SB1758 EnrolledLRB101 10278 AMC 55383 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Consumer Installment Loan Act is amended by
5changing Section 15 as follows:
 
6    (205 ILCS 670/15)  (from Ch. 17, par. 5415)
7    Sec. 15. Charges permitted.
8    (a) Every licensee may lend a principal amount not
9exceeding $40,000 and, except as to small consumer loans as
10defined in this Section, may charge, contract for and receive
11thereon interest at an annual percentage rate of no more than
1236%, subject to the provisions of this Act; provided, however,
13that the limitation on the annual percentage rate contained in
14this subsection (a) does not apply to title-secured loans,
15which are loans upon which interest is charged at an annual
16percentage rate exceeding 36%, in which, at commencement, an
17obligor provides to the licensee, as security for the loan,
18physical possession of the obligor's title to a motor vehicle,
19and upon which a licensee may charge, contract for, and receive
20thereon interest at the rate agreed upon by the licensee and
21borrower. For purposes of this Section, the annual percentage
22rate shall be calculated in accordance with the federal Truth
23in Lending Act.

 

 

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1    (b) For purpose of this Section, the following terms shall
2have the meanings ascribed herein.
3    "Applicable interest" for a precomputed loan contract
4means the amount of interest attributable to each monthly
5installment period. It is computed as if each installment
6period were one month and any interest charged for extending
7the first installment period beyond one month is ignored. The
8applicable interest for any monthly installment period is, for
9loans other than small consumer loans as defined in this
10Section, that portion of the precomputed interest that bears
11the same ratio to the total precomputed interest as the
12balances scheduled to be outstanding during that month bear to
13the sum of all scheduled monthly outstanding balances in the
14original contract. With respect to a small consumer loan, the
15applicable interest for any installment period is that portion
16of the precomputed monthly installment account handling charge
17attributable to the installment period calculated based on a
18method at least as favorable to the consumer as the actuarial
19method, as defined by the federal Truth in Lending Act.
20    "Interest-bearing loan" means a loan in which the debt is
21expressed as a principal amount plus interest charged on actual
22unpaid principal balances for the time actually outstanding.
23    "Precomputed loan" means a loan in which the debt is
24expressed as the sum of the original principal amount plus
25interest computed actuarially in advance, assuming all
26payments will be made when scheduled.

 

 

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1    "Small consumer loan" means a loan upon which interest is
2charged at an annual percentage rate exceeding 36% and with an
3amount financed of $4,000 or less. "Small consumer loan" does
4not include a title-secured loan as defined by subsection (a)
5of this Section or a payday loan as defined by the Payday Loan
6Reform Act.
7    "Substantially equal installment" includes a last
8regularly scheduled payment that may be less than, but not more
9than 5% larger than, the previous scheduled payment according
10to a disclosed payment schedule agreed to by the parties.
11    (c) Loans may be interest-bearing or precomputed.
12    (d) To compute time for either interest-bearing or
13precomputed loans for the calculation of interest and other
14purposes, a month shall be a calendar month and a day shall be
15considered 1/30th of a month when calculation is made for a
16fraction of a month. A month shall be 1/12th of a year. A
17calendar month is that period from a given date in one month to
18the same numbered date in the following month, and if there is
19no same numbered date, to the last day of the following month.
20When a period of time includes a month and a fraction of a
21month, the fraction of the month is considered to follow the
22whole month. In the alternative, for interest-bearing loans,
23the licensee may charge interest at the rate of 1/365th of the
24agreed annual rate for each day actually elapsed.
25    (d-5) No licensee or other person may condition an
26extension of credit to a consumer on the consumer's repayment

 

 

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1by preauthorized electronic fund transfers. Payment options,
2including, but not limited to, electronic fund transfers and
3Automatic Clearing House (ACH) transactions may be offered to
4consumers as a choice and method of payment chosen by the
5consumer.
6    (e) With respect to interest-bearing loans:
7        (1) Interest shall be computed on unpaid principal
8    balances outstanding from time to time, for the time
9    outstanding, until fully paid. Each payment shall be
10    applied first to the accumulated interest and the remainder
11    of the payment applied to the unpaid principal balance;
12    provided however, that if the amount of the payment is
13    insufficient to pay the accumulated interest, the unpaid
14    interest continues to accumulate to be paid from the
15    proceeds of subsequent payments and is not added to the
16    principal balance.
17        (2) Interest shall not be payable in advance or
18    compounded. However, if part or all of the consideration
19    for a new loan contract is the unpaid principal balance of
20    a prior loan, then the principal amount payable under the
21    new loan contract may include any unpaid interest which has
22    accrued. The unpaid principal balance of a precomputed loan
23    is the balance due after refund or credit of unearned
24    interest as provided in paragraph (f), clause (3). The
25    resulting loan contract shall be deemed a new and separate
26    loan transaction for all purposes.

