

     (iii) A public utility holding company registered under the

public utility holding company act of 1935 or a subsidiary of a

registered holding company within the meaning of that act.

     (f) A federal covered security specified in section 18(b)(1)

of the securities act of 1933, 15 USC 77r, or a security listed or

approved for listing on another securities market specified by rule

under this act; a put or a call option contract; warrant; a

subscription right on or with respect to those securities; or an

option or similar derivative security on a security or an index of

securities or foreign currencies issued by a clearing agency

registered under the securities exchange act of 1934 and listed or

designated for trading on a national securities exchange, a

facility of a national securities exchange, or a facility of a

national securities association registered under the securities

exchange act of 1934 or an offer or sale, of the underlying

security in connection with the offer, sale, or exercise of an

option or other security that was exempt when the option or other

security was written or issued; or an option or a derivative

security designated by the securities and exchange commission under

section 9(b) of the securities exchange act of 1934, 15 USC 78i.

     (g) A security issued by a person organized and operated

exclusively for religious, educational, benevolent, fraternal,

charitable, social, athletic, or reformatory purposes, or as a

chamber of commerce, and not for pecuniary profit, no part of the

net earnings of which inures to the benefit of a private

stockholder or other person, or a security of a company that is

excluded from the definition of an investment company under section

3(c)(10)(B) of the investment company act of 1940, 15 USC 80a-3.

With respect to the offer or sale of a note, bond, debenture, or

other evidence of indebtedness by a person described in this

subdivision, the administrator by rule or order may limit the

availability of this exemption by classifying securities, persons,

and transactions, imposing different requirements for different

classes, specifying with respect to subparagraph (ii) the scope of

the exemption and the grounds for denial or suspension, and

requiring an issuer to meet 1 or more of the following:

     (i) To file a notice specifying the material terms of the

proposed offer or sale and copies of any proposed sales and

advertising literature to be used and provide that the exemption

becomes effective if the administrator does not disallow the

exemption within the period established by the rule.

     (ii) To file a request for exemption authorization for which a

rule under this act may specify the scope of the exemption; the

requirement of an offering statement; the filing of sales and

advertising literature; the filing of consent to service of process

complying with section 611; and grounds for denial or suspension of

the exemption.

     (iii) To register under section 304.

     (h) A member's or owner's interest in, or a retention

certificate or like security given in lieu of a cash patronage

dividend issued by, a cooperative organized and operated as a

nonprofit membership cooperative under the cooperative laws of a

state, but not a member's or owner's interest, retention

certificate, or like security sold to persons other than bona fide

members of the cooperative.

     (i) An equipment trust certificate in respect to equipment

leased or conditionally sold to a person, if any security issued by

the person would be exempt under this section or would be a federal

covered security under section 18(b)(1) of the securities act of

1933, 15 USC 77r.

     Sec. 202. (1) The following transactions are exempt from the

requirements of sections 301 to 306 and 504:

     (a) An isolated nonissuer transaction, whether effected by or

through a broker-dealer or not.

     (b) A nonissuer transaction by or through a broker-dealer

registered or exempt from registration under this act, and a resale

transaction by a sponsor of a unit investment trust registered

under the investment company act of 1940, in a security of a class

that has been outstanding in the hands of the public for at least

90 days, if all of the following are met at the date of the

transaction:

     (i) The issuer of the security is engaged in business, the

issuer is not in the organizational stage or in bankruptcy or

receivership, and the issuer is not a blank check, blind pool, or

shell company that has no specific business plan or purpose or has

indicated that its primary business plan is to engage in a merger

or combination of the business with, or an acquisition of, an

unidentified person.

     (ii) The security is sold at a price reasonably related to its

current market price.

     (iii) The security does not constitute the whole or part of an

unsold allotment to, or a subscription or participation by, the

broker-dealer as an underwriter of the security or a

redistribution.

     (iv) A nationally recognized securities manual or its

electronic equivalent designated by rule or order under this act or

a record filed with the securities and exchange commission that is

publicly available contains all of the following:

     (A) A description of the business and operations of the

issuer.

     (B) The names of the issuer's executive officers and the names

of the issuer's directors, if any.

     (C) An audited balance sheet of the issuer as of a date within

18 months before the date of the transaction or, in the case of a

reorganization or merger, and when the parties to the

reorganization or merger each had an audited balance sheet, a pro

forma balance sheet for the combined entity.

     (D) An audited income statement for each of the issuer's 2

immediately previous fiscal years or for the period of existence of

the issuer, whichever is shorter, or, in the case of a

reorganization or merger when each party to the reorganization or

merger had audited income statements, a pro forma income statement.

     (v) Any of the following requirements are met:

     (A) The issuer of the security has a class of equity

securities listed on a national securities exchange registered

under section 6 of the securities exchange act of 1934, 15 USC 78f,

or designated for trading on the national association of securities

dealers automated quotation system.

     (B) The issuer of the security is a unit investment trust

registered under the investment company act of 1940.

     (C) The issuer of the security, including its predecessors,

has been engaged in continuous business for at least 3 years.

     (D) The issuer of the security has total assets of at least

$2,000,000.00 based on an audited balance sheet as of a date within

18 months before the date of the transaction or, in the case of a

reorganization or merger when the parties to the reorganization or

merger each had an audited balance sheet as of a date within 18

months before the date of the transaction, a pro forma balance

sheet for the combined entity.

     (c) A nonissuer transaction by or through a broker-dealer

registered or exempt from registration under this act in a security

of a foreign issuer that is a margin security defined in

regulations or rules adopted by the board of governors of the

federal reserve system.

     (d) A nonissuer transaction by or through a broker-dealer

registered or exempt from registration under this act in an

outstanding security if the guarantor of the security files reports

with the securities and exchange commission under the reporting

requirements of section 13 or 15(d) of the securities exchange act

of 1934, 15 USC 78m or 78o.

     (e) A nonissuer transaction by or through a broker-dealer

registered or exempt from registration under this act in a security

that meets 1 or more of the following:

     (i) Is rated at the time of the transaction by a nationally

recognized statistical rating organization in 1 of its 4 highest

rating categories.

     (ii) Has a fixed maturity or a fixed interest or dividend, if

both of the following are met:

     (A) A default has not occurred during the current fiscal year

or within the 3 previous fiscal years or during the existence of

the issuer and any predecessor if less than 3 fiscal years, in the

payment of principal, interest, or dividends on the security.

     (B) The issuer is engaged in business, is not in the

organizational stage or in bankruptcy or receivership, and is not

and has not been within the previous 12 months a blank check, blind

pool, or shell company that has no specific business plan or

purpose or has indicated that its primary business plan is to

engage in a merger or combination of the business with, or an

acquisition of, an unidentified person.

     (f) A nonissuer transaction by or through a broker-dealer

registered or exempt from registration under this act effecting an

unsolicited order or offer to purchase.

     (g) A nonissuer transaction executed by a bona fide pledgee

without any purpose of evading this act.

     (h) A nonissuer transaction by a federal covered investment

adviser with investments under management in excess of

$100,000,000.00 acting in the exercise of discretionary authority

in a signed record for the account of others.

     (i) A transaction in a security, whether or not the security

or transaction is otherwise exempt, in exchange for 1 or more bona

fide outstanding securities, claims, or property interests, or

partly in exchange and partly for cash, if the terms and conditions

of the issuance and exchange or the delivery and exchange and the

fairness of the terms and conditions have been approved by the

administrator at a hearing.

     (j) A transaction between the issuer or other person on whose

behalf the offering is made and an underwriter, or among

underwriters.

     (k) A transaction in a note, bond, debenture, or other

evidence of indebtedness secured by a mortgage or other security

agreement if all of the following are met:

     (i) The note, bond, debenture, or other evidence of

indebtedness is offered and sold with the mortgage or other

security agreement as a unit.

