Bill Text: IL SB1758 | 2019-2020 | 101st General Assembly | Enrolled
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Consumer Installment Loan Act and the Payday Loan Reform Act. Provides that "substantially equal installment" includes a last regularly scheduled payment that is no more than 5% as large as the previous scheduled payment according to a disclosed payment schedule agreed to by the parties. Effective immediately.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2019-08-23 - Public Act . . . . . . . . . 101-0563 [SB1758 Detail]
Download: Illinois-2019-SB1758-Enrolled.html
Bill Title: Amends the Consumer Installment Loan Act and the Payday Loan Reform Act. Provides that "substantially equal installment" includes a last regularly scheduled payment that is no more than 5% as large as the previous scheduled payment according to a disclosed payment schedule agreed to by the parties. Effective immediately.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2019-08-23 - Public Act . . . . . . . . . 101-0563 [SB1758 Detail]
Download: Illinois-2019-SB1758-Enrolled.html
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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Consumer Installment Loan Act is amended by | ||||||
5 | changing Section 15 as follows:
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6 | (205 ILCS 670/15) (from Ch. 17, par. 5415)
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7 | Sec. 15. Charges permitted.
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8 | (a) Every licensee may
lend a principal amount not | ||||||
9 | exceeding $40,000 and, except as to small consumer loans as | ||||||
10 | defined in this Section, may charge,
contract for
and receive | ||||||
11 | thereon interest at an annual percentage rate of no more than | ||||||
12 | 36%, subject to the provisions of this Act; provided, however, | ||||||
13 | that the limitation on the annual percentage rate contained in | ||||||
14 | this subsection (a) does not apply to title-secured loans, | ||||||
15 | which are loans upon which interest is charged at an annual | ||||||
16 | percentage rate exceeding 36%, in which, at commencement, an | ||||||
17 | obligor provides to the licensee, as security for the loan, | ||||||
18 | physical possession of the obligor's title to a motor vehicle, | ||||||
19 | and upon which a licensee may charge, contract for, and receive | ||||||
20 | thereon interest at the rate agreed upon by the licensee and | ||||||
21 | borrower. For purposes of this Section, the annual percentage | ||||||
22 | rate shall be calculated in accordance with the federal Truth | ||||||
23 | in Lending Act.
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1 | (b) For purpose of this Section, the following terms shall | ||||||
2 | have the
meanings ascribed herein.
| ||||||
3 | "Applicable interest" for a precomputed loan contract | ||||||
4 | means the amount of
interest attributable to each monthly | ||||||
5 | installment period. It is computed
as if each installment | ||||||
6 | period were one month and any interest charged for
extending | ||||||
7 | the first installment period beyond one month is ignored. The
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8 | applicable interest for any monthly installment period is, for | ||||||
9 | loans other than small consumer loans as defined in this | ||||||
10 | Section, that portion of
the precomputed interest that bears | ||||||
11 | the same ratio to the total precomputed
interest as the | ||||||
12 | balances scheduled to be outstanding during that month bear
to | ||||||
13 | the sum of all scheduled monthly outstanding balances in the | ||||||
14 | original
contract. With respect to a small consumer loan, the | ||||||
15 | applicable interest for any installment period is that portion | ||||||
16 | of the precomputed monthly installment account handling charge | ||||||
17 | attributable to the installment period calculated based on a | ||||||
18 | method at least as favorable to the consumer as the actuarial | ||||||
19 | method, as defined by the federal Truth in Lending Act.
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20 | "Interest-bearing loan" means a loan in which the debt is
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21 | expressed as a principal amount plus interest charged on actual | ||||||
22 | unpaid
principal balances for the time actually outstanding.
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23 | "Precomputed loan" means a loan in which the debt is | ||||||
24 | expressed as the sum
of the original principal amount plus | ||||||
25 | interest computed actuarially in
advance, assuming all | ||||||
26 | payments will be made when scheduled.
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1 | "Small consumer loan" means a loan upon which interest is | ||||||
2 | charged at an annual percentage rate exceeding 36% and with an | ||||||
3 | amount financed of $4,000 or less. "Small consumer loan" does | ||||||
4 | not include a title-secured loan as defined by subsection (a) | ||||||
5 | of this Section or a payday loan as defined by the Payday Loan | ||||||
6 | Reform Act. | ||||||
7 | "Substantially equal installment" includes a last | ||||||
8 | regularly scheduled payment that may be less than, but not more | ||||||
9 | than 5% larger than, the previous scheduled payment according | ||||||
10 | to a disclosed payment schedule agreed to by the parties. | ||||||
11 | (c) Loans may be interest-bearing or precomputed.
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12 | (d) To compute time for either interest-bearing or | ||||||
13 | precomputed loans for
the calculation of interest and other | ||||||
14 | purposes, a month shall be a calendar
month and a day shall be | ||||||
15 | considered 1/30th of a month when calculation is
made for a | ||||||
16 | fraction of a month. A month shall be 1/12th of a year. A
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17 | calendar month is that period from a given date in one month to | ||||||
18 | the same
numbered date in the following month, and if there is | ||||||
19 | no same numbered
date, to the last day of the following month. | ||||||
20 | When a period of time
includes a month and a fraction of a | ||||||
21 | month, the fraction of the month is
considered to follow the | ||||||
22 | whole month. In the alternative, for
interest-bearing loans, | ||||||
23 | the licensee may charge interest at the rate of
1/365th of the | ||||||
24 | agreed annual rate for each day actually
elapsed.
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25 | (d-5) No licensee or other person may condition an | ||||||
26 | extension of credit to a consumer on the consumer's repayment |
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1 | by preauthorized electronic fund transfers. Payment options, | ||||||
2 | including, but not limited to, electronic fund transfers and | ||||||
3 | Automatic Clearing House (ACH) transactions may be offered to | ||||||
4 | consumers as a choice and method of payment chosen by the | ||||||
5 | consumer. | ||||||
6 | (e) With respect to interest-bearing loans:
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7 | (1) Interest shall be computed on unpaid principal | ||||||
8 | balances outstanding
from time to time, for the time | ||||||
9 | outstanding, until fully paid. Each
payment shall be | ||||||
10 | applied first to the accumulated interest and the
remainder | ||||||
11 | of the payment applied to the unpaid principal balance; | ||||||
12 | provided
however, that if the amount of the payment is | ||||||
13 | insufficient to pay the
accumulated interest, the unpaid | ||||||
14 | interest continues to accumulate to be
paid from the | ||||||
15 | proceeds of subsequent payments and is not added to the | ||||||
16 | principal
balance.
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17 | (2) Interest shall not be payable in advance or | ||||||
18 | compounded. However, if
part or all of the consideration | ||||||
19 | for a new loan contract is the unpaid
principal balance of | ||||||
20 | a prior loan, then the principal amount payable under
the | ||||||
21 | new loan contract may include any unpaid interest which has | ||||||
22 | accrued.
The unpaid principal balance of a precomputed loan | ||||||
23 | is the balance due
after refund or credit of unearned | ||||||
24 | interest as provided in paragraph (f),
clause (3). The | ||||||
25 | resulting loan contract shall be deemed a new and separate
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26 | loan transaction for all purposes.
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1 | (3) Loans must be fully amortizing and be repayable in | ||||||
2 | substantially equal and consecutive weekly, biweekly, | ||||||
3 | semimonthly, or monthly installments. Notwithstanding this | ||||||
4 | requirement, rates may vary according to an
index that is | ||||||
5 | independently verifiable and beyond the control of the | ||||||
6 | licensee.
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7 | (4) The lender or creditor may, if the contract | ||||||
8 | provides, collect a
delinquency or collection charge on | ||||||
9 | each installment in default for a period of
not less than | ||||||
10 | 10 days in an amount not exceeding 5% of the installment on
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11 | installments in excess of $200, or $10 on installments of | ||||||
12 | $200 or less, but
only
one delinquency and collection | ||||||
13 | charge may be collected on any installment
regardless of | ||||||
14 | the period during which it remains in default.
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15 | (f) With respect to precomputed loans:
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16 | (1) Loans shall be repayable in substantially equal and | ||||||
17 | consecutive weekly, biweekly, semimonthly, or
monthly | ||||||
18 | installments of principal and interest combined, except | ||||||
19 | that the
first installment period may be longer than one | ||||||
20 | month by not more than 15
days, and the first installment | ||||||
21 | payment amount may be larger than the
remaining payments by | ||||||
22 | the amount of interest charged for the extra days;
and | ||||||
23 | provided further that monthly installment payment dates | ||||||
24 | may be omitted
to accommodate borrowers with seasonal | ||||||
25 | income.
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26 | (2) Payments may be applied to the combined total of |
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1 | principal and
precomputed interest until the loan is fully | ||||||
2 | paid. Payments shall be
applied in the order in which they | ||||||
3 | become due, except that any insurance
proceeds received as | ||||||
4 | a result of any claim made on any insurance, unless
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5 | sufficient to prepay the contract in full, may be applied | ||||||
6 | to the unpaid
installments of the total of payments in | ||||||
7 | inverse order.
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8 | (3) When any loan contract is paid in full by cash, | ||||||
9 | renewal or
refinancing, or a new loan, one month or more | ||||||
10 | before the final installment
due date, a licensee shall | ||||||
11 | refund or credit the obligor with
the total of
the | ||||||
12 | applicable interest for all fully unexpired installment | ||||||
13 | periods, as
originally scheduled or as deferred, which | ||||||
14 | follow the day of prepayment;
provided, if the prepayment | ||||||
15 | occurs prior to the first installment due date,
the | ||||||
16 | licensee may retain 1/30 of the applicable interest for a | ||||||
17 | first
installment period of one month for each day from the | ||||||
18 | date of the loan to
the date of prepayment, and shall | ||||||
19 | refund or credit the obligor
with the
balance of the total | ||||||
20 | interest contracted for. If the maturity of the loan
is | ||||||
21 | accelerated for any reason and judgment is entered, the | ||||||
22 | licensee shall
credit the borrower with the same refund as | ||||||
23 | if prepayment in full had been
made on the date the | ||||||
24 | judgement is entered.
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25 | (4) The lender or creditor may, if the contract | ||||||
26 | provides, collect a
delinquency or collection charge on |
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1 | each installment in default for a period of
not less than | ||||||
2 | 10 days in an amount not exceeding 5% of the installment on
| ||||||
3 | installments in excess of $200, or $10 on installments of | ||||||
4 | $200 or less, but
only
one delinquency or collection charge | ||||||
5 | may be collected on any installment
regardless of the | ||||||
6 | period during which it remains in default.
