SENATE BILL NO. 1253

View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact

Text to be added within a bill has been marked with Bold and Underline. Text to be removed has been marked with Strikethrough and Italic. How these codes are actually displayed will vary based on the browser software you are using.
This sentence is marked with bold and underline to show added text.
This sentence is marked with strikethrough and italic, indicating text to be removed.

Bill Status



S1253.......................................by COMMERCE AND HUMAN RESOURCES
SECURITIES ACT - Amends existing law relating to the Uniform Securities Act
to revise exempt transactions; and to delete obsolete language.

01/11    Senate intro - 1st rdg - to printing
01/14    Rpt prt - to Com/HuRes
02/04    Rpt out - rec d/p - to 2nd rdg
02/05    2nd rdg - to 3rd rdg
02/07    3rd rdg - PASSED - 32-0-3
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Cameron,
      Coiner, Corder, Darrington, Fulcher, Gannon, Geddes, Goedde, Hammond,
      Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
      Malepeai(Sagness), McGee, McKague, Pearce, Richardson, Schroeder,
      Siddoway, Stegner, Stennett(Thorson), Werk
      NAYS -- None
      Absent and excused -- Burkett, Davis, McKenzie
    Floor Sponsor - Cameron
    Title apvd - to House
02/08    House intro - 1st rdg - to Bus
03/04    Rpt out - rec d/p - to 2nd rdg
03/05    2nd rdg - to 3rd rdg
03/11    3rd rdg - PASSED - 64-0-6
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
      Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
      Harwood, Jaquet, Killen, King, Kren, Labrador, Lake, LeFavour,
      Loertscher, Luker, Marriott, Mathews, McGeachin, Nielsen, Nonini,
      Pasley-Stuart, Patrick, Pence, Raybould, Ringo, Ruchti, Rusche,
      Sayler, Schaefer, Shepherd(02), Shepherd(08), Shirley, Shively,
      Smith(30), Snodgrass, Stevenson, Thayn, Thomas, Trail, Vander Woude,
      Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- None
      Absent and excused -- Henbest, Henderson, Mortimer, Moyle, Roberts,
      Smith(24)
    Floor Sponsor - Patrick
    Title apvd - to Senate
03/12    To enrol
03/13    Rpt enrol - Pres signed - Sp signed
03/14    To Governor
03/17    Governor signed
         Session Law Chapter 143
         Effective: 07/01/08

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                                       IN THE SENATE

                                    SENATE BILL NO. 1253

                         BY COMMERCE AND HUMAN RESOURCES COMMITTEE

  1                                        AN ACT
  2    RELATING TO THE UNIFORM SECURITIES  ACT;  AMENDING  SECTION  30-14-202,  IDAHO
  3        CODE,  TO  REVISE  EXEMPT  TRANSACTIONS; AMENDING SECTION 30-14-412, IDAHO
  4        CODE, TO MAKE A TECHNICAL  CORRECTION;  AND  AMENDING  SECTION  30-14-611,
  5        IDAHO CODE, TO DELETE OBSOLETE LANGUAGE.