     (ii) A general solicitation or general advertisement of the

transaction is not made.

     (iii) A commission or other remuneration is not paid or given,

directly or indirectly, to a person not registered under this act

as a broker-dealer or as an agent.

     (l) A transaction by an executor, administrator of an estate,

sheriff, marshal, receiver, trustee in bankruptcy, guardian, or

conservator.

     (m) A sale or offer to sell to any of the following:

     (i) An institutional investor.

     (ii) A federal covered investment adviser.

     (iii) Any other person exempted by rule or order under this act.

     (n) A sale or an offer to sell securities by or on behalf of

an issuer, if the transaction is part of a single issue in which

all of the following are met:

     (i) There are not more than 25 purchasers in this state during

any 12 consecutive months, other than those designated in

subdivision (m).

     (ii) There is no general solicitation or general advertising

used in connection with the offer to sell or sale of the

securities.

     (iii) A commission or other remuneration is not paid or given,

directly or indirectly, to a person other than a broker-dealer

registered under this act or an agent registered under this act for

soliciting a prospective purchaser in this state.

     (iv) The issuer reasonably believes that all the purchasers in

this state other than those designated in subdivision (m) are

purchasing for investment.

     (o) A transaction under an offer to existing security holders

of the issuer, including persons that at the date of the

transaction are holders of convertible securities, options, or

warrants, if a commission or other remuneration, other than a

standby commission, is not paid or given, directly or indirectly,

for soliciting a security holder in this state.

     (p) An offer to sell, but not a sale, of a security not exempt

from registration under the securities act of 1933 if both of the

following are met:

     (i) A registration or offering statement or similar record as

required under the securities act of 1933 has been filed, but is

not effective, or the offer is made in compliance with rule 165

adopted under the securities act of 1933, 17 CFR 230.165.

     (ii) A stop order of which the offeror is aware has not been

issued against the offeror by the administrator or the securities

and exchange commission, and an audit, inspection, or proceeding

that is public and may culminate in a stop order is not known by

the offeror to be pending.

     (q) An offer to sell, but not a sale, of a security exempt

from registration under the securities act of 1933 if all of the

following are met:

     (i) A registration statement has been filed under this act, but

is not effective.

     (ii) A solicitation of interest is provided in a record to

offerees in compliance with a rule adopted by the administrator

under this act.

     (iii) A stop order of which the offeror is aware has not been

issued by the administrator under this act, and an audit,

inspection, or proceeding that may culminate in a stop order is not

known by the offeror to be pending.

     (r) A transaction involving the distribution of the securities

of an issuer to the security holders of another person in

connection with a merger, consolidation, exchange of securities,

sale of assets, or other reorganization to which the issuer, or its

parent or subsidiary, and the other person, or its parent or

subsidiary, are parties.

     (s) A rescission offer, sale, or purchase under section 510.

     (t) An offer or sale of a security to a person not resident in

this state and not present in this state if the offer or sale does

not constitute a violation of the laws of the state or foreign

jurisdiction in which the offeree or purchaser is present and is

not part of an unlawful plan or scheme to evade this act.

     (u) An offer or sale of a security pursuant to an employee's

stock purchase, savings, option, profit-sharing, pension, or

similar employees' benefit plan, including any securities, plan

interests, and guarantees issued under a compensatory benefit plan

or compensation contract, contained in a record, established by the

issuer, its parents, its majority-owned subsidiaries, or the

majority-owned subsidiaries of the issuer's parent for the

participation of their employees including any of the following:

     (i) Offers or sales of those securities to directors; general

partners; trustees, if the issuer is a business trust; officers; or

consultants and advisors.

     (ii) Family members who acquire those securities from those

persons through gifts or domestic relations orders.

     (iii) Former employees, directors, general partners, trustees,

officers, consultants, and advisors if those individuals were

employed by or providing services to the issuer when the securities

were offered.

     (iv) Insurance agents who are exclusive insurance agents of the

issuer, its subsidiaries or parents, or who derive more than 50% of

their annual income from those organizations.

     (v) A transaction involving any of the following:

     (i) A stock dividend or equivalent equity distribution, whether

the corporation or other business organization distributing the

dividend or equivalent equity distribution is the issuer or not, if

nothing of value is given by stockholders or other equity holders

for the dividend or equivalent equity distribution other than the

surrender of a right to a cash or property dividend if each

stockholder or other equity holder may elect to take the dividend

or equivalent equity distribution in cash, property, or stock.

     (ii) An act incident to a judicially approved reorganization in

which a security is issued in exchange for 1 or more outstanding

securities, claims, or property interests, or partly in exchange

and partly for cash.

     (iii) The solicitation of tenders of securities by an offeror in

a tender offer in compliance with rule 162 adopted under the

securities act of 1933, 17 CFR 230.162.

     (w) Subject to subsection (2), a nonissuer transaction in an

outstanding security by or through a broker-dealer registered or

exempt from registration under this act, if both of the following

are met:

     (i) The issuer is a reporting issuer in a foreign jurisdiction

designated in subsection (2)(a), or by rule or order of the

administrator, and has been subject to continuous reporting

requirements in the foreign jurisdiction for not less than 180 days

before the transaction.

     (ii) The security is listed on the foreign jurisdiction's

securities exchange that has been designated in subsection (2)(a),

or by rule or order under this act, or is a security of the same

issuer that is of senior or substantially equal rank to the listed

security or is a warrant or right to purchase or subscribe to any

of the foregoing.

     (2) For purposes of subsection (1)(w), both of the following

apply:

     (a) Canada, together with its provinces and territories, is a

designated foreign jurisdiction and the Toronto stock exchange,

inc., is a designated securities exchange.

     (b) After an administrative hearing in compliance with

applicable state law, the administrator, by rule or order under

this act, may revoke the designation of a securities exchange under

subsection (1)(w) or this subsection if the administrator finds

that revocation is necessary or appropriate in the public interest

and for the protection of investors.

     Sec. 203. A rule or order under this act may exempt a

security, transaction, or offer, or a rule or order under this act

may exempt a class of securities, transactions, or offers, from any

or all of the requirements of sections 301 to 306 and 504, and a

rule or order under this act may waive any or all of the conditions

for an exemption or offers under sections 201 and 202.

     Sec. 204. (1) Except with respect to a federal covered

security or a transaction involving a federal covered security, an

order of the administrator under this act may deny or suspend

application of, condition, limit, or revoke an exemption created

under section 201(c)(iii), (g), or (h) or 202 or an exemption or

waiver created under section 203 with respect to a specific

security, transaction, or offer. An order under this section may

only be issued pursuant to the procedures in section 306(4) or 604.

     (2) A person does not violate section 301, 303 to 306, 504, or

510 by an offer to sell, an offer to purchase, a sale, or a

purchase effected after the entry of an order issued under this

section if the person did not know, and in the exercise of

reasonable care could not have known, of the order.

ARTICLE 3

REGISTRATION OF SECURITIES AND NOTICE FILINGS OF FEDERAL COVERED

SECURITIES

     Sec. 301. A person shall not offer or sell a security in this

state unless 1 or more of the following are met:

     (a) The security is a federal covered security.

     (b) The security, transaction, or offer is exempted from

registration under sections 201 to 203.

     (c) The security is registered under this act.

     Sec. 302. (1) A rule or order under this act may require the

filing of 1 or more of the following records with respect to a

security issued by an investment company that is a federal covered

security as defined in section 18(b)(2) of the securities act of

1933, 15 USC 77r, that is not otherwise exempt under sections 201

to 203:

     (a) Before the initial offer of a federal covered security in

this state, all records that are part of a federal registration

statement filed with the securities and exchange commission under

the securities act of 1933, a consent to service of process signed

by the issuer, and a fee of $500.00.