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7 | (5) If the parties agree in writing, either in the loan | ||||||
8 | contract or in a
subsequent agreement, to a deferment of | ||||||
9 | wholly unpaid installments, a
licensee may grant a | ||||||
10 | deferment and may collect a deferment charge as
provided in | ||||||
11 | this Section. A deferment postpones the scheduled due date | ||||||
12 | of
the earliest unpaid installment and all subsequent | ||||||
13 | installments as
originally scheduled, or as previously | ||||||
14 | deferred, for a period equal to the
deferment period. The | ||||||
15 | deferment period is that period during which no
installment | ||||||
16 | is scheduled to be paid by reason of the deferment. The
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17 | deferment charge for a one month period may not exceed the | ||||||
18 | applicable
interest for the installment period immediately | ||||||
19 | following the due date of
the last undeferred payment. A | ||||||
20 | proportionate charge may be made for
deferment for periods | ||||||
21 | of more or less than one month. A deferment charge
is | ||||||
22 | earned pro rata during the deferment period and is fully | ||||||
23 | earned on the
last day of the deferment period. Should a | ||||||
24 | loan be prepaid in full during
a deferment period, the | ||||||
25 | licensee shall credit to the obligor a
refund of the | ||||||
26 | unearned deferment charge in addition to any other refund |
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1 | or
credit made for prepayment of the loan in full.
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2 | (6) If two or more installments are delinquent one full | ||||||
3 | month or more on
any due date, and if the contract so | ||||||
4 | provides, the licensee may reduce the
unpaid balance by the | ||||||
5 | refund credit which would be required for prepayment
in | ||||||
6 | full on the due date of the most recent maturing | ||||||
7 | installment in default.
Thereafter, and in lieu of any | ||||||
8 | other default or deferment charges, the
agreed rate of | ||||||
9 | interest or, in the case of small consumer loans, interest | ||||||
10 | at the rate of 18% per annum, may be charged on the unpaid | ||||||
11 | balance until fully paid.
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12 | (7) Fifteen days after the final installment as | ||||||
13 | originally scheduled or
deferred, the licensee, for any | ||||||
14 | loan contract which has not previously been
converted to | ||||||
15 | interest-bearing under paragraph (f), clause (6), may | ||||||
16 | compute
and charge interest on any balance remaining | ||||||
17 | unpaid, including unpaid
default or deferment charges, at | ||||||
18 | the agreed rate of interest or, in the case of small | ||||||
19 | consumer loans, interest at the rate of 18% per annum, | ||||||
20 | until fully
paid. At the time of payment of said final | ||||||
21 | installment, the licensee shall
give notice to the obligor | ||||||
22 | stating any amounts unpaid.
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23 | (Source: P.A. 96-936, eff. 3-21-11 .)
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24 | Section 10. The Illinois Securities Law of 1953 is amended | ||||||
25 | by changing Sections 2.11, 2.12b, 8, and 12 and by adding |
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1 | Section 3.5 as follows:
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2 | (815 ILCS 5/2.11) (from Ch. 121 1/2, par. 137.2-11)
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3 | Sec. 2.11. Investment adviser. "Investment adviser" means | ||||||
4 | any person
who, for compensation, engages in this State in the | ||||||
5 | business of advising
others, either directly or through | ||||||
6 | publications or writings, as to the
value of securities or as | ||||||
7 | to the advisability of investing in, purchasing,
or selling | ||||||
8 | securities or who, in this State for direct or indirect
| ||||||
9 | compensation and as part of a regular advisory business, issues | ||||||
10 | or
promulgates analyses or reports concerning securities or any | ||||||
11 | financial
planner or other person who, as an integral component | ||||||
12 | of other financially
related services, provides the foregoing | ||||||
13 | investment advisory services to
others for compensation and as | ||||||
14 | part of a business , or who holds himself or
herself out as | ||||||
15 | providing the foregoing investment advisory services to
others | ||||||
16 | for compensation; but "investment adviser" does not include:
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17 | (1) a bank or trust company, or the regular employees of a | ||||||
18 | bank or trust
company;
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19 | (2) any lawyer, accountant, engineer, geologist or teacher | ||||||
20 | (i) whose
performance of such services is solely incidental to | ||||||
21 | the practice of his
or her profession or (ii) who:
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22 | (A) does not exercise investment discretion with | ||||||
23 | respect to the
assets of clients or maintain custody of the | ||||||
24 | assets of clients for the
purpose of investing those | ||||||
25 | assets, except when the person is acting as a
bona fide |
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1 | fiduciary in a capacity such as an executor, trustee, | ||||||
2 | personal
representative, estate or trust agent, guardian, | ||||||
3 | conservator, or person
serving in a similar fiduciary | ||||||
4 | capacity;
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5 | (B) does not accept or receive, directly or indirectly, | ||||||
6 | any
commission, fee, or other remuneration contingent upon | ||||||
7 | the purchase or sale
of any specific security by a client | ||||||
8 | of such person; and
| ||||||
9 | (C) does not advise on the purchase or sale of specific | ||||||
10 | securities,
except that this clause (C) shall not apply | ||||||
11 | when the advice about specific
securities is based on | ||||||
12 | financial statement analyses or tax considerations
that | ||||||
13 | are reasonably related to and in connection with the | ||||||
14 | person's profession;
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15 | (3) any registered dealer or partner, officer, director or | ||||||
16 | regular
employee of a registered dealer, or registered | ||||||
17 | salesperson, whose
performance of these services, in each case, | ||||||
18 | is solely incidental to the
conduct of the business of the | ||||||
19 | registered dealer or registered salesperson,
as the case may | ||||||
20 | be, and who receives no special compensation, directly or
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21 | indirectly, for such services;
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22 | (4) any publisher or regular employee of such publisher of | ||||||
23 | a bona fide
newspaper, news magazine or business or financial | ||||||
24 | publication of regular
and established paid circulation;
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25 | (5) any person whose advice, analyses or reports relate | ||||||
26 | only to
securities which are direct obligations of, or |
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1 | obligations guaranteed as to
principal or interest by, the | ||||||
2 | United States, any state
or any political subdivision of any | ||||||
3 | state, or any public agency or
public instrumentality of any | ||||||
4 | one or more of the foregoing;
| ||||||
5 | (5.5) any person who is a federal covered investment | ||||||
6 | adviser; or
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7 | (6) any other persons who are not within the intent of this | ||||||
8 | Section as
the Secretary of State may designate by rules and | ||||||
9 | regulations or order.
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10 | (Source: P.A. 90-70, eff. 7-8-97.)
| ||||||
11 | (815 ILCS 5/2.12b) (from Ch. 121 1/2, par. 137.2-12b)
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12 | Sec. 2.12b. Investment adviser representative. "Investment | ||||||
13 | adviser
representative" means, with respect to an investment | ||||||
14 | adviser who is required
to register under this Act, any | ||||||
15 | partner, officer, director of (or a person
occupying a similar | ||||||
16 | status or performing similar functions), or other
natural | ||||||
17 | person employed by or associated with an investment adviser, | ||||||
18 | except
clerical or ministerial personnel, who in this State:
| ||||||
19 | (1) makes any recommendations or otherwise renders | ||||||
20 | advice regarding
securities or investment products ;
| ||||||
21 | (2) manages accounts or portfolios of clients;
| ||||||
22 | (3) determines what recommendation or advice regarding | ||||||
23 | securities or investments should
be given;
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24 | (4) supervises any employee who performs any of the | ||||||
25 | foregoing; or
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1 | (5) solicits, refers, offers, or negotiates for the | ||||||
2 | sale
of, or sells, investment advisory services.
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3 | With respect to a federal covered investment adviser, | ||||||
4 | "investment adviser
representative" means any person who is an | ||||||
5 | investment adviser representative
with a place of business in | ||||||
6 | this State as such terms are defined by the
Securities and | ||||||
7 | Exchange Commission under Section 203A of the Federal 1940
| ||||||
8 | Investment Advisers Act.
| ||||||
9 | (Source: P.A. 90-70, eff. 7-8-97; 90-667, eff. 7-30-98; 91-809, | ||||||
10 | eff.
1-1-01.)
| ||||||
11 | (815 ILCS 5/3.5 new) | ||||||
12 | Sec. 3.5. Authority of Secretary of State. Notwithstanding | ||||||
13 | any other law, the Secretary of State has the authority to | ||||||
14 | enforce this Act as it pertains to the offer, sale, or | ||||||
15 | investment advice concerning a covered security as defined by | ||||||
16 | Section 2.29.
| ||||||
17 | (815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
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18 | Sec. 8. Registration of dealers, limited Canadian dealers, | ||||||
19 | Internet portals,
salespersons, investment advisers, and | ||||||
20 | investment adviser representatives.
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21 | A. Except as otherwise provided in this subsection A, every | ||||||
22 | dealer,
limited Canadian dealer, salesperson, investment | ||||||
23 | adviser,
and investment adviser representative shall be |
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1 | registered as such with the
Secretary of State. No dealer or | ||||||
2 | salesperson need be registered as such when
offering or selling | ||||||
3 | securities in transactions
exempted by subsection A, B, C, D, | ||||||
4 | E, G, H, I, J, K, M, O, P, Q, R or S of
Section 4 of this Act, | ||||||
5 | provided that such dealer or salesperson is not
regularly | ||||||
6 | engaged in the business of offering or selling securities
in | ||||||
7 | reliance
upon the exemption set forth in subsection G or M of | ||||||
8 | Section 4 of this Act. No
dealer, issuer or controlling person | ||||||
9 | shall employ a salesperson unless such
salesperson is | ||||||
10 | registered as such with the Secretary of State or is employed
| ||||||
11 | for the purpose of offering or selling securities solely in
| ||||||
12 | transactions exempted by subsection A, B, C,
D, E, G, H, I, J, | ||||||
13 | K, L, M, O, P, Q, R or S of Section 4 of this Act;
provided that | ||||||
14 | such salesperson need not be registered when
effecting | ||||||
15 | transactions in this State limited to those transactions | ||||||
16 | described
in Section 15(h)(2) of the Federal 1934 Act or | ||||||
17 | engaging in the
offer or sale of securities in respect of which | ||||||
18 | he or she has beneficial
ownership and is a controlling person. | ||||||
19 | The Secretary of State may, by
rule, regulation or order and | ||||||
20 | subject to such terms, conditions, and
fees as
may be | ||||||
21 | prescribed in such rule, regulation or order, exempt from the
| ||||||
22 | registration requirements of this Section 8 any investment | ||||||
23 | adviser, if the
Secretary of State shall find that such | ||||||
24 | registration is not necessary in
the public interest by reason | ||||||
25 | of the small number of clients or otherwise
limited character | ||||||
26 | of operation of such investment adviser.
