S*200 Session 110 (1993-1994)
S*0200(Rat #0077, Act #0068) General Bill, By Hayes and Martin
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Chapter 73
to Title 39 so as to provide for the State Commodity Code.
01/13/93 Senate Introduced and read first time SJ-10
01/13/93 Senate Referred to Committee on Labor, Commerce and
Industry SJ-10
02/16/93 Senate Committee report: Favorable with amendment Labor,
Commerce and Industry SJ-9
02/17/93 Senate Amended SJ-27
02/17/93 Senate Read second time SJ-27
02/18/93 Senate Read third time and sent to House SJ-7
02/23/93 House Introduced and read first time HJ-11
02/23/93 House Referred to Committee on Labor, Commerce and
Industry HJ-11
04/14/93 House Committee report: Favorable Labor, Commerce and
Industry HJ-3
04/21/93 House Debate adjourned until Tuesday April 27 HJ-30
04/28/93 House Read second time HJ-37
04/29/93 House Read third time and enrolled HJ-16
05/11/93 Ratified R 77
05/14/93 Signed By Governor
05/14/93 Effective date 11/30/93
05/14/93 This Act takes effect two hundred days after approval
05/25/93 Copies available
(A68, R77, S200)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING CHAPTER 73 TO TITLE 39 SO AS TO
PROVIDE FOR THE STATE COMMODITY CODE.
Be it enacted by the General Assembly of the State of South Carolina:
State Commodity Code
SECTION 1. Title 39 of the 1976 Code is amended by adding:
"CHAPTER 73
State Commodity Code
Article 1
Commodity Transactions
Section 39-73-10. As used in this chapter:
(1) `Administrator' means the South Carolina Secretary of State.
(2) `Board of Trade' means a person or group of persons engaged in
buying or selling a commodity or receiving it for sale on consignment,
whether the person or group of persons is characterized as a board of trade,
exchange, or other form of marketplace.
(3) `CFTC Rule' means a rule, regulation, or order of the Commodity
Futures Trading Commission in effect on the effective date of this chapter
and their amendments unless the administrator, within ten days following
the effective date of an amendment disallows its application to this chapter
by regulation.
(4) `Commodity' means, except as otherwise specified by the
administrator, an agricultural, a grain, or a livestock product or by-product,
a metal or mineral, including a precious metal, a gem, or gemstone whether
characterized as precious, semi-precious, or otherwise, a fuel whether
liquid, gaseous, or otherwise, a foreign currency, and other goods, articles,
products, or items. It does not include:
(a) a numismatic coin whose fair market value is at least fifteen
percent higher than the value of the metal it contains;
(b) real property or a timber, an agricultural, or a livestock product
grown or raised on real property and offered or sold by the owner or lessee
of the property; or
(c) a work of art offered or sold by art dealers at public auction or
offered or sold through a private sale by the owner.
(5) `Commodity Contract' means an account, an agreement, or a
contract for the purchase or sale, primarily for speculation or investment
purposes and not for use or consumption by the offeree or purchaser of one
or more commodities, whether for immediate or subsequent delivery or
whether delivery is intended by the parties, and whether characterized as a
cash contract, deferred shipment or deferred delivery contract, forward
contract, futures contract, installment or margin contract, leverage contract,
or otherwise. A commodity contract offered or sold, in the absence of
evidence to the contrary, is presumed to be offered or sold for speculation
or investment purposes. A commodity contract does not include a contract
or an agreement which requires and under which the purchaser receives,
within twenty-eight calendar days from the payment in good funds of a
portion of the purchase price, physical delivery of the total amount of each
commodity to be purchased under the contract or agreement.
(6) `Commodity Exchange Act' means the act of Congress known as the
Commodity Exchange Act, as amended, unless the administrator within ten
days following the effective date of an amendment, disallows the
application to this chapter by regulation.
(7) `Commodity Futures Trading Commission' means the independent
regulatory agency established by Congress to administer the Commodity
Exchange Act.
