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1976 South Carolina Code of Laws
Unannotated
Updated through the end of the 2001 Session

Copyright and Disclaimer

The State of South Carolina owns the copyright to the Code of Laws of South Carolina, 1976, as contained herein. Any use of the text, section headings, or catchlines of the 1976 Code is subject to the terms of federal copyright and other applicable laws and such text, section headings, or catchlines may not be reproduced in whole or in part in any form or for inclusion in any material which is offered for sale or lease without the express written permission of the Chairman of the South Carolina Legislative Council or the Code Commissioner of South Carolina.

This statutory database is current through the 2001 Regular Session and the 2001 Extra Session of the South Carolina General Assembly. Changes to the statutes enacted by the 2002 General Assembly, which will convene in January 2002, will be incorporated as soon as possible. Some changes enacted by the 2002 General Assembly may take immediate effect. The State of South Carolina and the South Carolina Legislative Council make no warranty as to the accuracy of the data, and users rely on the data entirely at their own risk.

The Legislative Council by law is charged with compiling and publishing the 1976 Code and it is maintained in a database which may be accessed for commercial purposes by contacting the Legislative Council or the office of Legislative Printing, Information and Technology Systems.

Title 35 - Securities

CHAPTER 1.

UNIFORM SECURITIES ACT

ARTICLE 1.

GENERAL PROVISIONS

SECTION 35-1-10. Short title.

This chapter may be cited as the Uniform Securities Act.

SECTION 35-1-20. Definitions.

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

(1) "Securities commissioner" means Attorney General, who shall be ex officio securities commissioner.

(2) "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. 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.

(3) "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for his own account.

(4) "Federal covered adviser" means a person who is registered under Section 203 of the Investment Advisers Act of 1940 or who is excluded from the definition of "investment adviser" under Section 202(a)(11) of the Investment Advisers Act of 1940.

(5) "Federal covered security" means any security that is a covered security under Section 18(b) of the Securities Act of 1933 or the rules and regulations promulgated thereunder.

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

(7) "Guaranteed" means guaranteed as to payment of principal, interest or dividends.

(8) "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" also includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. "Investment adviser" does not include (a) an employee of an investment adviser; (b) a bank, savings institution, or trust company; (c) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his profession; (d) a broker-dealer whose performance of these services is solely incidental to the conduct of his business as a broker-dealer and who receives no special compensation for them; (e) a publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service, whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client; (f) any person that is a federal covered adviser; or (g) such other persons not within the intent of this item as the securities commissioner may by rule or order designate. Until October 10, 1999, the exclusions provided in Section 35-1-20(8)(f) shall not apply to a person who fails to pay the fees required under Section 35-1-480(B) of this chapter.

(9) "Investment adviser representative"

(a) with respect to any adviser registered or required to be registered under this chapter, means any partner, officer, director of or 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 and, who does any of the following:

(i) makes any recommendations or otherwise renders advice regarding securities,

(ii) manages accounts or portfolios of clients,

(iii) determines which recommendations or advice regarding securities should be given,

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

(v) supervises employees who perform any of the foregoing; or

(b) with respect to any person that is registered or required to be registered under Section 203 of the Investment Advisers Act of 1940 or that is excluded from the definition of an "investment adviser" under Section 202(a)(11) of the Investment Advisers Act of 1940, means any person who is defined as an investment adviser representative' under SEC Rule 203a-3 (17 CFR 275.203a-3) and who has a place of business located in this State.

(10) "Issuer" means any person who issues or proposes to issue any security, except that (a) with respect to certificates of deposit, voting-trust certificates or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management or unit type, the term "issuer" means the 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 (b) with respect to certificates of interest or participation in oil, gas or mining titles or leases or in payments out of production under such titles or leases, there is not considered to be any "issuer".

(11) "Nonissuer" means not directly or indirectly for the benefit of the issuer.

(12) "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.

(13)(a) "Sale" or "sell" includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.

(b) "Offer" or "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.

(c) 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.

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

(e) 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.

(f) The terms defined in this item (12) 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, limited partners, or members of a limited liability company, pursuant to certificate of incorporation, partnership or limited liability company agreement, or the applicable corporation, limited liability company or partnership statute, on a merger, consolidation, reclassification of securities, or sale of corporate assets in consideration of the issuance of securities of another entity, (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 or (v) a solicitation of interest the response to which does not legally obligate the responding person to purchase or pay for the securities and which conforms to such other requirements as the securities commissioner may adopt by rule, order, or statement of policy.

(14) "Securities Act of 1933", "Securities Exchange Act of 1934", "Public Utility Holding Company Act of 1935", and "Investment Company Act of 1940" mean the federal statutes of those names as amended before or after June 14, 1961.

(15) "Security" means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate of subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt 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 money either in a lump sum or periodically for life or for some other specified period.

(16) "State" means a state, territory, or possession of the United States, the District of Columbia, and Puerto Rico.

SECTION 35-1-30. Attorney General as securities commissioner; assistants; delegation of duties.

This chapter shall be administered by the Attorney General who shall be ex officio the securities commissioner and who may employ such additional assistants as he deems necessary. The securities commissioner may delegate any or all of his duties pursuant to this act to members of his staff, as he deems necessary or appropriate.

SECTION 35-1-40. Use or disclosure of information by securities commissioner or employees.

It is unlawful for the securities commissioner or any of his officers or employees to use for personal benefit any information which is filed with or obtained by the securities commissioner and which is not made public. No provision of this chapter authorizes the securities commissioner or any of his officers or employees to disclose any such information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. Investigative records and complaints filed with the securities commissioner shall not be considered public information. Orders issued by the commissioner, including complaints of the commission, are to be considered public records.

SECTION 35-1-50. Filing of advertising and sales literature.

The securities commissioner by rule or order may 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 or transaction is exempted by Section 35-1-310 or 35-1-320, or the security is a federal covered security or the transaction is with respect to a federal covered security.

SECTION 35-1-60. Promulgation of rules, forms and orders.

The securities commissioner may make, amend, and rescind those rules, forms, and orders, including cease and desist orders, as are necessary to carry out the provisions of this chapter, including rules and forms governing registration statements, applications, and reports and defining any terms, whether or not used in this chapter, insofar as the definitions are not inconsistent with the provisions of this chapter. For the purpose of rules and forms, the securities commissioner may classify securities, persons, and matters within his jurisdiction and prescribe different requirements for different classes.

No rule, form, or order may be made, amended, or rescinded unless the securities commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this chapter. In prescribing rules and forms, the securities commissioner may cooperate with the securities administrators of the other states and the Securities and Exchange Commission with a view to effectuating the policy of this chapter to achieve maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable.

All rules and forms of the securities commissioner must be published.

SECTION 35-1-70. Form and content of financial statements.

The securities commissioner may by rule or order prescribe (a) the form and content of financial statements required under this chapter, (b) the circumstances under which consolidated financial statements shall be filed and (c) whether any required financial statements shall be certified by independent or certified public accountants. All financial statements shall be prepared in accordance with generally accepted accounting practices.

SECTION 35-1-80. Liability for reliance on rule, form, order or policy statement.

No provision of this chapter imposing any liability applies to any act done or omitted in good faith in conformity with any rule, form, order or policy statement of the securities commissioner, notwithstanding that the rule, form, order or policy statement may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason. The burden of proving good faith rests on the person claiming reliance.