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1 | B. An application for registration as a dealer or limited | ||||||
2 | Canadian
dealer, executed, verified, or
authenticated by or on | ||||||
3 | behalf of the applicant,
shall be filed with the Secretary of | ||||||
4 | State, in such form as the Secretary of
State may by rule, | ||||||
5 | regulation or order prescribe, setting forth or accompanied
by:
| ||||||
6 | (1) The name and address of the applicant, the location | ||||||
7 | of its principal
business office and all branch offices, if | ||||||
8 | any, and the
date of its organization;
| ||||||
9 | (2) A statement of any other Federal or state licenses | ||||||
10 | or
registrations
which have been granted the applicant and | ||||||
11 | whether any such licenses or
registrations have ever been | ||||||
12 | refused, cancelled, suspended, revoked or
withdrawn;
| ||||||
13 | (3) The assets and all liabilities, including | ||||||
14 | contingent
liabilities of
the applicant, as of a date not | ||||||
15 | more than 60 days prior to the filing of
the application;
| ||||||
16 | (4) (a) A brief description of any civil or criminal
| ||||||
17 | proceeding of which
fraud is an essential element pending | ||||||
18 | against the applicant and whether the
applicant has ever | ||||||
19 | been convicted of a felony, or of any misdemeanor of
which | ||||||
20 | fraud is an essential element;
| ||||||
21 | (b) A list setting forth the name, residence and | ||||||
22 | business address and
a 10 year occupational statement of | ||||||
23 | each principal of the applicant and a
statement describing | ||||||
24 | briefly any civil or criminal proceedings of which
fraud is | ||||||
25 | an essential element pending against any such principal and |
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| |||||||
1 | the
facts concerning any conviction of any such principal | ||||||
2 | of a felony, or of
any misdemeanor of which fraud is an | ||||||
3 | essential element;
| ||||||
4 | (5) If the applicant is a corporation: a list
of its | ||||||
5 | officers and directors
setting forth the residence and | ||||||
6 | business address of each; a 10-year
occupational statement | ||||||
7 | of each such officer or director; and a
statement | ||||||
8 | describing briefly any civil or criminal proceedings of | ||||||
9 | which
fraud is an essential element pending against each | ||||||
10 | such officer or
director and the facts concerning any | ||||||
11 | conviction of any officer or director
of a felony, or of | ||||||
12 | any misdemeanor of which fraud is an essential element;
| ||||||
13 | (6) If the applicant is a sole proprietorship, a | ||||||
14 | partnership,
limited liability company, an unincorporated | ||||||
15 | association or any similar
form of business organization:
| ||||||
16 | the name, residence and business address of the proprietor | ||||||
17 | or of each
partner, member, officer, director, trustee or | ||||||
18 | manager; the limitations, if
any, of the liability of each | ||||||
19 | such individual; a 10-year occupational
statement of each | ||||||
20 | such individual; a statement describing briefly any civil
| ||||||
21 | or criminal proceedings of which fraud is an essential | ||||||
22 | element pending
against each such individual and the facts | ||||||
23 | concerning any conviction of
any such individual of a | ||||||
24 | felony, or of any misdemeanor of
which fraud is an | ||||||
25 | essential element;
| ||||||
26 | (7) Such additional information as the Secretary of
|
| |||||||
| |||||||
1 | State may by rule or regulation prescribe as necessary to | ||||||
2 | determine the
applicant's financial responsibility, | ||||||
3 | business repute and qualification to
act as a dealer.
| ||||||
4 | (8) (a) No applicant shall be registered or | ||||||
5 | re-registered as a
dealer or limited Canadian dealer
under | ||||||
6 | this Section unless and until each principal of the dealer | ||||||
7 | has
passed an examination conducted by the Secretary of | ||||||
8 | State or a
self-regulatory organization of securities | ||||||
9 | dealers or similar person, which
examination has been | ||||||
10 | designated by the Secretary of State by rule,
regulation or | ||||||
11 | order to be satisfactory for purposes of determining | ||||||
12 | whether
the applicant has sufficient knowledge of the | ||||||
13 | securities business and laws
relating thereto to act as a | ||||||
14 | registered dealer. Any dealer who was
registered on | ||||||
15 | September 30, 1963, and has continued to be so registered;
| ||||||
16 | and any principal of any registered dealer, who was acting | ||||||
17 | in such capacity
on and continuously since September 30, | ||||||
18 | 1963; and any individual who has
previously passed a | ||||||
19 | securities dealer examination administered by the
| ||||||
20 | Secretary of State or any examination designated by the | ||||||
21 | Secretary of State
to be satisfactory for purposes of | ||||||
22 | determining whether the applicant has
sufficient knowledge | ||||||
23 | of the securities business and laws relating thereto
to act | ||||||
24 | as a registered dealer by rule, regulation or order, shall | ||||||
25 | not be
required to pass an examination in order to continue | ||||||
26 | to act in such
capacity. The Secretary of State may by |
| |||||||
| |||||||
1 | order waive the examination
requirement for any principal | ||||||
2 | of an applicant for registration under this
subsection B | ||||||
3 | who has had such experience or education relating to the
| ||||||
4 | securities business as may be determined by the Secretary | ||||||
5 | of State to be
the equivalent of such examination. Any | ||||||
6 | request for such a waiver shall be
filed with the Secretary | ||||||
7 | of State in such form as may be prescribed by rule
or | ||||||
8 | regulation.
| ||||||
9 | (b) Unless an applicant is a member of the body | ||||||
10 | corporate known as the
Securities Investor Protection | ||||||
11 | Corporation established pursuant to the Act
of Congress of | ||||||
12 | the United States known as the Securities Investor
| ||||||
13 | Protection Act of 1970, as amended, a member of an | ||||||
14 | association of
dealers registered as a national securities | ||||||
15 | association pursuant to Section
15A of the Federal 1934 | ||||||
16 | Act,
or a member of a self-regulatory organization or stock | ||||||
17 | exchange in Canada
which the Secretary of State has | ||||||
18 | designated by rule or order,
an applicant shall not be | ||||||
19 | registered or
re-registered unless and until there is filed | ||||||
20 | with the Secretary of State
evidence that such applicant | ||||||
21 | has in effect insurance or other equivalent
protection for | ||||||
22 | each client's cash or securities held by such applicant, | ||||||
23 | and
an undertaking that such applicant will continually | ||||||
24 | maintain such insurance
or other protection during the | ||||||
25 | period of registration or re-registration.
Such insurance | ||||||
26 | or other protection shall be in a form and amount |
| |||||||
| |||||||
1 | reasonably
prescribed by the Secretary of State by rule or | ||||||
2 | regulation.
| ||||||
3 | (9) The application for the registration of a dealer or | ||||||
4 | limited Canadian
dealer shall be
accompanied by a filing | ||||||
5 | fee and a fee for each branch office in this State, in
each | ||||||
6 | case in the amount established pursuant to Section 11a of | ||||||
7 | this
Act, which fees shall not be returnable in any event.
| ||||||
8 | (10) The Secretary of State shall notify the dealer or | ||||||
9 | limited Canadian
dealer by written notice (which may be by | ||||||
10 | electronic or
facsimile transmission) of the effectiveness | ||||||
11 | of the registration as a dealer in
this State.
| ||||||
12 | (11) Any change which renders no longer accurate any
| ||||||
13 | information
contained in any application for registration | ||||||
14 | or re-registration of a
dealer or limited Canadian dealer | ||||||
15 | shall be reported to the Secretary of
State within 10 | ||||||
16 | business days
after the occurrence of such change; but in | ||||||
17 | respect to assets and
liabilities only materially adverse | ||||||
18 | changes need be reported.
| ||||||
19 | C. Any registered dealer, limited Canadian dealer, issuer, | ||||||
20 | or
controlling person desiring to
register a salesperson shall | ||||||
21 | file an application with the Secretary of
State, in such form | ||||||
22 | as the Secretary of State may by rule or regulation
prescribe, | ||||||
23 | which the salesperson is required by this Section to provide
to | ||||||
24 | the dealer, issuer, or controlling person, executed, verified, | ||||||
25 | or
authenticated by the salesperson setting forth or
|
| |||||||
| |||||||
1 | accompanied by:
| ||||||
2 | (1) the name, residence and business address of the | ||||||
3 | salesperson;
| ||||||
4 | (2) whether any federal or State license or | ||||||
5 | registration as dealer,
limited Canadian dealer, or | ||||||
6 | salesperson has ever been refused the salesperson
or | ||||||
7 | cancelled, suspended, revoked, withdrawn, barred, limited, | ||||||
8 | or
otherwise adversely affected in a similar manner or | ||||||
9 | whether the salesperson has
ever been censured or expelled;
| ||||||
10 | (3) the nature of employment with, and names and | ||||||
11 | addresses of, employers
of the salesperson for the 10 years | ||||||
12 | immediately preceding the date of
application;
| ||||||
13 | (4) a brief description of any civil or criminal | ||||||
14 | proceedings of which
fraud is an essential element pending | ||||||
15 | against the salesperson, and whether
the salesperson has | ||||||
16 | ever been convicted of a felony, or of any misdemeanor
of | ||||||
17 | which fraud is an essential element;
| ||||||
18 | (5) such additional information as the Secretary of | ||||||
19 | State may by rule,
regulation or order prescribe as | ||||||
20 | necessary to determine the salesperson's
business repute | ||||||
21 | and qualification to act as a salesperson; and
| ||||||
22 | (6) no individual shall be registered or re-registered | ||||||
23 | as a
salesperson
under this Section unless and until such | ||||||
24 | individual has passed an
examination conducted by the | ||||||
25 | Secretary of State or a self-regulatory
organization of | ||||||
26 | securities dealers or similar person, which examination |
| |||||||
| |||||||
1 | has
been designated by the Secretary of State by rule, | ||||||
2 | regulation or order to be
satisfactory for purposes of | ||||||
3 | determining whether the applicant has
sufficient knowledge | ||||||
4 | of the securities business and laws relating thereto
to act | ||||||
5 | as a registered salesperson.