 

 

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1        (3) Loans must be fully amortizing and be repayable in
2    substantially equal and consecutive weekly, biweekly,
3    semimonthly, or monthly installments. Notwithstanding this
4    requirement, rates may vary according to an index that is
5    independently verifiable and beyond the control of the
6    licensee.
7        (4) The lender or creditor may, if the contract
8    provides, collect a delinquency or collection charge on
9    each installment in default for a period of not less than
10    10 days in an amount not exceeding 5% of the installment on
11    installments in excess of $200, or $10 on installments of
12    $200 or less, but only one delinquency and collection
13    charge may be collected on any installment regardless of
14    the period during which it remains in default.
15    (f) With respect to precomputed loans:
16        (1) Loans shall be repayable in substantially equal and
17    consecutive weekly, biweekly, semimonthly, or monthly
18    installments of principal and interest combined, except
19    that the first installment period may be longer than one
20    month by not more than 15 days, and the first installment
21    payment amount may be larger than the remaining payments by
22    the amount of interest charged for the extra days; and
23    provided further that monthly installment payment dates
24    may be omitted to accommodate borrowers with seasonal
25    income.
26        (2) Payments may be applied to the combined total of

 

 

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1    principal and precomputed interest until the loan is fully
2    paid. Payments shall be applied in the order in which they
3    become due, except that any insurance proceeds received as
4    a result of any claim made on any insurance, unless
5    sufficient to prepay the contract in full, may be applied
6    to the unpaid installments of the total of payments in
7    inverse order.
8        (3) When any loan contract is paid in full by cash,
9    renewal or refinancing, or a new loan, one month or more
10    before the final installment due date, a licensee shall
11    refund or credit the obligor with the total of the
12    applicable interest for all fully unexpired installment
13    periods, as originally scheduled or as deferred, which
14    follow the day of prepayment; provided, if the prepayment
15    occurs prior to the first installment due date, the
16    licensee may retain 1/30 of the applicable interest for a
17    first installment period of one month for each day from the
18    date of the loan to the date of prepayment, and shall
19    refund or credit the obligor with the balance of the total
20    interest contracted for. If the maturity of the loan is
21    accelerated for any reason and judgment is entered, the
22    licensee shall credit the borrower with the same refund as
23    if prepayment in full had been made on the date the
24    judgement is entered.
25        (4) The lender or creditor may, if the contract
26    provides, collect a delinquency or collection charge on

 

 

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1    each installment in default for a period of not less than
2    10 days in an amount not exceeding 5% of the installment on
3    installments in excess of $200, or $10 on installments of
4    $200 or less, but only one delinquency or collection charge
5    may be collected on any installment regardless of the
6    period during which it remains in default.
7        (5) If the parties agree in writing, either in the loan
8    contract or in a subsequent agreement, to a deferment of
9    wholly unpaid installments, a licensee may grant a
10    deferment and may collect a deferment charge as provided in
11    this Section. A deferment postpones the scheduled due date
12    of the earliest unpaid installment and all subsequent
13    installments as originally scheduled, or as previously
14    deferred, for a period equal to the deferment period. The
15    deferment period is that period during which no installment
16    is scheduled to be paid by reason of the deferment. The
17    deferment charge for a one month period may not exceed the
18    applicable interest for the installment period immediately
19    following the due date of the last undeferred payment. A
20    proportionate charge may be made for deferment for periods
21    of more or less than one month. A deferment charge is
22    earned pro rata during the deferment period and is fully
23    earned on the last day of the deferment period. Should a
24    loan be prepaid in full during a deferment period, the
25    licensee shall credit to the obligor a refund of the
26    unearned deferment charge in addition to any other refund

 

 

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1    or credit made for prepayment of the loan in full.
2        (6) If two or more installments are delinquent one full
3    month or more on any due date, and if the contract so
4    provides, the licensee may reduce the unpaid balance by the
5    refund credit which would be required for prepayment in
6    full on the due date of the most recent maturing
7    installment in default. Thereafter, and in lieu of any
8    other default or deferment charges, the agreed rate of
9    interest or, in the case of small consumer loans, interest
10    at the rate of 18% per annum, may be charged on the unpaid
11    balance until fully paid.
12        (7) Fifteen days after the final installment as
13    originally scheduled or deferred, the licensee, for any
14    loan contract which has not previously been converted to
15    interest-bearing under paragraph (f), clause (6), may
16    compute and charge interest on any balance remaining
17    unpaid, including unpaid default or deferment charges, at
18    the agreed rate of interest or, in the case of small
19    consumer loans, interest at the rate of 18% per annum,
20    until fully paid. At the time of payment of said final
21    installment, the licensee shall give notice to the obligor
22    stating any amounts unpaid.
23(Source: P.A. 96-936, eff. 3-21-11.)
 