SECTION 35-1-90. Hearings to be public.

Every hearing in an administrative proceeding shall be public unless the securities commissioner in his discretion grants a request that the hearing be conducted privately.

SECTION 35-1-100. Document deemed filed when received.

A document is filed when it is received by the securities commissioner.

SECTION 35-1-110. [1962 Code Section 62-11; 1961 (52) 185]Repealed by 1997 Act No. 134,Section 1, eff June 13, 1997.

SECTION 35-1-120. Publication of information in registration statements, notice filings, applications, or reports.

The information contained in or filed with any registration statement, notice filing, application, or report may be made available to the public as the securities commissioner prescribes.

SECTION 35-1-130. Copies of records; use as evidence.

Upon request and at such reasonable charges as he prescribes, the securities commissioner shall furnish to any person photostatic or other copies, certified under his seal of office if requested, of any document which is a matter of public record. In any proceeding or prosecution under this chapter, any copy so certified is prima facie evidence of the contents of the entry or document certified.

SECTION 35-1-140. Interpretative opinions.

The securities commissioner in his discretion may honor requests from interested persons for interpretative opinions.

SECTION 35-1-150. Fees.

Fees for examinations, filings under Section 35-1-50, and other miscellaneous filings for which no fees are otherwise specified by law shall be set by the securities commissioner.

SECTION 35-1-160. False statements in documents or proceedings.

It is unlawful for any person to make or cause to be made, in any document filed with the securities commissioner or in any proceeding under this chapter, 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.

SECTION 35-1-170. Application, registration or exemption not to constitute approval by securities commissioner; unlawful representations.

(1) Neither (a) the fact that an application for registration under Article 5 of this chapter or a registration statement under Article 7 of this chapter or a notice filing under Article 8 of this chapter has been filed nor (b) the fact that a person or security is effectively registered or a notice of filing has been made constitutes a finding by the securities commissioner that any document filed under this chapter is true, complete, and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the securities commissioner has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security, or transaction.

(2) It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with subsection (1) of this section.

SECTION 35-1-180. Acts in this State making chapter applicable.

(1) Sections 35-1-170, 35-1-410, 35-1-810, 35-1-1210, and 35-1-1490 to 35-1-1560 apply to persons who sell or offer to sell when (a) an offer to sell is made in this State or (b) an offer to buy is made and accepted in this State.

(2) Sections 35-1-170, 35-1-410 and 35-1-1210 apply to persons who buy or offer to buy when (a) an offer to buy is made in this State or (b) an offer to sell is made and accepted in this State.

(3) For the purpose of this section, 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 (a) originates from this State or (b) 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.

(4) For the purpose of this section, an offer to buy or to sell is accepted in this State when acceptance (a) is communicated to the offeror in this State and (b) 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.

(5) An offer to sell or to buy is not made in this State when (a) the publisher circulates or there is circulated on his behalf in this State any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in this State, or which is published in this State but has had more than two-thirds of its circulation outside this State during the past twelve months or (b) a radio or television program originating outside this State is received in this State.

(6) Sections 35-1-420 and 35-1-1220 to 35-1-1240, as well as Section 35-1-170 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.

SECTION 35-1-190. [1962 Code Section 69-19; 1961 (52) 185]Repealed by 1997 Act No. 134,Section 1, eff June 13, 1997.

SECTION 35-1-200. Registrations under prior law.

All effective registrations under prior law, all administrative orders relating to such registrations, and all conditions imposed upon such registrations remain in effect so long as they would have remained in effect if this chapter had not become effective. They are considered to have been filed, entered, or imposed under this chapter, but are governed by prior law.

SECTION 35-1-210. [1962 Code Section 62-21; 1961 (52) 185]Repealed by 1997 Act No. 134,Section 1, eff June 13, 1997.

SECTION 35-1-220. Retention of fee revenues.

(A) The Attorney General may retain the first five hundred thousand dollars from fee revenues collected pursuant to this chapter to be used for the operations of the Securities Division.

(B) The Attorney General may retain the first two hundred fifty thousand dollars received by the Division of Securities in a fiscal year in settlement of litigation enforcement action and reimbursements of expenses arising from violations under this chapter to offset investigative, prosecutive, and administrative costs of enforcing this chapter.

ARTICLE 3.

EXEMPT SECURITIES AND TRANSACTIONS

SECTION 35-1-310. Exempt securities.

The following securities are exempted from Sections 35-1-50, 35-1-810, and 35-1-1100:

(1) Domestic government securities. 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) Foreign government securities. 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 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) Securities of banks, trusts and savings institutions. Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States or any bank, savings institution, or trust company organized and supervised under the laws of any state;

(4) Securities of federal savings and loan and similar associations. Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings and loan association, or any building and loan or similar association, organized under the laws of any state and authorized to do business in this State;

(5) Securities of federal or state credit unions. Any security issued or guaranteed by any federal credit union or any credit union, industrial loan association, or similar association organized and supervised under the laws of this State;

(6) Securities of public service companies. Any security issued or guaranteed by any railroad, other common carrier, public utility or holding company which is (a) subject to the jurisdiction of the Interstate Commerce Commission, (b) 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, (c) regulated in respect of its rates and charges by a governmental authority of the United States or any state or (d) 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;

(7) Securities listed on stock exchanges. Any security listed or approved for listing upon notice of issuance on the New York Stock Exchange, the American Stock Exchange, the Midwest Stock Exchange, the NASDAQ/National Market System, or that other securities exchange as the securities commissioner by regulation may designate, 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;

(8) Securities of religious, charitable, and trade organizations. Any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional association;

(9) Short-term commercial paper. 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 nine 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;

(10) Employees' investment plans. Any investment contract issued in connection with an employees' stock purchase, savings, pension, profit-sharing, or similar benefit plan if the securities commissioner is notified in writing thirty days before the inception of the plan; and

(11) Securities of state cooperatives. Any security issued by a cooperative association organized under the laws of this State.

SECTION 35-1-320. Exempt transactions.

The following transactions are exempted from Sections 35-1-50, 35-1-810, and 35-1-1100:

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

(2) Distributions of outstanding securities. 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 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 preceding fiscal years, or during the existence of the issuer and any predecessors if less than three years, in the payment of principal, interest, or dividends on the security;

(3) Nonissuer transactions with broker-dealers. Any nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy; but the securities commissioner may by rule or otherwise 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) Underwriting transactions. Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;

(5) Mortgage bonds sold as unit. 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) Transactions by fiduciaries, etc. Any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian or conservator;

(7) Transactions by pledgees. Any transaction executed by a bona fide pledgee without any purpose of evading this chapter;

(8) Transactions with banks, and other financial institutions or institutional buyers. 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) Limited offerings. Any transaction pursuant to an offer directed by the offeror to not more than twenty-five persons, other than those designated in item (8) of this section, in this State during any period of twelve consecutive months, whether or not the offeror or any of the offerees is then present in this State, if (a) the seller reasonably believes that all the buyers in this State, other than those designated in item (8) of this section, are purchasing for investment and (b) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective buyer in this State, other than those designated in item (8) of this section; but the securities commissioner may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, increase or decrease the number of offerees permitted or waive the conditions in clauses (a) and (b) with or without the substitution of a limitation on remuneration and the securities commissioner, further, may require persons claiming this exemption to notify him in writing of the claim of exemption, the number of offers extended and to whom made at any point during the offering process;

(10) Limited preorganization subscriptions. 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 twenty-five and (c) no payment is made by any subscriber prior to filing of the articles of incorporation, or limited partnership, limited liability partnership, or limited liability company agreement with the Secretary of State;

(11) Conversions and exercise of warrants. 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, 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 securities commissioner does not by order disallow the exemption within the next five full business days;

(12) Offers after registration statements filed. 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 this chapter.