  6    Be It Enacted by the Legislature of the State of Idaho:

  7        SECTION 1.  That Section 30-14-202, Idaho Code, be, and the same is hereby
  8    amended to read as follows:

  9        30-14-202.  EXEMPT  TRANSACTIONS.  The  following  transactions are exempt
 10    from the requirements of sections 30-14-301 through 30-14-306, Idaho Code, and
 11    section 30-14-504, Idaho Code:
 12        (1)  An isolated nonissuer transaction, whether  or  not  effected  by  or
 13    through a broker-dealer;
 14        (2)  A  nonissuer transaction by or through a broker-dealer registered, or
 15    exempt from registration under this chapter, and a  resale  transaction  by  a
 16    sponsor of a unit investment trust registered under the investment company act
 17    of  1940,  in  a security of a class that has been outstanding in the hands of
 18    the public for at least ninety (90) days, if, at the date of the transaction:
 19        (a)  The issuer of the security is engaged in business, the issuer is  not
 20        in  the  organizational  stage  or  in bankruptcy or receivership, and the
 21        issuer is not a blank check, blind pool, or shell company that has no spe-
 22        cific business plan or purpose or has indicated that its primary  business
 23        plan  is  to engage in a merger or combination of the business with, or an
 24        acquisition of, an unidentified person;
 25        (b)  The security is sold at a price reasonably  related  to  its  current
 26        market price;
 27        (c)  The  security  does  not  constitute  the  whole or part of an unsold
 28        allotment to, or a subscription or participation by, the broker-dealer  as
 29        an underwriter of the security or a redistribution;
 30        (d)  A  nationally  recognized securities manual or its electronic equiva-
 31        lent designated by any rule adopted or an order issued under this  chapter
 32        or a record filed with the securities and exchange commission that is pub-
 33        licly available contains:
 34             (i)   A description of the business and operations of the issuer;
 35             (ii)  The  names  of the issuer's executive officers and the names of
 36             the issuer's directors, if any;
 37             (iii) An audited balance sheet of the issuer  as  of  a  date  within
 38             eighteen  (18)  months  before the date of the transaction or, in the
 39             case of a reorganization or merger when the parties to the  reorgani-
 40             zation  or merger each had an audited balance sheet, a pro forma bal-
 41             ance sheet for the combined organization; and
 42             (iv)  An audited income statement for each of the  issuer's  two  (2)
 43             immediately  previous  fiscal years or for the period of existence of

                                       2

  1             the issuer, whichever is shorter, or, in the case of a reorganization
  2             or merger when each party to the reorganization or merger had audited
  3             income statements, a pro forma income statement; and
  4        (e)  Any one (1) of the following requirements is met:
  5             (i)   The issuer of the security has a  class  of  equity  securities
  6             listed  on  a national securities exchange registered under section 6
  7             of the securities exchange act of 1934 or designated for  trading  on
  8             the  national  association  of securities dealers automated quotation
  9             system;
 10             (ii)  The issuer of the security is a unit  investment  trust  regis-
 11             tered under the investment company act of 1940;
 12             (iii) The  issuer  of  the  security, including its predecessors, has
 13             been engaged in continuous business for at least three (3) years; or
 14             (iv)  The issuer of the security has total assets  of  at  least  two
 15             million  dollars ($2,000,000) based on an audited balance sheet as of
 16             a date within eighteen (18) months before the date of the transaction
 17             or, in the case of a reorganization or merger when the parties to the
 18             reorganization or merger each had such an audited  balance  sheet,  a
 19             pro forma balance sheet for the combined organization;
 20        (3)  A  nonissuer  transaction by or through a broker-dealer registered or
 21    exempt from registration under this chapter in a security of a foreign  issuer
 22    that is a margin security defined in regulations or rules adopted by the board
 23    of governors of the federal reserve system;
 24        (4)  A  nonissuer  transaction by or through a broker-dealer registered or
 25    exempt from registration under this chapter in an outstanding security if  the
 26    guarantor  of the security files reports with the securities and exchange com-
 27    mission under the reporting requirements of section 13 or 15(d) of the securi-
 28    ties exchange act of 1934 (15 U.S.C. 78m or 78o(d));
 29        (5)  A nonissuer transaction by or through a broker-dealer  registered  or
 30    exempt from registration under this chapter in a security that:
 31        (a)  Is  rated  at  the time of the transaction by a nationally recognized
 32        statistical rating organization in one (1) of its four (4) highest  rating
 33        categories; or
 34        (b)  Has a fixed maturity or a fixed interest or dividend, if:
 35             (i)   A  default  has  not occurred during the current fiscal year or
 36             within the three (3) previous fiscal years of the issuer or any  pre-
 37             decessor,  in the payment of principal, interest, or dividends on the
 38             security; and
 39             (ii)  The issuer is engaged in business, is not in the organizational
 40             stage or in bankruptcy or receivership, and is not and has  not  been
 41             within  the previous twelve (12) months a blank check, blind pool, or
 42             shell company that has no specific business plan or  purpose  or  has
 43             indicated  that its primary business plan is to engage in a merger or
 44             combination of the business with, or an acquisition of, an  unidenti-
 45             fied person;
 46        (6)  A  nonissuer  transaction by or through a broker-dealer registered or
 47    exempt from registration under this chapter effecting an unsolicited order  or
 48    offer to purchase;
 49        (7)  A  nonissuer  transaction executed by a bona fide pledgee without the
 50    purpose of evading this chapter;
 51        (8)  A nonissuer transaction by a federal covered investment adviser  with
 52    investments  under  management  in  excess  of  one  hundred  million  dollars
 53    ($100,000,000)  acting  in the exercise of discretionary authority in a signed
 54    record for the account of others;
 55        (9)  A transaction in a security, whether or not the security or  transac-

