Sen. Ram Villivalam

Filed: 3/4/2019

 

 


 

 


 
10100SB1628sam001LRB101 05279 JLS 56357 a

1
AMENDMENT TO SENATE BILL 1628

2    AMENDMENT NO. ______. Amend Senate Bill 1628 on page 1, by
3replacing line 5 with the following:
4"by changing Sections 2.11, 2.12b, 8, and 12 and by adding
5Section 3.5 as follows:
 
6    (815 ILCS 5/2.11)  (from Ch. 121 1/2, par. 137.2-11)
7    Sec. 2.11. Investment adviser. "Investment adviser" means
8any person who, for compensation, engages in this State in the
9business of advising others, either directly or through
10publications or writings, as to the value of securities or as
11to the advisability of investing in, purchasing, or selling
12securities or who, in this State for direct or indirect
13compensation and as part of a regular advisory business, issues
14or promulgates analyses or reports concerning securities or any
15financial planner or other person who, as an integral component
16of other financially related services, provides the foregoing
17investment advisory services to others for compensation and as

 

 

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1part of a business, or who holds himself or herself out as
2providing the foregoing investment advisory services to others
3for compensation; but "investment adviser" does not include:
4    (1) a bank or trust company, or the regular employees of a
5bank or trust company;
6    (2) any lawyer, accountant, engineer, geologist or teacher
7(i) whose performance of such services is solely incidental to
8the practice of his or her profession or (ii) who:
9        (A) does not exercise investment discretion with
10    respect to the assets of clients or maintain custody of the
11    assets of clients for the purpose of investing those
12    assets, except when the person is acting as a bona fide
13    fiduciary in a capacity such as an executor, trustee,
14    personal representative, estate or trust agent, guardian,
15    conservator, or person serving in a similar fiduciary
16    capacity;
17        (B) does not accept or receive, directly or indirectly,
18    any commission, fee, or other remuneration contingent upon
19    the purchase or sale of any specific security by a client
20    of such person; and
21        (C) does not advise on the purchase or sale of specific
22    securities, except that this clause (C) shall not apply
23    when the advice about specific securities is based on
24    financial statement analyses or tax considerations that
25    are reasonably related to and in connection with the
26    person's profession;

 

 

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1    (3) any registered dealer or partner, officer, director or
2regular employee of a registered dealer, or registered
3salesperson, whose performance of these services, in each case,
4is solely incidental to the conduct of the business of the
5registered dealer or registered salesperson, as the case may
6be, and who receives no special compensation, directly or
7indirectly, for such services;
8    (4) any publisher or regular employee of such publisher of
9a bona fide newspaper, news magazine or business or financial
10publication of regular and established paid circulation;
11    (5) any person whose advice, analyses or reports relate
12only to securities which are direct obligations of, or
13obligations guaranteed as to principal or interest by, the
14United States, any state or any political subdivision of any
15state, or any public agency or public instrumentality of any
16one or more of the foregoing;
17    (5.5) any person who is a federal covered investment
18adviser; or
19    (6) any other persons who are not within the intent of this
20Section as the Secretary of State may designate by rules and
21regulations or order.
22(Source: P.A. 90-70, eff. 7-8-97.)
 
23    (815 ILCS 5/2.12b)  (from Ch. 121 1/2, par. 137.2-12b)
24    Sec. 2.12b. Investment adviser representative. "Investment
25adviser representative" means, with respect to an investment

 

 

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1adviser who is required to register under this Act, any
2partner, officer, director of (or a person occupying a similar
3status or performing similar functions), or other natural
4person employed by or associated with an investment adviser,
5except clerical or ministerial personnel, who in this State:
6        (1) makes any recommendations or otherwise renders
7    advice regarding securities or investment products;
8        (2) manages accounts or portfolios of clients;
9        (3) determines what recommendation or advice regarding
10    securities or investments should be given;
11        (4) supervises any employee who performs any of the
12    foregoing; or
13        (5) solicits, refers, offers, or negotiates for the
14    sale of, or sells, investment advisory services.
15    With respect to a federal covered investment adviser,
16"investment adviser representative" means any person who is an
17investment adviser representative with a place of business in
18this State as such terms are defined by the Securities and
19Exchange Commission under Section 203A of the Federal 1940
20Investment Advisers Act.
21(Source: P.A. 90-70, eff. 7-8-97; 90-667, eff. 7-30-98; 91-809,
22eff. 1-1-01.)
 