24    Section 10. The Illinois Securities Law of 1953 is amended
25by changing Sections 2.11, 2.12b, 8, and 12 and by adding

 

 

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1Section 3.5 as follows:
 
2    (815 ILCS 5/2.11)  (from Ch. 121 1/2, par. 137.2-11)
3    Sec. 2.11. Investment adviser. "Investment adviser" means
4any person who, for compensation, engages in this State in the
5business of advising others, either directly or through
6publications or writings, as to the value of securities or as
7to the advisability of investing in, purchasing, or selling
8securities or who, in this State for direct or indirect
9compensation and as part of a regular advisory business, issues
10or promulgates analyses or reports concerning securities or any
11financial planner or other person who, as an integral component
12of other financially related services, provides the foregoing
13investment advisory services to others for compensation and as
14part of a business, or who holds himself or herself out as
15providing the foregoing investment advisory services to others
16for compensation; but "investment adviser" does not include:
17    (1) a bank or trust company, or the regular employees of a
18bank or trust company;
19    (2) any lawyer, accountant, engineer, geologist or teacher
20(i) whose performance of such services is solely incidental to
21the practice of his or her profession or (ii) who:
22        (A) does not exercise investment discretion with
23    respect to the assets of clients or maintain custody of the
24    assets of clients for the purpose of investing those
25    assets, except when the person is acting as a bona fide

 

 

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1    fiduciary in a capacity such as an executor, trustee,
2    personal representative, estate or trust agent, guardian,
3    conservator, or person serving in a similar fiduciary
4    capacity;
5        (B) does not accept or receive, directly or indirectly,
6    any commission, fee, or other remuneration contingent upon
7    the purchase or sale of any specific security by a client
8    of such person; and
9        (C) does not advise on the purchase or sale of specific
10    securities, except that this clause (C) shall not apply
11    when the advice about specific securities is based on
12    financial statement analyses or tax considerations that
13    are reasonably related to and in connection with the
14    person's profession;
15    (3) any registered dealer or partner, officer, director or
16regular employee of a registered dealer, or registered
17salesperson, whose performance of these services, in each case,
18is solely incidental to the conduct of the business of the
19registered dealer or registered salesperson, as the case may
20be, and who receives no special compensation, directly or
21indirectly, for such services;
22    (4) any publisher or regular employee of such publisher of
23a bona fide newspaper, news magazine or business or financial
24publication of regular and established paid circulation;
25    (5) any person whose advice, analyses or reports relate
26only to securities which are direct obligations of, or

 

 

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1obligations guaranteed as to principal or interest by, the
2United States, any state or any political subdivision of any
3state, or any public agency or public instrumentality of any
4one or more of the foregoing;
5    (5.5) any person who is a federal covered investment
6adviser; or
7    (6) any other persons who are not within the intent of this
8Section as the Secretary of State may designate by rules and
9regulations or order.
10(Source: P.A. 90-70, eff. 7-8-97.)
 
11    (815 ILCS 5/2.12b)  (from Ch. 121 1/2, par. 137.2-12b)
12    Sec. 2.12b. Investment adviser representative. "Investment
13adviser representative" means, with respect to an investment
14adviser who is required to register under this Act, any
15partner, officer, director of (or a person occupying a similar
16status or performing similar functions), or other natural
17person employed by or associated with an investment adviser,
18except clerical or ministerial personnel, who in this State:
19        (1) makes any recommendations or otherwise renders
20    advice regarding securities or investment products;
21        (2) manages accounts or portfolios of clients;
22        (3) determines what recommendation or advice regarding
23    securities or investments should be given;
24        (4) supervises any employee who performs any of the
25    foregoing; or

 

 

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1        (5) solicits, refers, offers, or negotiates for the
2    sale of, or sells, investment advisory services.
3    With respect to a federal covered investment adviser,
4"investment adviser representative" means any person who is an
5investment adviser representative with a place of business in
6this State as such terms are defined by the Securities and
7Exchange Commission under Section 203A of the Federal 1940
8Investment Advisers Act.
9(Source: P.A. 90-70, eff. 7-8-97; 90-667, eff. 7-30-98; 91-809,
10eff. 1-1-01.)
 
11    (815 ILCS 5/3.5 new)
12    Sec. 3.5. Authority of Secretary of State. Notwithstanding
13any other law, the Secretary of State has the authority to
14enforce this Act as it pertains to the offer, sale, or
15investment advice concerning a covered security as defined by
16Section 2.29.
 
17    (815 ILCS 5/8)  (from Ch. 121 1/2, par. 137.8)
18    Sec. 8. Registration of dealers, limited Canadian dealers,
19Internet portals, salespersons, investment advisers, and
20investment adviser representatives.
 