| ||||||
6 | Any salesperson who was registered prior to September | ||||||
7 | 30, 1963, and has
continued to be so registered, and any | ||||||
8 | individual who has passed a securities
salesperson
| ||||||
9 | examination administered by the Secretary of State or an | ||||||
10 | examination
designated by the Secretary of State by rule, | ||||||
11 | regulation or order to be
satisfactory for purposes of | ||||||
12 | determining whether the applicant has
sufficient knowledge | ||||||
13 | of the securities business and laws relating thereto
to act | ||||||
14 | as a registered salesperson, shall not be required to pass | ||||||
15 | an
examination in order to continue to act as a | ||||||
16 | salesperson. The Secretary of
State may by order waive the | ||||||
17 | examination requirement for any applicant for
registration | ||||||
18 | under this subsection C who has had such experience or
| ||||||
19 | education relating to the securities business as may be | ||||||
20 | determined by the
Secretary of State to be the equivalent | ||||||
21 | of such examination. Any request
for such a waiver shall be | ||||||
22 | filed with the Secretary of State in such form
as may be | ||||||
23 | prescribed by rule, regulation or order.
| ||||||
24 | (7) The application for registration of a salesperson | ||||||
25 | shall be
accompanied
by a filing fee and a Securities Audit | ||||||
26 | and Enforcement Fund fee, each
in the amount established |
| |||||||
| |||||||
1 | pursuant to Section 11a of this Act, which shall
not be | ||||||
2 | returnable in any event.
| ||||||
3 | (8) Any change which renders no longer accurate any
| ||||||
4 | information
contained in any application for registration | ||||||
5 | or re-registration as a
salesperson shall be reported to | ||||||
6 | the Secretary of State within 10 business
days after the | ||||||
7 | occurrence of such change. If the activities are terminated
| ||||||
8 | which rendered an individual a salesperson for the dealer, | ||||||
9 | issuer or
controlling person, the dealer, issuer or | ||||||
10 | controlling person, as the case
may be, shall notify the | ||||||
11 | Secretary of State, in writing, within 30 days of
the | ||||||
12 | salesperson's cessation of activities, using the | ||||||
13 | appropriate termination
notice form.
| ||||||
14 | (9) A registered salesperson may transfer his or her
| ||||||
15 | registration
under this Section 8 for the unexpired term | ||||||
16 | thereof from one registered
dealer or limited Canadian | ||||||
17 | dealer to another by the giving of notice of the
transfer | ||||||
18 | by the new
registered dealer or limited Canadian dealer to | ||||||
19 | the Secretary of State in
such form and subject to
such | ||||||
20 | conditions as the Secretary of State shall by rule or | ||||||
21 | regulation
prescribe. The new registered dealer or limited | ||||||
22 | Canadian dealer shall
promptly file an application
for | ||||||
23 | registration of such salesperson as provided in this | ||||||
24 | subsection C,
accompanied by the filing fee prescribed by | ||||||
25 | paragraph (7) of this
subsection C.
|
| |||||||
| |||||||
1 | C-5. Except with respect to federal covered investment | ||||||
2 | advisers whose only
clients
are investment companies as defined | ||||||
3 | in the Federal 1940 Act, other investment
advisers, federal | ||||||
4 | covered investment advisers, or any similar person which the
| ||||||
5 | Secretary of State may prescribe by rule or order, a federal | ||||||
6 | covered investment
adviser shall file with the Secretary of | ||||||
7 | State, prior to acting as a federal
covered investment adviser | ||||||
8 | in this State, such documents as have been filed
with the | ||||||
9 | Securities and Exchange Commission as the Secretary of State by | ||||||
10 | rule
or order may prescribe. The notification of a federal | ||||||
11 | covered investment
adviser shall be accompanied by a | ||||||
12 | notification filing fee established pursuant
to Section 11a of | ||||||
13 | this Act, which shall not be returnable in any event. Every
| ||||||
14 | person acting as a federal covered investment adviser in this | ||||||
15 | State shall file
a notification filing and pay an annual | ||||||
16 | notification filing fee established
pursuant to Section 11a of | ||||||
17 | this Act, which is not
returnable in any event. The failure to | ||||||
18 | file any such notification shall
constitute a violation of | ||||||
19 | subsection D of Section 12 of this Act, subject to
the | ||||||
20 | penalties enumerated in Section 14 of this Act.
Until October | ||||||
21 | 10, 1999 or other date as may be legally permissible, a
federal | ||||||
22 | covered investment adviser who fails to file the notification | ||||||
23 | or
refuses to pay the fees as required by this subsection shall | ||||||
24 | register as an
investment adviser with the Secretary of State | ||||||
25 | under Section 8 of this
Act.
The civil remedies
provided for in | ||||||
26 | subsection A of Section 13 of this Act and the civil remedies
|
| |||||||
| |||||||
1 | of rescission and appointment of receiver, conservator, | ||||||
2 | ancillary receiver, or
ancillary conservator provided for in | ||||||
3 | subsection F of Section 13 of this Act
shall not be available | ||||||
4 | against any person by reason of the failure to file any
such | ||||||
5 | notification or to pay the notification fee or on account of | ||||||
6 | the contents
of any such notification.
| ||||||
7 | D. An application for registration as an investment | ||||||
8 | adviser,
executed, verified, or authenticated by or on behalf | ||||||
9 | of the applicant, shall be
filed with
the Secretary of State, | ||||||
10 | in such form
as the Secretary of State may by rule or | ||||||
11 | regulation prescribe, setting
forth or accompanied by:
| ||||||
12 | (1) The name and form of organization under which the | ||||||
13 | investment adviser
engages or intends to engage in | ||||||
14 | business; the state or country and date of
its | ||||||
15 | organization; the location
of the adviser's principal | ||||||
16 | business office and branch offices, if any; the
names and | ||||||
17 | addresses of the adviser's principal, partners, officers,
| ||||||
18 | directors, and persons performing similar functions or, if | ||||||
19 | the
investment adviser is an individual, of the individual; | ||||||
20 | and the
number of the adviser's employees who perform | ||||||
21 | investment advisory functions;
| ||||||
22 | (2) The education, the business affiliations for the | ||||||
23 | past 10 years, and
the present business affiliations of the | ||||||
24 | investment adviser and of
the adviser's principal, | ||||||
25 | partners, officers, directors, and persons
performing |
| |||||||
| |||||||
1 | similar functions and of any person controlling the
| ||||||
2 | investment adviser;
| ||||||
3 | (3) The nature of the business of the investment | ||||||
4 | adviser,
including the manner of giving advice and | ||||||
5 | rendering analyses or reports;
| ||||||
6 | (4) The nature and scope of the authority of the | ||||||
7 | investment
adviser with respect to clients' funds and | ||||||
8 | accounts;
| ||||||
9 | (5) The basis or bases upon which the investment | ||||||
10 | adviser is
compensated;
| ||||||
11 | (6) Whether the investment adviser or any principal,
| ||||||
12 | partner, officer, director, person performing similar | ||||||
13 | functions or person
controlling the investment adviser (i) | ||||||
14 | within 10 years of the
filing of the application has been | ||||||
15 | convicted of a felony, or of
any misdemeanor of which fraud | ||||||
16 | is an essential element, or (ii) is
permanently or | ||||||
17 | temporarily enjoined by order or judgment from acting as an
| ||||||
18 | investment adviser, underwriter, dealer, principal or | ||||||
19 | salesperson, or
from engaging in or continuing any conduct | ||||||
20 | or practice in connection with
any such activity or in | ||||||
21 | connection with the purchase or sale of any
security, and | ||||||
22 | in each case the facts relating to the conviction,
order or | ||||||
23 | judgment;
| ||||||
24 | (7) (a) A statement as to whether the investment | ||||||
25 | adviser is
engaged or is to engage primarily in the | ||||||
26 | business of rendering investment
supervisory services; and
|
| |||||||
| |||||||
1 | (b) A statement that the investment adviser will | ||||||
2 | furnish his,
her, or its clients with such information as | ||||||
3 | the Secretary of State
deems necessary in the form | ||||||
4 | prescribed by the
Secretary of State by rule or regulation;
| ||||||
5 | (8) Such additional information as the Secretary of | ||||||
6 | State may, by rule,
regulation or order prescribe as | ||||||
7 | necessary to determine the applicant's
financial | ||||||
8 | responsibility, business repute and qualification to act | ||||||
9 | as an
investment adviser.
| ||||||
10 | (9) No applicant shall be registered or re-registered | ||||||
11 | as an investment
adviser under this Section unless and | ||||||
12 | until each principal of the applicant
who is actively | ||||||
13 | engaged in the conduct and management of the applicant's
| ||||||
14 | advisory business in this State has passed an examination | ||||||
15 | or completed an
educational program conducted by the | ||||||
16 | Secretary of State or an association
of investment advisers | ||||||
17 | or similar person, which examination or educational
| ||||||
18 | program has been designated by the Secretary of State by | ||||||
19 | rule, regulation
or order to be satisfactory for purposes | ||||||
20 | of determining whether the
applicant has sufficient | ||||||
21 | knowledge of the securities business and laws
relating | ||||||
22 | thereto to conduct the business of a registered investment | ||||||
23 | adviser.
| ||||||
24 | Any person who was a registered investment adviser | ||||||
25 | prior to September 30,
1963, and has continued to be so | ||||||
26 | registered, and any individual who has
passed an investment |
| |||||||
| |||||||
1 | adviser examination administered by the Secretary of
| ||||||
2 | State, or passed an examination or completed an educational | ||||||
3 | program
designated by the Secretary of State by rule, | ||||||
4 | regulation or order to be
satisfactory for purposes of | ||||||
5 | determining whether the applicant has
sufficient knowledge | ||||||
6 | of the securities business and laws relating thereto
to | ||||||
7 | conduct the business of a registered investment adviser, | ||||||
8 | shall not be
required to pass an examination or complete an | ||||||
9 | educational program in
order to continue to act as an | ||||||
10 | investment adviser. The Secretary of State
may by order | ||||||
11 | waive the examination or educational program requirement | ||||||
12 | for any
applicant for registration under this subsection D | ||||||
13 | if the principal
of the applicant who is actively engaged | ||||||
14 | in the conduct and management of the
applicant's advisory | ||||||
15 | business in this State has had such experience
or education | ||||||
16 | relating to the securities business as may be determined by | ||||||
17 | the
Secretary of State to be the equivalent of the | ||||||
18 | examination or
educational program. Any request for a | ||||||
19 | waiver shall be filed
with the Secretary of State in such | ||||||
20 | form as may be prescribed by
rule or regulation.