     (b) After the initial offer of the federal covered security in

this state, all records that are part of an amendment to a federal

registration statement filed with the securities and exchange

commission under the securities act of 1933.

     (2) Any security issued by a unit investment trust that is

registered or that has filed a registration statement under the

investment company act of 1940 as an investment company may be

offered for sale and sold into, from, or within this state for an

indefinite period commencing upon the later of the trust's

effectiveness with the securities and exchange commission or the

administrator's receipt of a notice as prescribed by the

administrator and a 1-time notice filing fee of $500.00.

     (3) Each of the following applies to a notice filing under

subsection (1):

     (a) A notice filing is effective for a period of 1 year,

commencing upon the later of the effectiveness of the offering with

the securities and exchange commission or the administrator's

receipt of the notice filing.

     (b) A notice filing may be renewed for an additional 1-year

period by filing a current form NF and the fee required by

subsection (8) before the expiration of the 1-year effective

period. The renewal is effective upon the expiration of the prior

notice period.

     (c) A notice filing may be terminated by filing with the

administrator a notice of termination as prescribed by the

administrator. The termination is effective upon the

administrator's receipt of the notice of termination.

     (4) With respect to any security that is a federal covered

security under section 18(b)(4)(D) of the securities act of 1933,

15 USC 77r, the issuer shall file all of the following:

     (a) A notice on securities and exchange commission form D or a

form approved by the administrator.

     (b) A consent to service of process signed by the issuer, no

later than 15 days after the first sale of a federal covered

security in this state.

     (c) A nonrefundable filing fee of $100.00.

     (5) The administrator, by rule or order, may require the

filing of any document filed with the securities and exchange

commission under the securities act of 1933 and a nonrefundable

filing fee of $100.00 with respect to any federal covered security.

     (6) The administrator may issue a stop order suspending the

offer and sale of a federal covered security, except a federal

covered security under section 18(b)(1) of the securities act of

1933, 15 USC 77r, if it finds that the order is in the public

interest and there is a failure to comply with this section.

     (7) The administrator may waive any or all of the provisions

of this section by rule or order.

     (8) All of the following apply to the renewals of a notice

filing under subsection (3):

     (a) Subject to adjustment under subdivision (c), the fee for

the renewal is 1 of the following:

     (i) If the issuer projects nonexempt sales of the security in

this state during the 1-year renewal period of $250,000.00 or less,

$100.00.

     (ii) If the issuer projects nonexempt sales of the security in

this state during the 1-year renewal period of more than

$250,000.00 but not more than $700,000.00, $400.00.

     (iii) If the issuer projects nonexempt sales of the security in

this state during the 1-year renewal period of more than

$700,000.00 but not more than $1,000,000.00, $800.00.

     (iv) If the issuer projects nonexempt sales of the security in

this state during the 1-year renewal period of more than

$1,000,000.00, $1,400.00.

     (b) For purposes of subdivision (a), an issuer's projection of

nonexempt sales of a security must be reasonable and based on any

facts known to the issuer at the time of renewal that may affect

sales of the security, including, but not limited to, nonexempt

sales of the security in this state during the current 1-year

notice filing period.

     (c) If an issuer's nonexempt sales of a security in this state

during a 1-year notice filing period exceed the projections for

that period that the issuer had submitted to the administrator for

determination of the issuer's renewal fee for that 1-year notice

filing period, the issuer is not required to amend its projections

or pay an additional fee for that notice filing period. However,

the fee for renewal of the notice filing shall be the greater of

the following:

     (i) The renewal fee determined under subdivision (a).

     (ii) A renewal fee determined under subdivision (a), using

actual sales during the current notice filing period as the

projected sales for the renewal notice filing period.

     (d) If an issuer's nonexempt sales of a security in this state

during a 1-year notice filing period are less than the projections

for that period that the issuer had submitted to the administrator

for determination of the issuer's renewal fee for the 1-year notice

filing period, the issuer is not entitled to a refund of any part

of the renewal fee for that period or adjustment of the renewal fee

for any renewal period.

     (e) Upon written request of the administrator, an issuer shall

provide sales reports showing the issuer's nonexempt sales of a

security in this state for the current and 2 previous 1-year notice

filing periods, but the issuer is not otherwise required to provide

a sales report to the administrator in connection with a renewal of

a notice filing.

     (f) If the administrator determines that for 2 consecutive 1-

year notice filing periods an issuer's nonexempt sales of a

security in this state exceeded the issuer's sales projections for

that period, the administrator may assess the issuer an

administrative fine in the amount of the renewal fees the issuer

would have paid under subdivision (a) if its projections had been

accurate. This administrative fine is in addition to an increased

fee for renewal under subdivision (c), if any.

     (9) If the administrator finds that there is a failure to

comply with a notice or fee requirement of this section, the

administrator may issue a stop order suspending the offer and sale

of a federal covered security in this state, except a federal

covered security under section 18(b)(1) of the securities act of

1933, 15 USC 77r. If the deficiency is corrected, the stop order is

void as of the time of its issuance and no other charge or

administrative or civil fine may be imposed by the administrator.

     Sec. 303. (1) A security for which a registration statement

has been filed under the securities act of 1933 in connection with

the same offering may be registered by coordination under this

section.

     (2) A registration statement and accompanying records under

this section must contain or be accompanied by all of the following

records in addition to the information specified in section 305 and

a consent to service of process complying with section 611:

     (a) A copy of the latest form of prospectus filed under the

securities act of 1933.

     (b) A copy of the articles of incorporation and bylaws or

their substantial equivalents currently in effect, a copy of any

agreement with or among underwriters, a copy of any indenture or

other instrument governing the issuance of the security to be

registered, and a specimen, copy, or description of the security

that is required by rule or order under this act.

     (c) Copies of any other information, or any other records,

filed by the issuer under the securities act of 1933 requested by

the administrator.

     (d) An undertaking to forward each amendment to the federal

prospectus, other than an amendment that delays the effective date

of the registration statement, promptly after it is filed with the

securities and exchange commission.

     (3) A registration statement under this section becomes

effective simultaneously with or subsequent to the federal

registration statement when all the following conditions are

satisfied:

     (a) A stop order under subsection (4) or section 306 or issued

by the securities and exchange commission is not in effect and a

proceeding is not pending against the issuer under section 306.

     (b) The registration statement has been on file for at least

20 days or a shorter period provided by rule or order under this

act.

     (c) The registrant has not consented to a later effective

date.

     (4) The registrant shall promptly notify the administrator in

a record of the date when the federal registration statement

becomes effective and the content of a price amendment, if any, and

shall promptly file a record containing the price amendment. If the

notice is not timely received, the administrator may issue a stop

order, without prior notice or hearing, retroactively denying

effectiveness to the registration statement or suspending its

effectiveness until compliance with this section. The administrator

shall promptly notify the registrant of an order by telegram,

telephone, or electronic means and promptly confirm this notice by

a record. If the registrant subsequently complies with the notice

requirements of this section, the stop order is void as of the date

of its issuance.

     (5) If the federal registration statement becomes effective

before each of the conditions in this section is satisfied or is

waived by the administrator, the registration statement is

automatically effective under this act when all the conditions are

satisfied or waived. If the registrant notifies the administrator

of the date when the federal registration statement is expected to

become effective, the administrator shall promptly notify the

registrant by telegram, telephone, or electronic means and promptly

confirm this notice by a record, indicating whether all the

conditions are satisfied or waived and whether the administrator

intends the institution of a proceeding under section 306. The

notice by the administrator does not preclude the institution of a

proceeding under section 306.