(8) `Commodity merchant' means any of the following as defined or
described in the Commodity Exchange Act or by CFTC Rule:
(a) futures commission merchant;
(b) commodity pool operator;
(c) commodity trading advisor;
(d) introducing broker;
(e) leverage transaction merchant;
(f) an associated person of item (a), (b), (c), (d), or (e);
(g) floor broker;
(h) other person, other than a futures association, required to register
with the Commodity Futures Trading Commission.
(9) `Commodity option' means an account, an agreement, or a contract
giving a party the right but not the obligation to purchase or sell one or
more commodities or one or more commodity contracts, or all of the
foregoing, whether characterized as an option, privilege, indemnity, bid,
offer, put, call, advance guaranty, decline guaranty, or otherwise. It does
not include an option traded on a national securities exchange registered
with the United States Securities and Exchange Commission.
(10) `Financial institution' means a bank, savings institution, or trust
company organized under, or supervised pursuant to the laws of the United
States or its states.
(11) `Offer' includes every offer to sell, offer to purchase, or offer to
enter into a commodity contract or commodity option.
(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. It does not include
a contract market designated by the Commodity Futures Trading
Commission, a clearinghouse of it, a national securities exchange registered
with the Securities and Exchange Commission, or an employee, an officer,
or a director of the contract market, clearinghouse, or exchange acting
solely in that capacity.
(13) `Precious metal' means the following in either coin, bullion, or
other form:
(a) silver;
(b) gold;
(c) platinum;
(d) palladium;
(e) copper;
(f) other items the administrator may specify by regulation.
(14) `Sale' or `sell' includes every sale, contract of sale, contract to sell,
or disposition for value.
Section 39-73-20. Except as otherwise provided in Section 39-73-30 or
Section 39-73-40 no person may sell or purchase or offer to sell or purchase
a commodity under commodity contract or under commodity option or
offer to enter into or enter into as seller or purchaser a commodity contract
or a commodity option.
Section 39-73-30. (A) The prohibitions in Section 39-73-20 do not
apply to transactions offered by and in which any of the following persons,
or an employee, an officer, or a director of them acting solely in that
capacity, is the purchaser or seller:
(1) a person registered with the Commodity Futures Trading
Commission as a futures commission merchant or as a leverage transaction
merchant whose activities require registration;
(2) a person registered with the Securities and Exchange Commission
as a broker-dealer whose activities require registration;
(3) a person affiliated with, and whose obligations and liabilities
under the transaction are guaranteed by, a person referred to in item (1) or
(2);
(4) a person who is a member of a contract market designated by the
Commodity Futures Trading Commission, or clearinghouse of it;
(5) a financial institution;
(6) a person registered under the laws of this State as a securities
broker-dealer whose activities require registration.
(B) The exemptions in this section do not apply to a transaction or an
activity prohibited by the Commodity Exchange Act or a CFTC Rule.
Section 39-73-40. (A) The prohibitions in Section 39-73-20 do not
apply to:
(1) an account, an agreement, or a transaction within the exclusive
jurisdiction of the Commodity Futures Trading Commission as granted
under the Commodity Exchange Act;
(2) a commodity contract for the purchase of one or more precious
metals which requires, and under which the purchaser receives, within
twenty-eight calendar days from the payment in good funds of a portion of
the purchase price, physical delivery of the quantity of the precious metals
purchased by the payment. For purposes of this paragraph physical
delivery is deemed to have occurred if, within the twenty-eight-day period,
the quantity of precious metals purchased by the payment is delivered,
whether in specifically segregated or fungible bulk forms into the
possession of a depository other than the seller which is:
(a) a financial institution;
(b) a depository the warehouse receipts of which are recognized for
delivery purposes for a commodity on a contract market designated by the
Commodity Futures Trading Commission;
(c) a storage facility licensed or regulated by the United States or its
agencies, or
(d) a depository designated by the administrator. The depository or
other person which itself qualifies as a depository or a qualified seller shall
issue and the purchaser shall receive a certificate, a document of title,
confirmation, or other instrument evidencing that the quantity of precious
metals has been delivered to the depository and is being and will continue
to be held by the depository on the purchaser's behalf, free and clear of all
liens and encumbrances other than liens of the purchaser, tax liens, liens
agreed to by the purchaser, or liens of the depository for fees and expenses,
which previously have been disclosed to the purchaser;
(3) a commodity contract solely between persons engaged in
producing, processing, using commercially, or handling as merchants, each
commodity subject to the contract or a by-product of it; or
(4) a commodity contract under which the offeree or the purchaser is a
person referred to in Section 39-73-30, an insurance company, an
investment company as defined in the Investment Company Act of 1940, or
an employee pension and profit-sharing or benefit plan other than a
self-employed individual retirement plan or individual retirement
account.