SECTION 35-1-330. Denial or revocation of certain exemptions; notice; hearings; summary orders.

The securities commissioner may by order deny or revoke any exemption specified in item (8) or (10) of Section 35-1-310 or in Section 35-1-320 with respect to a specific security or transaction. No such order may be entered without appropriate prior notice to all interested parties, opportunity for hearing and written findings of fact and conclusions of law, except that the securities commissioner may by order summarily deny or revoke any of the specified exemptions pending final determination of any proceeding under this section. Upon the entry of a summary order, the securities commissioner shall promptly notify all interested parties that it has been entered and of the reasons therefor and that within fifteen days of the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the securities commissioner, the order will remain in effect until it is modified or vacated by the securities commissioner. If a hearing is requested or ordered, the securities commissioner, after notice of an opportunity for hearing to all interested persons, may modify or vacate the order or extend it until final determination. No order under this section may operate retroactively. No person may be considered to have violated Section 35-1-50 or Section 35-1-810 by reason of any offer or sale effected after the entry of an order under this section if he sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the order.

SECTION 35-1-340. Burden of proving exemption or exception.

In any proceeding under this chapter the burden of proving an exemption or an exception from a definition is upon the person claiming it.

ARTICLE 5.

BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, AND INVESTMENT ADVISER REPRESENTATIVES

SECTION 35-1-410. Registration or exemption of broker-dealers and agents required; notice of employment or discharge of agent.

It is unlawful for any person to transact business in this State as a broker-dealer or agent unless he is registered under this chapter or exempt from licensing under this chapter. It is unlawful for any broker-dealer or issuer to employ an agent unless the agent is registered or exempt. The registration of an agent is not effective during any period when he is not associated with a particular broker-dealer registered under this chapter, 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 securities commissioner.

SECTION 35-1-415. Certain broker-dealers and agents exempt from licensing requirements.

(1) The following broker-dealers are exempt from the licensing requirements of Section 35-1-410:

(a) a broker-dealer who either is registered or, except as provided in subsection (2), is not required to be registered under the Securities Exchange Act of 1934 and who has no place of business in this State if:

(i) the transactions effected by the broker-dealer in this State are exclusively with the issuer of the securities involved in the transactions, other broker-dealers licensed or exempt under this section, and financial or institutional investors;

(ii) the broker-dealer is licensed under the securities act of a state in which the broker-dealer maintains a place of business and the broker-dealer offers and sells in this State to a person who is an existing customer of the broker-dealer and whose principal place of residence is not in this State; or

(iii) the broker-dealer is licensed under the securities law of a state in which the broker-dealer maintains a place of business and the broker-dealer during any twelve consecutive months does not effect transactions with more than five persons in this State in addition to transactions with the issuers of the securities involved in the transactions, financial or institutional investors, or broker-dealers, whether or not the offeror or an offeree is then present in this State; and

(b) other broker-dealers the commissioner, by rule or order, exempts.

(2) The exemption provided in subsection (1)(a)(i) is not available to a broker-dealer who deals solely in government securities and is not registered under the Securities Exchange Act of 1934 unless the broker-dealer is subject to supervision as a dealer in government securities by the Federal Reserve Board.

(3) The following agents are exempt from the licensing requirements of Section 35-1-410:

(a) an agent acting for a broker-dealer exempt under subsection (1);

(b) an agent acting for an issuer in effecting transactions in a security exempted by Section 35-1-310(1), (2), (3), (9), or (10);

(c) an agent acting for an issuer effecting offers or sales of securities in transactions exempted by Section 35-1-320;

(d) an agent acting for an issuer effecting offers or sales of securities that are covered securities under Section 18(b)(3) or Section 18(b)(4)(D) of the Securities Act of 1933, provided that no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this State;

(e) an agent acting for an issuer effecting transactions with employees, partners, officers, or directors of the issuer, a parent or a wholly-owned subsidiary of the issuer, if no commission or other similar compensation is paid or given directly or indirectly to the sales representative for soliciting an employee, partner, officer, or director in this State;

(f) an agent whose transactions in this State are limited to only those transactions set forth in Section 15(h)(2) of the Securities Exchange Act of 1934; and

(g) other agents the securities commissioner, by rule or order, exempts.

SECTION 35-1-420. Registration or exemption of investment advisers and investment adviser representatives.

(1) It is unlawful for any person to transact business in this State as an investment adviser or investment adviser representative unless he is registered under this chapter or exempt from licensing under this chapter. The following investment advisers are exempt from the licensing requirements of Section 35-1-420:

(a) an investment adviser if:

(i) it has as its only clients in this State other investment advisers, federal covered advisers, broker-dealers or financial or institutional investors; or

(ii) it has no place of business in this State and the investment adviser during the preceding twelve-month period has not had more than five clients, other than those specified in sub-subitem (i), who are residents of this State; and

(b) other investment advisers the commissioner, by rule or order, exempts.

(2)(a) It is unlawful for any person required to be registered as an investment adviser under this chapter to employ an investment adviser representative unless the investment adviser representative is registered under this chapter. The registration of an investment adviser representative is not effective during any period when he is not employed by an investment adviser registered under this chapter or a federal covered adviser not required to be registered.

(b) It is unlawful for an investment adviser representative of a federal covered adviser to transact business unless such investment adviser representative is registered under this chapter, or is exempt from registration.

(c) When an investment adviser representative begins or terminates employment with an investment adviser or a federal covered adviser, the investment adviser, in the case of Section 35-1-420(2)(a) and the investment adviser representative in the case of Section 35-1-420(2)(b), shall promptly notify the securities commissioner.

SECTION 35-1-430. Duration of registrations; renewals.

Every broker-dealer and broker-dealer agent registration expires at midnight on the last day of the calendar year in which it became effective unless renewed. Every investment adviser registration and federal covered adviser notice filing expires two years from its effective date unless renewed and, unless renewed prior to expiration, every investment adviser representative registration expires at the same time the registration or notice filing of the associated investment adviser or federal covered adviser would expire if not renewed.

SECTION 35-1-440. Applications for registration.

A broker-dealer, agent, investment adviser, or investment adviser representative may obtain an initial or renewal registration by filing with the securities commissioner an application together with a consent to service of process pursuant to Section 35-1-1410. The application must contain whatever information the securities commissioner by rule or order requires concerning such matters as (a) the applicant's form and place of organization, (b) the applicant's proposed method of doing business, (c) the qualifications and business history of the applicant, (d) 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, (e) in the case of an investment adviser, the qualifications and business history of any employee, (f) any injunction or administrative order or conviction of a misdemeanor involving a security or any aspect of the securities business and any conviction of a felony, (g) the applicant's financial condition and history and (h) information to be furnished or disseminated to any client or prospective client, if the applicant is an investment adviser.

For all applicants who are not members of the National Association of Securities Dealers (NASD), a criminal record history must be obtained, at the rate set by law, from the South Carolina Law Enforcement Division on an applicant's initial application for registration under this section. All convictions of misdemeanors involving a security or any aspect of the securities business and all felonies recorded within ten years of the date of the application must be noted on the registration.

