New-Jersey-Uniform-Securities-Law.pdf

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New Jersey Uniform Securities Law

Table of Contents

49:3-47. Title amended; "act" defined. ................................................................................................ 2

49:3-49. Definitions relative to Uniform Securities Law. ...................................................................... 2

49:3-50. Exemptions of certain securities............................................................................................. 7

49:3-51. Applicability of act. ............................................................................................................... 12

49:3-52. Unlawful activities ................................................................................................................ 13

49:3-52.1. Prohibitions relative to securities. ..................................................................................... 13

49:3-52.2. Sales of securities, misleading use of senior-specific certifications. ................................. 14

49:3-53. Prohibited practices relative to investment adviser. ............................................................ 15

49:3-54. False, misleading statements. .............................................................................................. 16

49:3-55. Determination of validity of filed document. ....................................................................... 16

49:3-56. Registration required. ........................................................................................................... 17

49:3-57. Obtaining initial, renewal registration. ................................................................................. 19

49:3-58. Denial, suspension, revocation of registration. .................................................................... 21

49:3-59. Maintenance of records, examination. ................................................................................ 24

49:3-60. Offer or sale of securities, lawful; conditions. ...................................................................... 25

49:3-60.1. Documents required to be filed. ....................................................................................... 25

49:3-61. Registration of security by qualification. .............................................................................. 26

49:3-61.1. Coordination with federal registration. ............................................................................. 29

49:3-61.2. Registration by notification. .............................................................................................. 31

49:3-62. Filing of registration statement, fee. .................................................................................... 32

49:3-63. Filing of materials distributed to prospective investors. ...................................................... 33

49:3-64. Issuance of stop order. ......................................................................................................... 33

49:3-65. Handling of filed documents................................................................................................. 36

49:3-66. Administration of act. ........................................................................................................... 36

49:3-66.1. Continuation of "Securities Enforcement Fund," fees, annual accounting of transactions.

............................................................................................................................................................ 36

49:3-67. Rules, forms, orders from bureau chief. ............................................................................... 37

49:3-68. Powers of bureau chief. ........................................................................................................ 37

49:3-68.1. Restraints ordered by bureau chief. .................................................................................. 39

49:3-69. Enforcement actions by bureau chief. .................................................................................. 40

49:3-70. Violations, penalties. ............................................................................................................ 41

49:3-70.1. Violations, civil penalties. .................................................................................................. 42

49:3-71. Action for deceit; liability...................................................................................................... 42

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49:3-72. Nonapplicability of act. ......................................................................................................... 44

49:3-73. Consent to bureau chief as attorney for service of process. ................................................ 44

49:3-75. Construction of act. .............................................................................................................. 45

49:3-76. Severability of provisions ...................................................................................................... 45

49:3-77. Information provided to prospective investors. ................................................................... 46

49:3-78. Agreements relative to exempted transaction..................................................................... 47

49:3-79. Promulgation of legend, investor certification. .................................................................... 47

49:3-80. Requirements for Internet site. ............................................................................................ 48

49:3-81. Quarterly report to investors................................................................................................ 49

49:3-82. Criteria for disqualifying issuers from claiming exemption. ................................................. 50

49:3-83. Regulations. .......................................................................................................................... 50

49:3-84. Short title. ............................................................................................................................. 50

49:3-85. Definitions relative to financial exploitation of vulnerable adults. ...................................... 51

49:3-86. Notification to bureau, county adult protective services provider. ..................................... 51

49:3-87. Notification of certain third party. ....................................................................................... 52

49:3-88. Delay of transaction, disbursement. .................................................................................... 52

48:3-89. Provision of access to records. ............................................................................................. 53

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49:3-47. Title amended; "act" defined.

This act amending and supplementing the "Uniform Securities Law (1967)" shall be known and may

be cited as the "Uniform Securities Law (1997)." "Act" as used in this revision means this 1997 act

amending and supplementing the "Uniform Securities Law (1967)."

L.1967,c.93,s.30; amended 1997, c.276, s.1.

49:3-49. Definitions relative to Uniform Securities Law.

When used in this act, unless the context requires otherwise:

(a) "Bureau" means the agency designated in subsection (a) of section 19 of P.L.1967, c.93 (C.49:3-

66);

(b) "Agent" means any individual other than a broker-dealer, who represents a broker-dealer or

issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include

an individual who represents an issuer in (1) effecting transactions in a security exempted by

paragraph (1), (2), (3), or (11) of subsection (a) of section 3 of P.L.1967, c.93 (C.49:3-50); (2) effecting

transactions exempted by subsection (b) of section 3 of P.L.1967, c.93 (C.49:3-50); (3) effecting

transactions with existing employees, partners, or directors of the issuer, if no commission or other

remuneration is paid or given directly or indirectly for soliciting any person in this State; or (4) a

broker-dealer in effecting transactions in this State limited to those transactions described in

paragraph (2) of subsection (h) of section 15 of the "Securities Exchange Act of 1934," 15 U.S.C.

s.78o(h)(2); or (5) such other persons not otherwise within the intent of this subsection (b), as the

bureau chief may by rule or order designate. A partner, officer, or director of a broker-dealer or

issuer, or a person occupying a similar status or performing similar functions, is an agent only if he

otherwise comes within this definition. The bureau chief may by rule or order, as to any transaction,

waive the requirement of agent registration. The bureau chief may by rule define classes of persons

as "agents," if those persons are regulated as "agents" by the Securities and Exchange Commission

or any self-regulatory organization established pursuant to the laws of the United States;

transactions in securities for the accounts of others or for his own account. "Broker-dealer" does

not include (1) an agent, (2) an issuer, (3) a person who effects transactions in this State exclusively

in securities described in paragraphs (1) and (2) of subsection (a) of section 3 of P.L.1967, c.93

(C.49:3-50), (4) a bank, savings institution, or trust company, or (5) a person who effects

transactions in this State exclusively with or through (i) the issuers of the securities involved in the

transactions, (ii) other broker-dealers, (iii) banks, savings institutions, trust companies, insurance

companies, investment companies as defined in the "Investment Company Act of 1940," pension or

profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for

themselves or as trustees or (iv) such other persons not otherwise within the intent of this

subsection (c), as the bureau chief may by rule or order designate;

(d) "Capital" shall mean net capital, as defined and adjusted under the formula established by the

Securities and Exchange Commission in Rule 15c3-1, 17 C.F.R. s.240.15c3-1, made pursuant to the

"Securities Exchange Act of 1934," prescribing a minimum permissible ratio of aggregate

indebtedness to net capital as such formula presently exists or as it may hereafter be amended;

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(e) "Fraud," "deceit," and "defraud" are not limited to common-law fraud or deceit. "Fraud,"

"deceit" and "defraud" in addition to the usual construction placed on these terms and accepted in

courts of law and equity, shall include the following, provided, however, that any promise,

representation, misrepresentation or omission be made with knowledge and with intent to deceive

or with reckless disregard for the truth and results in a detriment to the purchaser or client of an

investment adviser:

(1) Any misrepresentation by word, conduct or in any manner of any material fact, either

present or past, and any omission to disclose any such fact;

(2) Any promise or representation as to the future which is beyond reasonable expectation or is

unwarranted by existing circumstances;

(3) The gaining of, or attempt to gain, directly or indirectly, through a trade in any security, a

commission, fee or gross profit so large and exorbitant as to be unconscionable, unreasonable

or in violation of any law, regulation, rule, order or decision of the Securities and Exchange

Commission, or the bureau chief; or to the extent that such law, regulation, rule or order

directly applies to the person involved, the gaining of, or attempt to gain, directly or indirectly,

through a trade in any security, a commission, fee or gross profit so large and exorbitant as to be

in violation of any law, regulation, rule, order or decision of any other state or Canadian

securities administrator, or any self-regulatory organization established pursuant to the laws of

the United States;

(4) Generally any course of conduct or business which is calculated or put forward with intent

to deceive the public or the purchaser of any security or investment advisory services as to the

nature of any transaction or the value of such security;

(5) Any artifice, agreement, device or scheme to obtain money, profit or property by any of the

means herein set forth or otherwise prohibited by this act;

(f) "Guaranteed" means guaranteed as to payment of principal, interest or dividends;

(g) (1) "Investment adviser" means:

(i) any person who, for direct or indirect compensation, engages in the business of advising

others, either directly or through publications or writings, as to the value of securities or as

to the advisability of investing in, purchasing, selling or holding securities, or who, for

compensation and as a part of a regular business, issues or promulgates analyses or reports

concerning securities; and

(ii) any financial planner and other person who provides investment advisory services to

others for compensation and as part of a business or who holds himself out as providing

investment advisory services to others for compensation.

(2) "Investment adviser" does not include:

(i) a bank, savings institution, or trust company;

(ii) a lawyer, accountant, engineer, or teacher whose performance of these services is

solely incidental to the practice or conduct of the profession and who does not hold himself

out as providing investment advisory or financial planning services, and who receives no

special compensation for those investment advisory or financial planning services;

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(iii) a broker-dealer registered under this act;

(iv) a publisher of any bona fide newspaper, news magazine, or business or financial

publication of general, regular, and paid circulation;

(v) a person whose advice, analyses, or reports relate only to securities exempted by

paragraphs (1) and (2) of subsection (a) of section 3 of P.L.1967, c.93 (C.49:3-50);

(vi) a person whose only clients in this State are other investment advisers, any person that

is registered as an "investment adviser" under section 203 of the "Investment Advisers Act

of 1940," 15 U.S.C. s.80b-3, or excluded from the definition of an "investment adviser"

under paragraph (11) of subsection (a) of section 202 of the "Investment Advisers Act of

1940," 15 U.S.C. s.80b-2(a)(11), broker-dealers, banks, bank holding companies, savings

institutions, trust companies, insurance companies, investment companies as defined in the

"Investment Company Act of 1940," pension or profit-sharing trusts, or other financial

institutions or institutional buyers, whether acting for themselves or as trustees;

(vii) any person that is registered as an "investment adviser" under section 203 of the

"Investment Advisers Act of 1940," 15 U.S.C. s.80b-3, or excluded from the definition of an

"investment adviser" under paragraph (11) of subsection (a) of section 202 of the

"Investment Advisers Act of 1940," 15 U.S.C. s.80b-2(a)(11);

(viii) an investment adviser representative; or

(ix) such other persons not otherwise within the intent of this subsection (g) as the bureau

chief may by rule or order designate.

Subject to applicable federal law, the bureau chief may by rule limit the exclusions set out in this

paragraph (2), except for those exclusions provided in subparagraph (i) of paragraph (2).

For purposes of this act, "investment advisory services" means those services rendered by an

"investment adviser" as defined in this subsection;

(h) "Issuer" means any person who issues or proposes to issue any security, except that (1) with

respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with

respect to certificates of interest or shares in an unincorporated investment trust not having a board

of directors (or persons performing similar functions) or of the fixed, restricted management, or unit

type, the term "issuer" means the person or persons performing the acts and assuming the duties of

depositor or manager pursuant to the provisions of the trust or other agreement or instrument

under which the security is issued; and (2) with respect to certificates of interest in oil, gas, or

mining titles or leases, there is not considered to be any "issuer";

(i) "Person" means an individual, a corporation, a partnership, an association, a joint-stock

company, a trust where the interests of the beneficiaries are evidenced by a security, an

unincorporated organization, a government, or a political subdivision of a government;

(j) (1) "Sale" or "sell" includes every contract of sale of, contract to sell, or disposition of, a security

or interest in a security or investment advisory services for value;

(2) "Offer" or "offer to sell" includes every attempt or offer to dispose of, or solicitation of any

offer to buy, a security or interest in a security or investment advisory services for value;

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(3) Any security given or delivered with, or as a bonus on account of, any purchase of securities

or any other thing is considered to constitute part of the subject of the purchase and to have

been offered and sold for value;

(4) A purported gift of assessable stock is considered to involve an offer and sale;

(5) Every sale or offer of a warrant or right to purchase or subscribe to another security of the

same or another issuer, as well as every sale or offer of a security which gives the holder a

present or future right or privilege to convert into another security of the same or another

issuer, is considered to include an offer of the other security;

(6) The terms defined in this subsection (j) do not include (i) any bona fide pledge or loan; (ii)

any stock dividend, whether the corporation distributing the dividend is the issuer of the stock

or not, if nothing of value is given by stockholders for the dividend other than the surrender of a

right to a cash or property dividend when each stockholder may elect to take the dividend in

cash or property or in stock; (iii) any act incident to a class vote by stockholders, pursuant to the

certificate of incorporation or the applicable corporation statute, on a merger, consolidation,

reclassification of securities, or sale of corporate assets in consideration of the issuance of

securities of another corporation; or (iv) any act incident to a judicially approved reorganization

in which a security is issued in exchange for one or more outstanding securities, claims, or

property interests, or partly in such exchange and partly for cash;

(k) "Savings institutions" shall mean any savings and loan association or building and loan

association operating pursuant to the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-2 et

seq.), and any federal savings and loan association and any association or credit union organized

under the laws of the United States or of any state whose accounts are insured by a federal

corporation or agency;

(l) "Securities Act of 1933," 15 U.S.C. s.77a et seq.; "Securities Exchange Act of 1934," 15 U.S.C.

s.78a et seq.; "Public Utility Holding Company Act of 1935," 15 U.S.C. s.79 et seq.; "Investment

Advisers Act of 1940," 15 U.S.C. s.80b-1 et seq.; "Investment Company Act of 1940," 15 U.S.C. s.80a-

1 et seq.; and "Commodity Exchange Act," 7 U.S.C. s.1 et seq. mean the federal statutes of those

names;

(m) "Security" means any note; stock; treasury stock; bond; debenture; evidence of indebtedness;

certificate of interest or participation in any profit-sharing agreement, including, but not limited to,

certificates of interest or participation in real or personal property; collateral-trust certificate;

preorganization certificate or subscription; transferable share; investment contract; voting-trust

certificate; certificate of deposit for a security; certificate of interest in an oil, gas or mining title or

lease; a viatical investment; or, in general, any interest or instrument commonly known as a

"security," or any certificate of interest or participation in, temporary or interim certificate for,

guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. "Security" does

not include any insurance or endowment policy or annuity contract under which an insurance

company promises to pay a fixed or variable number of dollars either in a lump sum or periodically

for life or some other specified period;

(n) "State" means any state, territory, or possession of the United States, as well as the District of

Columbia and Puerto Rico;

(o) "Nonissuer" means secondary trading not involving the issuer of the securities or any person in a

control relationship with the issuer;

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(p) "Accredited investor" means any person who is an "accredited investor" as defined by

subsection (15) of section 2 of the "Securities Act of 1933," 15 U.S.C. s.77b(a)(15), and 17 C.F.R.

s.230.215 and s.230.501 or any successor rule promulgated pursuant to that act.

The bureau chief may rule, or order, waive or modify the conditions in this subsection (p) and shall

interpret and apply this subsection (p) so as to effectuate greater uniformity and coordination in federal-

state securities registration exemptions;

(q) "Direct participation security" means a security which provides for flow-through tax

consequences (tax shelter), regardless of the structure of the legal entity or vehicle for distribution,

including, but not limited to, a security representing an interest in gas, oil, real estate, agricultural

property, cattle, a condominium, a Subchapter S corporation, a limited liability company and all

other securities of a similar nature, regardless of the industry represented by the security, or any

combination thereof. Excluded from this definition are real estate investment trusts, tax qualified

pension and profit-sharing plans pursuant to sections 401 and 403(a) of the Internal Revenue Code

of 1986, 26 U.S.C. ss.401 and 403(a), and individual retirement plans under section 408 of the

Internal Revenue Code of 1986, 26 U.S.C. s.408, tax sheltered annuities pursuant to the provisions of

section 403(b) of the Internal Revenue Code of 1986, 26 U.S.C. s.403(b), and any company including

separate accounts registered pursuant to the "Investment Company Act of 1940;"

(r) "Blind pool" means an offering of securities in which, as to 65% or more of the proceeds of the

offering, the prospectus discloses no specific purpose to which the proceeds of the offering will be

put, or the prospectus discloses no specific assets to be purchased, projects to be undertaken, or

business to be conducted, except for:

(1) an offering of securities to provide working capital for an operating company (as opposed to

a development stage company);

(2) an offering of securities by an investment company registered under the "Investment

Company Act of 1940," including a business development company; or

(3) an offering of securities by a small business investment company licensed by the Small

Business Administration or a business development company within the meaning of the

"Investment Advisers Act of 1940;"

(s) "Investment adviser representative" means any person, including, but not limited to, a partner,

officer, or director, or a person occupying a similar status or performing similar functions, or other

individual, except clerical or ministerial personnel, who is employed by or associated with an

investment adviser registered under this act, or who has a place of business located in this State and

is employed by or associated with a person registered or required to be registered as an investment

adviser under section 203 of the "Investment Advisers Act of 1940," 15 U.S.C. s.80b-3; and who does

any of the following:

(1) makes any recommendations or otherwise renders advice regarding securities if the person

has direct advisory client contact;

(2) manages accounts or portfolios of clients;

(3) determines recommendations or advice regarding securities;

(4) solicits, offers or negotiates for the sale of or sells investment advisory services; or

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(5) directly supervises any investment adviser representative or the supervisors of those

investment adviser representatives. "Investment adviser representative" does not include a

broker-dealer or an agent;

(t) "Institutional buyer" includes, but is not limited to, a "qualified institutional buyer" as defined in

SEC Rule 144A, 17 C.F.R. s.230.144A;

(u) "Willful" or "willfully" means a person who acts intentionally in the sense that the person is

aware of what he is doing;

(v) "Federal covered security" means any security described as a covered security in subsection (b)

of section 18 of the "Securities Act of 1933," 15 U.S.C. s.77r(b);

(w) "Viatical investment" means the contractual right to receive any portion of the death benefit or

ownership of a life insurance policy or certificate, for consideration that is less than the expected

death benefit of the life insurance policy or certificate. Viatical investment does not include:

(1) any transaction between a viator and a viatical settlement provider as defined by the

"Viatical Settlements Act", P.L.2005, c.229 (C.17B:30B-1 et al.);

(2) any transfer of ownership or beneficial interest in a life insurance policy from a viatical

settlement provider to another viatical settlement provider as defined in the "Viatical

Settlements Act", P.L.2005, c.229 (C.17B:30B-1 et al.) or to any legal entity formed solely for the

purpose of holding ownership or beneficial interest in a life insurance policy or policies;

(3) the bona fide assignment of a life insurance policy to a bank, savings bank, savings and loan

association, credit union, or other licensed lending institution as collateral for a loan;

(4) the exercise of accelerated benefits pursuant to the terms of a life insurance policy issued in

accordance with the provisions of Title 17B of the New Jersey Statutes; or

(5) a loan by a life insurance company pursuant to the terms of the life insurance contract;

(x) "Internet site operator" means a business entity organized under the laws of this State and

authorized to do business in this State which makes available to the public through an Internet

website any offering pursuant to the exemption in paragraph (14) of subsection (b) of section 3 of

P.L.1967, c.93 (C.49:3-50). "Internet site operator" shall not include a broker-dealer.

