As used in this chapter, unless the context otherwise requires:
(1)
(A) “Agent” means an individual, other than a broker-dealer, who:
(i) Represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities; or
(ii) Supervises individuals who effect or attempt to effect purchases or sales of securities for a broker-dealer.
(B) “Agent” does not include an individual who represents:
(i) An issuer in:
(a) Effecting transactions in a security exempted by § 23-42-503(a)(1)-(4) or (a)(8) and any other transactions in a security exempted by other subdivisions or subsections of § 23-42-503 which the Securities Commissioner may by rule or order prescribe;
(b) Effecting transactions exempted by § 23-42-504 unless otherwise required by § 23-42-504;
(c) Effecting transactions in covered securities exempted by:
(1) Section 18(b)(3) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3), concerning sales to qualified purchasers;
(2) Section 18(b)(4)(E) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(4)(E), concerning sales of securities exempt under section 3(a) of the Securities Act of 1933, 15 U.S.C. § 77c(a); or
(3) Rule or order of the commissioner;
(d) Effecting transactions with existing employees, partners, or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state; or
(e) Effecting transactions involving a reorganization or any other individual assisting the issuer or any other constituent party in the process of the reorganization, so long as the individual is not employed for the primary purpose of obtaining or soliciting proxies, consents, or other required means of approval from the security holders of the issuer or any other constituent party to the reorganization and receives no compensation other than his or her regular salary and reimbursement for actual expenses, if any, incurred in good faith in the course of such duties or activities;
(ii) A broker-dealer in effecting a transaction for a customer in this state if:
(a) Such a transaction is effected on behalf of a customer that, for thirty (30) days prior to the day of the transaction, maintained an account with the broker-dealer;
(b) The individual is not ineligible to register with this state for any reason;
(c) The individual is registered with a registered securities association and at least one (1) state;
(d) The broker-dealer with which the individual is associated is registered with this state;
(e)
(1) The transaction is effected by the individual:
(2) For purposes of subdivision (1)(B)(ii)(e)(1)(B) of this section, each of up to three (3) individuals who are designated to effect transactions during the absence or unavailability of the assigned individual for a customer may be treated as such an assigned individual; and
(f) The transaction is effected within the period beginning on the date on which the individual files with the commissioner an application for registration and ending on the earlier of:
(1) Sixty (60) days after the date the application is filed; or
(2) The time at which the commissioner notifies the individual that he or she has denied the application for registration or has stayed the pendency of the application for cause; or
(iii) A person who is a registered broker-dealer in a state other than Arkansas who does not:
(a) Have a place of business in this state; and
(b) Effect securities transactions with more than three (3) persons in this state during any period of twelve (12) consecutive months as described in subdivision (3)(B)(iv) of this section.
(C) A partner, officer, or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if he or she otherwise comes within this definition;
(2)
(A) “Branch office” means any location other than the main office of a broker-dealer or investment adviser where an agent or representative regularly conducts business on behalf of the broker-dealer or investment adviser.
(B) “Branch office” includes a location that is held out as an office where an agent or representative regularly conducts business on behalf of a broker-dealer or investment advisor.
(C) “Branch office” does not include:
(i) A location that is established solely for customer service or back-office-type functions where no sales activities are conducted and that is not held out to the public as a branch office;
(ii) A location that is the primary residence of the agent or representative if:
(a) Only agents or representatives who reside at the location and are members of the same immediate family conduct business at the location;
(b) The location is not held out to the public as an office and the agent or representative does not meet with customers at the location;
(c) Neither customer funds nor securities are handled at the location;
(d) The agent or representative is assigned to a designated branch office and the designated branch office is reflected on all business cards, stationery, advertisements, and other communications to the public by the agent or representative;
(e) The correspondence of the agent or representative and communications with the public are subject to the supervision of the broker-dealer or investment adviser with which the agent or representative is associated;
(f) Electronic communications, including email, are made through the electronic system of the broker-dealer or investment adviser;
(g) All orders for securities are entered through the designated branch office or an electronic system established by a broker-dealer that is reviewable at the branch office;
(h) Written supervisory procedures pertaining to supervision of activities conducted at the residence are maintained by the broker-dealer or investment adviser; and
(i) A list of the residence locations is maintained by the broker-dealer or investment adviser;
(iii)
(a) A location other than a primary residence that:
(1) Is used for a securities or investment advisory business for less than thirty (30) business days in any one (1) calendar year; and
(2) Satisfies the requirements of subdivisions (2)(C)(ii)(b)-(h) of this section.