SECTION 35-1-450. Announcement of initial application.

The securities commissioner may by rule or order require an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in this State.

SECTION 35-1-460. Effective date of registration.

Registration becomes effective when the securities commissioner so orders.

SECTION 35-1-470. Registration of broker-dealer to include partners, officers or directors; registration of investment adviser to include investment adviser representatives.

Registration of a broker-dealer automatically constitutes registration of any agent who is a partner, officer or director, or a person occupying a similar status or performing similar functions. Registration of an investment adviser or a notice filing by a federal covered adviser automatically constitutes registration of any investment adviser representative who is a partner, officer, or director, or a person occupying a similar status or performing similar functions.

SECTION 35-1-480. Fees.

(A) Every applicant for initial or renewal registration as a broker-dealer, broker-dealer agent, investment adviser or investment adviser representative shall pass one or more examinations, pay a registration fee, and meet other requirements as required by the securities commissioner.

(B) Except with respect to federal covered advisers whose only clients are those described in Section 35-1-420(1)(a), a federal covered adviser shall file with the commissioner, prior to acting as a federal covered adviser in this State, such documents filed with the Securities and Exchange Commission or such other notice filing document, as the commissioner may by rule or otherwise require, together with such notice fee and consent to service of process as the commissioner, by rule or otherwise, may require. The notice filing provisions under this subsection shall expire as provided in Section 35-1-430.

(C) The following filing fees shall remain in effect for all initial, renewal and notice filings described in subsections (A) and (B) of this section unless and until the securities commissioner promulgates a rule or order establishing different fees:

(1) broker-dealer: three hundred dollars;

(2) agent: one hundred dollars;

(3) investment adviser and federal covered adviser: four hundred dollars;

(4) investment adviser representative: one hundred dollars.

(D) When an application is denied or withdrawn the filing fee must not be refunded.

SECTION 35-1-485. [1992 Act No. 501, Part II Section 9A, eff July 1, 1992] Repealed by 1997 Act No. 134, Section 1, eff June 13, 1997.

SECTION 35-1-490. Registration of successors to broker-dealers or investment advisers.

A registered broker-dealer or investment adviser may file an application for registration of a successor, and a federal covered adviser may file a notice filing for a successor, whether or not the successor is then in existence, for the unexpired portion of the year. There shall be no filing fee.

SECTION 35-1-500. Minimum capital requirements for broker-dealers and minimum financial requirements for investment advisers.

The securities commissioner, by rule or order, may require a minimum capital for registered broker-dealers not to exceed the limitations of Section 15 of the Securities Exchange Act of 1934, and establish minimum financial requirements for investment advisers, subject to the limitations provided in Section 222 of the Investment Advisers Act of 1940, which may include different requirements for those investment advisers who maintain custody of clients' funds or securities or who have discretionary authority over clients' funds and those investment advisers who do not.

SECTION 35-1-510. Surety bonds of broker-dealers, agents, and investment advisers.

The securities commissioner, by rule or order, may require registered broker-dealers, agents, and investment advisers who have custody of or discretionary authority over client funds or securities, to post surety bonds in amounts as the securities commissioner may, by rule or otherwise, prescribe, and may determine their conditions, subject to the limitations of Section 15 of the Securities Exchange Act of 1934 for broker-dealers and Section 222 of the Investment Advisers Act of 1940 for investment advisers. The bond may be so drawn as to cover the original registration and any renewal of the registration. Any appropriate deposit of cash or securities shall be accepted in lieu of any bond so required. No bond may be required of any registrant whose net capital, or, in the case of an investment adviser, whose minimum financial requirements, which may be defined by rule, exceeds the amounts required by the securities commissioner. Every bond shall provide for suit thereon by any person who has a cause of action under Section 35-1-1210 and, if the securities commissioner by rule or order requires, by any person who has a cause of action not arising under this act. Every bond must provide that no suit may be maintained to enforce any liability on the bond unless brought within three years after the sale or other act upon which the suit is based.

SECTION 35-1-520. Denial, suspension, or revocation of registration.

(1) The securities commissioner may by order deny, suspend, or revoke any registration if he finds (a) that the order is in the public interest and (b) 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:

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

(ii) has wilfully violated or wilfully failed to comply with any provision of this chapter or a predecessor law or any rule or order under this chapter or a predecessor law;

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

(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 business;

(v) is the subject of an order of the securities commissioner denying, suspending, or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative;

(vi) is the subject of an order entered within the past five years by the securities administrator of any other state or by the Securities and Exchange Commission denying or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative or the substantial equivalent of those terms as defined in this chapter, is the subject of an order of the Securities and Exchange Commission suspending or expelling him from a national securities exchange or national securities association registered under the Securities Exchange Act of 1934 or is the subject of a United States post office fraud order; but (1) the securities commissioner may not institute a revocation or suspension proceeding under this item (vi) more than one year from the date of the order relied on and (2) he may not enter an order under this item (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 this section;

(vii) has engaged in dishonest or unethical practices in the securities business;

(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 securities commissioner may not enter an order against a broker-dealer or investment adviser under this item (viii) without a finding of insolvency as to the broker-dealer or investment adviser; or

(ix) is not qualified on the basis of such factors as training, experience and knowledge of the securities business, except as otherwise provided in Section 35-1-530.

(2) The securities commissioner may by order deny, suspend, or revoke any registration if he finds (a) that the order is in the public interest and (b) that the applicant or registrant has failed:

(i) reasonably to supervise his agents if he is a broker-dealer or his employees if he is an investment adviser; or

(ii) to pay the proper filing fee; but the securities commissioner may enter only a denial order under this item (ii), and he shall vacate any such order when the deficiency has been corrected.

SECTION 35-1-530. Denial, suspension, or revocation of registration on ground of lack of qualifications; examinations.

The following provisions govern the application of item (ix) of subsection (1) of Section 35-1-520:

(1) The securities commissioner may not enter an order against a broker-dealer on the basis of the lack of qualification of any person other than (a) the broker-dealer himself if he is an individual or (b) an agent of the broker-dealer.

(2) The securities commissioner may not enter an order against an investment adviser on the basis of the lack of qualification of any person other than (a) the investment adviser himself if he is an individual or (b) any other person who represents the investment adviser in doing any of the acts which make him an investment adviser.

(3) The securities commissioner 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 securities commissioner 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 securities commissioner 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.

SECTION 35-1-540. [1962 Code Section 62-114; 1961 (52) 185; 1992 Act No. 451, Section 2, eff June 15, 1992] Repealed by 1997 Act No. 134, Section 1, eff June 13, 1997.

SECTION 35-1-550. Summary temporary postponement or suspension of registration; hearing.

The securities commissioner may by order summarily postpone or suspend registration pending final determination of any proceeding under this section. Upon the entry of the order, the securities commissioner shall promptly notify the applicant or registrant, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative, that it has been entered and of the reasons for the order and that within fifteen days after the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the securities commissioner, the order remains in effect until it is modified or vacated by the securities commissioner. If a hearing is requested or ordered, the securities commissioner, after notice of and opportunity for hearing, may modify or vacate the order or extend it until final determination.

SECTION 35-1-560. Cancellation of registration or application.