                                       3

  1    tion  is otherwise exempt, in exchange for one (1) or more bona fide outstand-
  2    ing securities, claims, or property interests, or partly in such exchange  and
  3    partly  for  cash, if the terms and conditions of the issuance and exchange or
  4    the delivery and exchange and the fairness of the terms  and  conditions  have
  5    been  approved  by  the  administrator  after a hearing as provided in section
  6    30-14-202A, Idaho Code, or otherwise;
  7        (10) A transaction between the issuer or other person on whose behalf  the
  8    offering is made and an underwriter, or among underwriters;
  9        (11) A transaction in a note, bond, debenture or other evidence of indebt-
 10    edness secured by a mortgage or other security agreement if:
 11        (a)  Tthe  note,  bond,  debenture  or  other  evidence of indebtedness is
 12        offered and sold with the mortgage or other security agreement as a unit;
 13        (b)  A general solicitation or general advertisement of the transaction is
 14        not made; and
 15        (c)  A commission or other remuneration is not paid or given, directly  or
 16        indirectly,  to  a  person  not registered under this chapter as a broker-
 17        dealer or as an agent;
 18        (12) A transaction by an executor, administrator of  an  estate,  sheriff,
 19    marshal, receiver, trustee in bankruptcy, guardian or conservator;
 20        (13) A sale or offer to sell to:
 21        (a)  An institutional investor;
 22        (b)  A federal covered investment adviser; or
 23        (c)  Any  other person exempted by a rule adopted or an order issued under
 24        this chapter;
 25        (14) A sale or an offer to sell securities of an issuer, if  the  transac-
 26    tion is part of a single issue in which:
 27        (a)  Not  more  than  ten (10) purchasers are present in this state during
 28        any twelve (12) consecutive months, other than those designated in subsec-
 29        tion (13) of this section;
 30        (b)  A general solicitation or general advertising is not made in  connec-
 31        tion with the offer to sell or sale of the securities;
 32        (c)  A  commission or other remuneration is not paid or given, directly or
 33        indirectly, to a person other than a broker-dealer registered  under  this
 34        chapter  or  an  agent registered under this chapter for soliciting a pro-
 35        spective purchaser in this state; and
 36        (d)  The issuer reasonably believes that all the purchasers in this state,
 37        other than those designated in subsection (13) of this section,  are  pur-
 38        chasing for investment;
 39        (15) A  transaction  under  an  offer  to existing security holders of the
 40    issuer, including persons that at the date of the transaction are  holders  of
 41    convertible securities, options or warrants, if a commission or other remuner-
 42    ation,  other  than  a  standby  commission, is not paid or given, directly or
 43    indirectly, for soliciting a security holder in this state;
 44        (16) An offer to sell, but not a sale, of a security not exempt from  reg-
 45    istration under the securities act of 1933 if:
 46        (a)  A  registration  or  offering statement or similar record as required
 47        under the securities act of 1933 has been filed, but is not effective,  or
 48        the offer is made in compliance with rule 165 adopted under the securities
 49        act of 1933 (17 CFR 230.165); and
 50        (b)  A  stop  order  of  which  the  offeror  is aware has not been issued
 51        against the offeror by the administrator or the  securities  and  exchange
 52        commission, and an audit, inspection or proceeding that is public and that
 53        may culminate in a stop order is not known by the offeror to be pending;
 54        (17) An offer to sell, but not a sale, of a security exempt from registra-
 55    tion under the securities act of 1933 if:

                                       4

  1        (a)  A  registration  statement  has been filed under this chapter, but is
  2        not effective;
  3        (b)  A solicitation of interest is provided in a  record  to  offerees  in
  4        compliance  with  a  rule adopted by the administrator under this chapter;
  5        and
  6        (c)  A stop order of which the offeror is aware has not been issued by the
  7        administrator under this chapter and an audit,  inspection  or  proceeding
  8        that may culminate in a stop order is not known by the offeror to be pend-
  9        ing;
 10        (18) A  transaction  involving  the  distribution  of the securities of an
 11    issuer to the security holders of another person in connection with a  merger,
 12    consolidation, exchange of securities, sale of assets, or other reorganization
 13    to  which the issuer, or its parent or subsidiary and the other person, or its
 14    parent or subsidiary, are parties;
 15        (19) A rescission offer, sale or purchase under section  30-14-510,  Idaho
 16    Code;
 17        (20) An  offer  or  sale  of a security to a person not a resident of this
 18    state and not present in this state if the offer or sale does not constitute a
 19    violation of the laws of the  state  or  foreign  jurisdiction  in  which  the
 20    offeree  or purchaser is present and is not part of an unlawful plan or scheme
 21    to evade this chapter;
 22        (21) Employees' stock purchase, savings, option, profit-sharing,  pension,
 23    or  similar employees' benefit plan, including any securities, plan interests,
 24    and guarantees issued under a compensatory benefit plan or  compensation  con-
 25    tract,  contained  in  a  record,  established by the issuer, its parents, its
 26    majority-owned  subsidiaries,  or  the  majority-owned  subsidiaries  of   the
 27    issuer's  parent  for the participation of their employees including offers or
 28    sales of such securities to:
 29        (a)  Directors; general partners; trustees, if the issuer  is  a  business
 30        trust; officers; consultants; and advisers;
 31        (b)  Family members who acquire such securities from those persons through
 32        gifts or domestic relations orders;
 33        (c)  Former  employees,  directors,  general partners, trustees, officers,
 34        consultants and advisers if those individuals were employed by or  provid-
 35        ing services to the issuer when the securities were offered; and
 36        (d)  Insurance agents who are exclusive insurance agents of the issuer, or
 37        the  issuer's  subsidiaries or parents, or who derive more than fifty per-
 38        cent (50%) of their annual income from those organizations;
 39        (22) A transaction involving:
 40        (a)  A stock dividend or equivalent equity distribution, whether the  cor-
 41        poration  or  other  business  organization  distributing  the dividend or
 42        equivalent equity distribution is the issuer or not, if nothing  of  value
 43        is  given  by  stockholders  or  other  equity holders for the dividend or
 44        equivalent equity distribution other than the surrender of a  right  to  a
 45        cash  or  property dividend if each stockholder or other equity holder may
 46        elect to take the dividend or  equivalent  equity  distribution  in  cash,
 47        property or stock;
 48        (b)  An  act  incident  to a judicially approved reorganization in which a
 49        security is issued in exchange for one (1) or more outstanding securities,
 50        claims, or property interests, or partly in such exchange and  partly  for
 51        cash; or
 52        (c)  The  solicitation  of tenders of securities by an offeror in a tender
 53        offer in compliance with rule 162 adopted under the securities act of 1933
 54        (17 CFR 230.162); or
 55        (23) A nonissuer transaction in an outstanding security by  or  through  a

