2001 Legislation
Print Friendly

HOUSE BILL NO. 23 – Securities, sales, applicatns, rqmts


View Daily Data Tracking History

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.

Daily Data Tracking History

H0023........................................................by MR. SPEAKER
                    Requested by: Department of Finance
SECURITIES - Amends existing law to delete the requirement that
fingerprints accompany applications for registration as a securities
broker-dealer, salesman or investment advisor; to delete the requirement
that a written examination be given at least twice each year; to delete the
examination requirement; to delete the exemption from the Securities Act
for securities issued or guaranteed by a railroad, other common carrier,
public utility or holding company which is subject to the jurisdiction of
the Interstate Commerce Commission; and to provide that the registration
fee shall not exceed five hundred dollars.
01/08    House intro - 1st rdg - to printing
    Rpt prt - to Bus
02/20    Rpt out - to Gen Ord
    Ret'd to Bus
03/02    Rpt out - rec d/p - to 2nd rdg
03/05    2nd rdg - to 3rd rdg
03/06    3rd rdg - PASSED - 60-3-7
      AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Boe, Bolz,
      Bradford, Bruneel, Campbell, Clark, Collins, Crow, Cuddy, Denney,
      Ellis, Ellsworth, Eskridge, Field(13), Gagner, Gould, Hadley,
      Hammond, Higgins, Hornbeck, Jones, Kellogg, Kendell, Kunz, Lake,
      Loertscher, Mader, Marley, McKague, Meyer, Montgomery, Mortensen,
      Moss, Moyle, Pearce, Pomeroy, Ridinger, Roberts, Robison, Sali,
      Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stone, Swan,
      Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
      NAYS -- Chase, Henbest, Jaquet
      Absent and excused -- Callister, Deal, Field(20), Harwood, Langford,
      Pischner, Raybould
    Floor Sponsor -- Higgins
    Title apvd - to Senate
03/07    Senate intro - 1st rdg - to Com/HuRes
03/14    Rpt out - rec d/p - to 2nd rdg
03/15    2nd rdg - to 3rd rdg
03/20    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Branch, Boatright, Brandt, Bunderson, Burtenshaw,
      Cameron, Danielson, Darrington, Davis, Deide, Dunklin, Frasure,
      Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee,
      Lodge, Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen,
      Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams,
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor -- Ipsen
    Title apvd - to House
03/21    To enrol
03/22    Rpt enrol - Sp signed - Pres signed - to Gov
03/23    Governor signed
         Session Law Chapter 131
         Effective: 07/01/01