23    (815 ILCS 5/3.5 new)
24    Sec. 3.5. Authority of Secretary of State. Notwithstanding
25any other law, the Secretary of State has the authority to

 

 

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1enforce this Act as it pertains to the offer, sale, or
2investment advice concerning a covered security as defined by
3Section 2.29."; and
 
4on page 32, by inserting immediately below line 4 the
5following:
 
6    "(815 ILCS 5/12)  (from Ch. 121 1/2, par. 137.12)
7    Sec. 12. Violation. It shall be a violation of the
8provisions of this Act for any person:
9        A. To offer or sell any security except in accordance
10    with the provisions of this Act.
11        B. To deliver to a purchaser any security required to
12    be registered under Section 5, Section 6 or Section 7
13    hereof unless accompanied or preceded by a prospectus that
14    meets the requirements of the pertinent subsection of
15    Section 5 or of Section 6 or of Section 7.
16        C. To act as a dealer, Internet portal, salesperson,
17    investment adviser, or investment adviser representative,
18    unless registered as such, where such registration is
19    required, under the provisions of this Act.
20        D. To fail to file with the Secretary of State any
21    application, report or document required to be filed under
22    the provisions of this Act or any rule or regulation made
23    by the Secretary of State pursuant to this Act or to fail
24    to comply with the terms of any order of the Secretary of

 

 

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1    State issued pursuant to Section 11 hereof.
2        E. To make, or cause to be made, (1) in any sworn
3    testimony before the Secretary of State or the Illinois
4    Securities Department within the Office of the Secretary,
5    or application, report or document filed under this Act or
6    any rule or regulation made by the Secretary of State
7    pursuant to this Act, any statement which was false or
8    misleading with respect to any material fact or (2) any
9    statement to the effect that a security (other than a
10    security issued by the State of Illinois) has been in any
11    way endorsed or approved by the Secretary of State or the
12    State of Illinois.
13        F. To engage in any transaction, practice or course of
14    business in connection with the sale or purchase of
15    securities which works or tends to work a fraud or deceit
16    upon the purchaser or seller thereof.
17        G. To obtain money or property through the sale of
18    securities by means of any untrue statement of a material
19    fact or any omission to state a material fact necessary in
20    order to make the statements made, in the light of the
21    circumstances under which they were made, not misleading.
22        H. To sign or circulate any statement, prospectus, or
23    other paper or document required by any provision of this
24    Act or pertaining to any security knowing or having
25    reasonable grounds to know any material representation
26    therein contained to be false or untrue.

 

 

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1        I. To employ any device, scheme or artifice to defraud
2    in connection with the sale or purchase of any security,
3    directly or indirectly.
4        J. When acting as an investment adviser, investment
5    adviser representative, or federal covered investment
6    adviser, by any means or instrumentality, directly or
7    indirectly:
8        (1) To employ any device, scheme or artifice to defraud
9        any client or prospective client;
10            (2) To engage in any transaction, practice, or
11        course of business which operates as a fraud or deceit
12        upon any client or prospective client; or
13            (3) To engage in any act, practice, or course of
14        business which is fraudulent, deceptive or
15        manipulative. The Secretary of State shall for the
16        purposes of this paragraph (3), by rules and
17        regulations, define and prescribe means reasonably
18        designed to prevent such acts, practices, and courses
19        of business as are fraudulent, deceptive, or
20        manipulative.
21        K. When offering or selling any mineral investment
22    contract or mineral deferred delivery contract:
23        (1) To employ any device, scheme, or artifice to
24        defraud any customer, prospective customer, or
25        offeree;
26        (2) To engage in any transaction, practice, or course

 

 

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1        of business that operates as a fraud or deceit upon any
2        customer, prospective customer, or offeree; or
3        (3) To engage in any act, practice, or course of
4        business that is fraudulent, deceptive, or
5        manipulative. The Secretary of State shall for the
6        purposes of this paragraph (3), by rules and
7        regulations, define and prescribe means reasonably
8        designed to prevent acts, practices, and courses of
9        business as are fraudulent, deceptive, or
10        manipulative.
11        L. To knowingly influence, coerce, manipulate, or
12    mislead any person engaged in the preparation or audit of
13    financial statements or appraisals to be used in the offer
14    or sale of securities for the purpose of rendering such
15    financial statements or appraisals materially misleading.
16(Source: P.A. 99-182, eff. 1-1-16.)
 
17    (815 ILCS 5/2.10a rep.)
18    Section 10. The Illinois Securities Law of 1953 is amended
19by repealing Section 2.10a.
 
20    Section 99. Effective date. This Act takes effect July 1,
212019.".