     Sec. 304. (1) A security may be registered by qualification

under this section.

     (2) A registration statement under this section must contain

the information or records specified in section 305, a consent to

service of process complying with section 611, and, if provided by

rule under this act, all of the following information or records:

     (a) With respect to the issuer and any significant subsidiary,

its name, address, and form of organization, the state or foreign

jurisdiction and date of its organization, the general character

and location of its business, a description of its physical

properties and equipment, and a statement of the general

competitive conditions in the industry or business in which it is

or will be engaged.

     (b) With respect to each director and officer of the issuer,

and other person having a similar status or performing similar

functions, the person's name, address, and principal occupation for

the previous 5 years, the amount of securities of the issuer held

by the person as of the thirtieth day before the filing of the

registration statement, the amount of the securities covered by the

registration statement to which the person has indicated an

intention to subscribe, and a description of any material interest

of the person in any material transaction with the issuer or a

significant subsidiary effected within the previous 3 years or

proposed to be effected.

     (c) With respect to persons covered by subdivision (b), the

aggregate sum of the remuneration paid to those persons during the

previous 12 months and estimated to be paid during the next 12

months, directly or indirectly, by the issuer, and all

predecessors, parents, subsidiaries, and affiliates of the issuer.

     (d) With respect to a person owning of record or owning

beneficially, if known, 10% or more of the outstanding shares of

any class of equity security of the issuer, the information

specified in subdivision (b) other than the person's occupation.

     (e) With respect to a promoter if the issuer was organized

within the previous 3 years, the information or records specified

in subdivision (b), any amount paid to the promoter within that

period or intended to be paid to the promoter, and the

consideration for the payment.

     (f) With respect to a person on whose behalf any part of the

offering is to be made in a nonissuer distribution, the person's

name and address, the amount of securities of the issuer held by

the person as of the date of the filing of the registration

statement, a description of any material interest of the person in

any material transaction with the issuer or any significant

subsidiary effected within the previous 3 years or proposed to be

effected, and a statement of the reasons for making the offering.

     (g) The capitalization and long-term debt, on both a current

and pro forma basis, of the issuer and any significant subsidiary,

including a description of each security outstanding or being

registered or otherwise offered, and a statement of the amount and

kind of consideration, whether in the form of cash, physical

assets, services, patents, goodwill, or anything else of value, for

which the issuer or any subsidiary has issued its securities within

the previous 2 years or is obligated to issue its securities.

     (h) The kind and amount of securities to be offered, the

proposed offering price or the method by which it is to be

computed, any variation at which a proportion of the offering is to

be made to a person or class of persons other than the

underwriters, with a specification of the person or class, the

basis upon which the offering is to be made if otherwise than for

cash, the estimated aggregate underwriting and selling discounts or

commissions and finders' fees, including separately cash,

securities, contracts, or anything else of value to accrue to the

underwriters or finders in connection with the offering, or, if the

selling discounts or commissions are variable, the basis of

determining them and their maximum and minimum amounts, the

estimated amounts of other selling expenses, including legal,

engineering, and accounting charges, the name and address of each

underwriter and each recipient of a finder's fee, a copy of any

underwriting or selling group agreement under which the

distribution is to be made, or the proposed form of any such

agreement whose terms have not yet been determined, and a

description of the plan of distribution of any securities that are

to be offered otherwise than through an underwriter.

     (i) The estimated monetary proceeds to be received by the

issuer from the offering, the purposes for which the proceeds are

to be used by the issuer, the estimated amount to be used for each

purpose, the order or priority in which the proceeds will be used

for the purposes stated, the amounts of any funds to be raised from

other sources to achieve the purposes stated, the sources of the

funds, and, if a part of the proceeds is to be used to acquire

property, including goodwill, otherwise than in the ordinary course

of business, the names and addresses of the vendors, the purchase

price, the names of any persons that have received commissions in

connection with the acquisition, and the amounts of the commissions

and other expenses in connection with the acquisition, including

the cost of borrowing money to finance the acquisition.

     (j) A description of any stock options or other security

options outstanding, or to be created in connection with the

offering, and the amount of those options held or to be held by

each person required to be named in subdivision (b), (d), (e), (f),

or (h) and by any person that holds or will hold 10% or more in the

aggregate of those options.

     (k) The dates of, parties to, and general effect concisely

stated of each managerial or other material contract made or to be

made otherwise than in the ordinary course of business to be

performed in whole or in part at or after the filing of the

registration statement or that was made within the previous 2

years, and a copy of the contract.

     (l) A description of any pending litigation, action, or

proceeding to which the issuer is a party and that materially

affects its business or assets, including any litigation, action,

or proceeding known to be contemplated by governmental authorities.

     (m) A copy of any prospectus, pamphlet, circular, form letter,

advertisement, or other sales literature intended as of the

effective date to be used in connection with the offering and any

solicitation of interest used in compliance with section 202(q)(ii).

     (n) A specimen or copy of the security being registered,

unless the security is uncertificated, a copy of the issuer's

articles of incorporation and bylaws, or their substantial

equivalents, in effect, and a copy of any indenture or other

instrument covering the security to be registered.

     (o) A signed or conformed copy of an opinion of counsel

concerning the legality of the security being registered, with an

English translation if it is in a language other than English,

which states whether the security when sold will be validly issued,

fully paid, and nonassessable and, if a debt security, a binding

obligation of the issuer.

     (p) A signed or conformed copy of a consent of any accountant,

engineer, appraiser, or other person whose profession gives

authority for a statement made by the person, if the person is

named as having prepared or certified a report or valuation, other

than an official record, that is public, which is used in

connection with the registration statement.

     (q) A balance sheet of the issuer as of a date within 4 months

before the filing of the registration statement, a statement of

income and a statement of cash flows for each of the 3 fiscal years

preceding the date of the balance sheet and for any period between

the close of the immediately previous fiscal year and the date of

the balance sheet, or for the period of the issuer's and any

predecessor's existence if less than 3 years, and, if any part of

the proceeds of the offering is to be applied to the purchase of a

business, the financial statements that would be required if that

business were the registrant.

     (r) Any additional information or records required by rule or

order under this act.

     (3) A registration statement under this section becomes

effective 30 days, or any shorter period provided by rule or order

under this act, after the date the registration statement or the

last amendment other than a price amendment is filed, if any of the

following apply:

     (a) A stop order is not in effect and a proceeding is not

pending under section 306.

     (b) The administrator has not issued an order under section

306 delaying effectiveness.

     (c) The applicant or registrant has not requested that

effectiveness be delayed.

     (4) The administrator may delay effectiveness once for not

more than 90 days if the administrator determines the registration

statement is not complete in all material respects and promptly

notifies the applicant or registrant of that determination. The

administrator may also delay effectiveness for a further period of

not more than 30 days if the administrator determines that the

delay is necessary or appropriate.

     (5) A rule or order under this act may require as a condition

of registration under this section that a prospectus containing a

specified part of the information or record specified in subsection

(2) be sent or given to each person to which an offer is made,

before or concurrently with the earliest of any of the following:

     (a) The first offer made in a record to the person otherwise

than by means of a public advertisement, by or for the account of

the issuer or another person on whose behalf the offering is being

made, or by an underwriter or broker-dealer that is offering part

of an unsold allotment or subscription taken by the person as a

participant in the distribution.

     (b) The confirmation of a sale made by or for the account of

the person.

     (c) Payment pursuant to the sale.

     (d) Delivery of the security pursuant to the sale.

     Sec. 305. (1) A registration statement may be filed by the

issuer, a person on whose behalf the offering is to be made, or a

broker-dealer registered under this act.