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 23
                                       BY MR. SPEAKER
                            Requested by: Department of Finance
  1                                        AN ACT
 12    Be It Enacted by the Legislature of the State of Idaho:
 13        SECTION  1.  That  Section 30-1407, Idaho Code, be, and the same is hereby
 14    amended to read as follows:
 17    TRATION  ON  PARTNERS'  OFFICES.  (1)  A broker-dealer, salesman or investment
 18    adviser or investment adviser representative shall apply for  registration  by
 19    filing  with the director or an organization which the director by rule desig-
 20    nates an application in such form as the director shall prescribe and  payment
 21    of  the  fee prescribed in section 30-1437, Idaho Code. Such application shall
 22    be accompanied by the fingerprints of the  applicant,  unless  waived  by  the
 23    director.
 24        (2)  (a) A  registered  investment  adviser shall file with the director a
 25        bond of a surety company duly authorized  to  transact  business  in  this
 26        state,  said  bond  to  be  in  the  sum  of  twenty-five thousand dollars
 27        ($25,000) and conditioned upon faithful compliance with the provisions  of
 28        this  chapter  by  the  investment  adviser, or its agents, such that upon
 29        failure to so comply by the investment adviser, or its agents, the  surety
 30        company shall be liable to any and all persons who may suffer loss by rea-
 31        son  thereof.  Except  that  an  investment adviser that has its principal
 32        place of business in a state other than this state shall be excluded  from
 33        these bonding requirements provided that such investment adviser is regis-
 34        tered as an investment adviser in the state where it maintains its princi-
 35        pal  place  of  business  and  is  in compliance with such state's bonding
 36        requirements.
 37        (b)  Upon a proper showing, the director, in his discretion, may waive the
 38        surety bond requirement of an investment adviser or an investment  adviser
 39        applicant who satisfies both of the following conditions:
 40             (i)  The investment adviser will not have custody of or discretionary
 41             authority over client funds or securities; and
 42             (ii)  The  investment  adviser includes a provision in all investment
 43             advisory contracts which states that the investment adviser will  not
  1             have custody of or discretionary authority over client funds or secu-
  2             rities, as required by section 30-1405(2), Idaho Code.
  3        (c)  Any salesman acting as agent for an issuer or issuers shall file with
  4        the  director a bond of a surety company duly authorized to transact busi-
  5        ness in this state, said bond to be in the sum  of  ten  thousand  dollars
  6        ($10,000)  and conditioned upon faithful compliance with the provisions of
  7        this act by the salesman, such that upon failure to    so  comply  by  the
  8        salesman the surety company shall be liable to any and all persons who may
  9        suffer  loss  by reason thereof. Provided, however, that the obligation of
 10        the surety bond must be maintained at all times in the amount therein pro-
 11        vided; and provided further, that a certificate of deposit issued  by  any
 12        bank in the state of Idaho and assigned to the director in an amount equal
 13        to  the  bond  which  would  otherwise  be required may be accepted by the
 14        director in lieu of a bond, if the certificate of deposit is maintained at
 15        all times in the amount and manner herein provided  during  the  term  for
 16        which the registration is effective and for three (3) years thereafter.
 17        (3)  The  director may by rule or order require a minimum capital for reg-
 18    istered broker-dealers, subject to the limitations of section 15 of the  secu-
 19    rities  exchange act of 1934, and establish minimum financial requirements for
 20    investment advisers, subject to the limitations of section 222 of the  invest-
 21    ment  advisers act of 1940, which may include different requirements for those
 22    investment advisers who maintain custody of clients' funds  or  securities  or
 23    who  have  discretionary authority over same and those investment advisers who
 24    do not. Except that an investment adviser that  has  its  principal  place  of
 25    business in a state other than this state shall be excluded from these minimum
 26    financial  requirements provided that such investment adviser is registered as
 27    an investment adviser in the state where it maintains its principal  place  of
 28    business and is in compliance with such state's minimum financial or net capi-
 29    tal requirements, as the case may be.
 30        (4)  The  director  shall  require as a condition of registration that the
 31    applicant (and, if the applicant is a corporation or  partnership,  all  offi-
 32    cers,  directors  or  partners doing securities business in this state) pass a