| ||||||
21 | (10) No applicant shall be registered or re-registered | ||||||
22 | as an
investment adviser under this Section 8 unless the | ||||||
23 | application for
registration or re-registration is | ||||||
24 | accompanied by an application for
registration or | ||||||
25 | re-registration for each person
acting as an investment | ||||||
26 | adviser representative on
behalf of the adviser and
a |
| |||||||
| |||||||
1 | Securities Audit and Enforcement Fund fee that shall not be | ||||||
2 | returnable in any
event is paid with respect to each | ||||||
3 | investment adviser representative.
| ||||||
4 | (11) The application for registration of an investment | ||||||
5 | adviser shall be
accompanied by a filing fee and a fee for | ||||||
6 | each branch office in this State, in
each case in the | ||||||
7 | amount established pursuant to Section 11a of this
Act, | ||||||
8 | which fees shall not be returnable in any event.
| ||||||
9 | (12) The Secretary of State shall notify the investment | ||||||
10 | adviser by written
notice (which may be by electronic or | ||||||
11 | facsimile transmission)
of
the effectiveness of the | ||||||
12 | registration as an investment adviser in this State.
| ||||||
13 | (13) Any change which renders no longer accurate any | ||||||
14 | information contained
in any application for registration | ||||||
15 | or re-registration of an investment adviser
shall be | ||||||
16 | reported to the Secretary of State within 10 business days | ||||||
17 | after the
occurrence of the change. In respect to assets | ||||||
18 | and liabilities of
an investment adviser that retains | ||||||
19 | custody of clients' cash or
securities or accepts | ||||||
20 | pre-payment of fees in excess of $500 per client and
6 or | ||||||
21 | more months in advance only materially adverse changes need | ||||||
22 | be reported by
written notice (which may be by electronic | ||||||
23 | or facsimile
transmission) no later
than the close of | ||||||
24 | business on the second business day following the discovery
| ||||||
25 | thereof.
| ||||||
26 | (14) Each application for registration as an |
| |||||||
| |||||||
1 | investment adviser shall
become effective automatically on | ||||||
2 | the 45th day following the filing of the
application, | ||||||
3 | required documents or information, and payment of the | ||||||
4 | required
fee unless (i) the Secretary of State has | ||||||
5 | registered the investment adviser
prior to that date or | ||||||
6 | (ii) an action with respect to the applicant is
pending | ||||||
7 | under Section 11 of this Act.
| ||||||
8 | D-5. A registered investment adviser or federal covered | ||||||
9 | investment adviser
desiring to register an investment adviser | ||||||
10 | representative shall file an
application with the Secretary of | ||||||
11 | State, in the form as the Secretary of State
may by rule or | ||||||
12 | order prescribe, which the investment adviser representative | ||||||
13 | is
required by this Section to provide to the investment | ||||||
14 | adviser, executed,
verified, or authenticated by the | ||||||
15 | investment adviser representative and setting
forth or | ||||||
16 | accompanied by:
| ||||||
17 | (1) The name, residence, and business address of the | ||||||
18 | investment
adviser representative;
| ||||||
19 | (2) A statement whether any federal or state license or | ||||||
20 | registration as a
dealer, salesperson, investment adviser, | ||||||
21 | or investment adviser representative
has ever been | ||||||
22 | refused, canceled, suspended, revoked or withdrawn;
| ||||||
23 | (3) The nature of employment with, and names and | ||||||
24 | addresses of,
employers of the investment adviser | ||||||
25 | representative for the 10 years immediately
preceding the |
| |||||||
| |||||||
1 | date of application;
| ||||||
2 | (4) A brief description of any civil or criminal | ||||||
3 | proceedings, of which
fraud is an essential element, | ||||||
4 | pending against the investment adviser
representative and | ||||||
5 | whether the investment adviser representative has ever | ||||||
6 | been
convicted of a felony or of any misdemeanor of which | ||||||
7 | fraud is an essential
element;
| ||||||
8 | (5) Such additional information as the Secretary of | ||||||
9 | State may by rule or
order prescribe as necessary to | ||||||
10 | determine the investment adviser
representative's business | ||||||
11 | repute or qualification to act as an investment
adviser | ||||||
12 | representative;
| ||||||
13 | (6) Documentation that the individual has passed an | ||||||
14 | examination conducted
by the Secretary of State, an | ||||||
15 | organization of investment advisers, or similar
person, | ||||||
16 | which examination has been designated by the Secretary of | ||||||
17 | State by rule
or order to be satisfactory for purposes of | ||||||
18 | determining whether the
applicant has sufficient knowledge | ||||||
19 | of the investment advisory or securities
business and laws | ||||||
20 | relating to that business to act as a registered investment
| ||||||
21 | adviser representative; and
| ||||||
22 | (7) A Securities Audit and Enforcement Fund fee | ||||||
23 | established under
Section 11a of this Act, which shall not | ||||||
24 | be returnable in any event.
| ||||||
25 | The Secretary of State may by order waive the examination | ||||||
26 | requirement for an
applicant for registration under this |
| |||||||
| |||||||
1 | subsection D-5 who has had the experience
or education relating | ||||||
2 | to the investment advisory or securities business as may
be | ||||||
3 | determined by the Secretary of State to be the equivalent of | ||||||
4 | the
examination. A request for a waiver shall be filed with the | ||||||
5 | Secretary of State
in the form as may be prescribed by rule or | ||||||
6 | order.
| ||||||
7 | A change that renders no longer accurate any information | ||||||
8 | contained in any
application for registration or | ||||||
9 | re-registration as an investment adviser
representative must | ||||||
10 | be reported to the Secretary of State within 10 business
days | ||||||
11 | after the occurrence of the change. If the activities that | ||||||
12 | rendered an
individual an investment adviser representative | ||||||
13 | for the investment adviser are
terminated, the investment | ||||||
14 | adviser shall notify the Secretary of State in
writing (which | ||||||
15 | may be by electronic or facsimile transmission), within 30 days
| ||||||
16 | of the investment adviser representative's termination, using | ||||||
17 | the
appropriate termination notice form as the Secretary of | ||||||
18 | State may prescribe by
rule or order.
| ||||||
19 | A registered investment adviser representative may | ||||||
20 | transfer his or her
registration under this Section 8 for the | ||||||
21 | unexpired term of the registration
from one registered | ||||||
22 | investment adviser to another by the giving of notice of
the | ||||||
23 | transfer by the new investment adviser to the Secretary of | ||||||
24 | State in the
form and subject to the conditions as the | ||||||
25 | Secretary of State shall prescribe.
The new registered | ||||||
26 | investment adviser shall promptly file an application for
|
| |||||||
| |||||||
1 | registration of the investment adviser representative as | ||||||
2 | provided in this
subsection, accompanied by the Securities | ||||||
3 | Audit and Enforcement Fund fee
prescribed by paragraph (7) of | ||||||
4 | this
subsection D-5.