     (2) A person filing a registration statement shall pay a

filing fee of 1/10 of 1% of the maximum aggregate offering price at

which the registered securities are to be offered in this state,

but the fee shall in no case be less than $100.00 or more than

$1,250.00. If an application for registration is withdrawn before

the effective date or a preeffective stop order is issued under

section 306, the administrator shall retain a fee of $100.00 if the

initial review has not been commenced, and the full filing fee

after review has been commenced.

     (3) A registration statement filed under section 303 or 304

must specify all of the following:

     (a) The amount of securities to be offered in this state.

     (b) The states in which a registration statement or similar

record in connection with the offering has been or is to be filed.

     (c) Any adverse order, judgment, or decree issued in

connection with the offering by a state securities regulator, the

securities and exchange commission, or a court.

     (4) A record filed under this act or the predecessor act,

within 5 years preceding the filing of a registration statement,

may be incorporated by reference in the registration statement to

the extent that the record is currently accurate.

     (5) In the case of a nonissuer distribution, information or a

record shall not be required under subsection (9) or section 304,

unless it is known to the person filing the registration statement

or to the person on whose behalf the distribution is to be made, or

unless it can be furnished by those persons without unreasonable

effort or expense.

     (6) A rule or order under this act may require as a condition

of registration that a security issued within the previous 5 years,

or to be issued to a promoter for a consideration substantially

less than the public offering price or to a person for a

consideration other than cash, be deposited in escrow and that the

proceeds from the sale of the registered security in this state be

impounded until the issuer receives a specified amount from the

sale of the security either in this state or elsewhere. The

conditions of any escrow or impoundment required under this

subsection may be established by rule or order under this act, but

the administrator shall not reject a depository institution solely

because of its location in another state.

     (7) A rule or order under this act may require as a condition

of registration that a security registered under this act be sold

only on a specified form of subscription or sale contract and that

a signed or conformed copy of each contract be filed under this act

or preserved for a period specified by the rule or order, which may

not be longer than 5 years.

     (8) Except while a stop order is in effect under section 306,

a registration statement is effective for 1 year after its

effective date, or for a longer period designated in an order under

this act during which the security is being offered or distributed

in a nonexempted transaction by or for the account of the issuer or

other person on whose behalf the offering is being made or by an

underwriter or broker-dealer that is still offering part of an

unsold allotment or subscription taken as a participant in the

distribution. For the purposes of a nonissuer transaction, all

outstanding securities of the same class identified in the

registration statement as a security registered under this act are

considered to be registered while the registration statement is

effective. If any securities of the same class are outstanding, a

registration statement may not be withdrawn until 1 year after its

effective date. A registration statement may be withdrawn only with

the approval of the administrator.

     (9) While a registration statement is effective, a rule or

order under this act may require the person that filed the

registration statement to file reports, not more often than

quarterly, to keep the information or other record in the

registration statement reasonably current and to disclose the

progress of the offering.

     (10) A registration statement may be amended after its

effective date. The posteffective amendment becomes effective when

the administrator so orders. If a posteffective amendment is made

to increase the number of securities specified to be offered or

sold, the person filing the amendment shall pay a registration fee

calculated in the manner specified in subsection (2). A

posteffective amendment relates back to the date of the offering of

the additional securities being registered if the amendment is

filed and the additional registration fee is paid within 1 year

after the date of the sale.

     Sec. 306. (1) The administrator may issue a stop order denying

effectiveness to, or suspending or revoking the effectiveness of, a

registration statement if the administrator finds that the order is

in the public interest and that 1 or more of the following apply:

     (a) The registration statement as of its effective date or

before the effective date in the case of an order denying

effectiveness, an amendment under section 305(10) as of its

effective date, or a report under section 305(9) is incomplete in a

material respect or contains a statement that, in the light of the

circumstances under which it was made, was false or misleading with

respect to a material fact.

     (b) This act or a rule adopted or order issued under this act

or a condition imposed under this act has been willfully violated,

in connection with the offering, by the person filing the

registration statement; by the issuer, a partner, officer, or

director of the issuer or a person having a similar status or

performing a similar function; a promoter of the issuer or a person

directly or indirectly controlling or controlled by the issuer; but

only if the person filing the registration statement is directly or

indirectly controlled by or acting for the issuer; or by an

underwriter.

     (c) The security registered or sought to be registered is the

subject of a permanent or temporary injunction of a court of

competent jurisdiction or an administrative stop order or similar

order issued under any federal, foreign, or state law other than

this act applicable to the offering, but the administrator shall

not institute a proceeding against an effective registration

statement under this paragraph more than 1 year after the date of

the order or injunction on which it is based, and the administrator

shall not issue an order under this subdivision on the basis of an

order or injunction issued under the securities act of another

state unless the order or injunction was based on conduct that

would constitute, as of the date of the order, a ground for a stop

order under this section.

     (d) The issuer's enterprise or method of business includes or

would include activities that are unlawful where performed.

     (e) With respect to a security sought to be registered under

section 303, there has been a failure to comply with the

undertaking required by section 303(2)(d).

     (f) The applicant or registrant has not paid the proper filing

fee, but the administrator shall void the order if the deficiency

is corrected.

     (g) One or more of the following apply to the offering:

     (i) The offering will work or tend to work a fraud upon

purchasers or would so operate.

     (ii) The offering has been or would be made with unreasonable

amounts of underwriters' and sellers' discounts, commissions, or

other compensation, promoters' profits or participations, or

unreasonable amounts or kinds of options.

     (iii) The offering is being made on terms that are unfair,

unjust, or inequitable.

     (2) To the extent practicable, the administrator by rule or

order under this act shall publish guidelines, rules, or orders

that provide notice of conduct that violates subsection (1)(g).

     (3) The administrator shall not institute a stop order

proceeding against an effective registration statement on the basis

of conduct or a transaction known to the administrator when the

registration statement became effective unless the proceeding is

instituted within 30 days after the registration statement became

effective.

     (4) The administrator may summarily revoke, deny, postpone, or

suspend the effectiveness of a registration statement pending final

determination of an administrative proceeding. Upon the issuance of

the order, the administrator shall promptly notify each person

specified in subsection (5) that the order has been issued, the

reasons for the revocation, denial, postponement, or suspension,

and that within 15 days after the receipt of a request in a record

from the person the matter will be scheduled for a hearing. If a

hearing is not requested and none is ordered by the administrator,

within 30 days after the date of service of the order, the order

becomes final. If a hearing is requested or ordered, the

administrator, after notice of and opportunity for hearing for each

person subject to the order, may modify or vacate the order or

extend the order until final determination.

     (5) The administrator shall not issue a stop order under this

section until all of the following have occurred:

     (a) Appropriate notice has been given to the applicant or

registrant, the issuer, and the person on whose behalf the

securities are to be or have been offered.

     (b) An opportunity for hearing has been given to the applicant

or registrant, the issuer, and the person on whose behalf the

securities are to be or have been offered.

     (c) Findings of fact and conclusions of law in a record in

accordance with the administrative procedures act of 1969, 1969 PA

306, MCL 24.201 to 24.328.

     (6) The administrator may modify or vacate a stop order issued

under this section if the administrator finds that the conditions

that caused its issuance have changed or that it is necessary or

appropriate in the public interest or for the protection of

investors.

     Sec. 307. The administrator may waive or modify, in whole or

in part, any or all of the requirements of sections 302, 303, and

304(2) or the requirement of any information or record in a

registration statement or in a periodic report filed pursuant to

section 305(9).

ARTICLE 4

BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER

REPRESENTATIVES, AND FEDERAL COVERED INVESTMENT ADVISERS

     Sec. 401. (1) A person shall not transact business in this

state as a broker-dealer unless the person is registered under this

act as a broker-dealer or is exempt from registration as a broker-

dealer under subsection (2) or (4).