(B) For purposes of item (2) of subsection (A) a qualified seller is a
person who:
(1) is a seller of precious metals and has a tangible net worth of at
least five million dollars or has an affiliate who unconditionally has
guaranteed the obligations and liabilities of the seller, and the affiliate has a
tangible net worth of at least five million dollars;
(2) has stored precious metals with one or more depositories on behalf
of customers for at least the previous three years;
(3) before an offer and annually files with the administrator a sworn
notice of intent to act as a qualified seller under item (2) of subsection (A)
containing:
(a) the seller's name and address and names of its directors, officers,
controlling shareholders, partners, principals, and other controlling
persons;
(b) the address of its principal place of business, state and date of
incorporation or organization, and the name and address of the seller's
registered agent in this State; (c) a statement that the seller, or a
person affiliated with the seller who has guaranteed the obligations and
liabilities of the seller has a tangible net worth of at least five million
dollars;
(d) depository information, including:
(i) the name and address of the depository or depositories that the
seller intends to sue;
(ii) the name and address of each depository where the seller has
stored precious metals on behalf of customers for the previous three
years;
(iii) independent verification from each depository named in
sub-subitem (ii) that the seller has in fact stored precious metals on behalf
of the seller's customers for the previous three years and a statement of total
deposits made during this period;
(e) financial statements for the seller or the person affiliated with the
seller who has guaranteed the obligations and liabilities of the seller for the
past three years, audited by an independent certified public accountant,
with the accountant's report;
(f) a statement describing the details of all civil, criminal, or
administrative proceedings currently pending or adversely resolved against
the seller or its directors, officers, controlling shareholders, partners,
principals, or other controlling persons during the past ten years,
including:
(i) civil litigation and administrative proceedings involving
securities or commodities violations or fraud;
(ii) criminal proceedings;
(iii) denials, suspensions, or revocations of securities or
commodities, licenses, or registrations;
(iv) suspensions or expulsions from membership in or associations
with self-regulatory organizations registered under the Securities Exchange
Act of 1934 or the Commodities Exchange Act;
(v) a statement that there were no proceedings.
(4) notifies the administrator within fifteen days of material changes
in the information provided in the notice of intent;
(5) annually furnishes to each purchaser for whom the seller is then
storing precious metals, and to the administrator a report by an independent
certified public accountant of the accountant's examination of the seller's
precious metals storage program.
(C) The administrator, upon request by the seller, may waive one or
more of the exemption requirements in subsection (B), conditionally or
unconditionally.