L.1967, c.93, s.2; amended 1983, c.292, s.1; 1985, c.405, s.2; 1987, c.301, s.1; 1997, c.276, s.2; 2005,

c.229, s.18; 2015, c.128, s.8.

49:3-50. Exemptions of certain securities.

(a) The following securities are exempted from the provisions of sections 13 and 16 of P.L.1967, c.93

(C.49:3-60 and 49:3-63):

(1) Any security (including a revenue obligation) issued or guaranteed by the United States, any

state, any political subdivision of a state, or any agency or corporate or other instrumentality of

one or more of the foregoing; or any certificate of deposit for any of the foregoing;

(2) Any security issued or guaranteed by Canada, any Canadian province, any political

subdivision of any such province, any agency or corporate or other instrumentality of one or

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more of the foregoing, or any other foreign government with which the United States currently

maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or

guarantor;

(3) Any security issued by and representing an interest in or a debt of, or guaranteed by, any

bank, savings institution, or trust company organized and supervised under the laws of any state

or under the laws of the United States;

(4) Any security issued by and representing an interest in or a debt of, or guaranteed by, any

savings institution;

(5) Any security issued by and representing an interest in or a debt of, or guaranteed by, any

insurance company organized under the laws of any state and authorized to do business in this

State;

(6) (Deleted by amendment, P.L.1997, c.276.)

(7) Any security issued or guaranteed by any railroad, other common carrier, public utility, or

holding company which is (i) a registered holding company under the "Public Utility Holding

Company Act of 1935" or a subsidiary of such a company within the meaning of that act; (ii)

regulated in respect to its rates and charges by a governmental authority of the United States or

any state; or (iii) regulated in respect of the issuance or guarantee of the security by a

governmental authority of the United States, any state, Canada or any Canadian province;

(8) Any security listed or approved for listing upon notice of issuance on the New York Stock

Exchange or the American Stock Exchange, and such other exchanges as the bureau chief may

from time to time designate by rule or order; any security designated or approved for

designation upon notice of issuance as a Nasdaq National Market security or any other national

quotation system as the bureau chief from time to time may designate by rule or order; any

other security of the same issuer which is of senior or substantially equal rank; any security

called for by subscription rights or warrants so listed or approved; or any warrant or right to

purchase or subscribe to any of the foregoing;

(9) Any security issued by a person organized and operated exclusively for religious,

educational, benevolent, fraternal, charitable or reformatory purposes and not for pecuniary

profit, and no part of the net earnings of which inures to the benefit of any person, private

stockholder, or individual;

(10) Any commercial paper which arises out of a current transaction or the proceeds of which

have been or are to be used for current transactions, and which evidences an obligation to pay

cash within 12 months of the date of issuance, exclusive of days of grace, or any renewal of such

paper which is likewise limited, or any guarantee of such paper or of any such renewal;

(11) Any investment contract issued in connection with an employees' or professional stock

purchase, savings, pension, profit-sharing, retirement or similar benefit plan and securities

issued pursuant to an employee benefit plan;

(12) (a) The bureau chief by rule or order, as to a particular security or class of securities, may

adopt a securities exemption (i) that will further the objectives of compatibility with the

exemptions from securities registration authorized by the "Securities Act of 1933" and

uniformity among the states, or (ii) if the bureau chief determines that the public interest does

not require registration.

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(b) The following transactions are exempted from the provisions of sections 13 and 16 of P.L.1967,

c.93 (C.49:3-60 and 49:3-63):

(1) Any isolated nonissuer transaction, whether effected through a broker-dealer or not;

(2) (i) Any nonissuer transaction by a broker-dealer registered under this act of a security, which

has been outstanding in the hands of the public for at least 90 days prior to the transaction and

which is sold at a price reasonably related to the current market price of such securities,

provided:

(a) the securities are of an issuer for which all reports required to be filed by section 13 or 15(d) of

the "Securities Exchange Act of 1934," 15 U.S.C. s.78m or s.78o(d) have been filed; or

(b) the following information is published in a recognized securities manual: the names of the

issuer's officers and directors; a balance sheet of the issuer as of a date not more than 18 months

prior to the date of the sale; and profit and loss statements for a period of not less than two years

next prior to the date of the balance sheet or for the period of the issuer's existence as of the date

of the balance sheet if the period of existence is less than two years;

(ii) The exemption provided in this paragraph (2) does not apply if the sale constitutes a

distribution and is made for the direct or indirect benefit of an issuer or controlling persons

of that issuer or if those securities constitute the whole or part of an unsold allotment to, or

subscription by, a broker-dealer as an underwriter of those securities. This exemption shall

not be available for any securities which have been subject to a bureau stop order pursuant

to section 17 of P.L.1967, c.93 (C.49:3-64), or a bureau order of denial of secondary trading

pursuant to subsection (c) of this section;

(iii) Notwithstanding the foregoing, resale transactions by a sponsor of a unit investment

trust registered pursuant to section 8 of the "Investment Company Act of 1940," 15 U.S.C.

s.80a-8, shall be exempt from registration in this State.

(3) Any nonissuer transaction effected by or through a registered broker-dealer pursuant to an

unsolicited order or offer to buy; but the bureau chief may by rule require that the customer

acknowledge upon a form prescribed by the bureau chief that the sale was unsolicited, and that

a signed copy of each such form be preserved by the broker-dealer for a specified period;

(4) Any transaction between the issuer or other person on whose behalf the offering is made

and an underwriter, or among underwriters;

(5) Any transaction on a bond or other evidence of indebtedness secured by a real or chattel

mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire

mortgage, deed of trust, or agreement, together with all the bonds or other evidences of

indebtedness secured thereby, is offered and sold as a single unit;

(6) Any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in

bankruptcy, guardian, or conservator;

(7) Any transaction executed by a bona fide pledgee without any purpose of evading this act;

(8) Any offer or sale to a bank, savings institution, trust company, insurance company,

investment company as defined in the "Investment Company Act of 1940," pension or profit-

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sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether

the purchaser is acting for itself or in some fiduciary capacity;

(9) Any transaction which results in sales to not more than 10 persons (other than those

persons designated in paragraph (8) of subsection (b) of this section in this State during any

period of 12 consecutive months, whether or not the seller or any of the buyers is then present

in this State, if (i) the seller reasonably believes that all buyers are purchasing for investment,

and (ii) no commission or other remuneration is paid or given directly or indirectly for soliciting

any prospective buyer in this State, and (iii) the securities are not offered or sold by general

solicitation or any general advertisement; but the bureau chief may by rule or order, as to any

transaction or class of transactions, withdraw or further condition this exemption, or increase or

decrease the number of buyers permitted, or waive the conditions in subparagraph (i), (ii) or (iii)

of this paragraph;

(10) Any offer or sale of a preorganization certificate or subscription if (i) no commission or

other remuneration is paid or given directly or indirectly for soliciting any prospective

subscriber, (ii) the number of subscribers does not exceed 10, and (iii) no payment is made by

any subscriber;

(11) Any transaction pursuant to an offer to existing security holders of the issuer, including

persons who at the time of the transaction are holders of convertible securities, nontransferable

warrants, or transferable warrants exercisable within not more than 90 days of their issuance, if

no commission or other remuneration (other than a standby commission) is paid or given

directly or indirectly for soliciting any security holder in this State;

(12) Any transaction by or on behalf of an issuer, or other person, if (i) the seller has reasonable

grounds to believe and, after making reasonable inquiry, believes, immediately prior to making

any sale, that there are no more than 35 purchasers of the issue in this State during any period

of 12 consecutive months and that each purchaser, who is not an accredited investor, either

alone or with his representative has the knowledge and experience in financial and business

matters that he is or they are capable of evaluating the merits and risks of the prospective

investment; (ii) a written offering statement or prospectus is furnished to each purchaser who is

not an accredited investor containing substantially the same information as is required by

subsection (b) of section 14 of P.L.1967, c.93 (C.49:3-61) or any applicable form of registration

under federal law, and provided that if any purchaser is furnished with a written offering

statement or prospectus, then all purchasers shall be furnished therewith; (iii) the securities

shall not be offered or sold by general solicitation or any general advertisement; and (iv) a

report of the offering is filed with the bureau not later than 15 days after the first sale of those

securities in this State, setting forth the name and address of the issuer, the total amount of the

securities sold under this paragraph (12), the price at which the securities were sold, the total

number of purchasers of the securities, and the names and addresses of the purchasers of the

securities who reside in this State, indicating the number and amount of the securities each

purchased. Supplemental reports shall be filed promptly after the initial filing with the bureau

whenever there are material changes to the information contained in the initial filing until the

closing of the offering. A final report shall be filed at the closing of the offering if the

information in the final report would be materially different from the last prior filing. The fee

for filing the report with the bureau shall be established by regulation of the bureau chief. The

information in the report of sale shall be deemed confidential and shall not be disclosed to the

public except by order of the court or in court proceedings. In calculating the number of

purchasers permitted under this paragraph, accredited investors shall be excluded;

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(13) The bureau chief, by rule or order, as to a particular transaction or class of transactions,

may adopt a transactional exemption (i) that will further the objectives of compatibility with the

exemptions from securities registration authorized by the "Securities Act of 1933" and

uniformity among the states, or (ii) if the bureau chief determines that the public interest does

not require registration;

(14) Any transaction by or on behalf of an issuer if the following conditions are met:

(i) the issuer is a business entity organized under the laws of this State and authorized to

do business in this State;

(ii) the transaction meets the requirements of the federal exemption for intrastate

offerings in section 3(a)(11) of the federal "Securities Act of 1933" (15 U.S.C. s.77c(a)(11))

and Rule 147 adopted under the "Securities Act of 1933" (17 C.F.R. s.230.147);

(iii) the sum of all cash and other consideration to be received for all sales of the security in

reliance on the exemption under this section, excluding sales to any accredited investor or

institutional investor, does not exceed $1,000,000, except that an offer or sale to an officer,

director, partner, trustee, or individual occupying similar status or performing similar

functions with the issuer or to a person owning 10 percent or more of the outstanding

securities of the issuer shall not be counted toward the aggregate monetary limitation of

shares to be issued as established herein;

(iv) the offering is not a blind pool;

(v) the offering by the issuer is made exclusively through an Internet site which meets with

the requirements of section 1 of P.L.2015, c.128 (C.49:3-77);

(vi) the issuer does not accept an investment of more than $5,000 from any single investor

unless the investor is an accredited investor or institutional buyer;

(vii) the investor in the securities is a resident of this State;

(viii) not less than 10 days prior to the commencement of an offering of the security, the

information required to be posted pursuant to section 1 of P.L.2015, c.128 (C.49:3-77) is

filed with the bureau, in a form to be prescribed by the bureau, with a filing fee which is to

be established by the bureau; and

(ix) the issuer has never previously sold securities pursuant to this paragraph.

(11) of subsection (a) of this section or in subsection (b) of this section with respect to a specific

security or transaction. These exemptions may be denied or revoked for the grounds set forth in

subsection (k) of section 9, section 11 and section 17 of P.L.1967, c.93 (C.49:3-56, 49:3-58 or 49:3-

64). No such order may be entered without appropriate notice to all interested parties, opportunity

for hearing, and written findings of fact and conclusions of law, except that the bureau chief may by

order summarily deny or revoke any of the specified exemptions pending final determination of any

proceeding under this subsection. Upon the entry of a summary order, the bureau chief shall

promptly notify all interested parties that it has been entered and of the reasons therefor.

(1) Upon service of notice of the order issued by the bureau chief, the respondent shall have up

to 15 days to respond to the bureau in the form of a written answer and written request for a

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hearing. The bureau chief shall, within five days of receiving the answer and a request for a

hearing, either transmit the matter to the Office of Administrative Law for a hearing or schedule

a hearing at the bureau. Orders issued pursuant to this subsection (c) shall be subject to an

application to vacate upon 10 days' notice, and a preliminary hearing on the order shall be held

in any event within 20 days after it is requested; and the filing of a motion to vacate the order

shall toll the time for filing an answer and written request for a hearing.

(2) If a respondent fails to respond by either filing a written answer and written request for a

hearing with the bureau or moving to vacate an order within the 15-day prescribed period, the

respondent shall be deemed to have waived the opportunity to be heard. The order will remain

in effect until it is modified or vacated upon notice to all interested parties by the bureau chief.

No order under this subsection may operate retroactively.

(d) In any proceeding under this act, the burden of proving an exemption or an exception from a

definition is upon the person claiming it.

L.1967, c.93, s.3; amended 1983, c.292, s.2; 1985, c.405, s.3; 1986, c.101; 1987, c.301, s.2; 1997,

c.276, s.3; 2015, c.128, s.9.

49:3-51. Applicability of act.

(a) Sections 5, 8, subsection (a) of section 9, and sections 13 and 24 of P.L.1967, c.93 (C.49:3-52,

49:3-55, 49:3-56, 49:3-60 and 49:3-71) apply to persons who sell or offer to sell when (1) an offer to

sell is made in this State, or (2) an offer to buy is made or accepted in this State;

(b) Sections 5, 8 and subsection (a) of section 9 of P.L.1967, c.93 (C.49:3-52, 49:3-55 and 49:3-56)

apply to persons who buy or offer to buy when (1) an offer to buy is made in this State, or (2) an

offer to sell is made or accepted in this State;

determine, an offer to sell or to buy is made in this State, whether or not either party is then present

in this State, when the offer (1) originates from this State or (2) is directed by the offeror to this

State and received at the place to which it is directed (or at any post office in this State in the case of

a mailed offer);

(d) For the purpose of this section, an offer to buy or to sell is accepted in this State when

acceptance (1) is communicated to the offeror in this State and (2) has not previously been

communicated to the offeror, orally or in writing, outside this State; and acceptance is

communicated to the offeror in this State, whether or not either party is then present in this State,

when the offeree directs it to the offeror in this State reasonably believing the offeror to be in this

State and it is received at the place to which it is directed (or at any post office in this State in the

case of a mailed acceptance);

(e) (Deleted by amendment, P.L.1997, c.276.)

(f) Sections 6, 8 and subsection (c) of section 9 of P.L.1967, c.93 (C.49:3-53, 49:3-55 and 49:3-56),

so far as investment advisers are concerned, apply when any act instrumental in effecting prohibited

conduct is done in this State, whether or not either party is then present in this State.

L.1967,c.93,s.4; amended 1997, c.276, s.4.

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49:3-52. Unlawful activities

It shall be unlawful for any person, in connection with the offer, sale, or purchase of any security,

directly or indirectly

(a) To employ any device, scheme, or artifice to defraud;

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in

order to make the statements made, in the light of the circumstances under which they are made,

not misleading;

or deceit upon any person;

(d) To fail to deliver the prospectus filed under the "Securities Act of 1933" to each purchaser of a

security registered under that act, in accordance with the prospectus delivery requirements of that

act.

L. 1967, c. 93, s. 5. Amended by L. 1985, c. 405, s. 4.

49:3-52.1. Prohibitions relative to securities.