 33    written examination in such form as the director shall prescribe  as  evidence
 34    of  knowledge of the securities business: Provided, that not more than two (2)
 35    officers of an issuer may be registered as salesmen for a particular  original
 36    offering  of the issuer's securities without being required to pass such writ-
 37    ten  examination  or  file  a  salesman's  bond   as   required   by   section
 38    30-1407(2)(c),  Idaho  Code;  and  provided  further, that no such officer may
 39    again register within five (5) years as such salesman for this  or  any  other
 40    issuer  without  passing  the  written  examination. Such examination shall be
 41    given twice a year or at such more frequent intervals as  the  director  shall
 42    direct.
 43        (5)  Any person who is licensed to sell securities or conduct a securities
 44    business  in  this state and (a) is a member or registered representative of a
 45    member of the New York Stock Exchange, the American Stock Exchange,  the  Mid-
 46    west Stock Exchange, the Pacific Coast Stock Exchange, or the National Associ-
 47    ation  of Securities Dealers or any other exchange registered with the Securi-
 48    ties and Exchange Commission and approved by the director; or,  (b)  has  suc-
 49    cessfully  completed  the  general  examination for nonmembers of the National
 50    Association of Securities Dealers, commonly known  as  the  SECO  examination,
 51    shall not be required to pass an examination given by the director as a condi-
 52    tion of registration.
 53        SECTION  2.  That  Section 30-1434, Idaho Code, be, and the same is hereby
 54    amended to read as follows:
  1        30-1434.  EXEMPT SECURITIES. (1) Sections 30-1416 through 30-1433A  inclu-
  2    sive, Idaho Code, shall not apply to:
  3        (a)  any  security  including a revenue obligation issued or guaranteed by
  4        the United States, any state, any political subdivision of a state or  any
  5        agency  or  corporate  or  other instrumentality of one (1) or more of the
  6        foregoing, or any certificate of deposit for any of the foregoing,
  7        (b)  any security issued or guaranteed by Canada, any  Canadian  province,
  8        any political subdivision of any such province, any agency or corporate or
  9        other  instrumentality  of  one  (1) or more of the foregoing or any other
 10        foreign government with which the United States currently maintains diplo-
 11        matic relations if the security is recognized as a valid obligation by the
 12        issuer or guarantor,
 13        (c)  any security issued by and representing an interest in or a debt  of,
 14        or  guaranteed  by, any bank organized under the laws of the United States
 15        or any bank, savings institution or trust company organized  or  chartered
 16        as  such  and under the jurisdiction and supervision of the superintendent
 17        of banks of any state,
 18        (d)  any security issued by and representing an interest in or a debt  of,
 19        or guaranteed by, any federal savings and loan association or any building
 20        and  loan or similar association organized under the laws of any state and
 21        authorized to do business in this state,
 22        (e)  any insurance or endowment policy or  annuity  contract  or  optional
 23        annuity  contract,  issued  by a corporation subject to the supervision of
 24        the director of the department of insurance,
 25        (f)  any security issued or guaranteed by any federal credit union or  any
 26        credit union, industrial loan association or similar association organized
 27        and supervised under the laws of this state,
 28        (g)  any  security issued or guaranteed by any railroad, other common car-
 29        rier, public utility or holding company which is:
 30             (i)   Subject to the jurisdiction of the interstate commerce  commis-
 31             sion,
 32             (ii)  A  registered  holding company under the Public Utility Holding
 33             Company Act of 1935 or a subsidiary of  such  a  company  within  the
 34             meaning of that act,
 35             (iii)  Regulated  with  respect to its rates and charges by a govern-
 36             mental authority of the United States or any state  or  municipality,
 37             or
 38             (ivii) Regulated  with  respect  to  the issuance or guarantee of the
 39             security by a governmental authority of the United States, any state,
 40             Canada or any Canadian province; also equipment trust certificates in
 41             respect to equipment  conditionally sold or leased to a  railroad  or
 42             public utility, if other securities issued by such railroad or public
 43             utility would be exempt under this subsection,
 44        (h)  any  security  listed or approved for listing upon notice of issuance
 45        on the New York Stock Exchange, the American Stock Exchange,  the  Midwest
 46        Stock  Exchange  or  any  other  stock exchange registered with the United