If the securities commissioner 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, or investment adviser representative, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the securities commissioner may by order cancel the registration or application.

SECTION 35-1-570. Withdrawal from registration; effect on revocation or suspension proceedings.

Withdrawal from registration as a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective thirty days after receipt of an application to withdraw or within that shorter period of time as the securities commissioner may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within thirty days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at that time and upon those conditions as the securities commissioner by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the securities commissioner may nevertheless institute a revocation or suspension proceeding under item (ii) of subsection (1) of Section 35-1-520 within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which registration was effective. Withdrawal of a notice filing by a federal covered adviser shall become effective upon receipt by the securities commissioner of notice of the intention to withdraw.

SECTION 35-1-580. Notice, opportunity for hearing, and written findings required.

No order may be entered under any part of Sections 35-1-520 to 35-1-570 or Section 35-1-1475 except the first sentence of Section 35-1-550 without (a) appropriate prior notice to the applicant or registrant, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative, (b) opportunity for hearing, and (c) written findings of fact and conclusions of law.

SECTION 35-1-590. Records of broker-dealers and investment advisers.

Every registered broker-dealer, shall comply with the recordkeeping requirements of the Securities Act of 1934. A licensed investment adviser, subject to the limitations of Section 222 of the Investment Advisers Act of 1940, shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the securities commissioner prescribes by rule or order. All records so required shall be preserved for three years, unless such period is modified by the securities commissioner by rule or order, and subject to the limitations of the Securities Exchange Act of 1934 and Section 222 of the Investment Advisers Act of 1940 for broker-dealers and investment advisers, respectively.

SECTION 35-1-595. Requirement that certain information be disseminated with respect to investment advisers.

With respect to investment advisers, the securities commissioner may require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients. To the extent determined by the securities commissioner in his discretion, 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 rules thereunder may be used in whole or partial satisfaction of this requirement.

SECTION 35-1-600. Examination of records.

All the records referred to in Section 35-1-590 are subject at any time or from time to time to such reasonable periodic, special or other examinations by representatives of the securities commissioner, within or without this State, as the securities commissioner deems necessary or appropriate in the public interest or for the protection of investors. For the purpose of avoiding unnecessary duplication of examinations, the securities commissioner, in so far as he deems it practicable in administering this section, may cooperate with the securities administrators of other states, the Securities and Exchange Commission, and any national securities exchange or national securities association registered under the Securities Exchange Act of 1934.

SECTION 35-1-610. Financial reports of broker-dealers and investment advisers.

Every registered broker-dealer, not to exceed the limitations of Section 15 of the Securities Exchange Act of 1934, and investment adviser, not to exceed the limitations of Section 222 of the Investment Advisers Act of 1940, shall file such financial reports as the securities commissioner prescribes by rule or order.

SECTION 35-1-620. Correcting information filed with Securities Commissioner.

If the information contained in any document filed with the securities commissioner 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 Section 35-1-410. A federal covered adviser shall file a corrected notice filing with the securities commissioner only if amended documents are required to be filed with the Securities Exchange Commission.

ARTICLE 7.

REGISTRATION OF SECURITIES

SECTION 35-1-810. Registered, exempted, or federal covered security required.

It is unlawful for any person to offer or sell any security in this State unless (a) it is registered under this chapter, (b) the security or transaction is exempted under Section 35-1-310 or 35-1-320, or (c) it is a federal covered security.

SECTION 35-1-820. Securities that may be registered by notification.

The following securities may be registered by notification, whether or not they are also eligible for registration by coordination under Section 35-1-840:

(1) Any security whose issuer and any predecessors have been in continuous operation for at least five years, if (a) 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 any predecessors, with a fixed maturity or a fixed interest or dividend provisions and (b) the issuer and any predecessors during the past three fiscal years have had 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 outstanding at the date the registration statement is filed and equal at least five percent of the amount of such outstanding securities, as measured by the maximum offering price or the market price on a day, selected by the registrant, within thirty days before the date of filing the registration statement, whichever is higher, or book value on a day, selected by the registrant, within ninety 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, if the issuer and any predecessors have not had any security of the type specified in clause (i) outstanding for three full fiscal years, equal at least five percent of the amount, as measured in clause (i), of all securities which will be outstanding if all 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; and

(2) Any security, other than a certificate of interest or participation in an oil, gas or mining title, or lease or in payments out of production under such a title or lease, registered for nonissuer distribution if (a) any security of the same class has ever been registered under this chapter or a predecessor law or (b) the security being registered was originally issued pursuant to an exemption under this chapter or a predecessor law.

SECTION 35-1-830. Statement and documents for registration by notification; effective date.

A registration statement under Section 35-1-820 and this section shall contain the following information and be accompanied by the following documents in addition to the information specified in Section 35-1-910 and the consent to service of process required by Section 35-1-1410:

(1) a statement demonstrating eligibility for registration by notification;

(2) with respect to the issuer and any significant subsidiary;

(a) its name, address, and form of organization,

(b) the state, or foreign jurisdiction, and the date of its organization, and

(c) 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;

(a) his name and address,

(b) the amount of securities of the issuer held by him as of the date of the filing of the registration statement, and

(c) a statement of his reasons for making the offering;

(4) a description of the security being registered;

(5) the information and documents specified in items (8), (9), (10) and (12) of Section 35-1-880;

(6) in the case of any registration under item (2) of Section 35-1-820 which does not also satisfy the conditions of item (1) of Section 35-1-820, 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; and

(7) such additional information as the securities commissioner may by rule or order require.

A registration statement under Section 35-1-820 and this section becomes effective when the securities commissioner so orders.

SECTION 35-1-840. Securities that may be registered by coordination.

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.

SECTION 35-1-850. Statement and documents for registration by coordination.

A registration statement under Section 35-1-840 and this section shall contain the following information and be accompanied by the following documents in addition to the information specified in Section 35-1-910 and the consent to service of process required by Section 35-1-1410:

(1) two copies of the latest form of prospectus filed under the Securities Act of 1933;

(2) if the securities commissioner by rule or otherwise requires, a copy of the articles of incorporation and bylaws, or their 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 securities commissioner requests, any other information or copies of any other documents filed under the Securities Act of 1933; and

(4) an undertaking to forward all future 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 first occurs.

SECTION 35-1-860. Effective date of registration by coordination.

A registration statement under Sections 35-1-840 and 35-1-850 automatically 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 under Sections 35-1-1010 to 35-1-1050;

(2) the registration statement has been on file with the securities commissioner for at least ten days; and

(3) 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 such shorter period as the securities commissioner permits by rule or otherwise and the offering is made within these limitations.

The registrant shall promptly notify the securities commissioner by telephone or telegram of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. "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 price. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the securities commissioner may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section, if he promptly notifies the registrant by telephone or telegram, and promptly confirms by letter or telegram when he notifies by telephone, of the issuance of the order. If the registrant proves compliance with the requirements of this section as to notice and post-effective amendment, the stop order is void as of the time of its entry. The securities commissioner may by rule or otherwise waive either or both of the conditions specified in items (2) and (3) of this section. If the federal registration statement becomes effective before all the conditions in this section are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all the conditions are satisfied. If the registrant advises the securities commissioner of the date when the federal registration statement is expected to become effective, the securities commissioner shall promptly advise the registrant by telephone or telegram, at the registrant's expense, whether all the conditions are satisfied and whether he then contemplates the institution of a proceeding under Sections 35-1-1010 to 35-1-1050. But this advice by the securities commissioner does not preclude the institution of such a proceeding at any time.