     (2) The following persons are exempt from the registration

requirement of subsection (1):

     (a) A broker-dealer if the broker-dealer does not have a place

of business in this state and if the broker-dealer's only

transactions effected in this state are with any of the following:

     (i) The issuer of the securities involved in the transactions.

     (ii) A broker-dealer registered as a broker-dealer under this

act or not required to be registered as a broker-dealer under this

act.

     (iii) An institutional investor.

     (iv) A nonaffiliated federal covered investment adviser with

investments under management in excess of $100,000,000.00 acting

for the account of others pursuant to discretionary authority in a

signed record.

     (v) A bona fide preexisting customer whose principal place of

residence is not in this state and the broker-dealer is registered

as a broker-dealer under the securities exchange act of 1934 or not

required to be registered under the securities exchange act of 1934

and is registered under the securities act of the state in which

the customer maintains a principal place of residence.

     (vi) A bona fide preexisting customer whose principal place of

residence is in this state but who was not present in this state

when the customer relationship was established, if both of the

following are met:

     (A) The broker-dealer is registered under the securities

exchange act of 1934 or not required to be registered under the

securities exchange act of 1934 and is registered under the

securities laws of the state in which the customer relationship was

established and where the customer had maintained a principal place

of residence.

     (B) Within 45 days after the customer's first transaction in

this state, the person files an application for registration as a

broker-dealer in this state and a further transaction is not

effected more than 75 days after the date on which the application

is filed, or, if earlier, the date on which the administrator

notifies the person that the administrator has denied the

application for registration or has stayed the pendency of the

application for good cause.

     (vii) Not more than 3 customers in this state during the

previous 12 months, in addition to those specified in subparagraphs

(i) to (vi) and under subparagraph (viii), if the broker-dealer is

registered under the securities exchange act of 1934 or not

required to be registered under the securities exchange act of 1934

and is registered under the securities act of the state in which

the broker-dealer has its principal place of business.

     (viii) Any other person exempted by rule or order under this

act.

     (b) A person that deals solely in United States government

securities and is supervised as a dealer in government securities

by the board of governors of the federal reserve system, the

comptroller of the currency, the federal deposit insurance

corporation, or the office of thrift supervision.

     (c) A person licensed or registered as a mortgage broker,

mortgage lender, or mortgage servicer under the mortgage brokers,

lenders, and servicers licensing act, 1987 PA 173, MCL 445.1651 to

445.1684, in the offer or sale of mortgage loans as defined in

section 1a of the mortgage brokers, lenders, and servicers

licensing act, 1987 PA 173, MCL 445.1651a.

     (3) A broker-dealer, or an issuer engaged in offering,

offering to purchase, purchasing, or selling securities in this

state, shall not directly or indirectly employ or associate with an

individual to engage in an activity related to securities

transactions in this state if the registration of the individual is

suspended or revoked or the individual is barred from employment or

association with a broker-dealer, an issuer, an investment adviser,

or a federal covered investment adviser by an order of the

administrator under this act, the securities and exchange

commission, a securities regulator of another state, or a self-

regulatory organization. A broker-dealer or issuer does not violate

this subsection if the broker-dealer or issuer did not know and in

the exercise of reasonable care could not have known of the

suspension, revocation, or bar. If requested by a broker-dealer or

issuer and if good cause is shown, an order under this act may

modify or waive, in whole or in part, the application of the

prohibitions of this subsection.

     (4) A rule or order under this act may permit any of the

following:

     (a) A broker-dealer that is registered in Canada or other

foreign jurisdiction and that does not have a place of business in

this state to effect transactions in securities with or for, or

attempt to effect the purchase or sale of any securities by, any of

the following:

     (i) An individual from Canada or other foreign jurisdiction who

is temporarily present in this state and with whom the broker-

dealer had a bona fide customer relationship before the individual

entered the United States.

     (ii) An individual from Canada or other foreign jurisdiction

who is present in this state and whose transactions are in a self-

directed tax advantaged retirement plan of which the individual is

the holder or contributor in that foreign jurisdiction.

     (iii) An individual who is present in this state, with whom the

broker-dealer customer relationship arose while the individual was

temporarily or permanently resident in Canada or the other foreign

jurisdiction.

     (b) An agent who represents a broker-dealer that is exempt

under this subsection to effect transactions in securities or

attempt to effect the purchase or sale of any securities in this

state as permitted for a broker-dealer described in subsection

(4)(a).

     Sec. 402. (1) An individual shall not transact business in

this state as an agent unless the individual is registered under

this act as an agent or is exempt from registration as an agent

under subsection (2).

     (2) Each of the following individuals is exempt from the

registration requirement of subsection (1):

     (a) An individual who represents a broker-dealer in effecting

transactions in this state limited to those described in section

15(h)(2) of the securities exchange act of 1934, 15 USC 78o.

     (b) An individual who represents a broker-dealer that is

exempt under section 401(2) or (4).

     (c) An individual who represents an issuer with respect to an

offer or sale of the issuer's own securities or those of the

issuer's parent or any of the issuer's subsidiaries, and who is not

compensated in connection with the individual's participation by

the payment of commissions or other remuneration based, directly or

indirectly, on transactions in those securities.

     (d) An individual who represents an issuer and who effects

transactions in the issuer's securities exempted by section 202,

other than section 202(1)(k) or (n).

     (e) An individual who represents an issuer who effects

transactions solely in federal covered securities of the issuer,

but an individual who effects transactions in a federal covered

security under section 18(b)(3) or 18(b)(4)(D) of the securities

act of 1933, 15 USC 77r, is not exempt if the individual is

compensated in connection with the agent's participation by the

payment of commissions or other remuneration based, directly or

indirectly, on transactions in those securities.

     (f) An individual who represents a broker-dealer registered in

this state under section 401(1) or exempt from registration under

section 401(2) in the offer and sale of securities for an account

of a nonaffiliated federal covered investment adviser with

investments under management in excess of $100,000,000.00 acting

for the account of others pursuant to discretionary authority in a

signed record.

     (g) An individual who represents an issuer in connection with

the purchase of the issuer's own securities.

     (h) An individual who represents an issuer and who restricts

participation to performing clerical or ministerial acts.

     (i) An employee of a person licensed or registered under the

mortgage brokers, lenders, and servicers licensing act, 1987 PA

173, MCL 445.1651 to 445.1684, in the offer or sale of mortgage

loans as defined in section 1a of the mortgage brokers, lenders,

and servicers licensing act, 1987 PA 173, MCL 445.1651a, when

acting as an employee of the licensed or registered person.

     (j) Any other individual exempted by rule or order under this

act.

     (3) The registration of an agent is effective only while the

agent is employed by or associated with a broker-dealer registered

under this act or an issuer that is offering, selling, or

purchasing its securities in this state.

     (4) A broker-dealer, or an issuer engaged in offering,

selling, or purchasing securities in this state, shall not employ

or associate with an agent who transacts business in this state on

behalf of broker-dealers or issuers unless the agent is registered

under subsection (1) or exempt from registration under subsection

(2).

     (5) An individual shall not act as an agent for more than 1

broker-dealer or more than 1 issuer at a time, unless the broker-

dealers or the issuers for which the agent acts are affiliated by

direct or indirect common control or are authorized by rule or

order under this act.

     Sec. 403. (1) A person shall not transact business in this

state as an investment adviser unless the person is registered

under this act as an investment adviser or is exempt from

registration as an investment adviser under subsection (2).

     (2) The following persons are exempt from the registration

requirement of subsection (1):

     (a) A person that does not have a place of business in this

state and that is registered under the securities act of the state

in which the person has its principal place of business, if its

only clients in this state are any of the following:

     (i) Federal covered investment advisers, investment advisers

registered under this act, or broker-dealers registered under this

act.