                                       5

  1    broker-dealer  registered  or  exempt from registration under this chapter, if
  2    the issuer is a reporting issuer in a foreign jurisdiction designated by  this
  3    subsection  or  by  a  rule adopted or an order issued under this chapter; has
  4    been subject to continuous reporting requirements in the foreign  jurisdiction
  5    for  not  less  than one hundred eighty (180) days before the transaction; and
  6    the  security is listed on the foreign jurisdiction's securities exchange that
  7    has been designated by this subsection or by a rule adopted or an order issued
  8    under this chapter, or is a security of the same issuer that is of  senior  or
  9    substantially  equal  rank  to the listed security or is a warrant or right to
 10    purchase or subscribe to any of the foregoing. For purposes  of  this  subsec-
 11    tion,  Canada,  together  with  its provinces and territories, is a designated
 12    foreign jurisdiction and the Toronto stock exchange,  inc.,  is  a  designated
 13    securities  exchange. After an administrative hearing in compliance with chap-
 14    ter 52, title 67, Idaho Code, the administrator, by rule adopted or  an  order
 15    issued under this chapter, may revoke the designation of a securities exchange
 16    under this subsection, if the administrator finds that revocation is necessary
 17    or appropriate in the public interest and for the protection of investors.

 18        SECTION 2.  That Section 30-14-412, Idaho Code, be, and the same is hereby
 19    amended to read as follows:

 20        30-14-412.  DENIAL,  REVOCATION, SUSPENSION, WITHDRAWAL, RESTRICTION, CON-
 21    DITION OR LIMITATION OF REGISTRATION. (a) Disciplinary  conditions  --  Appli-
 22    cants. If the administrator finds that the order is in the public interest and
 23    subsection  (d)  of  this section authorizes the action, an order issued under
 24    this chapter may deny an application, or may condition or  limit  registration
 25    of an applicant to be a broker-dealer, agent, investment adviser or investment
 26    adviser representative, and, if the applicant is a broker-dealer or investment
 27    adviser,  of or a partner, officer, director or person having a similar status
 28    or performing similar functions, or a person directly or  indirectly  in  con-
 29    trol, of the broker-dealer or investment adviser.
 30        (b)  Disciplinary  conditions  --  Registrants. If the administrator finds
 31    that the order is in the public interest and subsection (d)  of  this  section
 32    authorizes the action, an order issued under this chapter may revoke, suspend,
 33    condition  or limit the registration of a registrant and, if the registrant is
 34    a broker-dealer or investment adviser, of or a partner, officer,  director  or
 35    person  having  a  similar status or performing similar functions, or a person
 36    directly or indirectly in control, of the broker-dealer or investment adviser.
 37    Provided however, the administrator may not:
 38        (1)  Institute a revocation or suspension proceeding under this subsection
 39        based on an order issued under a law of another state that is reported  to
 40        the  administrator  or  a  designee of the administrator more than one (1)
 41        year after the date of the order on which it is based; or
 42        (2)  Under subsection (d)(5)(A) or (B) of this section, issue an order  on
 43        the  basis  of  an  order issued under the securities act of another state
 44        unless the other order was based on conduct for which  subsection  (d)  of
 45        this  section  would authorize the action had the conduct occurred in this
 46        state.
 47        (c)  Disciplinary penalties -- Registrants.  If  the  administrator  finds
 48    that  the  order is in the public interest and subsections (d)(1) through (6),
 49    (8), (9), (10), (12) or (13) of this section authorizes the action,  an  order
 50    under  this  chapter  may censure, impose a bar or suspension from association
 51    with a broker-dealer or investment adviser registered in this state, or impose
 52    a civil penalty in an amount not to exceed five thousand dollars ($5,000)  for
 53    each  violation,  on a registrant and, if the registrant is a broker-dealer or