| ||||||
5 | E. (1) Subject to the provisions of subsection F of Section | ||||||
6 | 11 of
this Act, the registration of a dealer, limited Canadian | ||||||
7 | dealer,
salesperson, investment adviser, or investment adviser
| ||||||
8 | representative may be denied, suspended or revoked if the | ||||||
9 | Secretary of State
finds that the dealer, limited Canadian | ||||||
10 | dealer, Internet portal, salesperson,
investment adviser, or | ||||||
11 | investment adviser representative or any
principal officer, | ||||||
12 | director, partner, member, trustee, manager or any
person who | ||||||
13 | performs a similar function of the dealer, limited Canadian
| ||||||
14 | dealer, Internet portal, or investment adviser:
| ||||||
15 | (a) has been convicted of any felony
during the 10 year | ||||||
16 | period preceding the date of filing of any application for
| ||||||
17 | registration or at any time thereafter, or of any | ||||||
18 | misdemeanor of
which fraud is an essential element;
| ||||||
19 | (b) has engaged in any unethical practice in connection | ||||||
20 | with any
security, or in any fraudulent business practice;
| ||||||
21 | (c) has failed to account for any money or property, or | ||||||
22 | has failed to
deliver any security, to any person entitled | ||||||
23 | thereto when due or within
a reasonable time thereafter;
| ||||||
24 | (d) in the case of a dealer, limited Canadian dealer, | ||||||
25 | or investment
adviser, is insolvent;
|
| |||||||
| |||||||
1 | (e) in the case of a dealer, limited Canadian dealer,
| ||||||
2 | salesperson, or registered principal of a dealer or
limited | ||||||
3 | Canadian dealer
(i) has
failed
reasonably to supervise the
| ||||||
4 | securities activities of any of its salespersons or other | ||||||
5 | employees and the
failure
has permitted or facilitated a | ||||||
6 | violation of Section 12 of this Act or (ii) is
offering or | ||||||
7 | selling or has offered or sold securities in this
State | ||||||
8 | through a salesperson other than a registered salesperson, | ||||||
9 | or, in
the case of a salesperson, is selling or has sold | ||||||
10 | securities in this State
for a dealer, limited Canadian | ||||||
11 | dealer, issuer or controlling person with
knowledge that | ||||||
12 | the
dealer, limited Canadian dealer, issuer or controlling | ||||||
13 | person has not
complied with the provisions of
this Act
or | ||||||
14 | (iii) has failed reasonably to supervise the
| ||||||
15 | implementation of compliance measures following notice by
| ||||||
16 | the Secretary of State of noncompliance with the Act or
| ||||||
17 | with the regulations promulgated thereunder or both or (iv) | ||||||
18 | has failed to
maintain and enforce written procedures to | ||||||
19 | supervise the types of
business in which it engages and to | ||||||
20 | supervise the activities of its
salespersons that are | ||||||
21 | reasonably designed to achieve compliance with applicable
| ||||||
22 | securities laws and regulations;
| ||||||
23 | (f) in the case of an investment adviser, has failed | ||||||
24 | reasonably to
supervise the advisory activities of any of | ||||||
25 | its investment adviser
representatives or employees and | ||||||
26 | the
failure has permitted or facilitated a violation of |
| |||||||
| |||||||
1 | Section 12 of this Act;
| ||||||
2 | (g) has violated any of the provisions of this Act;
| ||||||
3 | (h) has made any material misrepresentation to the | ||||||
4 | Secretary of State
in connection with any information | ||||||
5 | deemed necessary by the Secretary of
State to determine a | ||||||
6 | dealer's, limited Canadian dealer's, or investment
| ||||||
7 | adviser's financial responsibility
or a dealer's, limited | ||||||
8 | Canadian dealer's, investment adviser's,
salesperson's, or | ||||||
9 | investment
adviser representative's business repute or
| ||||||
10 | qualifications, or has refused to furnish any such | ||||||
11 | information
requested by the Secretary of State;
| ||||||
12 | (i) has had a license or registration under any Federal | ||||||
13 | or State law
regulating securities, commodity futures
| ||||||
14 | contracts,
or stock futures contracts refused, cancelled, | ||||||
15 | suspended, withdrawn,
revoked, or otherwise
adversely | ||||||
16 | affected in a similar manner;
| ||||||
17 | (j) has had membership
in or
association with any | ||||||
18 | self-regulatory
organization registered under the Federal | ||||||
19 | 1934 Act or the Federal 1974 Act
suspended, revoked, | ||||||
20 | refused, expelled, cancelled, barred, limited in any
| ||||||
21 | capacity, or
otherwise adversely affected in a similar | ||||||
22 | manner
arising from any fraudulent or deceptive act or a | ||||||
23 | practice in violation of
any rule, regulation or standard | ||||||
24 | duly promulgated by the self-regulatory
organization;
| ||||||
25 | (k) has had any order entered against it after notice | ||||||
26 | and opportunity
for hearing by a securities agency of any |
| |||||||
| |||||||
1 | state, any foreign government
or agency thereof, the | ||||||
2 | Securities and Exchange Commission, or the Federal
| ||||||
3 | Commodities Futures Trading Commission arising from any | ||||||
4 | fraudulent or
deceptive act or a practice in violation of | ||||||
5 | any statute, rule or regulation
administered or | ||||||
6 | promulgated by the agency or commission;
| ||||||
7 | (l) in the case of a dealer or limited Canadian dealer, | ||||||
8 | fails to
maintain a minimum net capital
in an amount which | ||||||
9 | the Secretary of State may by rule or regulation require;
| ||||||
10 | (m) has conducted a continuing course of dealing of | ||||||
11 | such
nature as to demonstrate an inability to properly | ||||||
12 | conduct the business of
the dealer, limited Canadian | ||||||
13 | dealer, salesperson, investment
adviser,
or investment | ||||||
14 | adviser representative;
| ||||||
15 | (n) has had, after notice and opportunity for hearing, | ||||||
16 | any injunction or
order entered against it or license or | ||||||
17 | registration refused, cancelled,
suspended, revoked, | ||||||
18 | withdrawn, limited, or otherwise adversely
affected in a | ||||||
19 | similar manner by any state or federal body,
agency or | ||||||
20 | commission regulating banking, insurance, finance or small | ||||||
21 | loan
companies, real estate or mortgage brokers or | ||||||
22 | companies, if the
action resulted from any act found by the | ||||||
23 | body, agency or
commission to be a fraudulent or deceptive | ||||||
24 | act or practice in violation of
any statute, rule or | ||||||
25 | regulation administered or
promulgated by the body, agency | ||||||
26 | or commission;
|
| |||||||
| |||||||
1 | (o) has failed to file a return, or to pay the tax, | ||||||
2 | penalty or interest
shown in a filed return, or to pay any | ||||||
3 | final assessment of tax, penalty or
interest, as required | ||||||
4 | by any tax Act administered by the Illinois
Department of | ||||||
5 | Revenue, until such time as the requirements of
that tax | ||||||
6 | Act are satisfied;
| ||||||
7 | (p) (blank);
| ||||||
8 | (q) has failed to maintain the books and records | ||||||
9 | required under this Act
or rules or regulations promulgated | ||||||
10 | under this Act or under any requirements
established by the | ||||||
11 | Securities and Exchange Commission or a self-regulatory
| ||||||
12 | organization;
| ||||||
13 | (r) has refused to allow or otherwise impeded designees | ||||||
14 | of the Secretary
of
State from conducting an audit, | ||||||
15 | examination, inspection, or investigation
provided for | ||||||
16 | under Section 8 or 11 of this Act;
| ||||||
17 | (s) has failed to maintain any minimum net capital or | ||||||
18 | bond requirement set
forth in this Act or any rule or | ||||||
19 | regulation promulgated under this Act;
| ||||||
20 | (t) has refused the Secretary of State or his or her | ||||||
21 | designee access to
any office or location within an office | ||||||
22 | to conduct an investigation, audit,
examination, or | ||||||
23 | inspection;
| ||||||
24 | (u) has advised or caused a public pension fund or | ||||||
25 | retirement system
established under the Illinois Pension | ||||||
26 | Code to make an investment or engage in
a transaction not |
| |||||||
| |||||||
1 | authorized by that Code;
| ||||||
2 | (v) if a corporation, limited liability company, or | ||||||
3 | limited liability
partnership has been suspended, | ||||||
4 | canceled, revoked, or has failed to register as
a foreign
| ||||||
5 | corporation, limited liability company, or limited | ||||||
6 | liability partnership
with the Secretary
of State;
| ||||||
7 | (w) is permanently or temporarily enjoined by any court | ||||||
8 | of competent
jurisdiction, including any state, federal, | ||||||
9 | or foreign government, from
engaging
in or continuing any | ||||||
10 | conduct or practice involving any aspect of the securities
| ||||||
11 | or commodities business or in any other business where the | ||||||
12 | conduct or practice
enjoined involved investments, | ||||||
13 | franchises, insurance, banking, or finance;
| ||||||
14 | (2) If the Secretary of State finds that any registrant or | ||||||
15 | applicant for
registration is no longer in existence or has | ||||||
16 | ceased to do business as a
dealer, limited Canadian dealer, | ||||||
17 | Internet portal, salesperson, investment
adviser, or | ||||||
18 | investment adviser representative, or is subject to an
| ||||||
19 | adjudication
as a person under legal disability or to the | ||||||
20 | control of a
guardian, or cannot be located after reasonable | ||||||
21 | search, or has failed
after written notice to pay to the | ||||||
22 | Secretary of State any additional fee
prescribed by this | ||||||
23 | Section or specified by rule or regulation, the Secretary of | ||||||
24 | State may by order cancel the
registration or application.
| ||||||
25 | (3) Withdrawal of an application for registration or | ||||||
26 | withdrawal from
registration as a dealer, limited Canadian |
| |||||||
| |||||||
1 | dealer, salesperson,
investment adviser, or investment adviser | ||||||
2 | representative becomes effective
30 days after receipt of an | ||||||
3 | application to withdraw or within such
shorter period of time | ||||||
4 | as the Secretary of State may determine, unless any
proceeding | ||||||
5 | is pending under Section 11 of this Act when the application is
| ||||||
6 | filed or a proceeding is instituted within 30 days after the | ||||||
7 | application is
filed. If a proceeding is pending or instituted, | ||||||
8 | withdrawal becomes effective
at such time and upon such | ||||||
9 | conditions as the Secretary
of State by order determines. If no | ||||||
10 | proceeding is pending or instituted and
withdrawal | ||||||
11 | automatically becomes effective, the Secretary of State may
| ||||||
12 | nevertheless institute a revocation or suspension proceeding | ||||||
13 | within 2
years after withdrawal became effective and enter a | ||||||
14 | revocation or suspension
order as of the last date on which | ||||||
15 | registration was effective.
| ||||||
16 | F. The Secretary of State shall make available upon request | ||||||
17 | the date
that each dealer, investment adviser, salesperson, or | ||||||
18 | investment
adviser representative was granted
registration, | ||||||
19 | together with the name and address of the dealer, limited
| ||||||
20 | Canadian dealer, or issuer on
whose behalf the salesperson is | ||||||
21 | registered, and all
orders of the Secretary of State denying or | ||||||
22 | abandoning an application, or
suspending or revoking | ||||||
23 | registration, or censuring the persons.
The Secretary of State | ||||||
24 | may designate by rule, regulation or order the
statements, | ||||||
25 | information or reports submitted to or filed with him or
her |
| |||||||
| |||||||
1 | pursuant to this Section 8 which the Secretary of State | ||||||
2 | determines are
of a sensitive nature and therefore should be | ||||||
3 | exempt from public
disclosure. Any such statement, information | ||||||
4 | or report shall be
deemed confidential and shall not be | ||||||
5 | disclosed to the public except upon the
consent of the person | ||||||
6 | filing or submitting the statement,
information or report or by | ||||||
7 | order of court or in court proceedings.
| ||||||
8 | G. The registration or re-registration of a dealer or | ||||||
9 | limited Canadian
dealer and of all salespersons
registered upon | ||||||
10 | application of the dealer or limited Canadian dealer shall
| ||||||
11 | expire on the next
succeeding anniversary date of the | ||||||
12 | registration or re-registration of the
dealer; and the | ||||||
13 | registration or re-registration of an investment
adviser and of | ||||||
14 | all investment adviser representatives registered upon
| ||||||
15 | application of the investment adviser shall expire on the next | ||||||
16 | succeeding
anniversary date of the
registration of the | ||||||
17 | investment adviser; provided, that the
Secretary of State may | ||||||
18 | by rule or regulation prescribe an alternate date which
any | ||||||
19 | dealer registered under the Federal 1934 Act or a member of any
| ||||||
20 | self-regulatory association approved pursuant thereto, a | ||||||
21 | member of a
self-regulatory organization or stock exchange in | ||||||
22 | Canada, or any investment
adviser may elect
as
the expiration | ||||||
23 | date of its dealer or limited Canadian dealer and
salesperson | ||||||
24 | registrations, or the expiration date of its investment adviser
| ||||||
25 | registration, as the case may be. A
registration of a |
| |||||||
| |||||||
1 | salesperson registered upon application of an issuer or
| ||||||
2 | controlling person shall expire on the next succeeding | ||||||
3 | anniversary date of
the registration, or upon termination or | ||||||
4 | expiration of the
registration of the securities, if any, | ||||||
5 | designated in the application for his
or her registration or | ||||||
6 | the alternative date as the Secretary may prescribe by
rule or | ||||||
7 | regulation. Subject to paragraph (9) of subsection C of this | ||||||
8 | Section
8, a salesperson's registration also shall terminate | ||||||
9 | upon cessation of his or
her employment, or termination of his | ||||||
10 | or her appointment or authorization, in
each case by the person | ||||||
11 | who applied for the salesperson's registration,
provided that | ||||||
12 | the Secretary of State may by rule or regulation prescribe an
| ||||||
13 | alternate date for the expiration of the registration.