     (ii) Institutional investors.

     (iii) Bona fide preexisting clients whose principal places of

residence are not in this state, if the investment adviser is

registered under the securities act of the state in which the

clients maintain principal places of residence.

     (iv) Any other client exempted by rule or order under this act.

     (b) A person that does not have a place of business in this

state if the person has had, during the preceding 12 months and in

addition to those described in subdivision (a), not more than 5

clients who are natural persons and residents of this state.

     (c) A person that does not hold itself out to the general

public as an investment adviser and that has had, during the

preceding 12 months and in addition to those described in

subdivision (a), not more than 5 clients who are natural persons,

who are residents of this state, and who are accredited investors

as defined in rule 501(a) under the securities act of 1933, 17 CFR

230.501.

     (d) The person is an investment adviser who is not required to

be registered as an investment adviser under the investment

advisers act of 1940 if the investment adviser's only clients in

this state are other investment advisers, federal covered advisers,

broker-dealers, or institutional investors.

     (e) Any other person exempted by rule or order under this act.

     (3) An investment adviser shall not, directly or indirectly,

employ or associate with an individual to engage in an activity

related to investment advice in this state if the registration of

the individual is suspended or revoked, or the individual is barred

from employment or association with an investment adviser, federal

covered investment adviser, or broker-dealer by an order under this

act, the securities and exchange commission, a securities regulator

of another state, or a self-regulatory organization, unless the

investment adviser did not know, and in the exercise of reasonable

care could not have known, of the suspension, revocation, or bar.

If the investment adviser request and good cause is shown, the

administrator, by order, may waive, in whole or in part, the

application of the prohibitions of this subsection.

     (4) An investment adviser shall not employ or associate with

an individual required to be registered under this act as an

investment adviser representative who transacts business in this

state on behalf of the investment adviser unless the individual is

registered under section 404(1) or is exempt from registration

under section 404(2).

     Sec. 404. (1) An individual shall not transact business in

this state as an investment adviser representative unless the

individual is registered under this act as an investment adviser

representative or is exempt from registration as an investment

adviser representative under subsection (2).

     (2) Each of the following individuals is exempt from the

registration requirement of subsection (1):

     (a) An individual who is employed by or associated with an

investment adviser that is exempt from registration under section

403(2) or a federal covered investment adviser that is excluded

from the notice filing requirements of section 405.

     (b) Any other individual exempted by rule or order under this

act.

     (3) The registration of an investment adviser representative

is not effective while the investment adviser representative is not

employed by or associated with an investment adviser registered

under this act or a federal covered investment adviser that has

made or is required to make a notice filing under section 405.

     (4) An individual may transact business as an investment

adviser representative for more than 1 investment adviser or

federal covered investment adviser unless a rule or order under

this act prohibits or limits an individual from acting as an

investment adviser representative for more than 1 investment

adviser or federal covered investment adviser.

     (5) An individual acting as an investment adviser

representative shall not, directly or indirectly, conduct business

in this state on behalf of an investment adviser or a federal

covered investment adviser if the registration of the individual as

an investment adviser representative is suspended or revoked or the

individual is barred from employment or association with an

investment adviser or a federal covered investment adviser by an

order under this act, the securities and exchange commission, a

securities regulator of another state, or a self-regulatory

organization. If a federal covered investment adviser requests and

good cause is shown, the administrator, by order, may waive, in

whole or in part, the application of the requirements of this

subsection.

     (6) An investment adviser registered under this act, a federal

covered investment adviser that has filed a notice under section

405, or a broker-dealer registered under this act is not required

to employ or associate with an individual as an investment adviser

representative if the only compensation paid to the individual for

a referral of investment advisory clients is paid to an investment

adviser registered under this act, a federal covered investment

adviser who has filed a notice under section 405, or a broker-

dealer registered under this act with which the individual is

employed or associated as an investment adviser representative.

     Sec. 405. (1) Except with respect to a federal covered

investment adviser described in subsection (2), a federal covered

investment adviser shall not transact business in this state as a

federal covered investment adviser unless the federal covered

investment adviser complies with subsection (3).

     (2) The following federal covered investment advisers are not

required to comply with subsection (3):

     (a) A federal covered investment adviser without a place of

business in this state if its only clients in this state are any of

the following:

     (i) Federal covered investment advisers, investment advisers

registered under this act, and broker-dealers registered under this

act.

     (ii) Institutional investors.

     (iii) Bona fide preexisting clients whose principal places of

residence are not in this state.

     (iv) Other clients specified by rule or order under this act.

     (b) A federal covered investment adviser that does not have a

place of business in this state if the federal covered investment

adviser has had, during the preceding 12 months, not more than 5

clients that are residents of this state in addition to those

specified under subdivision (a).

     (c) Any other person excluded by rule or order under this act.

     (3) A person acting as a federal covered investment adviser,

not excluded under subsection (2), shall file a notice, a consent

to service of process complying with section 611, and those records

that have been filed with the securities and exchange commission

under the investment advisers act of 1940 that are required by rule

or order under this act and pay the fees specified in section

410(5).

     (4) A notice under subsection (3) is effective on filing.

     Sec. 406. (1) A person shall register as a broker-dealer,

agent, investment adviser, or investment adviser representative by

filing an application and a consent to service of process complying

with section 611 and paying the fee specified in section 410 and

any reasonable fees charged by the designee of the administrator

for processing the filing. Each application must contain both of

the following:

     (a) The information or record required for the filing of a

uniform application.

     (b) If requested by the administrator, any other financial or

other information or record that the administrator determines is

appropriate.

     (2) If the information or record contained in an application

that is filed under subsection (1) is or becomes inaccurate or

incomplete in any material respect, the registrant shall promptly

file a correcting amendment.

     (3) If an order is not in effect and no proceeding is pending

under section 412, registration becomes effective at 12 noon on the

forty-fifth day after a completed application is filed unless the

registration is denied. A rule or order under this act may set an

earlier effective date or may defer the effective date until 12

noon on the forty-fifth day after the filing of any amendment

completing the application.

     (4) A registration is effective until 12 midnight on December

31 of the year for which the application for registration is filed.

Unless an order is in effect under section 412, a registration may

be automatically renewed each year by filing the records required

by rule or order under this act and paying the fee specified in

section 410 and the costs charged by the designee of the

administrator for processing the filings.

     (5) A rule or order under this act may impose other conditions

not inconsistent with the national securities markets improvement

act of 1996, Public Law 104-290, or an order under this act may

waive, in whole or in part, specific requirements in connection

with registration if the imposition or waiver is appropriate in the

public interest and for the protection of investors.

     Sec. 407. (1) A broker-dealer or investment adviser may

succeed to the current registration of another broker-dealer or

investment adviser or a notice filing of a federal covered

investment adviser, and a federal covered investment adviser may

succeed to the current registration of an investment adviser or

notice filing of another federal covered investment adviser, by

filing as a successor an application for registration under section

401 or 403, or a notice under section 405, for the unexpired

portion of the current registration or notice filing.

     (2) A broker-dealer or investment adviser that changes its

form of organization or state of incorporation or organization may

continue its registration by filing an amendment to its

registration if the change does not involve a material change in

its financial condition or management. The amendment is effective

when filed or on a date designated by the registrant in the filing.

The new organization is a successor to the original registrant for

the purposes of this act. If there is a material change in

financial condition or management, the broker-dealer or investment

adviser shall file a new application for registration. Any

predecessor registered under this act shall stop conducting its

securities business other than winding down transactions and shall

file for withdrawal of broker-dealer or investment adviser

registration within 45 days after filing its amendment to effect

succession.