(D) The administrator, by order, may deny, suspend, revoke, or place
limitations on the authority to engage in business as a qualified seller under
item (2) of subsection (A) if the administrator finds that the order is in the
public interest and that the person, the person's officers, directors, partners,
agents, servants, or employees, a person occupying a similar status or
performing similar functions, or a person who directly or indirectly controls
or is controlled by the seller, or his affiliates or subsidiaries:
(1) has filed a notice of intention under subsection (C) with the
administrator or the designee of the administrator which was incomplete in
material respect or contained a statement which was, in light of the
circumstances under which it was made, false or misleading with respect to
a material fact;
(2) within the last ten years, has pled guilty or nolo contendere to, or
been convicted of a crime indicating a lack of fitness to engage in the
investment commodity business;
(3) has been enjoined permanently or temporarily by a court of
competent jurisdiction from engaging in or continuing conduct or a practice
which injunction indicates a lack of fitness to engage in the investment
commodities business;
(4) is the subject of an order of the administrator denying, suspending,
or revoking the person's license as a securities broker-dealer, sales
representative, or investment advisor;
(5) is the subject of one or more of the following orders which
currently are effective and which were issued within the last five years:
(a) an order by a securities agency or an administrator of another
state, Canadian province or territory, the Securities and Exchange
Commission, or the Commodity Futures Trading Commission entered after
notice and opportunity for hearing, denying, suspending, or revoking the
person's registration as a futures commission merchant, commodity trading
adviser, commodity pool operator, securities broker-dealer, sales
representative, or investment adviser, or the substantial equivalent of the
foregoing;
(b) suspension or expulsion from membership in, or association
with, a self-regulatory organization registered under the Securities
Exchange Act of 1934 or the Commodity Exchange Act;
(c) a United States Postal Service fraud order;
(d) a cease and desist order entered after notice and opportunity of
hearing by the administrator or a securities agency or an administrator of
another state, Canadian province or territory, the Securities and Exchange
Commission, or the Commodity Futures Trading Commission;
(e) an order entered by the Commodity Futures Trading Commission
denying, suspending, or revoking registration under the Commodity
Exchange Act.
(6) has engaged in an unethical or a dishonest act or practice in the
investment commodities or securities business; or
(7) has failed reasonably to supervise sales representatives or
employees.
(E) If the public interest or the protection of investors so requires, the
administrator, by order, summarily may deny or suspend the exemption for
a qualified seller. Upon the entry of the order the administrator promptly
shall notify the person claiming the status that an order has been entered,
the reasons for it, and that within thirty days after the receipt of a written
request the matter will be set for hearing. Section 49-73-355 applies with
respect to subsequent proceedings.
(F) If the administrator finds that an applicant or a qualified seller is no
longer in existence, has ceased to do business, 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, he, by order, may
deny or revoke the exemption for a qualified seller.
(G) The administrator may promulgate regulations prescribing the terms
and conditions of transactions and contracts covered by this chapter which
are not within the exclusive jurisdiction of the Commodity Futures Trading
Commission as granted by the Commodity Exchange Act exempting and
conditionally or unconditionally and otherwise implementing this chapter
for the protection of purchasers and sellers of commodities.
Section 39-73-50. (A) No person may engage in a trade or business or
otherwise act as a commodity merchant unless he:
(1) is registered or temporarily licensed with the Commodity Futures
Trading Commission for each activity constituting the person as a
commodity merchant and the registration or temporary license has not
expired or been suspended or revoked; or
(2) is exempt from registration by virtue of the Commodity Exchange
Act or of a CFTC Rule.
(B) No board of trade may trade or provide a place for the trading of a
commodity contract or commodity option required to be traded on or
subject to the rules of a contract market designated by the Commodity
Futures Trading Commission unless the board of trade has been so
designated for the commodity contract or commodity option and the
designation has not been vacated, suspended, or revoked.
Section 39-73-60. No person, directly or indirectly, in or in connection
with the purchase or sale of, the offer to sell, the offer to purchase, the offer
to enter into, or the entry into of, a commodity contract or commodity
option subject to Sections 39-73-20, 39-73-310, or 39-73-40(A)(2) or (4),
may:
(1) cheat or defraud or attempt to cheat or defraud a person or employ a
device, a scheme, or an artifice to defraud a person;
(2) make a false report, enter a false record, or make an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading;
(3) engage in a transaction, an act, a practice, or a course of business,
including without limitation a form of advertising or solicitation which
operates or would operate as a fraud or deceit upon a person; or
(4) misappropriate or convert the funds, security, or property of a
person.
Section 39-73-70. (A) The act, omission or failure of an official, an
agent, or another person acting for an individual, an association, a
partnership, a corporation, or a trust within the scope of his employment or
office is deemed the act, omission or failure of the individual, association,
partnership, corporation, or trust as well as of the official, agent, or other
person.