(a) Without limiting the general applicability of section 5 of P.L.1967, c.93 (C.49:3-52), a person may

not:

(1) quote a fictitious price with respect to a security;

(2) effect a transaction in a security which involves no change in the beneficial ownership of the

security for the purpose of creating a false or misleading appearance of active trading in a

security or with respect to the market for the security;

(3) enter an order for the purchase of a security with the knowledge that an order of

substantially the same size and at substantially the same time and price for the sale of the

security has been, or will be, entered by or for the same, or affiliated, person for the purpose of

creating a false or misleading appearance of active trading in a security or with respect to the

market for the security;

(4) enter an order for the sale of a security with knowledge that an order of substantially the

same size and at substantially the same time and price for the purchase of the security has been,

or will be, entered by or for the same, or affiliated, person for the purposes of creating a false or

misleading appearance of active trading in a security or with respect to the market for the

security; or

(5) employ any other deceptive or fraudulent device, scheme, or artifice to manipulate the

market in a security.

(b) A transaction effected in compliance with, or conduct that does not violate, the applicable

provisions of the "Securities Exchange Act of 1934" and the rules and regulations of the Securities

and Exchange Commission thereunder is not a violation of subsection (a) of this section.

L.1997,c.276,s.5.

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49:3-52.2. Sales of securities, misleading use of senior-specific certifications.

a. A person who uses a certification or professional designation to indicate or imply that the user

has special training in advising or servicing senior citizens or retirees (hereinafter, a "senior-specific

certification or professional designation"), in such a way as to mislead any person, in connection

with the offer, sale, or purchase of a security, or the provision of advice as to the value of or the

advisability of investing in, purchasing, or selling a security, either directly or indirectly or through a

publication or a writing, or by issuing or promulgating an analysis or report relating to a security

shall have engaged in a dishonest or unethical practice pursuant to subparagraph (vii) of paragraph

(2) of subsection (a) of section 11 of P.L.1967, c.93 (C.49:3-58).

b. Uses of a senior-specific certification or professional designation that shall be a dishonest or

unethical practice pursuant to subsection a. of this section shall include, but shall not be limited to,

the use of:

(1) a certification or professional designation by a person who has not actually earned or who is

otherwise ineligible to use that certification or professional designation;

(2) a nonexistent or self-conferred certification or professional designation;

(3) a certification or professional designation that indicates or implies a level of occupational

qualifications obtained through education, training, or experience that the person using the

certification or professional designation does not have; and

(4) a certification or professional designation that was obtained from a certifying or designating

organization that:

(a) is primarily engaged in the business of instruction in sales or marketing;

(b) does not have reasonable standards or procedures for assuring the competency of its

certificants or designees;

certificants or designees for improper or unethical conduct; or

(d) does not have reasonable continuing education requirements for its certificants or

designees in order to maintain the certificate or designation.

c. A rebuttable presumption that a certifying or designating organization is not included as an

organization to which paragraph (4) of subsection b. of this section is applicable shall exist, if the

organization has been accredited by:

(1) the American National Standards Institute;

(2) the National Commission for Certifying Agencies; or

(3) an organization that is on the United States Department of Education's list entitled

"Accrediting Agencies Recognized for Title IV Purposes" and the certification or professional

designation issued by the organization does not primarily apply to sales or marketing.

d. In determining whether a combination of words, or an acronym standing for a combination of

words, constitutes a senior-specific certification or professional designation, factors to be

considered shall include:

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(1) use of one or more words such as "senior," "retirement," "elder," or like words, combined

with one or more words such as "certified," "registered," "chartered," "adviser," "specialist,"

"consultant," "planner," or like words, in the name of the certification or professional

designation; and

(2) the manner in which those words are combined.

e. For purposes of this section, a senior-specific certification or professional designation shall not

include a job title within an organization that is licensed or registered by a state or federal financial

services regulatory agency, if that job title:

(1) indicates seniority or standing within the organization; or

(2) specifies an individual's area of specialization within the organization.

For purposes of this subsection, "financial services regulatory agency" shall include, but shall not be

limited to, an agency that regulates brokers, dealers, investment advisers, or investment companies as

defined pursuant to the federal "Investment Advisers Act of 1940" (15 U.S.C. s.80b-1 et seq.) or the

federal "Investment Company Act of 1940" (15 U.S.C. s.80a-1 et seq.).

f. Nothing in this section shall limit the bureau chief's enforcement authority under the law.

L.2010, c.41, s.1.

49:3-53. Prohibited practices relative to investment adviser.

(a) It shall be unlawful for any person who receives, directly or indirectly, any compensation from

another person for advising the other person as to the value of securities or their purchase or sale,

whether through the issuance of analyses or reports or otherwise,

(1) to employ any device, scheme or artifice to defraud the other person;

(2) to engage in any act, practice, or course of business which operates or would operate as a

fraud or deceit upon the other person; or

(3) to engage in dishonest or unethical practices as the bureau chief may by rule define in a

manner consistent with and compatible with the laws and regulations of the Securities and

Exchange Commission, the self-regulatory organizations, and uniformity with the other states,

the remedies for which shall be civil or administrative only;

(b) It shall be unlawful for any person acting as an investment adviser, whether required to be

registered or not, to enter into, extend, or renew any investment advisory contract unless it

provides in writing

(1) that no assignment of the contract may be made by the investment adviser without the

consent of the other party to the contract; and

(2) that the investment adviser shall notify the other party to the contract of any change in

control of the investment adviser within a reasonable time after the change;

broker-dealer acting as an investment adviser to enter into, extend, or renew any investment

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advisory contract, unless it provides in writing that the investment adviser shall not be compensated

on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of

the funds, of the client, except as may be authorized by rules issued by the bureau chief;

(d) The bureau chief may by rule or order prohibit any investment adviser, except an investment

adviser that is registered or not required to be registered under the "Investment Advisers Act of

1940," from being compensated on the basis of a share of capital gains upon, or capital appreciation

of the funds, or any portion of the funds, of the client;

(e) Subsection (c) of this section does not prohibit an investment advisory contract which provides

for compensation based upon the total value of a fund averaged over a definite period, or as of

definite dates or taken as of a definite date. "Assignment," as used in paragraph (1) of subsection

(b) of this section, includes any direct or indirect transfer or hypothecation of an investment

advisory contract by the assignor or of a controlling block of the assignor's outstanding voting

securities by a security holder of the assignor; but, if the investment adviser is a partnership, no

assignment of an investment advisory contract is considered to result from the death or withdrawal

of a minority of the members of the investment adviser having only a minority interest in the

business of the investment adviser, or from the admission to the investment adviser of one or more

members who, after admission, will be only a minority of the members and will have only a minority

interest in the business;

(f) It shall be unlawful for any person soliciting advisory clients to make any untrue statement of a

material fact, or omit to state a material fact necessary to make the statements made, in light of the

circumstances under which they are made, not misleading.

L.1967,c.93,s.6; amended 1987, c.424; 1997, c.276, s.6.

49:3-54. False, misleading statements.

It is unlawful for any person to make or cause to be made, in any document filed with the bureau or

in any proceeding, investigation or examination conducted under this act, any statement which is, at the

time and in the light of the circumstances under which it is made, false or misleading in any material

respect.

L.1967,c.93,s.7; amended 1997, c.276, s.7.

49:3-55. Determination of validity of filed document.

(a) Neither (1) the fact that an application for registration of any persons or a registration statement

of any security has been filed nor (2) the fact that a person or security is effectively registered

constitutes a finding by the bureau chief that any document filed under this act is true, complete,

and not misleading. Neither any such fact nor the fact that an exemption or exception is available

for a person, security or transaction means that the bureau chief has passed in any way upon the

merits or qualifications of, or recommended or given approval to, any person, security, or

transaction.

(b) It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client

any representation inconsistent with subsection (a) of this section.

L.1967,c.93,s.8; amended 1997, c.276, s.8.

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49:3-56. Registration required.

(a) It shall be unlawful for any person to act as a broker-dealer, agent, investment adviser or

investment adviser representative or Internet site operator in this State unless that person is

registered or exempt from registration under this act;

(b) A person shall be exempt from registration as a broker-dealer if, during any period of 12

consecutive months, that person (1) does not effect more than 15 transactions with persons other

than those specified in paragraph (5) of subsection (c) of section 2 of P.L.1967, c.93 (C.49:3-49)

located within New Jersey; (2) does not effect transactions in more than five customer accounts of

New Jersey residents; or (3) effects transactions with persons who have no place of residence in

New Jersey and who are temporarily located in the State; if at the time of the transactions described

in paragraph (1), (2) or (3) of this subsection (b), the broker-dealer has no place of business in this

State and is a member in good standing of a recognized self-regulatory organization and is

registered in the state in which the broker-dealer is located;

(3) of subsection (b) of this section shall be exempt from registration for those transactions if they

are members of a recognized self-regulatory organization and registered in the state in which they

are located at the time of the transaction;

(d) The burden of proving an exemption from registration under this section shall be on the person

claiming the exemption. A person claiming an exemption from registration under this section shall

keep his books and records open to inspection by the bureau. If the bureau chief finds it is in the

public interest and necessary for the protection of investors, the bureau chief may deny any

exemption specified in paragraph (1), (2) or (3) of subsection (b) or in subsection (c) of this section

as to any broker-dealer or agent. The bureau chief may proceed in summary fashion or otherwise;

(e) The bureau chief may identify classes of customers, securities, transactions and broker-dealers

for the purpose of increasing the number of transactions or accounts available under the

exemptions specified in paragraph (1), (2) or (3) of subsection (b) or subsection (c) of this section;

(f) The bureau chief may by order identify the self-regulatory organizations recognized under

subsections (b) and (c) of this section and may by rule or order define the conditions under which

non-resident persons are temporarily in New Jersey under paragraph (3) of subsection (b) of this

section;

(g) A person shall be exempt from registration as an investment adviser or from making a notice

filing required by section 10 of P.L.1967, c.93 (C.49:3-57), if:

(1) The person has a place of business in this State and during any period of 12 consecutive

months that person does not have more than five clients, who are residents of this State, other

than those specified in subparagraph (vi) of paragraph (2) of subsection (g) of section 2 of

P.L.1967, c.93 (C.49:3-49); or

(2) The person has no place of business in this State, and during any period of 12 consecutive

months that person does not have more than five clients, who are residents of this State, other

than those specified in subparagraph (vi) of paragraph (2) of subsection (g) of section 2 of

P.L.1967, c.93 (C.49:3-49).

The bureau chief may by rule or order determine the availability of the exemptions provided by this

subsection (g), including the waiver of the conditions in paragraphs (1) and (2) of this subsection;

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(h) It shall be unlawful for any broker-dealer or issuer to employ an agent in this State unless the

agent is registered. The registration of an agent is not effective during any period when he is not

associated with a particular broker-dealer registered under this act or a particular issuer. When an

agent begins or terminates a connection with a broker-dealer or issuer, or begins or terminates

those activities which make him an agent, the agent as well as the broker-dealer or issuer shall

promptly notify the bureau. When an agent terminates his connection with a particular broker-

dealer or issuer, his authorization to engage in those activities which make him an agent is

terminated;

(i) It shall be unlawful for any person to transact business in this State as an investment adviser

unless (1) he is so registered under this act, is exempt from registration under this act, or is excluded

from the definition of investment adviser under this act, or (2) he is registered as a broker-dealer

without the imposition of a condition under paragraph (5) of subsection (b) of section 11 of

P.L.1967, c.93 (C.49:3-58);

(j) It shall be unlawful for any investment adviser required to be registered pursuant to this section

to employ an investment adviser representative, unless the investment adviser representative is

also registered pursuant to this section. It is unlawful for any person registered or required to be

registered as an investment adviser under section 203 of the "Investment Advisers Act of 1940," 15

U.S.C. s.80b-3, to employ, supervise, or associate with an investment adviser representative having a

place of business located in this State, unless that investment adviser representative is registered

under this act, or is exempt from registration. The registration of an investment adviser

representative is not effective during any period when the investment adviser representative is not

employed by an investment adviser registered pursuant to this section or registered under section

203 of the "Investment Advisers Act of 1940," 15 U.S.C. s.80b-3. When an investment adviser

representative described in this subsection begins or terminates employment with an investment

adviser, the investment adviser and the investment adviser representative shall promptly notify the

bureau chief. When an investment adviser representative terminates his connection with a

particular investment adviser, his authorization to engage in those activities which make him an

investment adviser representative is terminated;

(k) The bureau chief may summarily bar, pending final determination of any proceeding under this

subsection, any person, who has been convicted of any crime of embezzlement under state, federal

or foreign law or any crime involving any theft, forgery or fraudulent practices in regard to any state,

federal or foreign securities, banking, insurance, or commodities trading laws or anti-fraud laws,

from being a partner, officer or director of an issuer, broker-dealer or investment adviser, or from

occupying a similar status or performing a similar function or from directly or indirectly controlling

or being under common control or being controlled by an issuer, broker-dealer or investment

adviser, or from acting as a broker-dealer, agent or investment adviser in this State. Any person

barred by this subsection shall be entitled to request a hearing by the same procedures as set forth

in subsection (c) of section 3 of P.L.1967, c.93 (C.49:3-50);

(l) Notwithstanding any other provision of this act, the bureau chief may bring an administrative or

court action pursuant to section 29 of P.L.1997, c.276 (C.49:3-70.1), to seek and obtain civil

penalties for violations of this section;

(m) Every registration shall expire one year from its effective date unless renewed, except that the

bureau chief may by rule provide that registrations shall all expire on the same date;

(n) Except with respect to advisers whose only clients are those described in subparagraph (vi) of

paragraph (2) of subsection (g) of section 2 of P.L.1967, c.93 (C.49:3-49), it is unlawful for any person

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who is registered or required to be registered under section 203 of the "Investment Advisers Act of

1940," 15 U.S.C. s.80b-3, as an investment adviser to conduct advisory business in this State, unless

that person files those documents filed with the Securities and Exchange Commission with the

bureau chief, as the bureau chief may by rule or otherwise require, and a fee and consent to service

of process, as the bureau chief, by rule or otherwise, may require;

(o) Notwithstanding anything to the contrary in this act, until October 11, 1999, the bureau chief

may require the registration of any person who is registered or required to be registered as an

investment adviser under section 203 of the "Investment Advisers Act of 1940," 15 U.S.C. s.80b-3,

and who has failed to promptly pay the fees required by subsection (n) of this section after being

notified in writing by the bureau chief of the non-payment or underpayment of those fees. A person

shall be considered to have promptly paid those fees if they are remitted to the bureau chief within

15 days following that person's receipt of the written notification from the bureau chief;

(p) For the purposes of this section, each applicant for registration shall submit to the bureau chief,

the applicant's name, address, fingerprints and written consent for a criminal history record

background check to be performed. The bureau chief is hereby authorized to exchange fingerprint

data with and receive criminal history record information from the State Bureau of Identification in

the Division of State Police and the Federal Bureau of Investigation consistent with applicable State

and federal laws, rules and regulations. The applicant shall bear the cost for the criminal history

record background check, including all costs of administering and processing the check. The Division

of State Police shall promptly notify the bureau chief in the event a current holder of a license or

prospective applicant, who was the subject of a criminal history record background check pursuant

to this section, is arrested for a crime or offense in this State after the date the background check

was performed.

L.1967, c.93, s.9; amended 1967, c.286, s.17; 1985, c.405, s.11; 1997, c.276, s.9; 2003, c.199, s.32;

2015, c.128, s.10.

49:3-57. Obtaining initial, renewal registration.