     (3) A broker-dealer or investment adviser that changes its

name may continue its registration by filing an amendment to its

registration. The amendment is effective when filed or on a date

designated by the registrant.

     (4) A change of control of a broker-dealer or investment

adviser may be made in accordance with a rule or order under this

act.

     Sec. 408. (1) If an agent registered under this act terminates

employment by or association with a broker-dealer or issuer, or if

an investment adviser representative registered under this act

terminates employment by or association with an investment adviser

or federal covered investment adviser, or if either registrant

terminates activities that require registration as an agent or

investment adviser representative, the broker-dealer, investment

adviser, or federal covered investment adviser shall promptly file

a notice of termination. If the registrant learns that the broker-

dealer, issuer, investment adviser, or federal covered investment

adviser has not filed the notice, the registrant may file the

notice.

     (2) If an agent registered under this act terminates

employment by or association with a broker-dealer registered under

this act and begins employment by or association with another

broker-dealer registered under this act; or if an investment

adviser representative registered under this act terminates

employment by or association with an investment adviser registered

under this act or a federal covered investment adviser that has

filed a notice under section 405 and begins employment by or

association with another investment adviser registered under this

act or a federal covered investment adviser that has filed a notice

under section 405, then upon the filing by or on behalf of the

registrant, within 30 days after the termination, of an application

for registration that complies with the requirement of section

406(1) and payment of the filing fee required under section 410, 1

of the following applies to the registration of the agent or

investment adviser representative:

     (a) If the agent's central registration depository record or

successor record or the investment adviser representative's

investment adviser registration depository record or successor

record does not contain a new or amended disciplinary disclosure

within the previous 12 months, the registration is immediately

effective as of the date of the completed filing.

     (b) If the agent's central registration depository record or

the investment adviser representative's investment adviser

registration depository record contains a new or amended

disciplinary disclosure within the preceding 12 months, the

registration is temporarily effective as of the date of the

completed filing.

     (3) If there are or were grounds for discipline under section

412, the administrator may withdraw a temporary registration within

30 days after the application is filed. If the administrator does

not withdraw the temporary registration within the 30-day period,

registration becomes automatically effective on the thirty-first

day after filing.

     (4) The administrator may prevent the effectiveness of a

transfer of an agent or investment adviser representative under

subsection (2)(a) or (b) based on the public interest and the

protection of investors.

     (5) If the administrator determines that a registrant or

applicant for registration is no longer in existence, has ceased to

act as a broker-dealer, agent, investment adviser, or investment

adviser representative, is the subject of an adjudication of

incapacity, is subject to the control of a committee, conservator,

or guardian, or cannot reasonably be located, a rule or order under

this act may require the registration be canceled or terminated or

the application denied. The administrator may reinstate a canceled

or terminated registration, with or without hearing, and may make

the registration retroactive.

     Sec. 409. Withdrawal of registration by a broker-dealer,

agent, investment adviser, or investment adviser representative is

effective 60 days after an application to withdraw is filed or

within a shorter period as provided by rule or order under this

act, unless a revocation or suspension proceeding is pending when

the application is filed. If a proceeding is pending, withdrawal is

effective when and on conditions required by rule or order under

this act. The administrator may institute a revocation or

suspension proceeding under section 412 within 1 year after the

withdrawal became effective automatically and issue a revocation or

suspension order as of the last date on which registration was

effective if a proceeding is not pending.

     Sec. 410. (1) Before October 1, 2012, a person shall pay a fee

of $300.00 when initially filing an application for registration as

a broker-dealer and a fee of $300.00 when filing a renewal of

registration as a broker-dealer. After September 30, 2012, a person

shall pay a fee of $250.00 when initially filing an application for

registration as a broker-dealer and a fee of $250.00 when filing a

renewal of registration as a broker-dealer. If the filing results

in a denial or withdrawal, the administrator shall retain all of

the filing fee.

     (2) Before October 1, 2012, an individual shall pay a fee of

$65.00 when filing an application for registration as an agent, a

fee of $65.00 when filing a renewal of registration as an agent,

and a fee of $65.00 when filing for a change of registration as an

agent. After September 30, 2012, an individual shall pay a fee of

$30.00 when filing an application for registration as an agent, a

fee of $30.00 when filing a renewal of registration as an agent,

and a fee of $30.00 when filing for a change of registration as an

agent. If the filing results in a denial or withdrawal, the

administrator shall retain all of the filing fee.

     (3) Before October 1, 2012, a person shall pay a fee of

$200.00 when filing an application for registration as an

investment adviser and a fee of $200.00 when filing a renewal of

registration as an investment adviser. After September 30, 2012, a

person shall pay a fee of $150.00 when filing an application for

registration as an investment adviser and a fee of $150.00 when

filing a renewal of registration as an investment adviser. If the

filing results in a denial or withdrawal, the administrator shall

retain all of the filing fee.

     (4) Before October 1, 2012, an individual shall pay a fee of

$65.00 when filing an application for registration as an investment

adviser representative, a fee of $65.00 when filing a renewal of

registration as an investment adviser representative, and a fee of

$65.00 when filing a change of registration as an investment

adviser representative. After September 30, 2012, an individual

shall pay a fee of $30.00 when filing an application for

registration as an investment adviser representative, a fee of

$30.00 when filing a renewal of registration as an investment

adviser representative, and a fee of $30.00 when filing a change of

registration as an investment adviser representative. If the filing

results in a denial or withdrawal, the administrator shall retain

all of the filing fee.

     (5) Before October 1, 2012, a federal covered investment

adviser required to file a notice under section 405 shall pay an

initial and annual notice fee of $200.00. After September 30, 2012,

a federal covered investment adviser required to file a notice

under section 405 shall pay an initial and annual notice fee of

$150.00.

     (6) A person required to pay a filing or notice fee under this

section may transmit the fee through or to a designee as a rule or

order requires under this act.

     (7) An investment adviser representative who is registered as

an agent under section 402 and who represents a person that is both

registered as a broker-dealer under section 401 and registered as

an investment adviser under section 403 or required as a federal

covered investment adviser to make a notice filing under section

405 is not required to pay an initial or annual registration fee

for registration as an investment adviser representative.

     Sec. 411. (1) Subject to section 15(h) of the securities act

of 1934, 15 USC 78o, or section 222 of the investment advisers act

of 1940, 15 USC 80b-18a, a rule or order under this act may

establish minimum financial requirements for broker-dealers

registered or required to be registered under this act and

investment advisers registered or required to be registered under

this act.

     (2) Subject to section 15(h) of the securities exchange act of

1934, 15 USC 78o, or section 222(b) of the investment advisers act

of 1940, 15 USC 80b-18a, a broker-dealer registered or required to

be registered under this act and an investment adviser registered

or required to be registered under this act shall file financial

reports required by rule or order under this act. If the

information contained in a record filed under this subsection is or

becomes inaccurate or incomplete in any material respect, the

registrant shall promptly file a correcting amendment.

     (3) Subject to section 15(h) of the securities exchange act of

1934, 15 USC 78o, or section 222 of the investment advisers act of

1940, 15 USC 80b-18a, a broker-dealer registered or required to be

registered under this act and an investment adviser registered or

required to be registered under this act shall make and maintain

the accounts, correspondence, memoranda, papers, books, and other

records required by rule or order of the administrator. The records

required to be maintained under this subsection shall be maintained

as follows:

     (a) Broker-dealer records may be maintained in any form of

data storage acceptable under section 17(a) of the securities

exchange act of 1934, 15 USC 78q, if they are readily accessible to

the administrator.

     (b) Investment adviser records may be maintained in any form

of data storage required by rule or order under this act.

     (4) The records of a broker-dealer registered or required to

be registered under this act and of an investment adviser

registered or required to be registered under this act are subject