| ||||||
14 | H. Applications for re-registration of dealers, limited | ||||||
15 | Canadian
dealers, Internet portals, salespersons, investment | ||||||
16 | advisers, and investment
adviser representatives shall be | ||||||
17 | filed with the Secretary of State prior
to the expiration of | ||||||
18 | the then current registration and
shall
contain such | ||||||
19 | information as may be required by the Secretary of
State upon | ||||||
20 | initial application with such omission therefrom or
addition | ||||||
21 | thereto as the Secretary of State may authorize or prescribe. | ||||||
22 | Each
application for re-registration of a dealer, limited | ||||||
23 | Canadian dealer, Internet portal, or
investment adviser
shall | ||||||
24 | be accompanied by a filing fee, each application for
| ||||||
25 | re-registration as a salesperson shall be accompanied by a |
| |||||||
| |||||||
1 | filing fee and a
Securities Audit and Enforcement Fund fee | ||||||
2 | established pursuant to Section
11a of this Act, and
each | ||||||
3 | application for re-registration as an investment adviser | ||||||
4 | representative
shall be accompanied by a Securities Audit and | ||||||
5 | Enforcement Fund fee
established under Section 11a of this Act,
| ||||||
6 | which shall not be returnable in any event. Notwithstanding
the | ||||||
7 | foregoing, applications for
re-registration of dealers, | ||||||
8 | limited Canadian dealers, Internet portals, and investment
| ||||||
9 | advisers may be filed within 30 days
following the expiration | ||||||
10 | of the registration provided that the applicant pays
the annual | ||||||
11 | registration fee together with an additional amount equal to
| ||||||
12 | the annual registration fee and files any other information or | ||||||
13 | documents that
the Secretary of State may prescribe by rule
or | ||||||
14 | regulation or order. Any application filed within 30 days | ||||||
15 | following the
expiration of the registration shall be | ||||||
16 | automatically effective as of the
time of the earlier | ||||||
17 | expiration provided that the proper fee has been paid
to the | ||||||
18 | Secretary of State.
| ||||||
19 | Each registered dealer, limited Canadian dealer, Internet | ||||||
20 | portal, or investment adviser
shall continue to be
registered | ||||||
21 | if the registrant changes his, her, or its form of organization
| ||||||
22 | provided that the dealer or investment adviser files an | ||||||
23 | amendment to his,
her, or its application not later than 30 | ||||||
24 | days following the occurrence of the
change and pays the | ||||||
25 | Secretary of State a fee in the amount established under
| ||||||
26 | Section 11a of this Act.
|
| |||||||
| |||||||
1 | I. (1) (a) Every registered dealer, limited Canadian | ||||||
2 | dealer, Internet portal, and investment
adviser shall make and | ||||||
3 | keep
for such periods, such accounts, correspondence,
| ||||||
4 | memoranda, papers, books and records as the Secretary of State | ||||||
5 | may by rule or
regulation prescribe. All records so required | ||||||
6 | shall be preserved for 3 years
unless the Secretary of State by | ||||||
7 | rule, regulation or order prescribes otherwise
for particular | ||||||
8 | types of records.
| ||||||
9 | (b) Every registered dealer, limited Canadian dealer, | ||||||
10 | Internet portal, and investment adviser shall provide to the | ||||||
11 | Secretary of State, upon request, such accounts, | ||||||
12 | correspondence, memoranda, papers, books, and records as the | ||||||
13 | Secretary of State may by rule or regulation prescribe, that it | ||||||
14 | possesses and that it preserves for periods of longer than 3 | ||||||
15 | years. | ||||||
16 | (2) Every registered dealer, limited Canadian dealer, | ||||||
17 | Internet portal, and investment
adviser shall file such | ||||||
18 | financial reports as the Secretary of State may by rule
or | ||||||
19 | regulation
prescribe.
| ||||||
20 | (3) All the books and records referred to in paragraph (1) | ||||||
21 | of this
subsection I are subject at any time or from time to | ||||||
22 | time to such
reasonable periodic, special or other audits, | ||||||
23 | examinations, or inspections by
representatives of the | ||||||
24 | Secretary of State, within or without this State, as the
| ||||||
25 | Secretary of State deems necessary or appropriate in the public |
| |||||||
| |||||||
1 | interest or for
the protection of investors.
| ||||||
2 | (4) At the time of an audit, examination, or inspection, | ||||||
3 | the Secretary of
State, by his or her designees, may
conduct an | ||||||
4 | interview of any person employed or appointed by or
affiliated | ||||||
5 | with a registered dealer, limited Canadian dealer, Internet | ||||||
6 | portal, or investment
advisor, provided that the
dealer, | ||||||
7 | limited Canadian dealer, Internet portal, or investment | ||||||
8 | advisor shall be given
reasonable
notice of the time and place | ||||||
9 | for the interview. At the option of the dealer,
limited | ||||||
10 | Canadian dealer, Internet portal, or
investment advisor, a | ||||||
11 | representative of the dealer or investment advisor with
| ||||||
12 | supervisory responsibility over the individual being | ||||||
13 | interviewed may be present
at the interview.
| ||||||
14 | J. The Secretary of State may require by rule or regulation | ||||||
15 | the
payment of an additional fee for the filing of information | ||||||
16 | or documents
required to be filed by this Section which have | ||||||
17 | not been filed in a timely
manner. The Secretary of State may | ||||||
18 | also require by rule or regulation the
payment of an | ||||||
19 | examination fee for administering any examination which it
may | ||||||
20 | conduct pursuant to subsection B, C, D, or D-5 of this
Section | ||||||
21 | 8.
| ||||||
22 | K. The Secretary of State may declare any application for
| ||||||
23 | registration or limited registration
under this Section 8 | ||||||
24 | abandoned by order if the applicant fails to pay any
fee or |
| |||||||
| |||||||
1 | file any information or document required under this Section 8 | ||||||
2 | or by
rule or regulation for more than 30 days after the | ||||||
3 | required payment or
filing date. The applicant may petition the | ||||||
4 | Secretary of State for a
hearing within 15 days after the | ||||||
5 | applicant's receipt of the order of
abandonment, provided that | ||||||
6 | the petition sets forth the grounds
upon which the applicant | ||||||
7 | seeks a hearing.
| ||||||
8 | L. Any document being filed pursuant to this Section 8 | ||||||
9 | shall be deemed
filed, and any fee being paid pursuant to this | ||||||
10 | Section 8 shall be deemed
paid, upon the date of actual receipt | ||||||
11 | thereof by the Secretary of State or
his or her designee.
| ||||||
12 | M. (Blank).
| ||||||
13 | (Source: P.A. 99-182, eff. 1-1-16; 100-872, eff. 8-14-18.)
| ||||||
14 | (815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)
| ||||||
15 | Sec. 12. Violation. It shall be a violation of the | ||||||
16 | provisions of
this Act for any person:
| ||||||
17 | A. To offer or sell any security except in accordance | ||||||
18 | with the provisions
of this Act.
| ||||||
19 | B. To deliver to a purchaser any security required to | ||||||
20 | be registered
under Section 5, Section 6 or Section 7 | ||||||
21 | hereof unless accompanied or preceded
by a prospectus that | ||||||
22 | meets the requirements of the pertinent subsection of
| ||||||
23 | Section 5 or of Section 6 or of Section 7.
|
| |||||||
| |||||||
1 | C. To act as a dealer, Internet portal, salesperson, | ||||||
2 | investment adviser, or
investment adviser representative, | ||||||
3 | unless
registered as such, where such registration is | ||||||
4 | required, under the
provisions of this Act.
| ||||||
5 | D. To fail to file with the Secretary of State any | ||||||
6 | application,
report or document required to be filed under | ||||||
7 | the provisions of this Act
or any rule or regulation made | ||||||
8 | by the Secretary of State pursuant to
this Act or to fail | ||||||
9 | to comply with the terms of any order of the
Secretary of | ||||||
10 | State issued pursuant to Section 11 hereof.
| ||||||
11 | E. To make, or cause to be made, (1) in any sworn | ||||||
12 | testimony before the Secretary of State or the Illinois | ||||||
13 | Securities Department within the Office of the Secretary, | ||||||
14 | or application, report or
document filed under this Act or | ||||||
15 | any rule or regulation made by the
Secretary of State | ||||||
16 | pursuant to this Act, any statement which was false
or | ||||||
17 | misleading with respect to any material fact or (2) any | ||||||
18 | statement to
the effect that a security (other than a | ||||||
19 | security issued by the State of
Illinois) has been in any | ||||||
20 | way endorsed or approved by the Secretary of
State or the | ||||||
21 | State of Illinois.
| ||||||
22 | F. To engage in any transaction, practice or course of | ||||||
23 | business in
connection with the sale or purchase of | ||||||
24 | securities which works or tends
to work a fraud or deceit | ||||||
25 | upon the purchaser or seller thereof.
| ||||||
26 | G. To obtain money or property through the sale of |
| |||||||
| |||||||
1 | securities by
means of any untrue statement of a material | ||||||
2 | fact or any omission to
state a material fact necessary in | ||||||
3 | order to make the statements made, in
the light of the | ||||||
4 | circumstances under which they were made, not
misleading.
| ||||||
5 | H. To sign or circulate any statement, prospectus, or | ||||||
6 | other paper or
document required by any provision of this | ||||||
7 | Act or pertaining to any
security knowing or having
| ||||||
8 | reasonable grounds to know any material representation | ||||||
9 | therein contained
to be false or untrue.
| ||||||
10 | I. To employ any device, scheme or artifice to defraud | ||||||
11 | in connection
with the sale or purchase of any security, | ||||||
12 | directly or indirectly.