(B) Every person who directly or indirectly controls another person
liable under this chapter, every partner, officer, or director of the other
person, every person occupying a similar status or performing similar
functions, every employee of the other person who materially aids in the
violation also is liable jointly and severally with and to the same extent as
the other person, unless the person who also is liable by virtue of this
section sustains the burden of proof that he did not know and in exercise or
reasonable care could not have known of the existence of the facts by
reason of which the liability is alleged to exist.
Section 39-73-80. Nothing in this chapter impairs, derogates, or
otherwise, affects the authority or powers of the administrator under state
securities law or the application of this chapter to a person or transaction
subject to state securities law.
Section 39-73-90. This chapter may be construed and implemented to
effectuate its general purpose to protect investors, to prevent and prosecute
illegal and fraudulent schemes involving commodity contracts, and to
maximize coordination with federal and other states' laws and the
administration and enforcement of them. This chapter does not create
rights or remedies upon which actions may be brought by private persons
against persons who violate this chapter.
Article 3
Administration and Enforcement
Section 39-73-310. (A) The administrator may make investigations,
within or without this State, as it finds necessary or appropriate to:
(1) determine whether a person has violated or is about to violate this
chapter or a regulation of the administrator; or
(2) aid in enforcement of this chapter.
(B) The administrator may publish information concerning a violation
of this chapter or a regulation of the administrator.
(C) For purposes of an investigation or a proceeding under this chapter
the administrator or an officer or employee designated by regulation may
administer oaths and affirmations, subpoena witnesses, compel their
attendance, take evidence, and require the production of books, papers,
correspondence, memoranda, agreements, or other documents or records
which the administrator finds to be relevant or material to the inquiry.
(D)(1) If a person does not give testimony or produce the documents
required by the administrator or a designated employee pursuant to an
administrative subpoena, the administrator or designated employee may
apply for a court order compelling compliance with the subpoena or the
giving of the required testimony.
(2) The request for order of compliance may be addressed to:
(a) the circuit court of Richland County or the circuit court of the
county where service may be obtained on the person refusing to testify or
produce if the person is within this State; or
(b) the appropriate court of the state having jurisdiction over the
person refusing to testify or produce if the person is outside this State.
Section 39-73-315. (A) If the administrator believes, whether or not
based upon an investigation conducted under Section 39-73-310, that a
person has engaged or is about to engage in an act or a practice constituting
a violation of this chapter or a related regulation, the administrator
may:
(1) issue a cease and desist order;
(2) issue an order imposing a civil penalty of not more than ten
thousand dollars for a single violation or one hundred thousand dollars for
multiple violations in a single proceeding or a series of related
proceedings;
(3) initiate the actions specified in subsection (B); or
(4) take disciplinary action against a licensed person as specified in
Section 39-73-580.
(B) The administrator may institute one or more of the following
actions in the appropriate courts of this State or in the appropriate courts of
another state in addition to legal or equitable remedies otherwise
available:
(1) a declaratory judgment;
(2) an action for a prohibitory or mandatory injunction to enjoin the
violation and to ensure compliance with this chapter or a regulation or
order of the administrator;
(3) an action for disgorgement;
(4) an action for appointment of a receiver or conservator for the
defendant or the defendant's assets;
(5) an action to enjoin permanently a person from acting as a
commodity broker-dealer or a commodity sales representative, as defined in
Section 39-73-510.
Section 39-73-320. (A)(1) Upon a proper showing by the administrator
that a person has violated or is about to violate this chapter or a regulation
or order of the administrator, the court may grant appropriate legal or
equitable remedies.