(b) As used in this subdivision (2)(C)(iii), “business day” does not include a day in which the agent or representative spends at least four (4) hours at the designated branch office of the agent or representative during the hours that the designated branch office is normally open for business;
(iv) An office of convenience that is not held out to the public as an office where associated persons occasionally and exclusively by appointment meet with customers;
(v) A location that is used primarily to engage in nonsecurities activities and from which the agent or representative effects no more than twenty-five (25) securities transactions in any one (1) calendar year, if any advertisement or sales literature identifying the location also provides the address and telephone number of another location from which the agent or representative conducting business at the location is directly supervised;
(vi) The floor of a registered national securities exchange where a broker-dealer conducts a direct access business with public customers; or
(vii) A temporary location established in response to the implementation of a business continuity plan;
(3)
(A) “Broker-dealer” means a person engaged in the business of effecting transactions in securities for the account of others or for his or her own account.
(B) “Broker-dealer” does not include:
(i) An agent;
(ii) An issuer;
(iii) A bank, savings institution, savings and loan association, or trust company;
(iv) A person that has no place of business in this state if:
(a) The person effects transactions in this state exclusively with or through:
(1) The issuers of the securities involved in the transactions;
(2) Other broker-dealers; or
(3) Banks, savings institutions, savings and loan associations, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or
(b) The person:
(1) Is registered under the securities law of the state in which it has a principal place of business;
(2) Is registered or not required to be registered as a broker-dealer under the Securities Exchange Act of 1934; and
(3) Does not effect transactions with more than three (3) persons in this state during any period of twelve (12) consecutive months other than transactions with:
(A) The issuer of a security involved in the transaction;
(B) Another broker-dealer; or
(C) A bank, a savings institution, a savings and loan association, a trust company, an insurance company, an investment company as defined in the Investment Company Act of 1940, a pension or profit-sharing trust, or another financial institution or institutional buyer, whether acting for itself or as a trustee; and
(v) A person that is a resident of Canada and has no office or other physical presence in this state, if the person:
(a) Only effects or attempts to effect transactions in securities:
(1) With or through the issuers of the securities involved in the transactions, broker-dealers, banks, savings institutions, trust companies, insurance companies, qualified purchasers as defined by the United States Securities and Exchange Commission, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees;
(2) With or for a person from Canada that is temporarily present in this state if the person and the person from Canada had a bona fide business-client relationship before the person from Canada entered this state; or
(3) With or for a person from Canada that is present in this state and has transactions that are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor;
(b) Files a notice in the form of the person's current application required by the jurisdiction in which the person's main office is located and a consent to service of process;
(c) Is a member of a self-regulatory organization or stock exchange in Canada;
(d) Maintains the person's provincial or territorial registration and the person's membership in good standing in a self-regulatory organization or stock exchange;
(e) Discloses to the person's clients in this state that the person is not subject to the full regulatory requirements of this chapter; and
(f) Is not in violation of § 23-42-507;
(4) “Commissioner” means the Securities Commissioner;
(5) “Covered security” means any security described as a covered security in section 18(b) of the Securities Act of 1933;
(6) [Repealed.]
(7) “Fraud”, “deceit”, and “defraud” are not limited to common-law deceit;
(8) “Guaranteed” means guaranteed as to payment of principal, interest, or dividends;
(9)
(A) “Investment adviser” means any 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 as to the advisability of investing in, purchasing, or selling securities, or that, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.
(B) “Investment adviser” includes a financial planner or other person that, as an integral component of other financially related services, provides or holds himself, herself, or itself out as providing investment advice to others for compensation and as part of a business.