SECTION 35-1-870. Registration by qualification permitted.

Any security may be registered by qualification.

SECTION 35-1-880. Statement and documents for registration by qualification; effective date.

Filings pursuant to Section 35-1-870 and this section shall contain, within the registration statement, prospectus, offering circular, or other offering documents, the following information and be accompanied by the following documents in addition to the information specified in Section 35-1-910 and the consent to service of process required by Section 35-1-1410:

(1) with respect to the issuer and any significant subsidiary

(a) its name, address and form of organization,

(b) the state or foreign jurisdiction and date of its organization,

(c) the general character and location of its business,

(d) a description of its physical properties and equipment, and

(e) a statement of the general competitive conditions in the industry or business in which it is or will be engaged;

(2) with respect to every director and officer of the issuer or person occupying a similar status or performing similar functions

(a) his name, address, and principal occupation for the past five years,

(b) the amount of securities of the issuer held by him as of a specified date within thirty days of the filing of the registration statement,

(c) the amount of the securities covered by the registration statement to which he has indicated his intention to subscribe, and

(d) 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;

(3) with respect to persons covered by item (2) of this section, the remuneration paid during the past twelve months and estimated to be paid during the next twelve months, directly or indirectly, by the issuer, together with all predecessors, parents, subsidiaries, and affiliates, to all those persons in the aggregate;

(4) with respect to any person owning of record, or beneficially if known, ten percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in item (2) of this section other than his occupation;

(5) with respect to every promoter if the issuer was organized within the past three years, the information specified in item (2) of this section, the amount paid to him within that period or intended to be paid to him, and the consideration for any such payment;

(6) with respect to any person on whose behalf any part of the offering is to be made in a nonissuer distribution

(a) his name and address,

(b) the amount of securities of the issuer held by him as of the date of the filing of the registration statement,

(c) 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

(d) a statement of his reasons for making the offering;

(7) 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, good will, 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;

(8) 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 proportion 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;

(9) 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 good will, 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 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;

(10) 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 item (2), (4), (5), (6), or (8) of this section and by any person who holds or will hold ten percent or more in the aggregate of any such options;

(11) the dates of, parties to and general effect concisely stated of every management or other material contract 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;

(12) 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;

(13) two copies 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;

(14) 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;

(15) 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;

(16) 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;

(17) a balance sheet of the issuer as of a date within four months prior to the filing of the registration 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

(18) such additional information as the securities commissioner requires by rule or order.

A registration statement under Section 35-1-870 and this section becomes effective when the securities commissioner so orders.

SECTION 35-1-890. Persons entitled to file registration statements.

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.

SECTION 35-1-900. Fees.

Every person filing a registration statement shall pay a filing fee as required by the securities commissioner. A filing fee of five hundred dollars shall remain in effect unless and until the securities commissioner promulgates a rule or order establishing a different fee. No registration statement may be renewed or reregistered unless another filing fee of five hundred dollars or other appropriate amount as may be specified by the commissioner is paid. When a registration statement is withdrawn before the effective date or a preeffective stop order is entered under Sections 35-1-1010 to 35-1-1050, the securities commissioner shall retain the entire filing fee.

SECTION 35-1-910. Information required in all registration statements.

Every registration statement shall specify (a) the amount of securities to be offered in this State, (b) the states in which a registration statement or similar document in connection with the offering has been or is to be filed and (c) any adverse order, judgment or decree entered in connection with the offering by the regulatory authorities in each state or by any court or the Securities and Exchange Commission.

SECTION 35-1-920. Incorporation of documents by reference in registration statements.

Any document filed under this chapter or a predecessor law, within five 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.

SECTION 35-1-930. Permitting omission of information or document from registration statement.

The securities commissioner may by rule or otherwise permit the omission of any item of information or document from any registration statement.

SECTION 35-1-940. Information in nonissuer distribution.

In the case of a nonissuer distribution, information may not be required under Section 35-1-880 or Section 35-1-970 unless it is known to the person filing the registration statement or to the persons on whose behalf the distribution is to be made or can be furnished by them without unreasonable effort or expense.

SECTION 35-1-950. Conditions imposable on registration by qualification or coordination.

The securities commissioner may by rule or order require as a condition of registration by qualification or coordination (a) 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 (b) that the proceeds from the sale of the registered security in this State be impounded until the issuer receives a specified amount from the sale of the security either in this State or elsewhere.

The securities commissioner may by rule or order require as a condition of registration that any security registered by qualification or coordination 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 securities commissioner or preserved for any period up to three years specified in the rule or order.

SECTION 35-1-960. Duration of registration statements; outstanding securities of same class; withdrawals.

Every registration statement is effective for one year from its effective date, except during the time a stop order is in effect under Sections 35-1-1010 to 35-1-1050. All outstanding securities of the same class as a registered security are considered to be registered for the purpose of any nonissuer transaction (a) so long as the registration statement is effective and (b) no stop order suspending or revoking the effectiveness of the registration statement has been entered under Sections 35-1-1010 to 35-1-1050. A registration statement may not be withdrawn for one year from its effective date if any securities of the same class are outstanding. A registration statement may be withdrawn otherwise only in the discretion of the securities commissioner.

SECTION 35-1-970. Reports while registration statement effective.

So long as a registration statement is effective, the securities commissioner 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.

SECTION 35-1-980. [1962 Code Section 62-168; 1961 (52) 185; 1990 Act No. 612, Part II,Section 19M, eff July 1, 1990]Repealed by 1997 Act No. 134, Section 1, eff June 13, 1997.

SECTION 35-1-990. Prospectus to be furnished.

As a condition of registration a prospectus approved by the securities commissioner shall be sent or given to each person to whom an offer is made before or concurrently with (a) the first written offer made to him, otherwise than by means of a public advertisement, by or for 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, (b) the confirmation of any sale made by or for the account of any such person, (c) payment pursuant to any such sale or (d) delivery of the security pursuant to any such sale, whichever first occurs.

SECTION 35-1-1000. Outstanding registered securities eligible for trading.

Securities registered pursuant to Sections 35-1-820 to 35-1-880, become eligible for trading in the secondary market at current market prices upon completion of the original offering when such securities are outstanding and in the hands of the public.

SECTION 35-1-1010. Grounds for stop order denying, suspending or revoking registration.

The securities commissioner may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if he finds (a) that the order is in the public interest and (b) that:

(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 report under Section 35-1-970, 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;

(ii) any provision of this chapter or any rule, order or condition lawfully imposed under this chapter has been wilfully violated, in connection with the offering by (1) the person filing the registration statement, (2) 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, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer or (3) any underwriter;

(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 or state act applicable to the offering but (1) the securities commissioner may not institute a proceeding against an effective registration statement under this item (iii) more than one year from the date of the order or injunction relied on and (2) he may not enter an order under this item (iii) on the basis of an order or injunction entered under any other state act unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this section;

(iv) the issuer's enterprise or method of business includes or would include activities which are illegal where performed;

(v) the offering has worked or tended to work a fraud upon purchasers or would so operate;

(vi) the offering has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions or other compensation, promoters' profits or participation or unreasonable amounts or kinds of options;

(vii) when a security is sought to be registered by notification, it is not eligible for such registration;

(viii) when a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by item (4) of Section 35-1-850; or

(ix) the applicant or registrant has failed to pay the proper filing fee; but the securities commissioner may enter only a denial order under this item (ix), and he shall vacate any such order when the deficiency has been corrected.