(2) Upon a showing of a violation of this chapter or a regulation or
order of the administrator, the court, in addition to traditional legal and
equitable remedies, including temporary restraining orders, permanent or
temporary prohibitory or mandatory injunctions, and writs of prohibition or
mandamus, may grant the following special remedies:
(a) imposition of a civil penalty of not more than ten thousand
dollars for a single violation or one hundred thousand dollars for multiple
violations in a single proceeding or a series of related proceedings;
(b) disgorgement;
(c) declaratory judgment;
(d) restitution to investors wishing restitution;
(e) appointment of a receiver or conservator for the defendant or the
defendant's assets;
(f) injunction permanently enjoining the defendant from acting as a
commodity broker-dealer or a commodity sales representative, as defined in
Section 39-73-510.
(3) Appropriate remedies when the defendant is shown only about to
violate this chapter or a regulation or order of the administrator is limited
to:
(a) temporary restraining order;
(b) temporary or permanent injunction;
(c) writ of prohibition or mandamus; or
(d) order appointing a receiver or conservator for the defendant or
the defendant's assets.
(B) The court may not require the administrator to post a bond in an
official action under this chapter.
(C)(1) Upon a proper showing by the administrator or securities or
commodity agency of another state that a person, other than a government
or governmental agency or instrumentality, has violated, or is about to
violate, the commodity code of that state or a regulation or order of the
administrator or securities or commodity agency of that state, the court may
grant appropriate legal and equitable remedies.
(2) Upon showing of a violation of the securities or commodity act of
the foreign state or a regulation or order of the administrator or securities or
commodity agency of the foreign state, the court, in addition to traditional
legal or equitable remedies, including temporary restraining orders,
permanent or temporary prohibitory or mandatory injunctions, and writs of
prohibition or mandamus, may grant the following special remedies:
(a) disgorgement;
(b) appointment of a receiver, conservator, or ancillary receiver or
conservator for the defendant or the defendant's assets located in this
State.
(3) Appropriate remedies when the defendant is shown only about to
violate the securities or commodity act of the foreign state or a regulation
or order of the administrator or securities or commodity agency of the
foreign state is limited to:
(a) temporary restraining order;
(b) temporary or permanent injunction;
(c) writ or prohibition or mandamus; or
(d) order appointing a receiver, conservator, or ancillary receiver or
conservator for the defendant or the defendant's assets located in this
State.
Section 39-73-325. (A) A person who wilfully violates a regulation or
order of the administrator under this chapter, upon conviction, must be
fined not more than twenty thousand dollars, or imprisoned not more than
ten years, or both, for each violation.
(B) A person convicted of violating a regulation or order under this
chapter may be fined but must not be imprisoned if the person proves he
had no knowledge of the rule or order.
(C) The administrator may refer evidence available concerning
violations of this chapter or a regulation or order of the administrator to the
Attorney General or the appropriate solicitor who, with or without a
reference from the administrator, may institute the appropriate criminal
proceedings under this chapter.
Section 39-73-330. (A) This chapter must be administered by the South
Carolina Secretary of State.
(B) The administrator and his employees may not use information filed
with or obtained by the administrator which is not public information for
personal gain or benefit and may not conduct securities or commodity
dealings based upon the information, even though public, if there has not
been sufficient time for the securities or commodity markets to assimilate
the information.
(C)(1) Except as provided in item (2), all information collected,
assembled, or maintained by the administrator is public information and is
available for examination by the public.
(2) The following information is confidential and an exception to item
(1):
(a) information obtained in private investigations pursuant to Section
39-73-310;
(b) information made confidential by the Freedom of Information
Act;
(c) information obtained from federal agencies which must not be
disclosed under federal law.
(3) The administrator in his discretion may disclose information made
confidential under subsection (C)(2)(a) to persons identified in Section
39-73-335(A).
(4) This chapter does not create or derogate a privilege which exists at
common law, by statute, or otherwise when documentary or other evidence
is sought under subpoena directed to the administrator or his
employees.