                                       6

  1    investment adviser, a partner, officer, director or person  having  a  similar
  2    status  or performing similar functions, or a person directly or indirectly in
  3    control, of the broker-dealer or investment adviser.
  4        (d)  Grounds for discipline. A person may be disciplined under subsections
  5    (a) through (c) of this section if the person:
  6        (1)  Has filed an application for registration in this  state  under  this
  7        chapter  or the predecessor act within the previous ten (10) years, which,
  8        as of the effective date of registration or as of any date after filing in
  9        the case of an order denying effectiveness, was incomplete in any material
 10        respect or contained a statement that, in light of the circumstances under
 11        which it was made, was false or misleading  with  respect  to  a  material
 12        fact;
 13        (2)  Willfully violated or willfully failed to comply with this chapter or
 14        the  predecessor act or a rule adopted or an order issued under this chap-
 15        ter or the predecessor act within the previous ten (10) years;
 16        (3)  Has been convicted of any felony or  within  the  previous  ten  (10)
 17        years  has been convicted of a misdemeanor involving a security, a commod-
 18        ity future or option contract, or an aspect of a business involving  secu-
 19        rities,   commodities,  investments,  franchises,  insurance,  banking  or
 20        finance;
 21        (4)  Is enjoined or restrained by a court of competent jurisdiction in  an
 22        action instituted by the administrator under this chapter or the predeces-
 23        sor  act,  a  state, the securities and exchange commission, or the United
 24        States from engaging in or continuing an act, practice or course of  busi-
 25        ness  involving an aspect of a business involving securities, commodities,
 26        investments, franchises, insurance, banking or finance;
 27        (5)  Is the subject of an order, issued after notice and  opportunity  for
 28        hearing by:
 29             (A)  The  securities,  depository  institution,  insurance  or  other
 30             financial  services  regulator  of  a  state or by the securities and
 31             exchange commission or other federal agency denying,  revoking,  bar-
 32             ring or suspending registration as a broker-dealer, agent, investment
 33             adviser,  federal  covered  investment adviser, or investment adviser
 34             representative;
 35             (B)  The securities regulator  of  a  state  or  the  securities  and
 36             exchange   commission  against  a  broker-dealer,  agent,  investment
 37             adviser,  investment  adviser  representative,  or  federal   covered
 38             investment adviser;
 39             (C)  The  securities  and  exchange  commission  or a self-regulatory
 40             organization suspending or expelling the registrant  from  membership
 41             in the self-regulatory organization;
 42             (D)  A court adjudicating a United States postal service fraud order;
 43             (E)  The insurance regulator of a state denying, suspending or revok-
 44             ing registration as an insurance agent; or
 45             (F)  A  depository  institution  regulator  suspending or barring the
 46             person from the depository institution business;
 47        (6)  Is the subject of an adjudication or determination, after notice  and
 48        opportunity  for  hearing,  by the securities and exchange commission, the
 49        commodity futures trading commission; the federal trade commission; a fed-
 50        eral depository institution regulator, or a depository institution, insur-
 51        ance or other financial services regulator of  a  state  that  the  person
 52        willfully violated the securities act of 1933, the securities exchange act
 53        of  1934,  the investment advisers act of 1940, the investment company act
 54        of 1940, or the commodity exchange act, the securities or commodities  law
 55        of  a  state,  or  a federal or state law under which a business involving