 47        States securities and exchange commission and approved  by  the  director,
 48        any  other security of the same issuer which is of senior or substantially
 49        equal rank, any security called for by subscription rights or warrants  so
 50        listed or approved or any warrant or right to purchase or subscribe of the
 51        foregoing,
 52        (i)  any security issued by any person organized and operated not for pri-
 53        vate profit but exclusively for religious, educational, benevolent, chari-
 54        table, fraternal, social, athletic or reformatory purposes, also any secu-
 55        rities  issued by a community-sponsored or owned industrial corporation or
  1        foundation organized for the purpose of promoting growth  and/or  economic
  2        development of the community,
  3        (j)  any commercial paper which arises out of a current transaction or the
  4        proceeds  of which have been or are to be used for current transaction and
  5        which evidences an obligation to pay cash within nine (9)  months  of  the
  6        date  of  issuance,  exclusive    of days of grace, or any renewal of such
  7        paper which is likewise limited or any guarantee of such paper or  of  any
  8        such  renewal when such commercial paper is sold to the banks or insurance
  9        companies,
 10        (k)  any investment contract issued in connection with an employee's stock
 11        purchase, savings, pension, profit-sharing or similar benefit plan,
 12        (l)  any security issued by a nonprofit cooperative corporation  organized
 13        pursuant  to  this title, if no expenditure is made by or on its behalf in
 14        connection with the issuance or sale of  its  securities  other  than  the
 15        actual expenses of organization, calling or holding meetings of incorpora-
 16        tors or shareholders, printing, mailing, and taxes,
 17        (m)  any  security  issued  by a domestic or foreign corporation, partner-
 18        ship, trust or association engaged in  actual  mining  operations  or  the
 19        exploration and development of mining properties in this state, whether or
 20        not  sold  through  a broker-dealer, provided the following conditions are
 21        met:
 22             (i)   The term "actual mining operations" within the meaning of  this
 23             subsection  does  not include the development or production of gas or
 24             oil;
 25             (ii)  The total amount of the securities to be offered and sold  does
 26             not  exceed  five  hundred  thousand dollars ($500,000) in any twelve
 27             (12) month period;
 28             (iii) All sales brochures, pamphlets, advertisements and  literatures
 29             are filed with the director prior to being used;
 30             (iv)  At least eighty per cent percent (80%) of the gross amount paid
 31             by  the  purchasers of the securities is used in actual mining opera-
 32             tions or for actual exploration and development  expenses,  including
 33             legal, accounting, engineering and geological expenses; and
 34             (v)  The  issuer  shall  file  a  report  in a form prescribed by the
 35             director and at such times that the director by rule may provide, not
 36             to exceed once every three (3) months, stating the number  of  shares
 37             or  amount  of  other  securities sold, the number of purchasers, the
 38             amount of money obtained by the issuer from the sales, and the manner
 39             in which the moneys have been expended.
 40        (2)  Provided, that any person shall give notice in the form prescribed by
 41    the director of his intention to avail himself of the  exemption  afforded  by
 42    paragraphs  (d), (e), (f), (i), (k), (l) or (m) of subsection (1) of this sec-
 43    tion thirty (30) days prior to the first offer or sale to be made  thereunder.
 44    The  director may by order deny or revoke the exemption specified in such sub-
 45    sections with respect to a specific security. Upon the entry of such an  order
 46    the  director  shall  promptly  notify all interested parties that it has been
 47    entered and of the reasons therefor and that within twenty (20)  days  of  the
 48    receipt of a written request the matter will be set for hearing. If no hearing
 49    is  requested  and  none  is  ordered by the director the order will remain in
 50    effect until it is modified or vacated  by  the  director.  If  a  hearing  is
 51    requested  or ordered the director, after notice of an opportunity for hearing
 52    to all interested persons, may modify or vacate the order or extend  it  until
 53    final  determination.  No  order  under  said subsections may operate retroac-
 54    tively. No person may be considered to have violated this chapter by reason of
 55    any offer or sale effected after the entry of an order under said  subsections
  1    if  he  sustains the burden of proof that he did not know, and in the exercise
  2    of reasonable care, could not have known of the order.
  3        SECTION 3.  That Section 30-1437, Idaho Code, be, and the same  is  hereby