(a) A broker-dealer, agent, investment adviser or investment adviser representative, or Internet site

operator may obtain an initial or renewal registration by filing with the bureau an application

together with a consent to service of process pursuant to subsection (a) of section 26 of P.L.1967,

c.93 (C.49:3-73). Financial Industry Regulatory Authority, Inc. (FINRA) member broker-dealers and

their agents shall file their applications for initial or renewal registration with the Central

Registration Depository, or its successor organization, as appropriate and available. The application

shall contain whatever information the bureau chief by rule requires concerning such matters as (1)

the applicant's form and place of organization; (2) the applicant's proposed method of doing

business; (3) the qualifications and business history of the applicant; in the case of a broker-dealer

or investment adviser, the qualifications and business history of any partner, officer, or director, any

person occupying a similar status or performing similar functions, or any person directly or indirectly

controlling the broker-dealer or investment adviser; and, in the case of an investment adviser or

registered broker-dealer acting as an investment adviser, the qualifications and business history of

any employee who is to give investment advice or who is an investment adviser representative; (4)

any injunction or administrative order or conviction of a crime of the fourth degree or its equivalent

in any other jurisdiction involving a security or any aspect of the securities or investment advisory

business and any conviction of a crime of the first, second or third degree or its equivalent in any

other jurisdiction; (5) the applicant's financial condition; and (6) in the case of an investment

New Jersey Uniform Securities Law DEPARTMENT OF LAW AND PUBLIC SAFETY

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adviser, a copy of any information or brochure used by the adviser to comply with any rule of the

bureau promulgated pursuant to subsection (b) of section 12 of P.L.1967, c.93 (C.49:3-59). If no

denial, postponement or suspension order is in effect and no proceeding is pending under section

11 of P.L.1967, c.93 (C.49:3-58), registration becomes effective at noon of the thirtieth day after an

application is filed. The bureau chief may by rule or order specify an earlier effective date, or he

may by order defer the effective date until the first day of the next calendar month after the

thirtieth day after the filing of the application. The bureau chief may by order defer the effective

date for additional periods, as the applicant shall agree to in writing. The time limits herein

provided shall run anew from the filing of any amendment;

(b) Every applicant for initial or renewal registration for broker-dealer, agent, investment adviser

and investment adviser representative, and Internet site operator shall pay filing fees in the

amounts as set by rule of the bureau chief. If an application is denied or withdrawn, the bureau

shall retain the fee. Whenever any supplemental filing is made, for the purpose of keeping current

the information furnished to the bureau chief, there may be a supplemental filing fee in an amount

set by rule of the bureau chief;

for registration of a successor, whether or not the successor is then in existence, for the unexpired

portion of the registration period. There shall be no filing fee, except as may be provided by rule of

the bureau chief;

(d) (1) The bureau chief may by rule require a minimum capital for registered broker-dealers not to

exceed the limitations provided in section 15 of the "Securities Exchange Act of 1934," 15 U.S.C.

s.78o. The minimum capital required for a registered broker-dealer shall be determined by rule of

the bureau chief;

(2) The bureau chief may by rule establish minimum financial requirements for investment

advisers, not to exceed the limitations provided in section 222 of the "Investment Advisers Act

of 1940," 15 U.S.C. s.80b-18a, which may include different requirements for those investment

advisers who maintain custody of or have discretionary authority over clients' funds or securities

and investment advisers who do not maintain such custody or discretionary authority;

(e) The bureau chief may by rule require registered investment advisers who have custody of

clients' funds or securities to post bonds in amounts not to exceed the limitations provided in

section 222 of the "Investment Advisers Act of 1940," 15 U.S.C. s.80b-18a and registered broker-

dealers to post bonds in amounts not to exceed the limitations provided in section 15 of the

"Securities Exchange Act of 1934," 15 U.S.C. s.78o, and may determine their conditions. Any

appropriate deposit of cash or securities shall be accepted in lieu of any bond so required. Every

bond shall provide for suit thereon by any person who has a cause of action under section 24 of

P.L.1967, c.93 (C.49:3-71). Every bond shall provide that no suit may be maintained to enforce any

liability on the bond unless brought within two years after the sale or other act upon which it is

based, or within two years of the time when the person aggrieved knew or should have known of

the existence of his cause of action, whichever is later. The dollar amount of the bonds shall be set

by rule of the bureau chief;

(f) (1) The bureau chief may by rule provide for an examination which may be written or oral or

both, to be taken by any class of or all applicants, as well as persons who represent or will represent

an investment adviser in doing any of the acts which make him an investment adviser;

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(2) Each applicant for broker-dealer, agent, investment adviser or investment adviser

representative who takes an examination provided pursuant to paragraph (1) of this subsection

shall pay examination fees in the amounts as set forth by rule of the bureau chief;

(g) (1) Registration as a broker-dealer or agent under this act for the limited purpose of engaging in

the business of effecting or attempting to effect transactions in direct participation securities for the

accounts of others or for his own account shall be permitted. All the requirements of this act shall

apply to these limited registrations; except that any examination or other evaluation of proficiency

or knowledge required by the bureau for this registration shall be limited to matters relating to

direct participation securities and to the requirements of laws and regulations applicable to this

registrant.

(2) Any applicant for a limited registration shall acknowledge in writing to the bureau prior to

registration that he understands (i) the limitations on the scope of his authority to do business

pursuant to this limited registration; and (ii) that any activity which exceeds the limitations of

the registration shall violate the provisions of this act and may result in disciplinary action by the

bureau, prosecution under this act or other laws, or civil liability, to the same extent as if he was

not registered under this act.

L.1967, c.93, s.10; amended 1971, c.340; 1983, c.292, s.3; 1985, c.405, s.5; 1997, c.276, s.10; 2015,

c.128, s.11.

49:3-58. Denial, suspension, revocation of registration.

(a) The bureau chief may by order deny, suspend, or revoke any registration if he finds:

(1) that the order is in the public interest; and

(2) that the applicant or registrant or, in the case of a broker-dealer, investment adviser, or

Internet site operator, any partner, officer, or director, any person occupying a similar status or

performing similar functions, or any person directly or indirectly controlling the broker-dealer,

investment adviser, or Internet site operator:

(i) has filed an application for registration which as of its effective date, or as of any date

after filing in the case of an order denying effectiveness, was incomplete in any material

respect or contained any statement which was, in the light of the circumstances under

which it was made, false or misleading with respect to any material fact;

(ii) has willfully violated or willfully failed to comply with any provision of this act or any

rule or order authorized by this act or has willfully, materially aided others in such conduct;

(iii) has been convicted of any crime involving a security or any aspect of the securities,

commodities, banking, insurance or investment advisory business or any crime involving

moral turpitude; however, where the applicant can show by proof satisfactory to the bureau

chief that during the 10-year period preceding the application he has conducted himself in

such a manner as to warrant his registration consistent with all other provisions of this act,

the conviction shall not be a bar to registration;

(iv) is permanently or temporarily enjoined by any court of competent jurisdiction from

engaging in or continuing any conduct or practice involving any aspect of the securities,

commodities, banking, insurance or investment advisory business;

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(v) is the subject of an effective order of the bureau chief denying, suspending, or revoking

registration as a broker-dealer, agent, investment adviser, investment adviser

representative, securities offering registrant, or Internet site operator;

(vi) is the subject of an order entered within the past five years by any federal or state

securities, commodities, banking, insurance or investment advisory administrator or self-

regulatory organization denying or revoking a securities, commodities, banking, insurance or

investment advisory license or registration under federal or state securities, commodities,

banking, insurance or investment advisory law, including, but not limited to registration as a

broker-dealer, agent, investment adviser, investment adviser representative or issuer, or the

substantial equivalent of those terms as defined in this act, or is the subject of an order of

the Securities and Exchange Commission, a self-regulatory organization, the Commodity

Futures Trading Commission, an insurance regulator, or a federal or state banking regulator,

suspending or expelling him from a national securities or commodities exchange or national

securities or commodities association registered under the "Securities Exchange Act of

1934," or the "Commodity Exchange Act," or from engaging in the banking or insurance

business, or is the subject of a United States Post Office fraud order; but (A) the bureau chief

may not institute a revocation or suspension proceeding under this subparagraph (vi) more

than two years from the date of the order relied on and (B) he may not enter an order under

this subparagraph (vi) on the basis of an order under another state act unless that order was

based on facts which would currently constitute a ground for an order under New Jersey

law;

(vii) has engaged in dishonest or unethical practices in the securities, commodities, banking,

insurance or investment advisory business, as may be defined by rule of the bureau chief;

(viii) is insolvent, either in the sense that his liabilities exceed his assets or in the sense that

he cannot meet his obligations as they mature; but the bureau chief may not enter an order

against a broker-dealer or investment adviser for insolvency without a finding of insolvency

as to the broker-dealer or investment adviser;

(ix) is not qualified on the basis of such factors as character, training, experience and

knowledge of the securities business, except as otherwise provided in subsection (b) of this

section;

(x) has failed to pass an examination under subsection (f) of section 10 of P.L.1967, c.93

(C.49:3-57) if such an examination has been by rule provided for by the bureau chief;

(xi) has failed reasonably to supervise: his agents if he is a broker-dealer or issuer; the

agents of a broker dealer or issuer for whom he has supervisory responsibility; or his

employees who give investment advice if he is an investment adviser;

(xii) has failed to pay the proper fees, as set by rule of the bureau chief.

(b) The following provisions govern the application of subparagraph (ix) of paragraph (2) of

subsection (a) of this section:

(1) The bureau chief may not enter an order against a broker-dealer on the basis of the lack of

qualification of any person other than (i) the broker-dealer himself if he is an individual or (ii) an

agent of the broker-dealer;

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(2) The bureau chief may not enter an order against an investment adviser on the basis of the

lack of qualification of any person other than (i) the investment adviser himself if he is an

individual or (ii) any other person who represents the investment adviser in doing any of the

acts which make him an investment adviser;

(3) The bureau chief may not enter an order solely on the basis of lack of experience if the

applicant or registrant is qualified by training or knowledge or both;

(4) The bureau chief shall consider that an agent who will work under the supervision of a

registered broker-dealer need not have the same qualifications as a broker-dealer;

(5) The bureau chief shall consider that an investment adviser is not necessarily qualified solely

on the basis of experience as a broker-dealer or agent. If he finds that an applicant for initial or

renewal registration as a broker-dealer is not qualified as an investment adviser, he may by

order condition the applicant's registration as a broker-dealer upon his not transacting business

in this State as an investment adviser.

deny any registration pending final determination of any proceeding under this section. Upon entry

of the order, the bureau chief shall promptly notify the applicant or registrant, as well as the

employer or prospective employer if the applicant or registrant is an agent or an investment adviser

representative, that the order has been entered and of the reasons therefor.

(1) The bureau chief shall entertain on no less than three days' notice a written application to

lift the summary postponement, suspension or revocation on written application of the

applicant or registrant and in connection therewith may, but need not, hold a hearing and hear

testimony, but shall provide to the applicant or registrant a written statement of the reasons for

the summary postponement, suspension or revocation.

(2) Upon service of notice of the order issued by the bureau chief, the applicant or registrant

shall have up to 15 days to respond to the bureau in the form of a written answer and written

request for a hearing. The bureau chief shall, within five days of receiving the answer and a

request for a hearing, either transmit the matter to the Office of Administrative Law for a

hearing or schedule a hearing at the Bureau of Securities. Orders issued pursuant to this

subsection to suspend or revoke any registration shall be subject to an application to vacate

upon 10 days' notice, and a preliminary hearing on the order to suspend or revoke any

registration shall be held in any event within 20 days after it is requested, and the filing of a

motion to vacate the order shall toll the time for filing an answer and written request for a

hearing.

(3) If an applicant or registrant fails to respond by filing a written answer and request for a

hearing with the bureau or moving to vacate an order to suspend or revoke any registration

within the 15-day prescribed period, the registrant shall have waived the opportunity to be

heard and the order shall remain in effect until modified or vacated.

(d) If the bureau chief finds that any registrant or applicant for registration is no longer in existence

or has ceased to do business as a broker-dealer, agent, investment adviser, investment adviser

representative, or Internet site operator, or is subject to an adjudication of incapacity or to the

control of a committee, conservator, or guardian, or cannot be located after reasonable search, the

bureau chief may by order summarily revoke or deny the registration or application;

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(e) Withdrawal from registration as a broker-dealer, agent, investment adviser, investment adviser

representative, or Internet site operator becomes effective 30 days after receipt of an application to

withdraw or within such other period of time as the bureau chief may determine by rule or order.

The bureau chief may nevertheless institute a revocation or suspension proceeding under

subparagraph (ii) of paragraph (2) of subsection (a) of this section within two years after withdrawal

becomes effective and enter a revocation or suspension order as of the last date on which

registration was effective;

(f) (Deleted by amendment, P.L.1997, c.276).

(g) Every hearing which this act requires to be held shall be held in accordance with the

"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

L.1967, c.93, s.11; amended 1997, c.276, s.11; 1997, c.379, s.12; 2015, c.128, s.12.

49:3-59. Maintenance of records, examination.

(a) (Deleted by amendment, P.L.1997, c.276.)

(b) Every registered broker-dealer and investment adviser shall make and keep those accounts,

correspondence, memoranda, papers, books, and other records as the bureau chief by rule

prescribes. Such books, records and accounts shall conform to those prescribed by the Securities

and Exchange Commission. All records and books so required shall be accessible to the bureau and

preserved for three years unless the bureau chief by rule prescribes otherwise;

information be furnished or disseminated as necessary or appropriate in the public interest or for

the protection of investors and investment advisory clients. To the extent determined by the

bureau chief, information furnished to clients or prospective clients of an investment adviser that

would be in compliance with the "Investment Advisers Act of 1940" and the regulations

promulgated thereunder may be used in whole or partial satisfaction of this requirement;

(d) Every registered broker-dealer and investment adviser shall file the financial reports the bureau

chief prescribes by rule, except that the bureau chief shall not require a registered broker-dealer to

file financial reports which exceed the limitations provided in section 15 of the "Securities Exchange

Act of 1934," 15 U.S.C. s.78o;

(e) If the information contained in any document filed with the bureau is or becomes inaccurate or

incomplete in any material respect, the registrant shall promptly file a correcting amendment unless

notification of the correction has been given under subsection (h) of section 9 of P.L.1967, c.93

(C.49:3-56);

(f) All the records referred to in subsection (b) of this section are subject at any time or from time

to time to such reasonable periodic, special, or other examinations by representatives of the bureau

chief, within or without this State, as the bureau chief deems necessary or appropriate in the public

interest or for the protection of investors. The bureau chief may cooperate with the securities

administrators of other states, the Securities and Exchange Commission, Commodity Futures

Trading Commission, federal and state banking regulators, state insurance regulators and any

national securities exchange or national securities association registered under the "Securities

Exchange Act of 1934."

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L.1967,c.93,s.12; amended 1997, c.276, s.12.

49:3-60. Offer or sale of securities, lawful; conditions.

It is unlawful for any security to be offered or sold in this State unless:

(a) The security or transaction is exempt under section 3 of P.L.1967, c.93 (C.49:3-50);

(b) (Deleted by amendment, P.L.1997, c.276.)

(d) (Deleted by amendment, P.L.1985, c. 405.)

(e) The security is registered under this act; or

(f) It is a federal covered security for which a notice filing and fees have been submitted as required

by section 14 of this act (C.49:3-60.1).

L.1967,c.93,s.13; amended 1985, c.405, s.6; 1997, c.276, s.13.

49:3-60.1. Documents required to be filed.

(a) The bureau chief, by rule or otherwise, may require the filing of any or all of the following

documents with respect to a federal covered security under paragraph (2) of subsection (b) of

section 18 of the "Securities Act of 1933," 15 U.S.C. s.77r(b):

(1) Prior to the initial offer of such federal covered security in this State, a notice as prescribed

by the bureau chief by rule or otherwise or all documents that are part of a current federal

registration statement filed with the Securities and Exchange Commission under the "Securities

Act of 1933," together with a consent to service of process signed by the issuer and with the fee

required by section 15 of P.L.1967, c.93 (C.49:3-62);

(2) After the initial offer of such federal covered security in this State, all documents that are

part of an amendment to a current federal registration statement filed with the Securities and

Exchange Commission under the "Securities Act of 1933;"

(3) To the extent necessary to compute fees, an annual or periodic report of the value of such

federal covered securities offered or sold in this State;

(4) A notice setting forth the name and address of the issuer, and the name and the dollar

amount of the securities issued and the number of the securities to be issued;

(5) That notice shall be effective on the later of date of its receipt by the bureau chief or

effectiveness of the offering with the Securities and Exchange Commission and shall expire on

June 30 of each year, unless renewed prior to expiration by filing an additional notice and fee,

except that the bureau chief may by rule determine that such notice will automatically remain in

effect in the case of unit investment trusts. A renewal notice shall take effect upon expiration of

the notice filing being renewed. Only one notice and one fee needs to be filed for multiple

portfolios, classes, trusts, or funds that are offered through one prospectus. In setting fees, the

bureau shall take into account whether the investment company issuing the shares is an open-

end management company or unit investment trust and shall establish different fees for

New Jersey Uniform Securities Law DEPARTMENT OF LAW AND PUBLIC SAFETY

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different types of investment companies. In no event shall the fee charged in any calendar year

for claiming this exemption exceed the fee charged for registering securities with the bureau

under subsection (b) of section 15 of P.L.1967, c.93 (C.49:3-62);

(b) With respect to any security that is a federal covered security under subparagraph (D) of

paragraph (4) of subsection (b) of section 18 of the "Securities Act of 1933," 15 U.S.C. s.77r(b)(4)(D),

the bureau chief, by rule or otherwise, may require the issuer to file a notice on SEC Form D, 17

C.F.R. s.239.500, or a successor form, and a consent to service of process signed by the issuer no

later than 15 days after the first sale of that federal covered security in this State, together with the

fee required to be paid pursuant to paragraph (12) of subsection (b) of section 3 of P.L.1967, c.93

(C.49:3-50);

Securities and Exchange Commission under the "Securities Act of 1933" with respect to a federal

covered security under paragraph (3) or (4) of subsection (b) of section 18 of the "Securities Act of

1933," 15 U.S.C. s.77r(b)(3) or (4);

(d) The bureau chief may issue a stop order suspending the offer and sale of a federal covered

security, except a federal covered security under paragraph (1) of subsection (b) of section 18 of the

"Securities Act of 1933," 15 U.S.C. s.77r(b)(1), if the bureau chief finds that (1) the order is in the

public interest and (2) there is a failure to comply with any condition established under this section;

(e) The bureau chief, by rule or otherwise, may waive any or all of the provisions of this section.

L.1997,c.276,s.14.

49:3-61. Registration of security by qualification.

(a) Subject to the provisions of this section and section 15 of P.L.1967, c.93 (C.49:3-62) any security

may be registered by qualification.