                                       7

  1        investments, franchises, insurance, banking or finance is regulated;
  2        (7)  Is insolvent, either because  the  person's  liabilities  exceed  the
  3        person's    assets  or because the person cannot meet the person's obliga-
  4        tions as they mature, provided however  that  the  administrator  may  not
  5        enter an order against an applicant or registrant under this paragraph (7)
  6        without a finding of insolvency as to the applicant or registrant;
  7        (8)  Refuses to allow or otherwise impedes the administrator from conduct-
  8        ing  an  audit  or  inspection  under section 30-14-411(d), Idaho Code, or
  9        refuses access to a registrant's office to conduct an audit or  inspection
 10        under section 30-14-411(d), Idaho Code;
 11        (9)  Has  failed to reasonably supervise an agent, investment adviser rep-
 12        resentative or other individual, if the agent, investment  adviser  repre-
 13        sentative  or other individual was subject to the person's supervision and
 14        committed a violation of this chapter or the predecessor  act  or  a  rule
 15        adopted  or  an  order  issued  under  this chapter or the predecessor act
 16        within the previous ten (10) years;
 17        (10) Has not paid the proper filing fee within thirty (30) days after hav-
 18        ing been notified by the administrator of a deficiency,  provided  however
 19        that  the  administrator  shall  vacate an order under this paragraph (10)
 20        when the deficiency is corrected;
 21        (11) After notice and opportunity for a hearing, has been found within the
 22        previous ten (10) years:
 23             (A)  By a court of competent jurisdiction to have willfully  violated
 24             the  laws of a foreign jurisdiction under which the business of secu-
 25             rities, commodities, investment, franchises,  insurance,  banking  or
 26             finance is regulated;
 27             (B)  To  have  been the subject of an order of a securities regulator
 28             of a foreign jurisdiction denying, revoking or suspending  the  right
 29             to  engage  in  the business of securities as a broker-dealer, agent,
 30             investment adviser, investment adviser representative or similar per-
 31             son; or
 32             (C)  To have been suspended or expelled from membership by or partic-
 33             ipation in a securities exchange or securities association  operating
 34             under the securities laws of a foreign jurisdiction;
 35        (12) Is  the  subject of a cease and desist order issued by the securities
 36        and exchange commission  or  issued  under  the  securities,  commodities,
 37        investment, franchise, banking, finance or insurance laws of a state;
 38        (13) Has  engaged  in  dishonest or unethical practices in the securities,
 39        commodities, investment, franchise, banking, finance or insurance business
 40        within the previous ten (10) years; or
 41        (14) Is not qualified on the basis of factors such as training, experience
 42        and knowledge of the securities business. Provided however, in the case of
 43        an application by an agent for a broker-dealer that is a member of a self-
 44        regulatory organization or by an individual for registration as an invest-
 45        ment adviser representative, a denial order may not be based on this para-
 46        graph (14) if the individual has successfully completed  all  examinations
 47        required  by subsection (e) of this section. The administrator may require
 48        an applicant for registration under section 30-14-402 or 30-14-404,  Idaho
 49        Code, who has not been registered in a state within the two (2) years pre-
 50        ceding the filing of an application in this state to successfully complete
 51        an examination.
 52        (e)  Examinations.  A  rule  adopted or an order issued under this chapter
 53    may require  that  an  examination,  including  an  examination  developed  or
 54    approved  by  an  organization  of securities regulators, be successfully com-
 55    pleted by a class of individuals or all individuals.  An  order  issued  under

                                       8

  1    this chapter may waive, in whole or in part, an examination as to an  individ-
  2    ual  and  a rule adopted under this chapter may waive, in whole or in part, an
  3    examination as to a class of individuals if the administrator determines  that
  4    the examination is not necessary or appropriate in the public interest and for
  5    the protection of investors.
  6        (f)  Summary process. The administrator may suspend or deny an application
  7    summarily;  restrict,  condition, limit or suspend a registration; or censure,
  8    bar, or impose a civil penalty on a registrant before final  determination  of
  9    an administrative proceeding. Upon the issuance of an order, the administrator
 10    shall promptly notify each person subject to the order that the order has been
 11    issued,  the  reasons  for the action, and that within fifteen (15) days after
 12    the receipt of a request in a record from the person the matter will be sched-
 13    uled for a hearing. If a hearing is not requested and none is ordered  by  the
 14    administrator  within thirty (30) days after the date of service of the order,
 15    the order becomes final by operation of law. If  a  hearing  is  requested  or
 16    ordered,  the  administrator,  after  notice of and opportunity for hearing to
 17    each person subject to the order, may modify or vacate the order or extend the
 18    order until final determination.
 19        (g)  Procedural requirements. An order issued may not be issued under this
 20    section, except under subsection (f) of this section, without:
 21        (1)  Appropriate notice to the applicant or registrant;
 22        (2)  Opportunity for hearing; and
 23        (3)  Findings of fact and conclusions of law in  a  record  in  accordance
 24        with chapter 52, title 67, Idaho Code.
 25        (h)  Control  person  liability. A person that controls, directly or indi-
 26    rectly, a person not in compliance with this section  may  be  disciplined  by
 27    order  of  the administrator under subsections (a) through (c) of this section
 28    to the same extent as the noncomplying person, unless the  controlling  person
 29    did  not know, and in the exercise of reasonable care could not have known, of
 30    the existence of conduct that is a ground for discipline under this section.
 31        (i)  Limit on investigation  or  proceeding.  The  administrator  may  not
 32    institute  a proceeding under subsection (a), (b) or (c) of this section based
 33    solely on material facts actually known by the administrator unless an  inves-
 34    tigation  or the proceeding is instituted within one (1) year after the admin-
 35    istrator actually acquires knowledge of the material facts.