  4    amended to read as follows:
  5        30-1437.  FEES.  Fees  shall be fixed by the director and shall be paid in
  6    advance under the  provisions of this chapter, but shall not exceed  the  fol-
  7    lowing:
  8        (1)  (a) Except as otherwise provided herein, for the initial registration
  9        of  securities  by  notification or coordination or qualification or for a
 10        notice filing pursuant to section 30-1433A(1), Idaho Code, there shall  be
 11        paid  to  the director or to an organization designated by the director, a
 12        registration fee of not more than five  hundred  dollars  ($500)  notwith-
 13        standing the number of shares registered. The notice filing fee for shares
 14        of  a  unit  investment trust shall be two hundred dollars ($200) notwith-
 15        standing the number of shares to be offered or sold.
 16        (b)  Each series or portfolio of an investment company offering  shall  be
 17        required to make a separate notice filing under section 30-1433A(1), Idaho
 18        Code. Separate notice filings for classes of an investment company are not
 19        required  so long as classes are used solely as a method of distinguishing
 20        payment plans within a series or portfolio.
 21        (c)  Unless renewed as provided in subparagraph (d) of this subsection  or
 22        additional  time  is  granted by the director, the notice filing of a unit
 23        investment trust shall expire eighteen (18) months from the date  received
 24        by  the  department.  The  notice filing of all other investment companies
 25        shall expire two (2) months after the last day of the issuer's next fiscal
 26        year end. The registration of all other offerings  shall  expire  one  (1)
 27        year  from the date registration is granted by the director. If the issuer
 28        is an investment company, other than a unit investment trust, with a  fis-
 29        cal  year  end which falls within thirty (30) days after the effectiveness
 30        of a notice filing, such shares may be lawfully offered or sold until  two
 31        (2)  months after the last day of the following fiscal year of the issuer.
 32        No registration or notice filing may be renewed at any time after the reg-
 33        istration or notice filing has expired.
 34        (d)  For the renewal of a registration or notice filing made  pursuant  to
 35        section  30-1433A, Idaho Code, a renewal fee shall be paid to the director
 36        in an amount fixed by the director not to exceed the amount  specified  in
 37        subparagraph (a) of this subsection for the securities of the issuer.
 38        (e)  When an application for registration of securities is denied or with-
 39        drawn the director shall retain all fees paid by the applicant.
 40        (2)  For  filing  an annual statement the fee shall not exceed ten dollars
 41    ($10.00).
 42        (3)  For registration of a broker-dealer or investment adviser  or  for  a
 43    notice  filing  made pursuant to section 30-1406(4), Idaho Code, the fee shall
 44    not exceed one hundred dollars ($100) for original registration or for an ini-
 45    tial notice filing and one hundred dollars  ($100)  for  each  annual  renewal
 46    thereof.  When an application is denied or withdrawn the director shall retain
 47    the fee.
 48        (4)  For registration of a salesman or investment  adviser  representative
 49    the fee shall not exceed twenty dollars ($20.00) for the original registration
 50    with  each  employer and twenty dollars ($20.00) for each annual renewal. When
 51    an application is denied or an application or notice filing is  withdrawn  the
 52    director shall retain the fee.
 53        (5)  For certified copies of any documents filed with the director the fee
  1    shall be the cost to the department as determined by the director.
  2        (6)  For  each  examination,  exemption,  opinion  letter or notice filing
  3    under section 30-1433A(2) and (3), Idaho Code, the fee shall not exceed  fifty
  4    dollars ($50.00), which fee shall not be refundable.
  5        All  fees,  fines,  examination and miscellaneous charges collected by the
  6    director pursuant to the Idaho securities act  shall  be  deposited  into  the
  7    finance administrative account pursuant to section 67-2702, Idaho Code.

Statement of Purpose / Fiscal Impact

                STATEMENT OF PURPOSE
                    RS 10528

This legislation proposes to amend the Idaho Securities Act 
to delete outdated language or make other non-substantive 
changes. The proposed amendments will delete references to 
the S.E.C.O. examination and Interstate Commerce Commission, 
both of which no longer exist, eliminate the requirement for 
fingerprint cards to be submitted with certain applications, 
exclude certain investment advisers from the Act's bonding 
requirements, and clarify the fee provisions for securities 

                      FISCAL NOTE

No fiscal impact.

Name: Marilyn Chastain, Department of Finance
Phone: 332-8070

Statement of Purpose/Fiscal Note        Bill No. H23