SECTION 35-1-1020. [1962 Code Section 62-172; 1961 (52) 185]Repealed by 1997 Act No. 134, Section 1, eff June 13, 1997.

SECTION 35-1-1030. Summary temporary postponement or suspension of registration; hearing.

The securities commissioner may by order summarily postpone or suspend the effectiveness of the registration statement pending final determination of any proceeding under this section. Upon the entry of the order, the securities commissioner shall promptly notify each person specified in Section 35-1-1040 that it has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the securities commissioner, the order will remain in effect until it is modified or vacated by the securities commissioner. If a hearing is requested or ordered, the securities commissioner, after notice of and opportunity for hearing to each person specified in Section 35-1-1040, may modify or vacate the order or extend it until final determination.

SECTION 35-1-1040. Notice, opportunity for hearing, and written findings required for stop order.

No stop order may be entered under any part of Sections 35-1-1010 to 35-1-1030 except the first sentence of Section 35-1-1030 without (a) appropriate prior notice to the applicant or registrant, the issuer and the person on whose behalf the securities are to be or have been offered, (b) opportunity for hearing and (c) written findings of fact and conclusions of law.

SECTION 35-1-1050. Vacation or modification of stop order.

The securities commissioner may vacate or modify a stop order if he finds that the conditions which prompted entry have changed or that it is otherwise in the public interest to do so.

ARTICLE 8.

NOTICE FILINGS FOR FEDERAL COVERED SECURITIES

SECTION 35-1-1100. Documents required to be filed for federal covered security; notice and consent to service of process; stop order suspending offer and sale; modification or waiver of section.

(a) The securities commissioner, by rule or order, may require the filing of any or all of the following documents with respect to a federal covered security under Section 18(b)(2) of the Securities Act of 1933:

(1) Prior to the initial offer of such federal covered security in this State, all documents that are part of a current federal registration statement filed with the United States Securities and Exchange Commission under the Securities Act of 1933 or a notice form adopted by the commissioner in lieu thereof, together with a consent to service of process signed by the issuer and a notice filing fee of five hundred dollars.

(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 United States Securities and Exchange Commission under the Securities Act of 1933, or a notice form adopted by the commissioner in lieu thereof which shall be filed concurrently with the securities commissioner.

(3) All notice filings for federal covered securities are effective upon receipt by the commission, unless another date is requested by the issuer. These filings are effective for twelve months. If securities are to be offered beyond this twelve-month period, the issuer must file an annual notice filing consisting of any documents that the securities commissioner, by rule or otherwise, may require and a fee of five hundred dollars. The renewal notice filing shall be effective upon the expiration of the prior filing period.

(4) Amendments to a notice filing are effective upon receipt by the securities commissioner. Termination of a notice filing is effective upon receipt by the securities commissioner of notice of the termination.

(b) With respect to any security that is a federal covered security under Section 18(b)(4)(D) of the Securities Act of 1933, the securities commissioner, by rule or order, may require the issuer to file a notice on SEC Form D and a consent to service of process signed by the issuer no later than fifteen (15) days after the first sale of such federal covered security in this State, together with a fee of three hundred dollars.

(c) The securities commissioner, by rule or order, may require the filing of any document filed with the United States Securities and Exchange Commission under the Securities Act of 1933 with respect to a federal covered security under Section 18(b)(3) or (4) of the Securities Act of 1933, together with a filing fee of twenty-five dollars.

(d) The securities commissioner may issue a stop order suspending the offer and sale of a federal covered security, except a federal covered security under Section 18(b)(1) of the Securities Act of 1933, if he 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 securities commissioner, by rule or order, may modify, change, or waive any or all of the provisions of this section.

ARTICLE 9.

FRAUDULENT AND OTHER PROHIBITED PRACTICES

SECTION 35-1-1210. Fraud or deceit in offers, sales or purchases.

It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly, to:

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

(2) 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

(3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

SECTION 35-1-1220. Fraud or deceit in advertising as to securities; exceptions.

It is unlawful for any person who receives any consideration from another person primarily 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 would operate as a fraud or deceit upon the other person;

(3) acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this subparagraph shall not apply to any transaction with a customer of a broker-dealer if such broker-dealer is not acting as an investment adviser in relation to such transaction;

(4) to engage in dishonest or unethical practices as the commissioner may define by rule;

(5) The provisions of items (3) and (4) of this section do not apply to federal covered advisers.

The commissioner may by rule or order adopt exemptions from item (3) of this section where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this chapter.

SECTION 35-1-1230. Investment advisory contracts; exemptions.

Except as may be permitted by rule or order of the securities commissioner, it is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing that:

(1) 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;

(2) no assignment of the contract may be made by the investment adviser without the consent of the other party to the contract; and

(3) the investment adviser, if a partnership, shall notify the other party to the contract of any change in the membership of the partnership within a reasonable time after the change.

Item (1) 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 time. "Assignment", as used in item (2), 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.

The commissioner may by rule or order adopt exemptions from the provisions of this section where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this chapter.

SECTION 35-1-1240. Investment adviser taking custody of client's securities or funds.

To the extent permitted by rule or order of the securities commissioner, an investment adviser licensed under this chapter may take or retain custody of securities or funds of a client.

ARTICLE 11.

JUDICIAL REVIEW OF SECURITIES COMMISSIONER'S ORDERS

SECTION 35-1-1310. Petition for review of order; stay pending review; scope of review.

Any person aggrieved by a final order of the securities commissioner may obtain a review of the order in the court of common pleas for Richland County or in the county wherein the person resides by filing in court, within thirty days after the entry of the order, a written petition praying that the order be modified or set aside in whole or in part. The filing of a written petition for review, accompanied by the posting of any bond set by the court in which a petition is filed, shall stay the effectiveness of the commissioner's final order until such time as the court has reviewed the order. A copy of the petition must be served upon the securities commissioner, and the securities commissioner shall certify and file in court a copy of the filing and evidence upon which the order was entered. When these have been filed, the court has exclusive jurisdiction to affirm, modify, enforce or set aside the order, in whole or in part. The findings of the securities commissioner as to the facts, if supported by competent, material, and substantial evidence, are conclusive.

SECTION 35-1-1320. Requiring securities commissioner to take additional evidence.

If either party applies to the court for leave to adduce additional material evidence, and shows to the satisfaction of the court that there were reasonable grounds for failure to adduce the evidence in the hearing before the securities commissioner, the court may order the additional evidence to be taken before the securities commissioner and to be adduced upon the hearing in such manner and upon such conditions as the court considers proper. The securities commissioner may modify his findings and order by reason of the additional evidence and shall file in court the additional evidence together with any modified or new findings or order.

SECTION 35-1-1330. Court order necessary to stay order under review.

The commencement of proceedings under Section 35-1-1310 does not, unless specifically ordered by the court, operate as a stay of the securities commissioner's order.

ARTICLE 13.

ENFORCEMENT, REMEDIES, LIABILITIES AND PENALTIES

SECTION 35-1-1410. Appointment of securities commissioner as agent for service of civil process; manner of service.

