(1) The prohibitions in section 11-53-103 shall not apply to the following:
An account, agreement, or transaction within the exclusive jurisdiction of the commodity futures trading commission as granted under the commodity exchange act;
A commodity contract for the purchase of one or more precious metals which requires, and under which the purchaser receives, within twenty-eight calendar days from the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment; except that, for purposes of this paragraph (b), physical delivery shall be deemed to have occurred if, within such twenty-eight-day period:
(I) Such quantity of precious metals purchased by such payment is delivered (whether in specifically segregated or fungible bulk form) into the possession of a depository (other than the seller) which is either:
A financial institution;
A depository the warehouse receipts of which are recognized for delivery purposesfor any commodity on a contract market designated by the commodity futures trading commission;
A storage facility licensed or regulated by the United States or any agency thereof;or
A depository designated by the commission; and
(II) Such depository (or other person which itself qualifies as a depository as provided in said subparagraph (I)) or a qualified seller issues and the purchaser receives a certificate, document of title, confirmation, or other instrument evidencing that such quantity of precious metals has been delivered to the depository and is being and will continue to be held by the depository on the purchaser's behalf, free and clear of all liens and encumbrances, other than liens of the purchaser, tax liens, liens agreed to by the purchaser, or liens of the depository for fees and expenses, which have previously been disclosed to the purchaser;
A commodity contract solely between persons engaged in producing, processing, using commercially, or handling as merchants, each commodity subject thereto, or any byproduct thereof; or
A commodity contract under which the offeree or the purchaser is a person referredto in section 11-53-104, an insurance company, an investment company as defined in the "Investment Company Act of 1940", or an employee pension and profit sharing or benefit plan (other than a self-employed individual retirement plan or individual retirement account).
(2) For the purposes of paragraph (b) of subsection (1) of this section, a "qualified seller" is a person who:
Is a seller of precious metals and has a tangible net worth of at least five milliondollars (or has an affiliate who has unconditionally guaranteed the obligations and liabilities of the seller, and the affiliate has a tangible net worth of at least five million dollars);
Has stored precious metals with one or more depositories on behalf of customers forat least the previous three years;
Prior to any offer, and annually thereafter, files with the commissioner a sworn noticeof intent to act as a qualified seller under paragraph (b) of subsection (1) of this section, containing:
The seller's name and address, names of its directors, officers, controlling shareholders, partners, principals, and other controlling persons;
The address of its principal place of business, state and date of incorporation ororganization, and the name and address of the seller's registered agent in this state;
A statement that the seller (or a person affiliated with the seller who has unconditionally guaranteed the obligations and liabilities of the seller) has a tangible net worth of at least five million dollars;
The name and address of the depository or depositories that the seller intends touse, and the name and address of each and every depository where the seller has stored precious metals on behalf of customers for the previous three years;
Financial statements for the seller (or the person affiliated with the seller who hasguaranteed the obligations and liabilities of the seller) for the past three years, including balance sheet and income statements which have been audited by an independent certified public accountant, together with the accountant's report;
A statement describing the details of all civil, criminal, or administrative proceedings currently pending or adversely resolved against the seller or its directors, officers, controlling shareholders, partners, principals, or other controlling persons during the past ten years including:
Civil litigation and administrative proceedings involving securities or commoditieslaw violations, or fraud;
Criminal proceedings;
Denials, suspensions, or revocations of securities or commodities licenses or registrations;
Suspensions or expulsions from membership in, or association with, self-regulatoryorganizations registered under the "Securities Exchange Act of 1934" or the commodity exchange act; or
A statement that there were no such proceedings;
Notifies the commissioner within fifteen days of any material changes in the information provided in the notice of intent; and
Annually furnishes to each purchaser for whom the seller is then storing preciousmetals, and to the commissioner, a report by an independent certified public accountant of the accountant's examination of the seller's precious metals storage program.
The commissioner may, upon request by the seller, waive any of the exemption requirements in paragraph (b) of subsection (1) and subsection (2) of this section, conditionally or unconditionally.
The commissioner may, by order, deny, suspend, revoke, or place limitations on thequalified seller exemption under paragraph (b) of subsection (1) and subsection (2) of this section if the commissioner finds that the order is in the public interest and that the seller, the seller's officers, directors, partners, agents, servants, or employees, any person occupying a similar status or performing a similar function to the seller, or any person who directly or indirectly controls or is controlled by the seller, or the seller's affiliates or subsidiaries:
Has filed a notice of intention under subsection (2) of this section with the commissioner or the designee of the commissioner which was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
Has violated or failed to comply with a provision of this article or is the subject of anadjudication or determination within the last five years by an agency, administrator, or court of competent jurisdiction of any other jurisdiction that the person has willfully violated the antifraud provisions of any state or federal securities or commodities law;
Has, within the last ten years, pled guilty or nolo contendere to, or been convicted ofany crime involving fraud or unlawful taking;
Has been permanently or temporarily enjoined by any court of competent jurisdictionfrom engaging in, or continuing, any conduct or practice in violation of the anti-fraud provisions of any state or federal securities or commodities law;
Is the subject of any of the following orders which are in effect and issued within thelast five years:
An order by the administrator of any jurisdiction administering a state commoditylaw or the commodity futures trading commission entered after notice and opportunity for hearing, denying, suspending, or revoking the person's registration as a futures commission merchant, commodity pool operator, commodity trading advisor, introducing broker, leverage transaction merchant, associated person, floor broker, or the substantial equivalent of those terms;
A suspension or expulsion from membership in or association with a self-regulatoryorganization registered under the commodity exchange act;
A United States postal service fraud order; or
An order entered by the commodity futures trading commission denying, suspending, or revoking registration under the commodity exchange act;
(f) Has failed reasonably to supervise its sales representatives or sales employees engaged in the investment commodities business.
The commissioner may designate an administrative law judge, appointed pursuant topart 10 of article 30 of title 24, C.R.S., to conduct hearings pursuant to section 24-4-105, C.R.S.
Any person aggrieved by a final order of the commissioner may obtain review of theorder in the district court of the city and county of Denver pursuant to the provisions of section 24-4-106, C.R.S.
If the commissioner finds that any applicant or qualified seller is no longer in existence or has ceased to do business or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the commissioner may, by order, revoke qualified seller status.
By order or rule and subject to such terms and conditions prescribed therein, thecommissioner may, from time to time, add any persons or transactions not within the exclusive jurisdiction of the commodity futures trading commission as granted by the commodity exchange act, to the persons and transactions exempted from the prohibitions set forth in section 11-53-103, if the commissioner finds that such prohibitions are not necessary in the public interest and for the protection of investors.
Source: L. 89: Entire article R&RE, p. 632, § 1, effective July 1. L. 90: (1)(b)(II) amended, p. 1839, § 13, effective May 31.
Cross references: For the "Investment Company Act of 1940", see Pub.L. 76-768, codified at 15 U.S.C. § 80a-1 et seq.; for the "Securities Exchange Act of 1934", see Pub.L. 73291, codified at 15 U.S.C. § 78a et seq.