(b) A registration statement under this section shall contain the following information and be

accompanied by the following documents:

(1) the information specified in subsection (c) of section 15 of P.L.1967, c.93 (C.49:3-62);

(2) the consent to service of process required by subsection (a) of section 26 of P.L.1967, c.93

(C.49:3-73);

(3) with respect to the issuer and any significant subsidiary; its name, address, and form of

organization; the State or foreign jurisdiction and date of its organization; the general character

and location of its business; a description of its physical properties and equipment; and a

statement of the general competitive conditions in the industry or business in which it is or will

be engaged;

(4) with respect to every director and officer of the issuer, or person occupying a similar status

or performing similar functions: his name, address, and principal occupation for the past five

years; the amount of securities of the issuer held by him as of a specified date within 30 days of

the filing of the registration statement; the amount of the securities covered by the registration

statement to which he has indicated his intention to subscribe; and a description of any material

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interest in any material transaction with the issuer or any significant subsidiary effected within

the past three years or proposed to be effected;

(5) with respect to persons covered by paragraph (4) of this subsection; the remuneration paid

during the past 12 months and estimated to be paid during the next 12 months, directly or

indirectly, by the issuer (together with all predecessors, parents, subsidiaries, and affiliates) to

all those persons in the aggregate;

(6) with respect to any person owning of record, or beneficially if known, 10% or more of the

outstanding shares of any class of equity security of the issuer: the information specified in

paragraph (4) of this subsection other than his occupation;

(7) with respect to every promoter if the issuer was organized within the past three years: the

information specified in paragraph (4) of this subsection, any amount paid to him within the

period or intended to be paid to him, and the consideration for any such payment;

(8) with respect to any person on whose behalf any part of the offering is to be made in a

nonissuer transaction: his name and address; the amount of securities of the issuer held by him

as of the date of the filing of the registration statement; a description of any material interest in

any material transaction with the issuer or any significant subsidiary effected within the past

three years or proposed to be effected; and a statement of his reasons for making the offering;

(9) the capitalization and long-term debt (on both a current and a pro forma basis) of the issuer

and any significant subsidiary, including a description of each security outstanding or being

registered or otherwise offered, and a statement of the amount and kind of consideration

(whether in the form of cash, physical assets, services, patents, goodwill, or anything else) for

which the issuer or any subsidiary has issued any of its securities within the past two years or is

obligated to issue any of its securities;

(10) the kind and amount of securities to be offered; the proposed offering price or the method

by which it is to be computed; any variation therefrom at which any portion of the offering is to

be made to any person or class of persons other than the underwriters, with a specification of

any such person or class; the basis upon which the offering is to be made if otherwise than for

cash; the estimated aggregate underwriting and selling discounts or commissions and finders'

fees (including separately cash, securities, contracts, or anything else of value to accrue to the

underwriters or finders in connection with the offering) or, if the selling discounts or

commissions are variable, the basis of determining them and their maximum and minimum

amounts; the estimated amounts of other selling expenses, including legal, engineering, and

accounting charges; the name and address of every underwriter and every recipient of a

finder's fee; a copy of any underwriting or selling-group agreement pursuant to which the

distribution is to be made, or the proposed form of any such agreement whose terms have not

yet been determined, and a description of the plan of distribution of any securities which are to

be offered otherwise than through an underwriter;

(11) the estimated cash proceeds to be received by the issuer from the offering; the purposes

for which the proceeds are to be used by the issuer; the amount to be used for each purpose;

the order or priority in which the proceeds will be used for the purposes stated; the amounts of

any funds to be raised from other sources to achieve the purposes stated; the sources of any

such funds; and, if any part of the proceeds is to be used to acquire any property (including

goodwill) otherwise than in the ordinary course of business, the names and addresses of the

vendors, the purchase price, the names of any persons who have received commissions in

New Jersey Uniform Securities Law DEPARTMENT OF LAW AND PUBLIC SAFETY

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connection with the acquisition, and the amounts of any such commissions and any other

expense in connection with the acquisition (including the cost of borrowing money to finance

the acquisition);

(12) a description of any stock options or other security options outstanding, or to be created in

connection with the offering, together with the amount of any such options held or to be held

by every person required to be named in paragraph (4), (6), (7), (8), or (10) of this subsection

and by any person who holds or will hold 10% or more in the aggregate of any such options;

(13) the dates of, parties to, and general effect concisely stated of, every management or other

contract of material importance made or to be made otherwise than in the ordinary course of

business if it is to be performed in whole or in part at or after the filing of the registration

statement or was made within the past two years, together with a copy of every such contract;

and a description of any pending litigation or proceeding to which the issuer is a party and

which materially affects its business or assets (including any such litigation or proceeding

known to be contemplated by governmental authorities);

(14) a copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales

literature intended as of the effective date to be used in connection with the offering;

(15) a specimen or copy of the security being registered; a copy of the issuer's articles of

incorporation and bylaws, or their substantial equivalents, as currently in effect; and a copy of

any indenture or other instrument covering the security to be registered;

(16) a signed or conformed copy of an opinion of counsel as to the legality of the security being

registered (with an English translation if it is in a foreign language), which shall state whether

the security when sold will be legally issued, fully paid, and nonassessable, and, if a debt

security, a binding obligation of the issuer;

(17) the written consent of any accountant, engineer, appraiser, or other person whose

profession gives authority to a statement made by him, if any such person is named as having

prepared or certified a report or valuation (other than a public and official document or

statement) which is used in connection with the registration statement;

(18) a balance sheet of the issuer as of a date within four months prior to the filing of the

registration statement, accompanied by a declaration that there has been no substantial change

in the financial position of the issuer since the date of such statement; a profit and loss

statement and analysis of surplus for each of the three fiscal years preceding the date of the

balance sheet and for any period between the close of the last fiscal year and the date of the

balance sheet, or for the period of the issuer's and any predecessor's existence if less than three

years; and, if any part of the proceeds of the offering is to be applied to the purchase of any

business, the same financial statements which would be required if that business were the

registrant; and

(19) such additional information as the bureau chief requires by rule or order.

(d) The bureau chief may by rule or order require as a condition of registration by qualification that

a prospectus containing any designated part of the information specified in subsection (b) of this

section be sent or given to each person to whom an offer is made before or concurrently with (1)

the first written offer made to him (otherwise than by means of a public advertisement) by or for

New Jersey Uniform Securities Law DEPARTMENT OF LAW AND PUBLIC SAFETY

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the account of the issuer or any other person on whose behalf the offering is being made, or by any

underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by

him as a participant in the distribution, (2) the confirmation of any sale made by or for the account

of any such person, (3) payment pursuant to any such sale, or (4) delivery of the security pursuant

to any such sale, whichever first occurs.

(e) The bureau chief may by rule or order require as a condition of registration by qualification (1)

that any security issued within the past three years or to be issued to a promoter for a consideration

substantially different from the public offering price, or to any person for a consideration other than

cash, be deposited in escrow; and (2) that the proceeds from the sale of the registered security in

this State be deposited in escrow until the issuer receives a specified amount from the sale of the

security either in this State or elsewhere. The bureau chief may by rule or order determine the

conditions of any escrow required hereunder, but he may not reject a depository solely because of

location in another state.

(f) The bureau chief may by rule or order require as a condition of registration that any security

registered by qualification be sold only on a specified form of subscription or sale contract, and that

a signed or conformed copy of each contract be filed with the bureau chief or preserved for any

period up to three years specified in the rule or order.

L.1967,c.93,s.14; amended 1997, c.276, s.15.

49:3-61.1. Coordination with federal registration.

a. Any security for which a registration statement has been filed under the "Securities Act of 1933,"

in connection with the same offering may be registered by coordination.

b. A registration statement under this section shall contain the following information and be

accompanied by the following documents in addition to the information specified in section 15 of

P.L.1967, c.93 (C.49:3-62) and the consent to service of process required by section 26 of P.L.1967,

c.93 (C.49:3-73):

(1) Three copies of the latest form of prospectus filed under the "Securities Act of 1933;"

(2) If the bureau chief by rule or otherwise requires, a copy of the articles of incorporation and

bylaws, or other substantial equivalents, currently in effect, a copy of any agreements with or

among underwriters, a copy of any indenture or other instrument governing the issuance of the

security to be registered, and a specimen or copy of the security;

(3) If the bureau chief requests, any other information, or copies of any other documents, filed

under the "Securities Act of 1933"; and

(4) An undertaking to forward all amendments to the federal prospectus, other than an

amendment which merely delays the effective date of the registration statement, promptly, and

in any event, not later than the first business day after the day they are forwarded to or filed

with the Securities and Exchange Commission, whichever occurs first.

c. The bureau chief shall make reasonable efforts to coordinate comments or requests with the

securities administrators in other jurisdictions in which registration is sought and particularly with

jurisdictions in which the issuer is located.

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d. A registration statement under this section becomes effective at the moment the federal

registration statement becomes effective if all the following conditions are satisfied:

(1) No stop order is in effect and no proceeding is pending against any person directly or

indirectly involved in the offering under subsection (c) of section 3, section 17 or 23 of P.L.1967,

c.93 (C.49:3-50, 49:3-64 or 49:3-70 ) or section 29 of this act (C.49:3-70.1); and

(2) The registration statement has been on file with the bureau chief for at least five days, but if

the registration statement is not filed with the bureau chief within 10 days after the initial filing

under the "Securities Act of 1933," the registration statement has been on file with the bureau

chief for 30 days or any shorter period the bureau chief, by rule or order, specifies; and

(3) There are no comments or requests from the bureau that have not been answered to the

satisfaction of the bureau; and

(4) A statement of the maximum and minimum proposed offering prices and the maximum

underwriting discounts and commissions has been on file for two full business days or a shorter

period as the bureau chief permits by rule or otherwise; and

(5) The offering is made within the limitations set forth in paragraphs (1), (2), (3) and (4) of this

subsection.

The registrant shall promptly notify the bureau chief by telephone or telegram of the date and time

when the federal registration statement became effective, and the content of a price amendment, if any

is made, and shall promptly file a post-effective amendment containing the information and documents

in the price amendment.

For the purposes of this section, "price amendment" means the final federal amendment which

includes a statement of the offering price, underwriting and selling discounts or commissions, amount of

proceeds, conversion rates, call prices, and other matters dependent upon the offering prices.

e. Upon failure to receive the required notification and post-effective amendment with respect to

the price amendment, the bureau chief may enter a stop order, without notice or hearing,

retroactively denying effectiveness to the registration statement or suspending its effectiveness

until there is compliance with subsection d. of this section, if he promptly notifies the registrant by

telephone or telegram, and in the case of a telephone notification, by subsequent written

notification, of the issuance of the order. If the registrant proves compliance with the requirements

of this subsection as to notice and post-effective amendment, the stop order shall be void as of the

time of its entry. The bureau chief may by rule or otherwise waive any of the conditions specified in

paragraphs (1), (2), (3) and (4) of subsection d. of this section.

f. If the federal registration statement becomes effective before all the conditions in subsection d.

are satisfied and they are not waived, the registration statement shall become effective as soon as

all the conditions are satisfied. If the registrant advises the bureau chief of the date when the

federal registration statement is expected to become effective, the bureau chief shall promptly

advise the registrant by telephone or telegram, at the registrant's expense, whether all the

conditions are satisfied and whether he contemplates the institution of a proceeding under section

17 of P.L.1967, c.93 (C.49:3-64), but any advice by the bureau chief pursuant to this subsection shall

not preclude the institution of such a proceeding at any time.

L.1985,c.405,s.7; amended 1997, c.276, s.16.

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49:3-61.2. Registration by notification.

The following securities may be registered by notification, whether or not they are also eligible for

registration by coordination under section 7 of P.L.1985, c.405 (C.49:3-61.1) or by qualification under

section 14 of P.L.1967, c.93 (C. 49:3-61):

a. Any security whose issuer, and any predecessors, have been in continuous operation for at least

five years, if:

(1) There has been no default during the current fiscal year or within the three preceding fiscal

years in the payment of principal, interest, or dividends on any security of the issuer, or of any

predecessor thereof, with a fixed maturity or a fixed interest or dividend provision; and

(2) The issuer, and any predecessors, during the past three fiscal years, have had an average net

earnings, determined in accordance with generally accepted accounting practices:

(i) Which are applicable to all securities without a fixed maturity or a fixed interest or

dividend provision, which securities are outstanding at the date the registration statement is

filed, and which average net earnings equal at least 5% of the amount of those outstanding

securities, as measured by the maximum offering price or the market price on a day,

selected by the registrant, within 30 days before the date of filing the registration

statement, whichever is higher, or by the book value on a day, selected by the registrant,

within 90 days of the date of filing the registration statement, to the extent that there is

neither a readily determinable market price nor a cash offering price; or

(ii) Which average net earnings, if the issuer, and any predecessors, have not had any

security of the type specified in subparagraph (i) of this paragraph outstanding for three full

fiscal years, equal to at least 5% of the amount, as established in subparagraph (i) of this

paragraph, of all securities which will be outstanding if all of the securities being offered or

proposed to be offered, whether or not they are proposed to be registered or offered in this

State, are issued;

b. A registration statement under this section shall contain the following information and shall be

accompanied by the following documents, in addition to the information specified in section 15 of

P.L.1967, c.93 (C.49:3-62) and the consent to service of process required by section 26 of P.L.1967,

c.93 (C.49:3-73):

(1) A statement demonstrating eligibility for registration by notification;

(2) With respect to the issuer and any significant subsidiary: its name, address, and form of

organization, the state or foreign jurisdiction and the date of its organization, and the general

character and location of its business;

(3) With respect to any person on whose behalf any part of the offering is to be made in a

nonissuer distribution: his name and address, the amount of securities of the issuer held by him

as of the date of the filing of the registration statement, and a statement of his reasons for

making the offering;

(4) A description of the security being registered;

(5) The information and documents specified in paragraphs (10), (12), and (14) of subsection (b)

of section 14 of P.L.1967, c.93 (C.49:3-61); and

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(6) In the case of any registration under paragraph (2) of subsection a. of this section which

does not satisfy the conditions of paragraph (1) of subsection a. of this section, a balance sheet

of the issuer as of a date within four months prior to the filing of the registration statement, and

a summary of earnings for each of the two fiscal years preceding the date of the balance sheet

and for any period between the close of the last fiscal year and the date of the balance sheet, or

for the period of the issuer's and any predecessors' existence, if less than two years.

c. If no stop order is in effect and no proceeding is pending against any person directly or indirectly

involved in the offering under subsection (c) of section 3, section 17 or section 23 of P.L.1967, c.93

(C.49:3-50, 49:3-64 or 49:3-70) or section 29 of this act (C.49:3-70.1), a registration statement under

this section automatically becomes effective at three o'clock Eastern Standard Time in the

afternoon of the second full business day after the filing of the registration statement or the last

amendment, or at such earlier time as the bureau chief determines.

L.1985,c.405,s.8; amended 1997, c.276, s.17.

49:3-62. Filing of registration statement, fee.

(a) A registration statement may be filed by the issuer, any other person on whose behalf the

offering is to be made, or a registered broker-dealer.

(b) Every person filing a registration statement shall pay a filing fee for each registration statement,

as set by rule of the bureau chief. This fee shall not be refundable.

(2) the states in which a registration statement or similar document in connection with the offering

has been or is to be filed; and (3) any adverse order, judgment, or decree entered in connection

with the offering by the regulatory authorities in any state or by any court or the Securities and

Exchange Commission.

(d) Any document filed pursuant to this supplementary act within three years preceding the filing of

a registration statement may be incorporated by reference in the registration statement to the

extent that the document is currently accurate.

(e) The bureau chief may by rule or order permit the omission of any item of information or

document from any registration statement.

(f) (Deleted by amendment, P.L.1997, c.276.)

(g) Every registration statement is effective for one year from its effective date, or any longer

period during which the security is being offered or distributed in a nonexempt transaction by or for

the account of the issuer or other person on whose behalf the offering is being made or by any

underwriter or broker-dealer who is still offering part of an unsold allotment or subscription taken

by him as a participant in the distribution, except during the time a stop order is in effect under

section 17 of P.L.1967, c.93 (C.49:3-64). All outstanding securities of the same class as a registered

security of the issuer are considered to be registered for the purpose of any nonissuer transaction

(1) so long as the registration statement is effective and (2) between the thirtieth day after the entry

of any stop order suspending or revoking the effectiveness of the registration statement under

section 17 of P.L.1967, c.93 (C.49:3-64) (if the registration statement did not relate in whole or in

part to a nonissuer distribution) and one year from the effective date of the registration statement.

A registration statement may not be withdrawn for one year from its effective date if any securities

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of the same class are outstanding. A registration statement may be withdrawn otherwise only in the

discretion of the bureau chief.

(h.) So long as a registration statement is effective, the bureau chief may by rule or order require the

person who filed the registration statement to file reports, not more often than quarterly, to keep

reasonably current the information contained in the registration statement and to disclose the

progress of the offering.

(i.) A registration statement relating to a security issued by a face-amount certificate company or a

redeemable security issued by an open-end management company or unit investment trust, as

those terms are defined in the "Investment Company Act of 1940," may be amended after its

effective date so as to increase the securities specified as proposed to be offered. Such an

amendment becomes effective when the bureau chief so orders. Every person filing such an

amendment shall pay a filing fee, as may be set by rule of the bureau chief, with respect to the

additional securities proposed to be offered.

