HB-4865, As Passed Senate, September 28, 2007

SUBSTITUTE FOR

HOUSE BILL NO. 4865

A bill to amend 1964 PA 265, entitled

"Uniform securities act,"

by amending section 202 (MCL 451.602), as amended by 2003 PA 150.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 202. (a) A broker-dealer, agent, or investment adviser

may obtain an initial registration by filing with the administrator

an application together with a consent to service of process

pursuant to section 414(g). The application shall contain the

information that the administrator by rule requires concerning any

of the following:

(1) The applicant's form and place of organization.

(2) The applicant's proposed method of doing business.

(3) The qualifications and business history of the applicant;

in the case of a broker-dealer or investment adviser, the

qualifications and business history of any partner, officer, or

director, any person occupying a similar status or performing

similar functions, or any person directly or indirectly controlling

the broker-dealer or investment adviser; and, in the case of an

investment adviser, the qualifications and business history of any

employee.

(4) Any injunction or administrative order or conviction of a

misdemeanor or of a felony.

(5) The applicant's financial condition and history.

(b) The administrator may by rule or order require an

applicant for initial registration to publish an announcement of

the application in 1 or more specified newspapers published in this

state. Registration becomes effective upon order of the

administrator. The administrator may by rule or order establish

classes of or otherwise condition the registration of broker-

dealers, agents, or investment advisers.

an applicant for registration shall pay a filing fee and every

registrant shall pay an annual fee of $250.00 in the case of a

broker-dealer, $30.00 in the case of an agent, and $150.00 in the

case of an investment adviser. Before October 1, 2003 or after

September 30, ~~2007~~ 2012, an applicant filing an application for

registration of a successor pursuant to subsection (d) shall pay a

filing fee of $100.00 for the unexpired portion of the year. Before

October 1, 2003 or after September 30, ~~2007~~ 2012, a registered

agent who has terminated his or her connection with a broker-dealer

shall pay a transfer fee of $10.00 when transferring his or her

connection to another broker-dealer. After September 30, 2003 and

before October 1, ~~2007~~ 2012, an applicant for registration shall

pay a filing fee and every registrant shall pay an annual fee of

$300.00 in the case of a broker-dealer, $65.00 in the case of an

agent, and $200.00 in the case of an investment adviser. After

September 30, 2003 and before October 1, ~~2007~~ 2012, an applicant

filing an application for registration of a successor pursuant to

subsection (d) shall pay a filing fee of $125.00 for the unexpired

portion of the year. After September 30, 2003 and before October 1,

~~2007~~ 2012, a registered agent who has terminated his or her

connection with a broker-dealer shall pay a transfer fee of $20.00

when transferring his or her connection to another broker-dealer.

(d) A registered broker-dealer or investment adviser may file

an application for registration of a successor, whether or not the

successor is then in existence. The administrator may grant or deny

the application.

(e) An applicant for registration under this act or an issuer

who offers or sells a security in this state through any person

shall file with the administrator, in the form prescribed by the

administrator by rule or order, an irrevocable consent to service

of process.

(f) Subject to the requirements of section 15 of the

securities exchange act of 1934, 15 ~~U.S.C.~~ USC 78o, and section 222

of the investment advisers act of 1940, 15 ~~U.S.C.~~ USC 80b-18a, the

administrator may by rule or order require a minimum capital for

registered broker-dealers and investment advisers and prescribe a

ratio between net capital and aggregate indebtedness. If the

registrant fails to comply with the minimum net capital

requirement, the registrant shall immediately cease all investment

advisory or securities business operations and promptly notify the

administrator of its failure to maintain the required net capital,

of the steps to be taken to cure the net capital deficiency, and of

its anticipated date of reopening business operations. The

registrant shall not reactivate its securities or investment

advisory business operations without prior notification to the

administrator.

(g) Except as otherwise provided in this section, the

administrator may require a fidelity bond from a broker-dealer,

agent, or investment adviser who is required to be registered under

this act. The administrator may not require a bond from a broker-

dealer that is registered under the securities exchange act of 1934

or an investment adviser that maintains its principal place of

business in a state other than this state if the investment adviser

is registered in that other state and is in compliance with that

state's bonding requirements, if any.

(h) Unless the requirement is waived by rule or order of the

administrator, all persons, including but not limited to partners,

officers, directors, and agents employed by a broker-dealer or

investment adviser who are regularly employed within this state

shall, as a condition of employment, be fingerprinted. The

administrator may process the fingerprint cards with the federal

bureau of investigation and the department of state police either

directly or through the national association of securities dealers.