21    A. Except as otherwise provided in this subsection A, every
22dealer, limited Canadian dealer, salesperson, investment
23adviser, and investment adviser representative shall be

 

 

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1registered as such with the Secretary of State. No dealer or
2salesperson need be registered as such when offering or selling
3securities in transactions exempted by subsection A, B, C, D,
4E, G, H, I, J, K, M, O, P, Q, R or S of Section 4 of this Act,
5provided that such dealer or salesperson is not regularly
6engaged in the business of offering or selling securities in
7reliance upon the exemption set forth in subsection G or M of
8Section 4 of this Act. No dealer, issuer or controlling person
9shall employ a salesperson unless such salesperson is
10registered as such with the Secretary of State or is employed
11for the purpose of offering or selling securities solely in
12transactions exempted by subsection A, B, C, D, E, G, H, I, J,
13K, L, M, O, P, Q, R or S of Section 4 of this Act; provided that
14such salesperson need not be registered when effecting
15transactions in this State limited to those transactions
16described in Section 15(h)(2) of the Federal 1934 Act or
17engaging in the offer or sale of securities in respect of which
18he or she has beneficial ownership and is a controlling person.
19The Secretary of State may, by rule, regulation or order and
20subject to such terms, conditions, and fees as may be
21prescribed in such rule, regulation or order, exempt from the
22registration requirements of this Section 8 any investment
23adviser, if the Secretary of State shall find that such
24registration is not necessary in the public interest by reason
25of the small number of clients or otherwise limited character
26of operation of such investment adviser.
 

 

 

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1    B. An application for registration as a dealer or limited
2Canadian dealer, executed, verified, or authenticated by or on
3behalf of the applicant, shall be filed with the Secretary of
4State, in such form as the Secretary of State may by rule,
5regulation or order prescribe, setting forth or accompanied by:
6        (1) The name and address of the applicant, the location
7    of its principal business office and all branch offices, if
8    any, and the date of its organization;
9        (2) A statement of any other Federal or state licenses
10    or registrations which have been granted the applicant and
11    whether any such licenses or registrations have ever been
12    refused, cancelled, suspended, revoked or withdrawn;
13        (3) The assets and all liabilities, including
14    contingent liabilities of the applicant, as of a date not
15    more than 60 days prior to the filing of the application;
16        (4) (a) A brief description of any civil or criminal
17    proceeding of which fraud is an essential element pending
18    against the applicant and whether the applicant has ever
19    been convicted of a felony, or of any misdemeanor of which
20    fraud is an essential element;
21        (b) A list setting forth the name, residence and
22    business address and a 10 year occupational statement of
23    each principal of the applicant and a statement describing
24    briefly any civil or criminal proceedings of which fraud is
25    an essential element pending against any such principal and

 

 

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1    the facts concerning any conviction of any such principal
2    of a felony, or of any misdemeanor of which fraud is an
3    essential element;
4        (5) If the applicant is a corporation: a list of its
5    officers and directors setting forth the residence and
6    business address of each; a 10-year occupational statement
7    of each such officer or director; and a statement
8    describing briefly any civil or criminal proceedings of
9    which fraud is an essential element pending against each
10    such officer or director and the facts concerning any
11    conviction of any officer or director of a felony, or of
12    any misdemeanor of which fraud is an essential element;
13        (6) If the applicant is a sole proprietorship, a
14    partnership, limited liability company, an unincorporated
15    association or any similar form of business organization:
16    the name, residence and business address of the proprietor
17    or of each partner, member, officer, director, trustee or
18    manager; the limitations, if any, of the liability of each
19    such individual; a 10-year occupational statement of each
20    such individual; a statement describing briefly any civil
21    or criminal proceedings of which fraud is an essential
22    element pending against each such individual and the facts
23    concerning any conviction of any such individual of a
24    felony, or of any misdemeanor of which fraud is an
25    essential element;
26        (7) Such additional information as the Secretary of

 

 

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1    State may by rule or regulation prescribe as necessary to
2    determine the applicant's financial responsibility,
3    business repute and qualification to act as a dealer.
4        (8) (a) No applicant shall be registered or
5    re-registered as a dealer or limited Canadian dealer under
6    this Section unless and until each principal of the dealer
7    has passed an examination conducted by the Secretary of
8    State or a self-regulatory organization of securities
9    dealers or similar person, which examination has been
10    designated by the Secretary of State by rule, regulation or
11    order to be satisfactory for purposes of determining
12    whether the applicant has sufficient knowledge of the
13    securities business and laws relating thereto to act as a
14    registered dealer. Any dealer who was registered on
15    September 30, 1963, and has continued to be so registered;
16    and any principal of any registered dealer, who was acting
17    in such capacity on and continuously since September 30,
18    1963; and any individual who has previously passed a
19    securities dealer examination administered by the
20    Secretary of State or any examination designated by the
21    Secretary of State to be satisfactory for purposes of
22    determining whether the applicant has sufficient knowledge
23    of the securities business and laws relating thereto to act
24    as a registered dealer by rule, regulation or order, shall
25    not be required to pass an examination in order to continue
26    to act in such capacity. The Secretary of State may by