(j.) Every registration statement shall be accompanied by an undertaking by the registrant agreeing

that, as a condition of registration, the registrant will allow the bureau chief in the bureau chief's

discretion (subject in all cases to the constitutional or statutory rights of the registrant, its agents

and principals, if any) to (1) make such investigations within or outside this State as the bureau chief

deems necessary to determine if the registrant, the registrant's agents, or principals have violated or

are about to violate any provision of this act or any rule or order hereunder, or to aid in the

enforcement of this act or in the prescribing of rules and forms hereunder, or (2) require or permit

the registrant, the registrant's agents, and principals to file a statement in writing, under oath or

otherwise as the bureau chief determines, as to all the facts and circumstances concerning the

matter to be investigated.

(k.) The bureau chief may by rule or order restrict or condition a securities registration of any kind,

or restrict the sale of such securities to accredited investors.

L.1967,c.93,s.15; amended 1985, c.405, s.9; 1997, c.276, s.18.

49:3-63. Filing of materials distributed to prospective investors.

The bureau chief may by rule or order require the filing of any prospectus, pamphlet, circular, form

letter, advertisement, or other sales literature or advertising communication addressed or intended for

distribution to prospective investors, including clients or prospective clients of an investment adviser,

unless the security is not required to be registered by subsection (a) or (f) of section 13 of P.L.1967, c.93

(C.49:3-60).

L.1967,c.93,s.16; amended 1997, c.276, s.19.

49:3-64. Issuance of stop order.

(a) The bureau chief may issue a stop order denying effectiveness to, or suspending or revoking the

effectiveness of, any registration statement if he finds:

(1) that the order is in the public interest: and

(2) that:

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(i) The registration statement, as of its effective date or as of any earlier date in the case of

an order denying effectiveness, or any amendment under subsection (i) of section 15 of

P.L.1967, c.93 (C.49:3-62) as of its effective date, or any report under subsection (h) of

section 15 of P.L.1967, c.93 (C.49:3-62), is incomplete in any material respect or contains

any statement which was, in the light of the circumstances under which it was made, false

or misleading with respect to any material fact; or

(ii) Any provision of this act or any rule, order, or condition lawfully imposed thereunder

has been willfully violated, in connection with the offering by (A) the person filing the

registration statement, (B) the issuer, any partner, officer, or director of the issuer, any

person occupying a similar status or performing similar functions, or any person directly or

indirectly controlling or controlled by the issuer, or (C) any underwriter; or

(iii) The security registered or sought to be registered is the subject of an administrative

stop order or similar order or a permanent or temporary injunction of any court of

competent jurisdiction entered under any other federal, foreign or State act applicable to

the offering; but the bureau chief may not institute a proceeding against an effective

registration statement under this subsection more than two years from the date of the

order or injunction relied on; or

(iv) The issuer's enterprise or method of business includes or would necessarily include

activities which are illegal where performed; or

(v) (Deleted by amendment, P.L.1985, c.405).

(vi) (Deleted by amendment, P.L.1985, c.405).

(vii) The applicant or registrant has failed to pay the proper filing fee, as set by rule of the

bureau chief;

(viii) The issuer, any partner, officer or director of the issuer, any person occupying a similar

status or performing similar functions, or any person directly or indirectly controlling or

controlled by the issuer, or any broker-dealer or other person involved directly or indirectly

in the offering (A) has been convicted of any crime of embezzlement under state, federal or

foreign law or any crime involving any theft, forgery or fraudulent practices in regard to any

state, federal or foreign securities, investment advisory, banking, insurance, or commodities

trading laws or anti-fraud laws; (B) is permanently or temporarily enjoined by any court of

competent jurisdiction from engaging in or continuing any conduct or practice involving any

aspect of the securities, commodities, banking, insurance or investment advisory business;

securities registration, registration as a broker-dealer, agent, investment adviser or

investment adviser representative; (D) is the subject of an order entered by any federal or

state securities, commodities, banking, insurance or investment advisory administrator or

self-regulatory organization denying or revoking any securities, commodities, banking,

insurance or investment advisory license or registration under federal or state securities,

commodities, banking, insurance or investment advisory law, including, but not limited to,

registration as a broker-dealer, agent, investment adviser, investment adviser

representative, or the substantial equivalent of those terms as defined in this act, or is the

subject of an order of the Securities and Exchange Commission, a self-regulatory

organization, the Commodity Futures Trading Commission, an insurance commissioner, or a

federal or state banking regulator, suspending or expelling him from a national securities or

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commodities exchange or national securities or commodities association registered under

the "Securities Exchange Act of 1934" or the "Commodity Exchange Act," or from engaging

in the banking or insurance business, or is the subject of a United States Postal Service fraud

order, except the bureau chief may not institute a revocation or suspension proceeding

pursuant to this subsubparagraph (D) of this subparagraph more than two years from the

date of the order relied on and he may not enter an order pursuant to this subsubparagraph

(D) of this subparagraph on the basis of an order under another state act unless that order

was based on facts which would currently constitute a ground for an order under New

Jersey law; (E) has engaged in dishonest or unethical practices in the securities business; or

(F) is insolvent, either in the sense that liabilities exceed assets or in the sense that

obligations cannot be met as they mature; or

(ix) The offering is a blind pool.

(b) (Deleted by amendment, P.L.1997, c.276.)

registration statement pending final determination of any proceeding instituted pursuant to this

section. Upon entry of such an order, the bureau chief shall promptly notify each person specified

in subsection (d) of this section that it has been entered and of the reasons therefor.

(1) Upon service of notice of the order issued by the bureau chief, the applicant shall have up to

15 days to respond to the bureau in the form of a written answer and written request for a

hearing. The bureau chief shall, within five days of receiving the answer and a request for a

hearing, either transmit the matter to the Office of Administrative Law for a hearing or schedule

a hearing at the Bureau of Securities. Orders issued pursuant to this subsection to postpone or

suspend the effectiveness of any registration statement shall be subject to an application to

vacate upon 10 days' notice, and in any event a preliminary hearing on the order to postpone or

suspend the effectiveness of any registration statement shall be held within 20 days after it is

requested, and the filing of a motion to vacate the order shall toll the time for filing an answer

and written request for a hearing.

(2) If an applicant fails to respond by either filing a written answer and written request for a

hearing with the bureau or moving to vacate an order to postpone or suspend the effectiveness

of any registration statement within the 15-day period prescribed, the registrant shall have

waived the opportunity to be heard and the order shall remain in effect until modified or

vacated.

(d) No stop order may be entered pursuant to this section, except as provided in subsection (c),

without (1) appropriate notice to the applicant or registrant, the issuer, and the person on whose

behalf the securities are to be offered, (2) opportunity for hearing, and (3) written findings of fact

and conclusions of law.

(e) The bureau chief may vacate or modify a stop order if he finds that the conditions which

prompted its entry have changed.

(f) Notwithstanding any other provision of this act to the contrary, the bureau chief may bring an

administrative or court action pursuant to section 29 of this act (C.49:3-70.1) to seek and obtain civil

penalties for violations of this section.

L.1967,c.93,s.17; amended 1985, c.405, s.10; 1987, c.301, s.3; 1997, c.276, s.20.

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49:3-65. Handling of filed documents.

(a) A document is filed when it is received in completed form by the bureau;

(b) The bureau shall keep a register of all applications for registration and registration statements

which are or have ever been effective under this act and all denial, suspension, revocation or other

orders which have been entered under this act. The register shall be open for public inspection;

be made available to the public under such rules as the bureau chief prescribes;

(d) Upon request, the bureau chief shall furnish to any person photographic or other copies,

certified under his seal of office if requested, of any entry in the register or any document in the

custody of the bureau chief which is a public record. The bureau chief may establish such

reasonable conditions and charges for the obtaining of such copies as will in his judgment be

practicable.

(e) The provisions of this section are subject to the provisions of P.L.1963, c.73 (C.47:1A-1 et seq.).

L.1967,c.93,s.18; amended 1997, c.276, s.21.

49:3-66. Administration of act.

(a) This act shall be administered by the Bureau of Securities in the Division of Consumer Affairs of

the Department of Law and Public Safety. The principal executive officer of the bureau shall be a

chief who is appointed by and serves at the pleasure of the Attorney General. The chief of the

bureau shall have power to employ such officers and employees as may be necessary to carry out

the purposes of this act and to define their duties;

(b) It shall be unlawful for any of the officers or employees of the bureau to use for personal benefit

any information which is filed with or obtained by the bureau and which is not made public. No

provision of this act authorizes any officers or employees of the bureau to disclose any such

information except among themselves or when necessary or appropriate in a proceeding or

investigation under this act. No provision of this act either creates or derogates from any privilege

which exists at common law or otherwise when documentary or other evidence is sought under

subpoena directed to any of the officers or employees of the bureau.

L.1967,c.93,s.19; amended 1997, c.276, s.22.

49:3-66.1. Continuation of "Securities Enforcement Fund," fees, annual accounting of transactions.

The "Securities Enforcement Fund" in the Division of Consumer Affairs of the Department of Law

and Public Safety shall continue as a nonlapsing, revolving fund. All fees, penalties, costs, fines and

other moneys collected pursuant to this act, shall be deposited in the fund. Moneys in the fund shall be

used by the Director of the Division of Consumer Affairs to administer the provisions of this act and to

investigate violations and to enforce the prohibitions of this act to protect the public. There shall be

made available from the General Fund such additional amounts as may be required to carry out the

provisions of this act.

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All fees set by rule of the bureau chief pursuant to this act may be imposed for revenue if the fees,

taken together, are reasonably related to the overall costs of carrying out the regulatory and

administrative duties of the bureau as set forth in this act.

The fees set pursuant to the "Uniform Securities Law (1967)," P.L.1967, c.93 (C.49:3-47 et seq.) and

supplements thereto which are in effect on the effective date of this act, but which are to be set by

regulation pursuant to this act, shall remain in effect until the regulations promulgated pursuant to this

act take effect.

An annual accounting of deposits to and withdrawals from the fund shall be made by the Director of

the Division of Consumer Affairs and filed with the Attorney General and bureau chief and any State

agency, as required by law.

L.1985,c.405,s.15; amended 1997, c.276, s.23.

49:3-67. Rules, forms, orders from bureau chief.

(a) The bureau chief may from time to time make, amend and rescind such rules, forms and orders

as are reasonably necessary to carry out the provisions of this act, including rules and forms

governing applications and reports, and defining any terms, whether or not used in this act, insofar

as the definitions are not inconsistent with the provisions of this act. For the purpose of rules and

forms, the bureau chief may classify securities, persons and matters within his jurisdiction, and

prescribe different requirements for different classes;

(b) No rule, form or order may be made, amended or rescinded unless the bureau chief finds that

the action is necessary and appropriate (1) in the public interest, or (2) for the protection of

investors, or (3) consistent with the purposes fairly intended by the policy and provisions of this act.

In prescribing rules and forms the bureau chief may co-operate with the securities administrators of

the other states and the Securities and Exchange Commission with a view to effectuating the policy

of this statute to achieve maximum uniformity in the form and content of applications and reports

wherever practicable;

required under this act; and (2) the circumstances under which consolidated financial statements

shall be filed. All financial statements shall be prepared in accordance with generally accepted

accounting practices. The form and content of financial statements shall conform, insofar as

practicable, to those prescribed by the Securities and Exchange Commission;

(d) All rules and forms promulgated by the bureau chief shall be filed as required pursuant to the

"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). Copies of the rules and

samples of the forms shall be published in convenient form by the bureau for distribution to

interested persons, subject to available appropriations.

L.1967,c.93,s.20; amended 1997, c.276, s.24.

49:3-68. Powers of bureau chief.

(a) The bureau chief in his discretion (1) may make such private investigations within or outside of

this State as he deems necessary to determine whether any person has violated or is about to

violate any provision of this act or any rule or order hereunder, or to aid in the enforcement of this

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act or in the prescribing of rules and forms hereunder, (2) may require or permit any person to file a

statement in writing, under oath or otherwise as the bureau chief determines, as to all the facts and

circumstances concerning the matter to be investigated, and (3) may publish information concerning

any violation of this act or any rule or order hereunder;

(b) For the purpose of any investigation or proceeding under this act, the bureau chief or any officer

designated by him may administer oaths and affirmations, subpoena witnesses, compel their

attendance, take evidence and require the production of any books, papers, correspondence,

memoranda, agreements or other documents or records which the bureau chief deems relevant or

material to the inquiry. At his discretion, the bureau chief may make available private investigative

materials to representatives of domestic or foreign governmental authorities, self-regulatory

organizations, state or federal law enforcement officers, state securities administrators, and

trustees in bankruptcy. The bureau may also disclose that information: (i) in court proceedings; (ii) if

ordered to do so by a court of competent jurisdiction; or (iii) if appropriate, in furtherance of any

ongoing investigation or proceeding. The bureau chief may also request and use private

investigative materials provided to it by other federal and state authorities, including authorities of

other states and foreign countries;

Superior Court, upon application by the bureau chief, may issue to the person an order requiring

him to appear before the bureau chief, or the officer designated by him, there to produce

documentary evidence if so ordered or to give evidence touching the matter under investigation or

in question. The court may grant injunctive relief restraining the issuance, sale or offer for sale,

purchase or offer to purchase, promotion, negotiation, advertisement or distribution from or within

this State of any securities or investment advisory advice concerning securities by a person, or

agent, employee, broker, partner, officer, director, investment adviser, investment adviser

representative or issuer or stockholder thereof, until such person has fully complied with such

subpoena or order and the bureau has completed its investigation. The court may proceed in the

action in a summary manner or otherwise;

(d) No person is excused from attending and testifying or from producing any document or record

before the bureau or in obedience to the subpoena or order of the bureau chief or any officer

designated by him, or in any proceeding instituted by the bureau, on the ground that the testimony

or evidence (documentary or otherwise) required of him may tend to incriminate him or subject him

to a penalty or forfeiture; but the testimony or evidence (documentary or otherwise) compelled

from an individual who has claimed his privilege against self-incrimination, or the fruits thereof, may

not be used to prosecute that individual or to subject that individual to any penalty or forfeiture,

except that the individual testifying is not exempt from prosecution and punishment for perjury,

false swearing or contempt committed in testifying;

(e) When it shall appear to the bureau chief that the testimony of any person is essential to an

investigation instituted by him as provided by this chapter, and that the failure of such person to

appear and testify may defeat the proper and effective conduct thereof, the bureau chief, in

addition to the other remedies provided for herein, may, by petition verified generally, setting forth

the facts, apply to the Superior Court for a writ of ne exeat against such person. The court shall

thereupon direct the issuance of the writ against such person requiring him to give sufficient bail

conditioned to insure his appearance before the bureau chief for examination under oath in such

investigation and that he will continue his appearance therein from time to time until the

completion of the investigation and will appear before the court if the bureau chief shall institute

any proceeding therein as a result of his investigation.

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The court shall cause to be indorsed on the writ of ne exeat, in words at length, a suitable amount of

bail upon which the person named in the writ shall be freed, having a due regard to the nature of the

case and the value of the securities involved. All applications to be freed on bail shall be on notice to

the bureau chief and the sufficiency of the bail given on the writ shall be approved by the court. All

recognizances shall be to the State and all forfeitures thereof shall be declared by the court. The

proceeds of the forfeitures shall be paid into the State treasury.

L.1967,c.93,s.21; amended 1997, c.276, s.25.

49:3-68.1. Restraints ordered by bureau chief.

(a) In case of contumacy by, or refusal to obey a subpoena or order issued to, any person, the

bureau chief may, in his discretion, summarily order restraints on the issuance, sale, offer for sale,

purchase or offer to purchase, promotion, negotiation, advertisement, or distribution from or within

the State of any securities or investment advisory advice concerning securities, by the person, or

agent, employee, broker, partner, officer, director, investment adviser representative, or

stockholder thereof, until that person has fully complied with that subpoena or order and the

bureau has completed its investigation.

(b) The bureau chief may proceed in an action in a summary manner or otherwise, by issuing a

cease and desist order, by denying, revoking or suspending any registration or exemption under this

act, by assessing civil monetary penalties, or by any combination of these actions he deems

appropriate. Upon entry of such an order, the bureau chief shall promptly notify each person

subject thereto that it has been entered and of the reasons therefor. In the case of an agent, notice

shall also be given to the broker-dealer with which the agent is affiliated as shown on the Central

Registration Depository, and in the case of an investment adviser representative, notice shall also be

given to the investment adviser with which the investment adviser representative is affiliated as

shown on Form ADV, 17 C.F.R. s.279.1, or successor federal registration form;

(1) The bureau chief shall entertain on no less than three days' notice an application to lift the

summary order on written application of the person subject thereto and in connection

therewith may, but need not, hold a hearing and hear testimony, but shall provide to the person

subject thereto a written statement of the reasons for the summary order;

(2) Upon service of notice of the order issued by the bureau chief, each person subject thereto

shall have up to 15 days to respond to the bureau in the form of a written answer and written

request for a hearing. The bureau chief shall, within five days of receiving the answer and

request for a hearing, either transmit the matter to the Office of Administrative Law for a

hearing, or schedule a hearing at the Bureau of Securities. Orders issued pursuant to this

section shall be subject to an application to vacate upon 10 days' notice, and in any event a

preliminary hearing on the order shall be held within 20 days after it is requested, and the filing

of a motion to vacate the order shall toll the time for filing an answer and written request for a

hearing;

(3) If a person subject to the order fails to respond by either filing a written answer and written

request for a hearing with the bureau or moving to vacate the order within the 15-day

prescribed period, that person shall have waived the opportunity to be heard and the order shall

remain in effect as to that person until modified or vacated by the bureau chief.