| ||||||
13 | J. When acting as an investment adviser, investment | ||||||
14 | adviser
representative, or federal covered investment | ||||||
15 | adviser, by any means or
instrumentality, directly or | ||||||
16 | indirectly:
| ||||||
17 | (1) To employ any device, scheme or artifice to defraud | ||||||
18 | any client
or prospective client;
| ||||||
19 | (2) To engage in any transaction, practice, or | ||||||
20 | course of business
which operates as a fraud or deceit | ||||||
21 | upon any client or prospective
client; or
| ||||||
22 | (3) To engage in any act, practice, or course of | ||||||
23 | business which is
fraudulent, deceptive or | ||||||
24 | manipulative. The Secretary of State shall for
the | ||||||
25 | purposes of this paragraph (3), by rules and | ||||||
26 | regulations, define and
prescribe means reasonably |
| |||||||
| |||||||
1 | designed to prevent such acts, practices,
and courses | ||||||
2 | of business as are fraudulent, deceptive, or | ||||||
3 | manipulative.
| ||||||
4 | K. When offering or selling any mineral investment | ||||||
5 | contract or mineral
deferred delivery contract:
| ||||||
6 | (1) To employ any device, scheme, or artifice to | ||||||
7 | defraud any customer,
prospective customer, or | ||||||
8 | offeree;
| ||||||
9 | (2) To engage in any transaction, practice, or course | ||||||
10 | of business that
operates as a fraud or deceit upon any | ||||||
11 | customer, prospective customer, or
offeree; or
| ||||||
12 | (3) To engage in any act, practice, or course of | ||||||
13 | business that is
fraudulent, deceptive, or | ||||||
14 | manipulative. The Secretary of State shall for
the | ||||||
15 | purposes of this paragraph (3), by rules and | ||||||
16 | regulations, define and
prescribe means reasonably | ||||||
17 | designed to prevent acts, practices, and
courses of | ||||||
18 | business as are fraudulent, deceptive, or | ||||||
19 | manipulative.
| ||||||
20 | L. To knowingly influence, coerce, manipulate, or | ||||||
21 | mislead any person
engaged
in
the
preparation or audit of | ||||||
22 | financial statements or appraisals to be used in the
offer | ||||||
23 | or
sale of securities for the purpose of rendering such | ||||||
24 | financial statements or
appraisals materially misleading.
| ||||||
25 | (Source: P.A. 99-182, eff. 1-1-16 .)
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1 | Section 15. The Payday Loan Reform Act is amended by | ||||||
2 | changing Section 2-5 as follows:
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3 | (815 ILCS 122/2-5)
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4 | Sec. 2-5. Loan terms. | ||||||
5 | (a) Without affecting the right of a consumer to prepay at | ||||||
6 | any time without cost or penalty, no payday loan may have a | ||||||
7 | minimum term of less than 13 days. | ||||||
8 | (b) Except for an installment payday loan as defined in | ||||||
9 | this Section,
no payday loan may be made to a consumer if the | ||||||
10 | loan would result in the consumer being indebted to one or more | ||||||
11 | payday lenders for a period in excess of 45 consecutive days. | ||||||
12 | Except as provided under subsection (c) of this Section and | ||||||
13 | Section 2-40, if a consumer has or has had loans outstanding | ||||||
14 | for a period in excess of 45 consecutive days, no payday lender | ||||||
15 | may offer or make a loan to the consumer for at least 7 | ||||||
16 | calendar days after the date on which the outstanding balance | ||||||
17 | of all payday loans made during the 45 consecutive day period | ||||||
18 | is paid in full. For purposes of this subsection, the term | ||||||
19 | "consecutive days" means a series of continuous calendar days | ||||||
20 | in which the consumer has an outstanding balance on one or more | ||||||
21 | payday loans; however, if a payday loan is made to a consumer | ||||||
22 | within 6 days or less after the outstanding balance of all | ||||||
23 | loans is paid in full, those days are counted as "consecutive | ||||||
24 | days" for purposes of this subsection. | ||||||
25 | (c) Notwithstanding anything in this Act to the contrary, a |
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1 | payday loan
shall also include any installment loan otherwise | ||||||
2 | meeting the definition of
payday loan contained in Section | ||||||
3 | 1-10, but that has a term agreed by the
parties of not less | ||||||
4 | than 112 days and not exceeding 180 days; hereinafter an
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5 | "installment payday loan". The following provisions shall | ||||||
6 | apply:
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7 | (i) Any installment payday loan must be fully | ||||||
8 | amortizing, with a finance
charge calculated on the | ||||||
9 | principal balances scheduled to be outstanding and
be | ||||||
10 | repayable in substantially equal and consecutive | ||||||
11 | installments, according
to a payment schedule agreed by the | ||||||
12 | parties with not less than 13 days and
not more than one | ||||||
13 | month between payments; except that the first installment
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14 | period may be longer than the remaining installment periods | ||||||
15 | by not more than
15 days, and the first installment payment | ||||||
16 | may be larger than the remaining
installment payments by | ||||||
17 | the amount of finance charges applicable to the
extra days. | ||||||
18 | In calculating finance charges under this subsection, when | ||||||
19 | the first installment period is longer than the remaining | ||||||
20 | installment periods, the amount of the finance charges | ||||||
21 | applicable to the extra days shall not be greater than | ||||||
22 | $15.50 per $100 of the original principal balance divided | ||||||
23 | by the number of days in a regularly scheduled installment | ||||||
24 | period and multiplied by the number of extra days | ||||||
25 | determined by subtracting the number of days in a regularly | ||||||
26 | scheduled installment period from the number of days in the |
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1 | first installment period. | ||||||
2 | (ii) An installment payday loan may be refinanced by a | ||||||
3 | new installment
payday loan one time during the term of the | ||||||
4 | initial loan; provided that the
total duration of | ||||||
5 | indebtedness on the initial installment payday loan | ||||||
6 | combined
with the total term of indebtedness of the new | ||||||
7 | loan refinancing that initial
loan, shall not exceed 180 | ||||||
8 | days. For purposes of this Act, a refinancing
occurs when | ||||||
9 | an existing installment payday loan is paid from the | ||||||
10 | proceeds of
a new installment payday loan. | ||||||
11 | (iii) In the event an installment payday loan is paid | ||||||
12 | in full prior to
the date on which the last scheduled | ||||||
13 | installment payment before maturity is
due, other than | ||||||
14 | through a refinancing, no licensee may offer or make a | ||||||
15 | payday
loan to the consumer for at least 2 calendar days | ||||||
16 | thereafter. | ||||||
17 | (iv) No installment payday loan may be made to a | ||||||
18 | consumer if the loan would
result in the consumer being | ||||||
19 | indebted to one or more payday lenders for a
period in | ||||||
20 | excess of 180 consecutive days. The term "consecutive days" | ||||||
21 | does not include the date on which a consumer makes the | ||||||
22 | final installment payment. | ||||||
23 | (d) (Blank). | ||||||
24 | (e) No lender may make a payday loan to a consumer if the | ||||||
25 | total of all payday loan payments coming due within the first | ||||||
26 | calendar month of the loan, when combined with the payment |
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1 | amount of all of the consumer's other outstanding payday loans | ||||||
2 | coming due within the same month, exceeds the lesser of: | ||||||
3 | (1) $1,000; or | ||||||
4 | (2) in the case of one or more payday loans, 25% of the | ||||||
5 | consumer's gross monthly income; or | ||||||
6 | (3) in the case of one or more installment payday | ||||||
7 | loans, 22.5% of the consumer's gross monthly income; or | ||||||
8 | (4) in the case of a payday loan and an installment | ||||||
9 | payday loan, 22.5% of the consumer's gross monthly income. | ||||||
10 | No loan shall be made to a consumer who has an outstanding | ||||||
11 | balance on 2 payday loans, except that, for a period of 12 | ||||||
12 | months after March 21, 2011 (the effective date of Public Act | ||||||
13 | 96-936), consumers with an existing CILA loan may be issued an | ||||||
14 | installment loan issued under this Act from the company from | ||||||
15 | which their CILA loan was issued. | ||||||
16 | (e-5) Except as provided in subsection (c)(i), no lender | ||||||
17 | may charge more than $15.50 per $100 loaned on any payday loan, | ||||||
18 | or more than $15.50 per $100 on the initial principal balance | ||||||
19 | and on the principal balances scheduled to be outstanding | ||||||
20 | during any installment period on any installment payday loan. | ||||||
21 | Except for installment payday loans and except as provided in | ||||||
22 | Section 2-25, this charge is considered fully earned as of the | ||||||
23 | date on which the loan is made. For purposes of determining the | ||||||
24 | finance charge earned on an installment payday loan, the | ||||||
25 | disclosed annual percentage rate shall be applied to the | ||||||
26 | principal balances outstanding from time to time until the loan |
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1 | is paid in full, or until the maturity date, whichever occurs | ||||||
2 | first. No finance charge may be imposed after the final | ||||||
3 | scheduled maturity date. | ||||||
4 | When any loan contract is paid in full, the licensee shall | ||||||
5 | refund any unearned finance charge. The unearned finance charge | ||||||
6 | that is refunded shall be calculated based on a method that is | ||||||
7 | at least as favorable to the consumer as the actuarial method, | ||||||
8 | as defined by the federal Truth in Lending Act. The sum of the | ||||||
9 | digits or rule of 78ths method of calculating prepaid interest | ||||||
10 | refunds is prohibited. | ||||||
11 | (f) A lender may not take or attempt to take an interest in | ||||||
12 | any of the consumer's personal property to secure a payday | ||||||
13 | loan. | ||||||
14 | (g) A consumer has the right to redeem a check or any other | ||||||
15 | item described in the definition of payday loan under Section | ||||||
16 | 1-10 issued in connection with a payday loan from the lender | ||||||
17 | holding the check or other item at any time before the payday | ||||||
18 | loan becomes payable by paying the full amount of the check or | ||||||
19 | other item.
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20 | (h) For the purpose of this Section, "substantially equal | ||||||
21 | installment" includes a last regularly scheduled payment that | ||||||
22 | may be less than, but no more than 5% larger than, the previous | ||||||
23 | scheduled payment according to a disclosed payment schedule | ||||||
24 | agreed to by the parties. | ||||||
25 | (Source: P.A. 100-201, eff. 8-18-17.)
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1 | (815 ILCS 5/2.10a rep.) | ||||||
2 | Section 20. The Illinois Securities Law of 1953 is amended | ||||||
3 | by repealing Section 2.10a.
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