 

 

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1    order waive the examination requirement for any principal
2    of an applicant for registration under this subsection B
3    who has had such experience or education relating to the
4    securities business as may be determined by the Secretary
5    of State to be the equivalent of such examination. Any
6    request for such a waiver shall be filed with the Secretary
7    of State in such form as may be prescribed by rule or
8    regulation.
9        (b) Unless an applicant is a member of the body
10    corporate known as the Securities Investor Protection
11    Corporation established pursuant to the Act of Congress of
12    the United States known as the Securities Investor
13    Protection Act of 1970, as amended, a member of an
14    association of dealers registered as a national securities
15    association pursuant to Section 15A of the Federal 1934
16    Act, or a member of a self-regulatory organization or stock
17    exchange in Canada which the Secretary of State has
18    designated by rule or order, an applicant shall not be
19    registered or re-registered unless and until there is filed
20    with the Secretary of State evidence that such applicant
21    has in effect insurance or other equivalent protection for
22    each client's cash or securities held by such applicant,
23    and an undertaking that such applicant will continually
24    maintain such insurance or other protection during the
25    period of registration or re-registration. Such insurance
26    or other protection shall be in a form and amount

 

 

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1    reasonably prescribed by the Secretary of State by rule or
2    regulation.
3        (9) The application for the registration of a dealer or
4    limited Canadian dealer shall be accompanied by a filing
5    fee and a fee for each branch office in this State, in each
6    case in the amount established pursuant to Section 11a of
7    this Act, which fees shall not be returnable in any event.
8        (10) The Secretary of State shall notify the dealer or
9    limited Canadian dealer by written notice (which may be by
10    electronic or facsimile transmission) of the effectiveness
11    of the registration as a dealer in this State.
12        (11) Any change which renders no longer accurate any
13    information contained in any application for registration
14    or re-registration of a dealer or limited Canadian dealer
15    shall be reported to the Secretary of State within 10
16    business days after the occurrence of such change; but in
17    respect to assets and liabilities only materially adverse
18    changes need be reported.
 
19    C. Any registered dealer, limited Canadian dealer, issuer,
20or controlling person desiring to register a salesperson shall
21file an application with the Secretary of State, in such form
22as the Secretary of State may by rule or regulation prescribe,
23which the salesperson is required by this Section to provide to
24the dealer, issuer, or controlling person, executed, verified,
25or authenticated by the salesperson setting forth or

 

 

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1accompanied by:
2        (1) the name, residence and business address of the
3    salesperson;
4        (2) whether any federal or State license or
5    registration as dealer, limited Canadian dealer, or
6    salesperson has ever been refused the salesperson or
7    cancelled, suspended, revoked, withdrawn, barred, limited,
8    or otherwise adversely affected in a similar manner or
9    whether the salesperson has ever been censured or expelled;
10        (3) the nature of employment with, and names and
11    addresses of, employers of the salesperson for the 10 years
12    immediately preceding the date of application;
13        (4) a brief description of any civil or criminal
14    proceedings of which fraud is an essential element pending
15    against the salesperson, and whether the salesperson has
16    ever been convicted of a felony, or of any misdemeanor of
17    which fraud is an essential element;
18        (5) such additional information as the Secretary of
19    State may by rule, regulation or order prescribe as
20    necessary to determine the salesperson's business repute
21    and qualification to act as a salesperson; and
22        (6) no individual shall be registered or re-registered
23    as a salesperson under this Section unless and until such
24    individual has passed an examination conducted by the
25    Secretary of State or a self-regulatory organization of
26    securities dealers or similar person, which examination

 

 

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1    has been designated by the Secretary of State by rule,
2    regulation or order to be satisfactory for purposes of
3    determining whether the applicant has sufficient knowledge
4    of the securities business and laws relating thereto to act
5    as a registered salesperson.
6        Any salesperson who was registered prior to September
7    30, 1963, and has continued to be so registered, and any
8    individual who has passed a securities salesperson
9    examination administered by the Secretary of State or an
10    examination designated by the Secretary of State by rule,
11    regulation or order to be satisfactory for purposes of
12    determining whether the applicant has sufficient knowledge
13    of the securities business and laws relating thereto to act
14    as a registered salesperson, shall not be required to pass
15    an examination in order to continue to act as a
16    salesperson. The Secretary of State may by order waive the
17    examination requirement for any applicant for registration
18    under this subsection C who has had such experience or
19    education relating to the securities business as may be
20    determined by the Secretary of State to be the equivalent
21    of such examination. Any request for such a waiver shall be
22    filed with the Secretary of State in such form as may be
23    prescribed by rule, regulation or order.
24        (7) The application for registration of a salesperson
25    shall be accompanied by a filing fee and a Securities Audit
26    and Enforcement Fund fee, each in the amount established