L.1997,c.276,s.26.

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49:3-69. Enforcement actions by bureau chief.

(a) If it appears to the bureau chief that any person has, or directly or indirectly controls another

person who has engaged in, is engaging in, or is about to engage in any act or practice constituting a

violation of any provision of this act or any rule or order hereunder, or if it appears that it will be

against the public interest for any person to issue, sell, offer for sale, purchase, offer to purchase,

promote, negotiate, advertise or distribute any securities from or within this State, the bureau chief

may take, in addition to any other enforcement actions available under this act and in the bureau

chief's discretion, either or both of the following actions:

(1) issue a cease and desist order against the persons engaged in the prohibited activities

directing them to cease and desist from further illegal activity or doing any acts in furtherance

thereof. Upon entry of such an order, the bureau chief shall promptly notify each person

subject thereto that it has been entered and of the reasons therefor. In the case of an agent,

notice shall also be given to the broker-dealer with which the agent is affiliated as shown on the

Central Registration Depository, and in the case of an investment adviser representative, notice

shall also be given to the investment adviser with which the investment adviser representative is

affiliated as shown on Form ADV, 17 C.F.R. s.279.1, or successor federal registration form;

(i) The bureau chief shall entertain on no less than three days' notice an application to lift

the summary order on written application of the person subject thereto and in connection

therewith may, but need not, hold a hearing and hear testimony, but shall provide to the

person subject thereto a written statement of the reasons for the summary order;

(ii) Upon service of notice of the order issued by the bureau chief, each person subject

thereto shall have up to 15 days to respond to the bureau in the form of a written answer

and written request for a hearing. The bureau chief shall, within five days of receiving the

answer and request for a hearing, either transmit the matter to the Office of Administrative

Law for a hearing or schedule a hearing at the Bureau of Securities. Orders issued pursuant

to this section shall be subject to an application to vacate upon 10 days' notice, and in any

event a preliminary hearing on the order shall be held within 20 days after it is requested,

and the filing of a motion to vacate the order shall toll the time for filing an answer and

written request for a hearing;

(iii) If any person subject to the order fails to respond by either filing a written answer and

written request for a hearing with the bureau or moving to vacate the order within the 15-

day prescribed period, that person shall have waived the opportunity to be heard and the

order shall remain in effect as to that person until modified or vacated by the bureau chief;

(2) Have an action brought by the Attorney General in the Superior Court on the bureau chief's

behalf to enjoin the acts or practices to enforce compliance with this act or any rule or order

hereunder. Upon a proper showing, a permanent or temporary injunction, restraining order, or

writ of mandamus shall be granted and a receiver or conservator may be appointed for the

defendant or the defendant's assets. In addition, upon a proper showing by the bureau chief,

the court may enter an order of rescission, restitution or disgorgement or any other order

within the court's power, directed to any person who has engaged in any act constituting a

violation of any provision of this act or any rule or order hereunder. The court may not require

the bureau chief to post a bond. The court may proceed in the action in a summary manner or

otherwise;

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(b) If it appears to the court in the action that such person has engaged in, is engaging in, or is

about to engage in any act or practice constituting a violation of any provision of this act or any rule

or order hereunder, it may enjoin such person, and any agent, employee, broker, partner, officer,

director or stockholder thereof, from continuing such practices or engaging therein or doing any acts

in furtherance thereof. The court may also enjoin the issuance, sale, offer for sale, purchase, offer

to purchase, promotion, negotiation, advertisement or distribution from or within this State of any

securities by such persons, and any agent, employee, broker, partner, officer, director or

stockholder thereof, until the court shall otherwise order;

appoint a receiver with power to sue for, collect, receive and take into his possession all the goods

and chattels, rights and credits, moneys and effects, lands and tenements, books, records,

documents, papers, choses in action, bills, notes and property of every description, derived by

means of any practice constituting a violation of this act or any rule or order hereunder, including

property with which such property has been mingled, if it cannot be identified in kind because of

such commingling, and to sell, convey and assign the same and hold and dispose of the proceeds

thereof under the direction of the court for the equal benefit of all who establish an interest therein

by reason of the use and employment by the defendant of any practices constituting a violation of

this act or any rule or order hereunder. The receiver may retain an attorney with the consent of the

Attorney General and the court. The court shall have jurisdiction of all questions arising in such

proceedings and may make such orders and judgments therein as justice shall require;

(d) If injunctive relief is granted as provided for in subsection (b) of this section against a

corporation, partnership, company, association or trust, the court may appoint a receiver and may

restrain the corporation, its officers, directors, stockholders, and agents, the partnership, company

or association, its officers, members and agents, and the trust, its grantors, trustees, officers, cestuis

que trustent and agents, from exercising any of its privileges or franchises, and in the case of a trust

from executing the trust, and in all cases from collecting or receiving any debts, or paying out,

selling, assigning or transferring any of its estate, moneys, funds, lands, tenements or effects except

to the receiver appointed by the court until the court shall otherwise order.

Upon the appointment of the receiver, all the real and personal property of the corporation,

partnership, company, association or trust, and its franchises, rights, privileges and effects shall

forthwith vest in him and the corporation, partnership, company, association or trust shall be divested

of the title thereto.

The receiver shall settle the estate and distribute the assets, and have all the powers and duties

conferred upon receivers by the provisions of Title 14A of the New Jersey Statutes, Corporations,

General, so far as the provisions thereof are applicable.

L.1967,c.93,s.22; amended 1985, c.405, s.12; 1997, c.276, s.27.

49:3-70. Violations, penalties.

(a) Any person who knowingly violates any provision of this act, except section 7 or 13 of P.L.1967,

c.93 (C.49:3-54 or C.49:3-60), or who knowingly violates any rule or order under this act, or who

willfully violates section 7 of P.L.1967, c.93 (C.49:3-54), knowing the statement made to be false or

misleading in any material respect, shall be guilty of a second or third degree crime, depending upon

the amount of the loss as provided in subsection (d) of this section.

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(b) Any person who recklessly violates subsection (a), (b) or (c) of section 5 or paragraph (1) or (2) of

subsection (a) or subsection (f) of section 6 of P.L.1967, c.93 (C.49:3-52 or 49:3-53) or section 6 of

this act, shall be guilty of a crime of the fourth degree.

ascribed to them in subsection (b) of N.J.S.2C:2-2.

(d) If the total value of all money or anything else of value paid by or lost by victims of the violations

of this act, resulting from the same device, scheme or artifice, from the same untrue statement of a

material fact or failure to state a material fact, from the same act, practice or course of business, or

from any other fraud involving any security is:

(1) less than $75,000, or if no monetary value can be placed upon the loss or if no person pays

or loses anything of monetary value, the offender is guilty of a crime of the third degree;

(2) $75,000 or more, the offender is guilty of a crime of the second degree;

(e) No person may be imprisoned for the violation of any rule or order if he proves that he had no

knowledge of the rule or order.

(f) An indictment or information returned under this act shall be subject to the limitations of

N.J.S.2C:1-6. A violation is committed when every element occurs or at the time when the course of

conduct or the actor's complicity therein is terminated.

(g) Nothing in this act shall limit the power of this State to prosecute a person for conduct

constituting a crime under any other law.

L.1967,c.93,s.23; amended 1985, c.405, s.13; 1997, c.276. s.28.

49:3-70.1. Violations, civil penalties.

Any person who violates any of the provisions of this act or who violates any rule or order under this

act, shall be liable for the first violation to a penalty of not more than $10,000; for a second violation to

a penalty of not more than $20,000; and for each subsequent violation to a penalty of not more than

$20,000 per violation. One or more violations may occur at the same time or be part of the same

conduct or pattern of conduct. The penalty shall be entered, with the requisite notice, sued for and

recovered by and in the name of the bureau chief and shall be collected and enforced by summary

proceeding pursuant to "the penalty enforcement law," N.J.S.2A:58-1 et seq., or administratively.

L.1997,c.276,s.29.

49:3-71. Action for deceit; liability.

(a) Any person who

(1) Offers, sells or purchases a security in violation of subsection (b) of section 8, subsection (a)

of section 9 or section 13 of P.L.1967, c.93 (C.49:3-55, 49:3-56, or 49:3-60), or

(2) Offers, sells or purchases a security by means of any untrue statement of material fact or

any omission to state a material fact necessary in order to make the statements made, in the

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light of the circumstances under which they are made, not misleading (the buyer not knowing of

the untruth or omission), or

(3) offers, sells or purchases a security by employing any device, scheme, or artifice to defraud,

(4) offers, sells or purchases a security by engaging in any act, practice or course of business

which operates or would operate as a fraud or deceit upon any person, or

(5) engages in the business of advising others, for compensation, either directly or through

publications or writings, as to the value of securities, or as to the advisability of investing in,

purchasing or selling securities, or who, for compensation and as a part of a regular business,

issues or promulgates analyses or reports concerning securities (i) in willful violation of this act

or of any rule or order promulgated pursuant to this act, or (ii) employs any device, scheme or

artifice to defraud the other person or engages in any act, practice or course of business or

conduct which operates or would operate as a fraud or deceit on the other person, is liable as

set forth in subsection (c) of this section;

(b) (1) If any claim is brought for violation of paragraph (2), (3), (4) or (5) of subsection (a) of this

section, the person who bought the security or received the investment advice shall sustain the

burden of proof that the seller or giver of investment advice knew of the untruth or omission and

intended to deceive the buyer or recipient of investment advice and that the buyer or recipient of

investment advice has suffered a financial detriment;

(2) If any claim is brought for violation of paragraph (2), (3), (4) or (5) of subsection (a) of this

section involving a purchase of securities by others or investment advice as to the selling of securities,

the person who sold the security or who received the investment advice to sell the security shall sustain

the burden of proof that that person suffered a net loss with respect to that sale or investment advice

taking into account all transactions by that person in the same security or any security convertible into

that security within one year before or after the sale or advice which is the basis of the claim;

investment advice to a person in violation of paragraph (1), (2), (3), (4) or (5) of subsection (a) of this

section is liable to that person, who may bring an action either at law or in equity to recover the

consideration paid for the security or the investment advice and any loss due to the advice, together

with interest set at the rate established for interest on judgments for the same period by the Rules

Governing the Courts of the State of New Jersey from the date of payment of the consideration for

the investment advice or security, and costs, less the amount of any income received on the

security, upon the tender of the security and any income received from the investment advice or on

the security, or for damages if he no longer owns the security. Damages are the amount that would

be recoverable upon a tender less the value of the security when the buyer disposed of it and

interest at the rate established for interest on judgments for the same period by the Rules

Governing the Courts of the State of New Jersey from the date of disposition;

(d) Every person who directly or indirectly controls a seller liable under subsection (a) of this

section, every partner, officer, or director of such a seller, or investment adviser, every person

occupying a similar status or performing similar functions, every employee of such a seller or

investment adviser who materially aids in the sale or in the conduct giving rise to the liability, and

every broker-dealer, investment adviser, investment adviser representative or agent who materially

aids in the sale or conduct are also liable jointly and severally with and to the same extent as the

seller or investment adviser, unless the nonseller who is so liable sustains the burden of proof that

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he did not know, and in the exercise of reasonable care could not have known, of the existence of

the facts under paragraphs (1) through (5) of subsection (a) of this section which give rise to liability.

There is contribution as in cases of contract among the several persons so liable;

(e) Any tender specified in this section may be made at any time before entry of judgment;

(f) Every cause of action under this act survives the death of any person who might have been a

plaintiff or defendant;

(g) No person may bring an action under this section more than two years after the contract of sale

or the rendering of the investment advice, or more than two years after the time when the person

aggrieved knew or should have known of the existence of his cause of action, whichever is later. No

person may bring an action under this section (1) if the buyer received a written offer, before suit

and at a time when he owned the security, to refund the consideration paid, together with interest

at the rate established for interest on judgments for the same period by the Rules Governing the

Courts of the State of New Jersey at the time the offer was made, from the date of payment, less

the amount of any income received on the security, and he failed to accept the offer within 30 days

of its receipt, or (2) if the buyer received such an offer before suit and at a time when he did not

own the security, unless he rejected the offer in writing within 30 days of its receipt;

(h) No person who has made or engaged in the performance of any contract in violation of any

provision of this act or any rule or order hereunder, or who has acquired any purported right under

any such contract with knowledge of the facts by reason of which its making or performance was in

violation, may base any suit on the contract;

(i) Any condition, stipulation or provision binding any person acquiring any security or receiving

investment advice to waive compliance with any provision of this act or any rule or order hereunder

is void;

(j) The rights and remedies provided by this act are in addition to any other rights or remedies that

may exist at law or in equity, but this act does not create any cause of action not specified in this

section or subsection (e) of section 10 of P.L.1967, c.93 (C.49:3-57).

L.1967,c.93,s.24; amended 1985, c.405, s.14; 1997, c.3; 1997, c.276, s.30.

49:3-72. Nonapplicability of act.

No provision of this act imposing any liability applies to any act done or omitted in good faith in

conformity with any rule, form or order of the bureau chief, notwithstanding that the rule, form or order

may later be amended or rescinded or be determined by judicial or other authority to be invalid for any

reason.

L.1967,c.93,s.25; amended 1997, c.276, s.31.

49:3-73. Consent to bureau chief as attorney for service of process.

(a) Every broker-dealer, agent or investment adviser applicant for registration under this act and

every issuer who is required to file with the bureau to claim an exemption from registration or to

prescribes, an irrevocable consent appointing the bureau chief or his successor in office to be his

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attorney to receive service of any lawful process in any noncriminal suit, action or proceeding

against him or his successor, executor or administrator which arises under this act or any rule or

order hereunder after the consent has been filed, with the same force and validity as if served

personally on the person filing the consent. A person who has filed such a consent in connection

with a previous registration need not file another. Service may be made by leaving a copy of the

process in the office of the bureau, but it is not effective unless the plaintiff, who may be the bureau

chief, in a suit, action or proceeding instituted on his behalf by the Attorney General forthwith sends

notice of the service and a copy of the process by certified or registered mail to the defendant or

respondent at his last address on file with the bureau. It is the responsibility of the registrant to

maintain its current address on file with the bureau. If process was served on the last address on

file with the bureau and is returned by the post office unclaimed, refused or not forwarded, that

service will constitute valid service;

(b) If any person, including any nonresident of this State, engages in conduct prohibited or made

actionable by this act or any rule or order authorized by this act, and he has not filed a consent to

service of process under subsection (a) of this section and personal jurisdiction over him cannot

otherwise be obtained in this State, that conduct shall be considered equivalent to his appointment

of the bureau chief or his successor in office to be his attorney to receive service of any lawful

process in any noncriminal suit, action or proceeding against him or his successor, executor or

administrator which grows out of that conduct and which is brought under this act or any rule or

order hereunder, with the same force and validity as if served on him personally. Service may be

made by leaving a copy of the process in the office of the bureau, and it is not effective unless the

plaintiff, who may be the bureau chief in any action instituted on his behalf by the Attorney General,

forthwith sends notice of the service and a copy of the process by certified or registered mail to the

defendant or respondent at his last known address.

L.1967,c.93,s.26; amended 1997, c.276, s.32.

49:3-75. Construction of act.

This act shall be so construed as to effectuate its general purpose to make uniform the law of those

states which enact similar laws and to co-ordinate the interpretation and administration of this act with

related federal regulations. The bureau chief and the bureau chief's designees may participate in

private investigations and enforcement proceedings and cooperate in sharing information with other

State authorities, and with authorities of other states and of federal and foreign governments.

L.1967,c.93,s.28; amended 1997, c.276, s.33.

49:3-76. Severability of provisions

If any provision of this law or the application thereof to any person or circumstance is held invalid,

the invalidity shall not affect other provisions or applications of the law which can be given effect

without the invalid provision or application, and to this end the provisions of this law are severable.

L.1967, c. 93, s. 29.

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49:3-77. Information provided to prospective investors.