Section 39-73-335. (A) To encourage uniform application and
interpretation of this chapter and securities regulation and enforcement in
general, the administrator and his employees may cooperate, including
bearing the expense of the cooperation, with the securities agencies or
administrator of another jurisdiction, the Canadian province or territory, or
other agencies administering this chapter, the Commodity Futures Trading
Commission, the Securities and Exchange Commission, a self-regulatory
organization established under the Commodity Exchange Act or the
Securities Exchange Act of 1934, a national or an international
organization of commodities or securities officials or agencies, and a
governmental law enforcement agency.
(B) The cooperation authorized by subsection (A) includes, but is not
limited to:
(1) making joint examinations or investigations;
(2) holding joint administrative hearings;
(3) filing and prosecuting joint litigation;
(4) sharing and exchanging personnel;
(5) sharing and exchanging information and documents;
(6) formulating and adopting mutual regulations, statements of policy,
guidelines, proposed statutory changes, and releases;
(7) issuing and enforcing subpoenas at the request of the agency
administering this chapter in another jurisdiction, the securities agency of
another jurisdiction, the Commodity Futures Trading Commission, or the
Securities and Exchange Commission if the information sought also is
subject to lawful subpoena for conduct occurring in this State.
Section 39-73-340. (A) In addition to specific authority granted
elsewhere in this chapter, the administrator may make, amend, rescind
regulations, forms, and orders as are necessary to carry out this chapter.
The regulations or forms must include, but are not limited to, regulations
defining terms, whether or not used in this chapter. The definitions must
not be inconsistent with this chapter. For the purpose of regulations or
forms the administrator may classify commodities and commodity
contracts, persons, and matters within the administrator's jurisdiction.
(B) Unless specifically provided in this chapter, no regulation, form, or
order may be adopted, amended, or rescinded unless the administrator finds
that action is:
(1) necessary or appropriate in the public interest or for the protection
of investors;
(2) consistent with the purposes fairly intended by the policy and
provisions of this chapter.
(C) Regulations and forms of the administrator must be published.
(D) A provision of this chapter imposing liability does not apply to an
act done or omitted in good faith in conformity with a regulation, order, or
form adopted by the administrator, notwithstanding that the regulation,
order, or form may be amended, rescinded, or determined by judicial or
other authority to be invalid.
Section 39-73-345. When a person, including a nonresident of this
State, engages in conduct prohibited or made actionable by the chapter or a
regulation or order of the administrator, the engaging in the conduct
constitutes the appointment of the administrator as the person's attorney to
receive service of lawful process in a noncriminal proceeding against the
person, a successor, or personal representative, which grows out of that
conduct and which is brought under the chapter or a regulation or order of
the administrator with the same force as if served personally.
Section 39-73-350. (A) Sections 39-73-20, 39-73-50, and 39-73-60
apply to persons who:
(1) sell or offer to sell when an offer to:
(a) sell is made in this State; or
(b) buy is made and accepted in this State;
(2) buy or offer to buy when an offer to:
(a) buy is made in this State; or
(b) sell is made and accepted in this State.
(B) For the purpose of this section, an offer to sell or buy is made in this
State, whether or not either party is then present in this State, when the
offer:
(1) originates from this State; or
(2) is directed by the offeror to this State and received at the place to
which it is directed, or at a post office in this State for a mailed offer.
(C) For the purpose of this section, an offer to buy or sell is accepted in
this State when acceptance:
(1) is communicated to the offeror in this State;
(2) previously has not 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
a post office in this State for a mailed acceptance.
(D) An offer to sell or to buy is not made in this State when one or both
of the following exist:
(1) The publisher circulates or there is circulated on his behalf in this
State a 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.
(2) A radio or television program originating outside this State is
received in this State.
Section 39-73-355. (A) The administrator shall commence an
administrative proceeding under this chapter by entering a notice of intent
to do a contemplated act or a summary order. The notice of intent or
summary order may be entered without notice, and without opportunity for
hearing and need not be supported by findings of fact or conclusions of law
but must be in writing.