 36        SECTION 3.  That Section 30-14-611, Idaho Code, be, and the same is hereby
 37    amended to read as follows:

 38        30-14-611.  SERVICE OF PROCESS. (a) Signed consent to service of  process.
 39    From September 1, 2004, through June 30, 2005, all persons applying for regis-
 40    tration  or  making a notice filing shall submit to the administrator a signed
 41    consent to service of process. A  consent  appointing  the  administrator  the
 42    person's  agent  for  service of process in a noncriminal action or proceeding
 43    against the person, or the person's successor or personal representative under
 44    this chapter or a rule adopted or an order issued under this chapter after the
 45    consent is filed, has the same force and validity as if the service were  made
 46    personally  on  the person filing the consent. From July 1, 2005, and thereaf-
 47    ter, registrants shall be required to submit a consent to service  of  process
 48    only if there has been a material change.
 49        (b)  Conduct  constituting  appointment of agent for service. If a person,
 50    including a nonresident of this state, engages in an act, practice, or  course
 51    of business prohibited or made actionable by this chapter or a rule adopted or
 52    an  order  issued under this chapter and the person has not filed a consent to
 53    service of process under subsection (a) of this  section, the  act,  practice,

                                       9

  1    or  course of business constitutes the appointment of the administrator as the
  2    person's agent for service of process in a noncriminal  action  or  proceeding
  3    against the person or the person's successor or personal representative.
  4        (c)  Procedure for service of process. Service under subsection (a) or (b)
  5    of  this  section may be made by providing a copy of the process to the office
  6    of the administrator, but it is not effective unless:
  7        (1)  The plaintiff, which may be the administrator, promptly sends  notice
  8        of the service and a copy of the process, return receipt requested, to the
  9        defendant or respondent at the address set forth in the consent to service
 10        of  process  or, if a consent to service of process has not been filed, at
 11        the last known address, or takes other reasonable steps  to  give  notice;
 12        and
 13        (2)  The  plaintiff  files an affidavit of compliance with this subsection
 14        in the action or proceeding on or before the return day of the process, if
 15        any, or within the time that the court, or the administrator in a proceed-
 16        ing before the administrator, allows.
 17        (d)  Service in administrative proceedings or civil actions by administra-
 18    tor. Service pursuant to subsection (c) of this section may be used in a  pro-
 19    ceeding  before the administrator or by the administrator in a civil action in
 20    which the administrator is the moving party.
 21        (e)  Opportunity to defend. If process is served under subsection  (c)  of
 22    this  section,  the  court,  or  the  administrator in a proceeding before the
 23    administrator, shall order continuances as are  necessary  or  appropriate  to
 24    afford the defendant or respondent reasonable opportunity to defend.

Statement of Purpose / Fiscal Impact



                   STATEMENT OF PURPOSE

                         RS 17329

These changes are intended to correct and update statutory 
language. Specifically, (1)the proposed changes to  Idaho Code 
30-14-202(11) will bring the statute's language into conformity 
with an order issued by the Director of Finance in 2005 when it 
became clear that the new Uniform Securities Act language 
deviated from language in the prior Idaho Securities Act causing 
disruption to local securities issuers; (2) correcting "of" to 
"or" in Idaho Code 30-14-412 (a) and (b); and, (3) eliminating 
transition language in Idaho Code 30-14-611 that is no longer 
applicable to any situation.


                         FISCAL NOTE

No fiscal impact.





CONTACT
Name:	Marilyn Chastain
Agency:	Finance, Dept. of
Phone:	332-8070

STATEMENT OF PURPOSE/FISCAL NOTE                	S 1253