In order for a transaction to meet the requirements of paragraph (14) of subsection (b) of section 3

of P.L.1967, c.93 (C.49:3-50), the issuer seeking to offer securities that meet those requirements and the

Internet site through which the offering is made shall provide the following information to the

prospective investors in writing on that site:

a. a copy of the legend required pursuant to subsection a. of section 3 of P.L.2015, c.128 (C.49:3-

79);

b. evidence that the issuer is a business organization organized under the laws of this State and is

authorized to do business in this State;

c. a description of the company, its form and date of business organization, the address and

telephone number of its principal office, its history, its business plan, a description of material

agreements and the intended use of the offering proceeds, at least 65 percent of which shall be

specifically disclosed in dollar amount and percentage terms in a use of proceeds section and which

shall also include any amounts to be paid, as compensation or otherwise, to any owner, executive

officer, director, managing member, or other person occupying a similar status or performing similar

functions on behalf of the issuer;

d. the identity of all persons owning more than 10 percent of the ownership interests of any class

of securities of the company, with a description of options or other contingent securities

outstanding and a description of the amount of those options or other contingent securities that

those persons own;

e. the identity of the executive officers, directors, managing members, and other persons

occupying a similar status or performing similar functions in the name of and on behalf of the issuer,

including their titles and their prior experience, with a description of options or other contingent

securities outstanding and a description of the amount of those options or other contingent

securities that those persons own;

f. the terms and conditions of the securities being offered and of any outstanding securities of the

company, the minimum and maximum amount of securities being offered, if any, and the

percentage ownership of the company represented by the offered securities and the valuation of

the company implied by the price of the offered securities;

g. the minimum offering amount that is necessary to implement the business plan, and a notice

that the funds will only be released to the issuer if the minimum offering amount is reached;

h. the time and date, which may be no more than 12 months from the date of the offering, by

which the minimum offering amount must be reached before the funds will be returned to

investors;

i. a provision stating that the investors may cancel their commitment to invest for up to 30 days

following the date the investment is made, except that investors who invest within 30 days of the

time and date by which the minimum offering amount must be reached as provided in subsection h.

of this section shall only have the amount of time left before the time and date by which the

minimum offering amount must be reached in which to cancel their commitment to invest, even if

that amount of time is less than 30 days;

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j. the identity of any person who has been or will be retained by the issuer to assist the issuer in

conducting the offering and sale of the securities, including any Internet site operator, but excluding

persons acting solely as accountants or attorneys and employees whose primary job responsibilities

involve the operating business of the issuer, rather than assisting the issuer in raising capital;

k. a description of the consideration being paid for assistance to each person identified under

subsection j. of this section;

l. a description of any litigation or legal proceedings involving the company or its management;

m. a discussion of significant factors that make the offering speculative or risky;

n. a description of any conflicts of interest;

o. financial statements, including a balance sheet, income statement, cash flow statement, and

capitalization of issuer;

p. a statement of current liabilities outstanding, including obligations past due and obligations due

within 12 months;

q. the Internet site address at which the quarterly report required by section 5 of P.L.2015, c.128

(C.49:3-81) will be made available; and

r. any additional information material to the offering.

L.2015, c.128, s.1.

49:3-78. Agreements relative to exempted transaction.

For any exempted transaction which meets the requirements of paragraph (14) of subsection (b) of

section 3 of P.L.1967, c.93 (C.49:3-50), the issuer shall execute an escrow agreement with a bank,

savings bank, savings and loan association, or credit union, which institution has a place of business in

New Jersey, that provides that investor funds obtained pursuant to the provisions of P.L.2015, c.128

(C.49:3-77 et al.) will be deposited in that institution, and shall further provide that all offering proceeds

will be released to the issuer only when the aggregate capital raised from all investors pursuant to

P.L.2015, c.128 (C.49:3-77 et al.) is equal to or greater than the minimum offering amount specified in

the issuer's business plan as necessary to implement the business plan. The agreement shall also

provide that all investor funds will be returned within 60 days to investors if that minimum offering

amount is not raised by the time stated in the disclosures required to be set forth pursuant to P.L.2015,

c.128 (C.49:3-77 et al.).

L.2015, c.128, s.2.

49:3-79. Promulgation of legend, investor certification.

a. The bureau shall promulgate a legend that the issuer shall be required to provide to all

prospective investors in exempted securities offered pursuant to paragraph (14) of subsection (b) of

section 3 of P.L.1967, c.93 (C.49:3-50), informing prospective investors that the securities have not

been registered with the United States Securities and Exchange Commission or the bureau and that

the securities are subject to limitations on resale, along with any other information the bureau finds

relevant to be included in that legend.

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b. The bureau shall promulgate an investor certification which, prior to the consummation of a

purchase, the investor in the securities shall be required to certify in writing or electronically that

the investor understands:

(1) The investment may be a high-risk speculative business venture;

(2) The offering has not been reviewed or approved by any State or federal securities regulatory

authority and no person or authority has confirmed the accuracy or determined the adequacy of

disclosures made relating to this offering;

(3) The securities are illiquid, there is no ready market for the sale of the securities, and it may

be difficult or impossible to sell or otherwise dispose of the investment;

(4) The investor may be subject to tax on the taxable income and losses of the company; and

(5) Any additional information the bureau finds relevant.

L.2015, c.128, s.3.

49:3-80. Requirements for Internet site.

The following requirements apply to an Internet site through which an issuer offers or sells

securities exempted pursuant to paragraph (14) of subsection (b) of section 3 of P.L.1967, c.93 (C.49:3-

50):

a. The Internet site operator shall register with the bureau by filing an application for registration,

accompanied by a filing fee to be determined by the bureau, that includes all of the following:

(1) That the Internet site operator is a business entity organized under the laws of this State

and authorized to do business in this State;

(2) That the Internet site is being utilized to offer and sell securities pursuant to the exemption

under paragraph (14) of subsection (b) of section 3 of P.L.1967, c.93 (C.49:3-50);

(3) The identity and location of, and contact information for, the Internet site operator; and

(4) Except as provided in subsections b. and c. of this section, that the Internet site operator is

registered as a broker-dealer under P.L.1967, c.93 (C.49:3-47 et seq.).

If any change occurs in the information that an Internet site operator submits to the bureau

pursuant to this subsection, the Internet site operator shall notify the bureau of the change within 30

days after the change occurs.

b. The Internet site operator shall not be required to register as a broker-dealer under P.L.1967,

c.93 (C.49:3-47 et seq.) if all of the following apply with respect to the Internet site and its operator:

(1) It does not offer investment advice or recommendations;

(2) It does not solicit purchases, sales, or offers to buy the securities offered or displayed on the

Internet site;

(3) It does not compensate employees, agents, or other persons for the solicitation or based on

the sale of securities displayed or referenced on the Internet site;

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(4) It is not compensated based on the amount of securities sold, and it does not hold, manage,

possess, or otherwise handle investor funds or securities;

(5) The fee it charges an issuer for an offering of securities on the Internet site is a fixed amount

for each offering, a variable amount based on the length of time that the securities are offered

on the Internet site, or a combination of such fixed and variable amounts;

(6) It does not identify, promote, or otherwise refer to any individual security offered on the

Internet site in any advertising for the Internet site;

(7) It does not engage in other activities the bureau determines to be prohibited; and

(8) Neither the Internet site operator, nor any director, executive officer, general partner,

managing member, or other person with management authority over the Internet site operator,

has been subject to any conviction, order, judgment, decree, or other action specified in Rule

506 (d) (1) adopted under the "Securities Act of 1933" (17 C.F.R. s.230.506(d)(1)) that would

disqualify an issuer under Rule 506 (d) adopted under the "Securities Act of 1933" (17 C.F.R.

s.230.506(d)) from claiming an exemption specified in Rule 506 (a) to (c) adopted under the

"Securities Act of 1933" (17 C.F.R. ss.230.506(a) to (c)).

c. The Internet site operator is not required to register as a broker-dealer under P.L.1967, c.93

(C.49:3-47 et seq.) if the Internet site operator is registered as a broker-dealer under the "Securities

Exchange Act of 1934" (15 U.S.C. s.78o) or is a funding portal registered under the "Securities Act of

1933" (15 U.S.C. s.77d) and the Securities and Exchange Commission has adopted rules under

authority of section 3 (h) of the "Securities Exchange Act of 1934" (15 U.S.C. s.78c(h)) and Pub.L.

112-106, section 304, governing funding portals, and the Internet site operator files with the bureau

chief those documents filed with the Securities and Exchange Commission that the bureau chief may

by rule or otherwise require, and the Internet site operator consents to service or process and pays

a fee to be established by the bureau. Nothing in this section shall be construed to require an

Internet site operator to register as a broker-dealer under the "Securities Exchange Act of 1934" or

as a funding portal under the "Securities Act of 1933."

d. The issuer and the Internet site operator shall maintain records of all offers and sales of

securities effected through the Internet site and shall provide ready access to the records to the

bureau, upon request. The bureau may access, inspect, and review any Internet site registered

under this section as well as its records.

e. Notwithstanding any law or regulation to the contrary, if the Securities and Exchange

Commission adopts rules under authority of section 3(h) of the "Securities Exchange Act of 1934"

(15 U.S.C. s.78c (h)) and Pub.L. 112-106, section 304, that authorize funding portals to receive

commissions without registering as broker-dealers under the "Securities Exchange Act of 1934," the

bureau may promulgate rules authorizing Internet site operators registered with the bureau

pursuant to this section to receive commissions without registering as broker-dealers.

L.2015, c.128, s.4.

49:3-81. Quarterly report to investors.

An issuer of securities exempted pursuant to paragraph (14) of subsection (b) of section 3 of

P.L.1967, c.93 (C.49:3-50) shall provide, free of charge, a quarterly report to the issuer's investors. An

issuer may satisfy the reporting requirement of this section by making the information available on an

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Internet site if the information is made available within 45 days after the end of each fiscal quarter and

remains available until the succeeding quarterly report is issued. A written copy shall be provided to an

investor upon request. The report shall include a statement of the compensation received by each

director and executive officer, including cash compensation earned since the previous report, as well as

any bonuses, stock options, other rights to receive securities of the issuer or any affiliate of the issuer, or

any compensation received. The report shall also include an analysis by management of the issuer of

the business operations and financial condition of the issuer.

L.2015, c.128, s.5.

49:3-82. Criteria for disqualifying issuers from claiming exemption.

The bureau shall establish by regulation criteria for disqualifying issuers of securities from claiming

the exemption from registration pursuant to paragraph (14) of subsection (b) of section 3 of P.L.1967,

c.93 (C.49:3-50). The criteria shall include, but not be limited to, the following disqualifying events:

a. Criminal convictions in connection with the purchase or sale of a security, or involving the

making of a false filing related to the offer or sale of a security;

b. Injunctions and court orders against engaging in or continuing conduct or practices in

connection with the purchase or sale of securities or involving the making of a false filing related to

the offer or sale of a security or any criminal conviction as described in subsection (k) of section 9 of

P.L.1967, c.93 (C.49:3-56);

c. United States Postal Service false representation orders; and

d. The issuer is subject to a bureau stop order.

L.2015, c.128, s.6.

49:3-83. Regulations.

The bureau chief, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et

seq.), may adopt regulations to effectuate the purposes of P.L.2015, c.128 (C.49:3-77 et al.) and to

comply with the requirements of applicable federal law; except that, notwithstanding any provision of

P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the bureau chief may adopt, immediately upon filing

with the Office of Administrative Law, those regulations as the bureau chief deems necessary to

implement the provisions of P.L.2015, c.128 (C.49:3-77 et al.), which regulations shall be effective for a

period not to exceed six months after the date of filing and may, thereafter, be amended, adopted or

readopted by the commissioner in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et

seq.).

L.2015, c.128, s.7.

49:3-84. Short title.

This act shall be known and may be cited as the "Safeguarding against Financial Exploitation Act."

L.2019, c.340, s.1.

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49:3-85. Definitions relative to financial exploitation of vulnerable adults.

As used in this act:

"Applicable county adult services provider" means the county adult services provider that services

the county of residence of the eligible adult.

"County adult protective services provider" has the meaning in section 2 of P.L.1993, c.249

(C.52:27D-407).

"Eligible adult" means:

(1) a person 65 years of age or older; or

(2) a person subject to the "Adult Protective Services Act," P.L.1993, c.249 (C.52:27D-406 et seq.).

"Financial exploitation" means:

(1) the wrongful or unauthorized taking, withholding, appropriation, or use of money, assets or

property of an eligible adult; or

(2) any act or omission taken by a person, including through the use of a power of attorney,

guardianship, or conservatorship of an eligible adult, to:

(a) obtain control, through deception, intimidation or undue influence, over the eligible adult's

money, assets or property to deprive the eligible adult of the ownership, use, benefit or

possession of his or her money, assets or property; or

(b) convert money, assets or property of the eligible adult to deprive such eligible adult of the

ownership, use, benefit or possession of his or her money, assets or property.

"Qualified individual" means any broker-dealer, agent, investment adviser, investment adviser

representative or other person who serves in a supervisory, compliance, legal, or senior investor

protection capacity for a broker-dealer or investment adviser.

L.2019, c.340, s.2.

49:3-86. Notification to bureau, county adult protective services provider.

a. If a qualified individual reasonably believes that financial exploitation of an eligible adult may

have occurred, may have been attempted, or is being attempted, the broker-dealer or investment

adviser shall promptly notify the bureau and the applicable county adult protective services

provider.

b. A qualified individual who, in good faith and exercising reasonable care, makes a disclosure in

compliance with this section shall be immune from administrative or civil liability that might

otherwise arise from such disclosure or for any failure to notify the eligible adult of the disclosure.

L.2019, c.340, s.3.

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49:3-87. Notification of certain third party.

a. If a qualified individual reasonably believes that financial exploitation of an eligible adult may

have occurred, may have been attempted, or is being attempted, a qualified individual shall notify

any third party previously designated by, and may notify any third party reasonably associated with,

the eligible adult, provided that disclosure may not be made to any third party that is suspected of

financial exploitation or other abuse of the eligible adult.

b. A qualified individual who, in good faith and exercising reasonable care, makes a disclosure in

compliance with this section shall be immune from any administrative or civil liability that might

otherwise arise from such disclosure.

L.2019, c.340, s.4.

49:3-88. Delay of transaction, disbursement.

a. A broker-dealer or investment adviser may delay a transaction in connection with, or a

disbursement from, an account of an eligible adult or an account on which an eligible adult is a

beneficiary if:

(1) the qualified individual reasonably believes, after initiating an internal review of the

requested transaction or disbursement and the suspected financial exploitation, that the

requested transaction or disbursement may result in financial exploitation of an eligible adult;

and

(2) the broker-dealer or investment adviser:

(a) immediately, but in no event more than two business days after the date on which the

transaction or disbursement was first delayed, provides written notification of the delay and the

reason for the delay to all parties authorized to transact business on the account, unless any such

party is reasonably believed to have engaged in suspected or attempted financial exploitation of the

eligible adult;

(b) immediately, but in no event more than two business days after the date on which the

transaction or disbursement was first delayed, notifies the bureau and the applicable county adult

protective services provider; and

adult, as necessary, and provides updates to the bureau or the applicable county adult protective

services provider upon request, but no later than seven business days after the completion of the

review.

b. Any delay of a transaction or disbursement as authorized by this section shall expire upon the

sooner of:

(1) a determination by the broker-dealer or investment adviser that the transaction or

disbursement will not result in financial exploitation of the eligible adult; or

(2) 15 business days after the date on which the broker-dealer or investment adviser first

delayed the transaction or disbursement of the funds, unless either the bureau or the applicable

county adult protective services provider requests that the broker-dealer or investment adviser

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extend the delay, in which case the delay shall expire no more than 25 business days after the

date on which the broker-dealer or investment adviser first delayed the transaction or

disbursement of the funds, unless otherwise terminated or further extended by either of the

agencies or an order of a court of competent jurisdiction.

c. A court of competent jurisdiction may enter an order extending the delay of the transaction or

disbursement of funds or may order other protective relief based on the petition of the bureau, the

applicable county adult protective services provider, the broker-dealer or investment adviser that

initiated the delay under this section, or other interested party.

d. A broker-dealer or investment adviser who, in good faith and exercising reasonable care, acts in

compliance with this section shall be immune from any administrative or civil liability that might

otherwise arise from such delay in a transaction or disbursement in accordance with this section.

e. Notwithstanding any provision of law to the contrary, the bureau or the applicable county adult

services provider may disclose to any notifying broker-dealer or investment adviser reasonable

information regarding the general status or final disposition of any investigation that arose from a

report made by the qualified person in connection with an extension under this section or

reasonable efforts to protect an eligible adult from financial exploitation or other abuse.

L.2019, c.340, s.5.

48:3-89. Provision of access to records.

a. A broker-dealer or investment adviser shall provide access to, or copies of records that are

relevant to the suspected or attempted financial exploitation of an eligible adult to agencies charged

with administering State adult protective services laws and to law enforcement, either as part of a

referral to the agency or to law enforcement, or upon request of the agency or law enforcement

pursuant to an investigation. The records may include historical records as well as records relating to

the most recent transaction or transactions that may comprise financial exploitation of an eligible

adult. All records made available to agencies under this section shall not be deemed to be a public

record pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.) or P.L.2001, c.404 (C.47:1A-5 et seq.). Nothing

in this section shall limit or otherwise impede the authority of the bureau to access or examine the

books and records of broker-dealers and investment advisers as otherwise provided by law.

b. A broker-dealer or investment adviser who, in good faith and exercising reasonable care, acts in

compliance with this section shall be immune from any administrative or civil liability that might

otherwise arise from providing access in accordance with this section.

L.2019, c.340, s.6.