(B) Upon entry of a notice of intent or summary order, the administrator
promptly shall notify all interested parties that the notice or summary order
has been entered and its reasons. If the proceeding is pursuant to a notice
of intent, the administrator shall inform all interested parties of the date,
time, and place set for the hearing on the notice. If the proceeding is
pursuant to a summary order, the administrator shall inform all interested
parties that they have thirty business days from the entry of the order to file
a written request for a hearing on the matter with the administrator and that
the hearing will be scheduled to commence within thirty business days after
the receipt of the written request.
(C) If the proceeding is pursuant to a summary order, the administrator,
whether or not a written request for a hearing is received from an interested
party, may set the matter down for hearing on the administrator's own
motion.
(D) If no hearing is requested and none is ordered by the administrator,
the summary order automatically becomes a final order after thirty business
days.
(E) If a hearing is requested or ordered, the administrator, after notice of
a hearing to and an opportunity for a hearing for all interested persons, may
modify or vacate the order or extend it until final determination.
(F) No final order or order after hearing may be returned without:
(1) appropriate notice to all interested persons;
(2) opportunity for hearing by all interested persons;
(3) entry of written findings of fact and conclusions of law.
(G) Every hearing in an administrative proceeding under this chapter is
public unless the administrator grants a request joined in by all the
respondents that the hearing be conducted privately.
Section 39-73-360. (A) A person aggrieved by a final order of the
administrator may obtain a review of the order in court by filing, within
sixty days after the entry of the order, a written petition requesting the order
be modified or set aside in whole or in part. A copy of the petition for
review must be served upon the administrator.
(B) Upon the filing of a petition for review, except where the taking of
additional evidence is ordered by the court pursuant to subsection (E) or
(F), the court shall have exclusive jurisdiction of the matter, and the
administrator may not modify or set aside the order, in whole or in part.
(C) The filing of a petition for review under subsection (A), unless
specifically ordered by the court, does not operate as a stay of the
administrator's order, and the administrator may enforce or ask the court to
enforce the order pending the outcome of the review proceedings.
(D) Upon receipt of the petition for review, the administrator shall
certify and file in the court a copy of the order and the transcript or record
of the evidence upon which it was based. If the order became final by
operation of law under Section 39-73-355(D), the administrator shall
certify and file in court the summary order and evidence of its source upon
the parties to it and an affidavit certifying that no hearing has been held and
the order became final pursuant to Section 39-73-355(D).
(E) If the aggrieved party or the administrator applies to the court for
leave to adduce additional evidence and shows to the satisfaction of the
court there were reasonable grounds for failure to adduce the evidence in
the hearing before the administrator or other good cause, the court may
order the additional evidence to be taken by the administrator under
conditions the court considers proper.
(F) If new evidence is ordered taken by the court, the administrator may
modify the findings and order by reason of the additional evidence and
shall file in the court the additional evidence with modified or new findings
or order.
(G) The court shall review the petition based upon the original record
before the administrator as amended under subsections (E) and (F). The
findings of the administrator as to the facts, if supported by competent,
material, and substantive evidence, are conclusive. Based upon this review,
the court may affirm, modify, enforce, or set aside the order, in whole or in
part.
(H) The judgment of the court is subject to review by the court.
Section 39-73-365. It is not necessary to negate the exemptions of this
chapter in a complaint, information, indictment, a writ, or a proceeding
brought under this chapter. The burden of proof of the exemption is upon
the party claiming it.
Section 39-73-370. It is a defense in a complaint, information,
indictment, a writ, or a proceeding brought under this chapter alleging a
violation of Section 39-73-20 based solely on the failure in an individual
case to make physical delivery within the applicable time under Section
39-73-10(5) or Section 39-73-40(A)(2) if:
(1) failure to make physical delivery was due solely to factors beyond
the control of the seller, the seller's officers, directors, partners, agents,
servants, or employees, persons occupying a similar status or performing
similar functions, persons who directly or indirectly control or are
controlled by the seller, or the seller's affiliates, subsidiaries, or
successors;
(2) physical delivery was completed within a reasonable time under the
applicable circumstances."
Time effective
SECTION 2. This act takes effect two hundred days after approval by the
Governor.
Approved the 14th day of May, 1993. |