 

 

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1    pursuant to Section 11a of this Act, which shall not be
2    returnable in any event.
3        (8) Any change which renders no longer accurate any
4    information contained in any application for registration
5    or re-registration as a salesperson shall be reported to
6    the Secretary of State within 10 business days after the
7    occurrence of such change. If the activities are terminated
8    which rendered an individual a salesperson for the dealer,
9    issuer or controlling person, the dealer, issuer or
10    controlling person, as the case may be, shall notify the
11    Secretary of State, in writing, within 30 days of the
12    salesperson's cessation of activities, using the
13    appropriate termination notice form.
14        (9) A registered salesperson may transfer his or her
15    registration under this Section 8 for the unexpired term
16    thereof from one registered dealer or limited Canadian
17    dealer to another by the giving of notice of the transfer
18    by the new registered dealer or limited Canadian dealer to
19    the Secretary of State in such form and subject to such
20    conditions as the Secretary of State shall by rule or
21    regulation prescribe. The new registered dealer or limited
22    Canadian dealer shall promptly file an application for
23    registration of such salesperson as provided in this
24    subsection C, accompanied by the filing fee prescribed by
25    paragraph (7) of this subsection C.
 

 

 

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1    C-5. Except with respect to federal covered investment
2advisers whose only clients are investment companies as defined
3in the Federal 1940 Act, other investment advisers, federal
4covered investment advisers, or any similar person which the
5Secretary of State may prescribe by rule or order, a federal
6covered investment adviser shall file with the Secretary of
7State, prior to acting as a federal covered investment adviser
8in this State, such documents as have been filed with the
9Securities and Exchange Commission as the Secretary of State by
10rule or order may prescribe. The notification of a federal
11covered investment adviser shall be accompanied by a
12notification filing fee established pursuant to Section 11a of
13this Act, which shall not be returnable in any event. Every
14person acting as a federal covered investment adviser in this
15State shall file a notification filing and pay an annual
16notification filing fee established pursuant to Section 11a of
17this Act, which is not returnable in any event. The failure to
18file any such notification shall constitute a violation of
19subsection D of Section 12 of this Act, subject to the
20penalties enumerated in Section 14 of this Act. Until October
2110, 1999 or other date as may be legally permissible, a federal
22covered investment adviser who fails to file the notification
23or refuses to pay the fees as required by this subsection shall
24register as an investment adviser with the Secretary of State
25under Section 8 of this Act. The civil remedies provided for in
26subsection A of Section 13 of this Act and the civil remedies

 

 

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1of rescission and appointment of receiver, conservator,
2ancillary receiver, or ancillary conservator provided for in
3subsection F of Section 13 of this Act shall not be available
4against any person by reason of the failure to file any such
5notification or to pay the notification fee or on account of
6the contents of any such notification.
 
7    D. An application for registration as an investment
8adviser, executed, verified, or authenticated by or on behalf
9of the applicant, shall be filed with the Secretary of State,
10in such form as the Secretary of State may by rule or
11regulation prescribe, setting forth or accompanied by:
12        (1) The name and form of organization under which the
13    investment adviser engages or intends to engage in
14    business; the state or country and date of its
15    organization; the location of the adviser's principal
16    business office and branch offices, if any; the names and
17    addresses of the adviser's principal, partners, officers,
18    directors, and persons performing similar functions or, if
19    the investment adviser is an individual, of the individual;
20    and the number of the adviser's employees who perform
21    investment advisory functions;
22        (2) The education, the business affiliations for the
23    past 10 years, and the present business affiliations of the
24    investment adviser and of the adviser's principal,
25    partners, officers, directors, and persons performing

 

 

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1    similar functions and of any person controlling the
2    investment adviser;
3        (3) The nature of the business of the investment
4    adviser, including the manner of giving advice and
5    rendering analyses or reports;
6        (4) The nature and scope of the authority of the
7    investment adviser with respect to clients' funds and
8    accounts;
9        (5) The basis or bases upon which the investment
10    adviser is compensated;
11        (6) Whether the investment adviser or any principal,
12    partner, officer, director, person performing similar
13    functions or person controlling the investment adviser (i)
14    within 10 years of the filing of the application has been
15    convicted of a felony, or of any misdemeanor of which fraud
16    is an essential element, or (ii) is permanently or
17    temporarily enjoined by order or judgment from acting as an
18    investment adviser, underwriter, dealer, principal or
19    salesperson, or from engaging in or continuing any conduct
20    or practice in connection with any such activity or in
21    connection with the purchase or sale of any security, and
22    in each case the facts relating to the conviction, order or
23    judgment;
24        (7) (a) A statement as to whether the investment
25    adviser is engaged or is to engage primarily in the
26    business of rendering investment supervisory services; and