Every applicant for registration under this chapter, federal covered adviser, and every issuer which proposes to offer a security in this State through any person acting on any agency basis in the common-law sense shall file with the securities commissioner, in such form as he by rule prescribes, an irrevocable consent appointing the securities commissioner 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 arises under this chapter 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 securities commissioner, but it is not effective unless (a) the plaintiff, who may be the securities commissioner in a suit, action, or proceeding instituted by him, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address on file with the securities commissioner and (b) the plaintiff's affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

SECTION 35-1-1420. Violation of chapter equivalent to appointment of securities commissioner as agent for service of process; manner of service on violator.

When any person, including any nonresident of this State, engages in conduct prohibited or made actionable by this chapter or any rule or order hereunder, has not filed a consent to service of process under Section 35-1-1410 and personal jurisdiction over him cannot otherwise be obtained in this State, that conduct shall be considered equivalent to his appointment of the securities commissioner 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 chapter 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 securities commissioner, and it is not effective unless (a) the plaintiff, who may be the securities commissioner in a suit, action, or proceeding instituted by him, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last-known address or takes other steps which are reasonably calculated to give actual notice and (b) the plaintiff's affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

SECTION 35-1-1430. Continuance to allow defense reasonable opportunity to defend.

When process is served under Section 35-1-1410 or Section 35-1-1420, the court or the securities commissioner in a proceeding before him shall order such continuance as may be necessary to afford the defendant or respondent reasonable opportunity to defend.

SECTION 35-1-1440. Investigations by securities commissioner.

The securities commissioner in his discretion (a) may make such public or 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 chapter or any rule or order hereunder or to aid in the enforcement of this chapter or in the prescribing of rules and forms hereunder, (b) may require or permit any person to file a statement in writing, under oath or otherwise as the securities commissioner determines, as to all the facts and circumstances concerning the matter to be investigated and (c) may publish information concerning any violation of this chapter or any rule or order hereunder.

SECTION 35-1-1450. Powers of securities commissioner as to witnesses and evidence.

For the purpose of any investigation or proceeding under this chapter, the securities commissioner 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 securities commissioner deems relevant or material to the inquiry.

SECTION 35-1-1460. Order or subpoena to compel obedience of witness; imposition of fine, fees, and costs.

In case of contumacy by, or refusal to obey a subpoena issued to, any person, the court of common pleas, upon application by the securities commissioner, may issue to the person an order requiring him to appear before the securities commissioner or the officer designated by him, to produce documentary evidence, if so ordered, or to give evidence touching the matter under investigation or in question. The court may fine the person not exceeding three thousand dollars if it finds that the person's failure to respond fully to the subpoena was not in good faith or was for purposes of delay. In any case the court may award the securities commissioner fees and costs incurred in appearing before the court. Failure to obey the order of the court may be punished by the court as a contempt of court in addition to the other penalties authorized by this section.

SECTION 35-1-1470. Immunity of witness compelled to give evidence

No person is excused from attending and testifying or from producing any document or record before the securities commissioner or in obedience to the subpoena of the securities commissioner or any officer designated by him or in any proceeding instituted by the securities commissioner, 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 no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he is compelled, after claiming his privilege against self-incrimination, to testify or produce evidence documentary or otherwise, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

SECTION 35-1-1475. Administrative fine for violation of provision of chapter or violation of rule, order, or written agreement.

The securities commissioner may impose and collect an administrative fine against any person found to have violated any provision of this chapter, any rule or order promulgated by the commissioner, or any written agreement entered into with the commissioner in an amount not exceeding five thousand dollars for each violation.

SECTION 35-1-1480. Power of securities commissioner to apply for injunction, mandamus or receiver.

Whenever it appears to the securities commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule or order hereunder, he may in his discretion bring an action in the court of common pleas for Richland County or in the county wherein such person resides to enjoin the acts or practices and to enforce compliance with this chapter 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. The court may not require the securities commissioner to post a bond.

SECTION 35-1-1490. Liability to buyers for illegal or fraudulent sales or offers.

Any person who:

(1) offers or sells a security in violation of subsection (2) of Section 35-1-170 or Section 35-1-410 or Section 35-1-810, or of any rule or order under Section 35-1-50 which requires the affirmative approval of sales literature before it is used or of any condition imposed under Section 35-1-950 or Section 35-1-990; or

(2) Offers or sells a security by means of any untrue statement of a material fact or any omission 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, the buyer not knowing of the untruth or omission, and who does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission;

Is liable to the person buying the security from him, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at six percent per year from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security, upon the tender of 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 six percent per year from the date of disposition.

SECTION 35-1-1500. Persons jointly and severally liable with seller; contribution.

Every person who directly or indirectly controls a seller liable under Section 35-1-1490, every partner, officer or director of such a seller, every person occupying a similar status or performing similar functions, every employee of such a seller who materially aids in the sale, and every broker-dealer or agent who materially aids in the sale are also liable jointly and severally with and to the same extent as the seller, unless the nonseller who is so liable sustains the burden of proof that he did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. There is contribution as in cases of contract among the several persons so liable.

SECTION 35-1-1510. Time for making tender.

Any tender specified in Section 35-1-1490 may be made at any time before entry of judgment.

SECTION 35-1-1520. Survival of causes of action.

Every cause of action under this chapter survives the death of any person who might have been a plaintiff or defendant.

SECTION 35-1-1530. Limitation of actions; effect of offer to refund consideration with interest.

No person may sue under Sections 35-1-1490 and 35-1-1500 more than three years after the contract of sale. No person may sue under either section (a) 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 six percent per year from the date of payment, less the amount of any income received on the security, and he failed to accept the offer within thirty days of its receipt or (b) 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 thirty days of its receipt.

SECTION 35-1-1540. Person violating chapter not allowed to sue on contract.

No person who has made or engaged in the performance of any contract in violation of any provision of this chapter 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.

SECTION 35-1-1550. Waiver of compliance with chapter is void.

Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this chapter or any rule or order hereunder is void.

SECTION 35-1-1560. Rights and remedies under chapter additional to those existing at law or in equity.

The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist at law or in equity, but this chapter does not create any cause of action not specified in this section or in Section 35-1-510.

SECTION 35-1-1570. Power to punish crimes not limited.

Nothing in this chapter limits the power of the State to punish any person for any conduct which constitutes a crime by statute or at common law.

SECTION 35-1-1580. Institution of criminal proceedings.

The securities commissioner may refer that evidence as is available concerning violations of this chapter or of any rule or order under this chapter to the appropriate Division of the Attorney General's Office or other appropriate prosecution, law enforcement, or licensing authorities who may, institute the appropriate proceedings under this chapter.

SECTION 35-1-1590. Penalties for violations.

Any person who wilfully violates any provision of this chapter except Section 35-1-160, who wilfully violates any rule or order under this chapter, or who wilfully violates Section 35-1-160, knowing the statement made to be false or misleading in any material respect, is guilty of a:

(1) felony and, upon conviction, must be fined not more than fifty thousand dollars or imprisoned not more than ten years, or both, if the person's actions result in loss to an investor of twenty thousand dollars or more;

(2) felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than five years, or both, if the person's actions result in loss to an investor of more than one thousand dollars but less than twenty thousand dollars;

(3) misdemeanor and, upon conviction, must be fined not more than thirty thousand dollars or imprisoned not more than three years, or both, if the person's actions result in loss to an investor of one thousand dollars or less, or if no losses are proven.

However, 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.





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