2001 Regular Session

To: Judiciary A

By: Representative Pierce

House Bill 837

(As Passed the House)



SECTION 1. Section 75-71-203, Mississippi Code of 1972, is amended as follows:

75-71-203. The following transactions are exempted from Sections 75-71-113 and 75-71-401:

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

(2) Any nonissuer distribution of an outstanding security if (A) a recognized securities manual contains the names of the issuer's officers and directors, a balance sheet of the issuer as of a date within eighteen (18) months, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations, or (B) the security has a fixed maturity or a fixed interest or dividend provision and there has been no default during the current fiscal year or within the three (3) preceding fiscal years, or during the existence of the issuer and any predecessors if less than three (3) years, in the payment of principal, interest or dividends on the security.

(3) Any nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy; but the Secretary of State may by rule require that the customer acknowledge upon a specified form 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 in 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 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 chapter.

(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-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) The sale of its securities by an issuer during a period of twelve (12) consecutive months ending with the date of the sale in question to not more than ten (10) persons, in this state, if (A) the seller reasonably believes that all the buyers are purchasing for investment purposes only; (B) no commission or remuneration is paid or given directly or indirectly for soliciting any prospective buyer; and (C) no public advertising or solicitation is used in any such solicitation or sale.

Such offers or sales of securities shall be made only by duly elected and acting officers of the issuer, or by the general partner of a limited partnership, or a broker-dealer and his agents registered pursuant to this chapter.

The Secretary of State may by rule or order withdraw or further condition this exemption or waive one or more of the conditions herein.

(10) Any offer or sale of a preorganization certificate or subscription if (A) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber, (B) the number of subscribers does not exceed thirty-five (35), and (C) 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 ninety (90) days of their issuance, if (A) 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, or (B) the issuer first files a notice specifying the terms of the offer and the Secretary of State does not by order disallow the exemption within the next ten (10) full business days.

(12) Any offer (but not a sale) of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no stop order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under either law.

(13) Any other transaction which the Secretary of State by rule or order exempts from the registration requirements of this chapter upon finding that (A) such registration is neither necessary in the public interest nor for the protection of investors; or (B) such exemption shall further the objectives of compatibility with federal exemptions and uniformity among the states.

SECTION 2. Section 75-71-321, Mississippi Code of 1972, is amended as follows:

75-71-321. (a) The Secretary of State may by order deny, suspend or revoke any registration if the Secretary of State 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 or investment adviser, 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:

(A) 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 light of the circumstances under which it was made, false or misleading with respect to any material fact;

(B) Has willfully violated or willfully failed to comply with any provision of this chapter or any rule or order under this chapter;

(C) Has been convicted, within the past ten (10) years, of any misdemeanor involving a security or any aspect of the securities business, or any felony;

(D) 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 business;

(E) Is the subject of an order of the Secretary of State denying, suspending or revoking registration as a broker-dealer, agent, investment adviser or investment adviser representative;

(F) Has engaged in dishonest or unethical practices in the securities business;

(G) 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;

(H) Is not qualified on the basis of such factors such as training, experience and knowledge of the securities business.

(b) The Secretary of State may by order deny, suspend or revoke any registration if the Secretary of State finds (1) that the order is in the public interest and (2) that the applicant or registrant:

(A) Has failed reasonably to supervise his agents if he is a broker-dealer or his investment adviser representatives if he is an investment adviser; or

(B) Has failed to pay the proper filing fee.

SECTION 3. This act shall take effect and be in force from and after its passage.