 

 

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1        (b) A statement that the investment adviser will
2    furnish his, her, or its clients with such information as
3    the Secretary of State deems necessary in the form
4    prescribed by the Secretary of State by rule or regulation;
5        (8) Such additional information as the Secretary of
6    State may, by rule, regulation or order prescribe as
7    necessary to determine the applicant's financial
8    responsibility, business repute and qualification to act
9    as an investment adviser.
10        (9) No applicant shall be registered or re-registered
11    as an investment adviser under this Section unless and
12    until each principal of the applicant who is actively
13    engaged in the conduct and management of the applicant's
14    advisory business in this State has passed an examination
15    or completed an educational program conducted by the
16    Secretary of State or an association of investment advisers
17    or similar person, which examination or educational
18    program has been designated by the Secretary of State by
19    rule, regulation or order to be satisfactory for purposes
20    of determining whether the applicant has sufficient
21    knowledge of the securities business and laws relating
22    thereto to conduct the business of a registered investment
23    adviser.
24        Any person who was a registered investment adviser
25    prior to September 30, 1963, and has continued to be so
26    registered, and any individual who has passed an investment

 

 

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1    adviser examination administered by the Secretary of
2    State, or passed an examination or completed an educational
3    program designated by the Secretary of State by rule,
4    regulation or order to be satisfactory for purposes of
5    determining whether the applicant has sufficient knowledge
6    of the securities business and laws relating thereto to
7    conduct the business of a registered investment adviser,
8    shall not be required to pass an examination or complete an
9    educational program in order to continue to act as an
10    investment adviser. The Secretary of State may by order
11    waive the examination or educational program requirement
12    for any applicant for registration under this subsection D
13    if the principal of the applicant who is actively engaged
14    in the conduct and management of the applicant's advisory
15    business in this State has had such experience or education
16    relating to the securities business as may be determined by
17    the Secretary of State to be the equivalent of the
18    examination or educational program. Any request for a
19    waiver shall be filed with the Secretary of State in such
20    form as may be prescribed by rule or regulation.
21        (10) No applicant shall be registered or re-registered
22    as an investment adviser under this Section 8 unless the
23    application for registration or re-registration is
24    accompanied by an application for registration or
25    re-registration for each person acting as an investment
26    adviser representative on behalf of the adviser and a

 

 

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1    Securities Audit and Enforcement Fund fee that shall not be
2    returnable in any event is paid with respect to each
3    investment adviser representative.
4        (11) The application for registration of an investment
5    adviser shall be accompanied by a filing fee and a fee for
6    each branch office in this State, in each case in the
7    amount established pursuant to Section 11a of this Act,
8    which fees shall not be returnable in any event.
9        (12) The Secretary of State shall notify the investment
10    adviser by written notice (which may be by electronic or
11    facsimile transmission) of the effectiveness of the
12    registration as an investment adviser in this State.
13        (13) Any change which renders no longer accurate any
14    information contained in any application for registration
15    or re-registration of an investment adviser shall be
16    reported to the Secretary of State within 10 business days
17    after the occurrence of the change. In respect to assets
18    and liabilities of an investment adviser that retains
19    custody of clients' cash or securities or accepts
20    pre-payment of fees in excess of $500 per client and 6 or
21    more months in advance only materially adverse changes need
22    be reported by written notice (which may be by electronic
23    or facsimile transmission) no later than the close of
24    business on the second business day following the discovery
25    thereof.
26        (14) Each application for registration as an

 

 

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1    investment adviser shall become effective automatically on
2    the 45th day following the filing of the application,
3    required documents or information, and payment of the
4    required fee unless (i) the Secretary of State has
5    registered the investment adviser prior to that date or
6    (ii) an action with respect to the applicant is pending
7    under Section 11 of this Act.
 