(C) “Investment adviser” does not include:
(i) A bank, savings and loan association, credit union, or trust company;
(ii) A lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his or her profession;
(iii) A broker-dealer whose performance of these services is solely incidental to the conduct of his or her business as a broker-dealer and who receives no special compensation for them;
(iv) A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service of general, regular, and paid circulation, whether communicated in hard copy form, by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;
(v) A person who has no place of business in this state if:
(a) His or her only clients in this state are other investment advisers, broker-dealers, banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or
(b) During the preceding twelve-month period he or she has had fewer than six (6) clients who are residents of this state, other than those persons specified in subdivision (9)(C)(v)(a) of this section; or
(vi) Any person not within the intent of this subdivision (9) as the commissioner may by rule or order designate;
(10) “Issuer” means every person who issues or proposes to issue any security, except that:
(A) With respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management, or unit type, the term “issuer” means the persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the securities are issued;
(B) In the case of an unincorporated association which provides by its articles for limited liability of any or all of its members, or in the case of a trust, committee, or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity;
(C) With respect to equipment-trust certificates or like securities, the term “issuer” means the person by whom the equipment or property is used or is to be used;
(D) With respect to fractional undivided interests in oil, gas, or other mineral rights, the term “issuer” means the owner of the right or of any whole or fractional interest in the right who creates fractional interests therein for the purpose of the offering; and
(E) For life settlement contracts, “issuer” means:
(i) For a fractional or pooled interest in a life settlement contract, the person that creates for the purpose of sale the fractional or pooled interest; and
(ii) For a life settlement contract that is not fractionalized or pooled, the person effecting the transaction with the investor in the contract, but does not include a broker-dealer or agent of a broker-dealer;
(11) “Main office” means the principal place of business of a broker-dealer or an 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;
(12) “Nonissuer” means not directly or indirectly for the benefit of the issuer;
(13) “Person” means an individual, a corporation, a limited liability company, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government;
(14) “Representative” means any partner, officer, director of an investment adviser, or a person occupying a similar status or performing similar functions, or other individual employed by or associated with an investment adviser, except clerical or ministerial personnel, who for compensation:
(A) Makes any recommendation or otherwise renders advice regarding securities;
(B) Manages accounts or portfolios of clients;
(C) Determines which recommendation or advice regarding securities should be given; or
(D) Supervises employees who perform any of the foregoing;
(15)
(A)
(i) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.
(ii) “Offer” or “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.
(iii) Any security given or delivered with, or given as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
(iv) A purported gift of assessable stock is considered to involve an offer and sale.
(v) Every other sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.
(B) The terms defined in this subdivision (15) do not include:
(i) Any bona fide pledge or loan;
(ii) Any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash or property or in stock;
(iii) Any stock split, reverse stock split, or change in par value which involves the substitution of a security of an issuer for another security of the same issuer; or
(iv) Any act incident to a judicially approved reorganization in which a security is issued in exchange for one (1) or more outstanding securities, claims, or property interests, or partly in such an exchange and partly for cash;
(16) “Securities Act of 1933”, “Securities Exchange Act of 1934”, “Public Utility Holding Company Act of 1935”, “Investment Advisers Act of 1940”, and “Investment Company Act of 1940” mean the federal statutes of those names, as amended;
(17)
(A) “Security” means any:
(i) Note;
(ii) Stock;
(iii) Treasury stock;
(iv) Bond;
(v) Debenture;
(vi) Evidence of indebtedness;
(vii) Certificate of interest or participation in any profit-sharing agreement;
(viii) Collateral-trust certificate;
(ix) Preorganization certificate or subscription;
(x) Transferable share;
(xi) Investment contract;
(xii) Variable annuity contract;
(xiii) Life settlement contract or fractionalized or pooled interest in a life settlement contract;
(xiv) Voting-trust certificate;
(xv) Certificate of deposit for a security;
(xvi) Certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease; or
(xvii) In general, any interest or instrument commonly known as a “security” or any certificate of interest or participation in, temporary or interim certificate for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
(B) Except as set forth in subdivision (17)(A)(xiii) of this section, “security” does not include any insurance or endowment policy or annuity contract or variable annuity contract issued by any insurance company; and
(18) “State” means any state, territory, or possession of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.
(A) To which the customer was assigned for fourteen (14) days prior to the day of the transaction; and
(B) Who is registered with a state in which the customer was a resident or was present for at least thirty (30) consecutive days during the one-year period prior to the transaction. Except that, if the customer is present in this state for thirty (30) or more consecutive days or has permanently changed his or her residence to this state, this subdivision (1)(B)(ii) shall not be applicable unless the individual files with the commissioner an application for registration within ten (10) calendar days of the later of the date of the transaction or the date of the discovery of the presence of the customer in this state for thirty (30) or more consecutive days or the change in the customer's residence.