8    D-5. A registered investment adviser or federal covered
9investment adviser desiring to register an investment adviser
10representative shall file an application with the Secretary of
11State, in the form as the Secretary of State may by rule or
12order prescribe, which the investment adviser representative
13is required by this Section to provide to the investment
14adviser, executed, verified, or authenticated by the
15investment adviser representative and setting forth or
16accompanied by:
17        (1) The name, residence, and business address of the
18    investment adviser representative;
19        (2) A statement whether any federal or state license or
20    registration as a dealer, salesperson, investment adviser,
21    or investment adviser representative has ever been
22    refused, canceled, suspended, revoked or withdrawn;
23        (3) The nature of employment with, and names and
24    addresses of, employers of the investment adviser
25    representative for the 10 years immediately preceding the

 

 

SB1758 Enrolled- 29 -LRB101 10278 AMC 55383 b

1    date of application;
2        (4) A brief description of any civil or criminal
3    proceedings, of which fraud is an essential element,
4    pending against the investment adviser representative and
5    whether the investment adviser representative has ever
6    been convicted of a felony or of any misdemeanor of which
7    fraud is an essential element;
8        (5) Such additional information as the Secretary of
9    State may by rule or order prescribe as necessary to
10    determine the investment adviser representative's business
11    repute or qualification to act as an investment adviser
12    representative;
13        (6) Documentation that the individual has passed an
14    examination conducted by the Secretary of State, an
15    organization of investment advisers, or similar person,
16    which examination has been designated by the Secretary of
17    State by rule or order to be satisfactory for purposes of
18    determining whether the applicant has sufficient knowledge
19    of the investment advisory or securities business and laws
20    relating to that business to act as a registered investment
21    adviser representative; and
22        (7) A Securities Audit and Enforcement Fund fee
23    established under Section 11a of this Act, which shall not
24    be returnable in any event.
25    The Secretary of State may by order waive the examination
26requirement for an applicant for registration under this

 

 

SB1758 Enrolled- 30 -LRB101 10278 AMC 55383 b

1subsection D-5 who has had the experience or education relating
2to the investment advisory or securities business as may be
3determined by the Secretary of State to be the equivalent of
4the examination. A request for a waiver shall be filed with the
5Secretary of State in the form as may be prescribed by rule or
6order.
7    A change that renders no longer accurate any information
8contained in any application for registration or
9re-registration as an investment adviser representative must
10be reported to the Secretary of State within 10 business days
11after the occurrence of the change. If the activities that
12rendered an individual an investment adviser representative
13for the investment adviser are terminated, the investment
14adviser shall notify the Secretary of State in writing (which
15may be by electronic or facsimile transmission), within 30 days
16of the investment adviser representative's termination, using
17the appropriate termination notice form as the Secretary of
18State may prescribe by rule or order.
19    A registered investment adviser representative may
20transfer his or her registration under this Section 8 for the
21unexpired term of the registration from one registered
22investment adviser to another by the giving of notice of the
23transfer by the new investment adviser to the Secretary of
24State in the form and subject to the conditions as the
25Secretary of State shall prescribe. The new registered
26investment adviser shall promptly file an application for

 

 

SB1758 Enrolled- 31 -LRB101 10278 AMC 55383 b

1registration of the investment adviser representative as
2provided in this subsection, accompanied by the Securities
3Audit and Enforcement Fund fee prescribed by paragraph (7) of
4this subsection D-5.
 
5    E. (1) Subject to the provisions of subsection F of Section
611 of this Act, the registration of a dealer, limited Canadian
7dealer, salesperson, investment adviser, or investment adviser
8representative may be denied, suspended or revoked if the
9Secretary of State finds that the dealer, limited Canadian
10dealer, Internet portal, salesperson, investment adviser, or
11investment adviser representative or any principal officer,
12director, partner, member, trustee, manager or any person who
13performs a similar function of the dealer, limited Canadian
14dealer, Internet portal, or investment adviser:
15        (a) has been convicted of any felony during the 10 year
16    period preceding the date of filing of any application for
17    registration or at any time thereafter, or of any
18    misdemeanor of which fraud is an essential element;
19        (b) has engaged in any unethical practice in connection
20    with any security, or in any fraudulent business practice;
21        (c) has failed to account for any money or property, or
22    has failed to deliver any security, to any person entitled
23    thereto when due or within a reasonable time thereafter;
24        (d) in the case of a dealer, limited Canadian dealer,
25    or investment adviser, is insolvent;

 

 

SB1758 Enrolled- 32 -LRB101 10278 AMC 55383 b

1        (e) in the case of a dealer, limited Canadian dealer,
2    salesperson, or registered principal of a dealer or limited
3    Canadian dealer (i) has failed reasonably to supervise the
4    securities activities of any of its salespersons or other
5    employees and the failure has permitted or facilitated a
6    violation of Section 12 of this Act or (ii) is offering or
7    selling or has offered or sold securities in this State
8    through a salesperson other than a registered salesperson,
9    or, in the case of a salesperson, is selling or has sold
10    securities in this State for a dealer, limited Canadian
11    dealer, issuer or controlling person with knowledge that
12    the dealer, limited Canadian dealer, issuer or controlling
13    person has not complied with the provisions of this Act or
14    (iii) has failed reasonably to supervise the
15    implementation of compliance measures following notice by
16    the Secretary of State of noncompliance with the Act or
17    with the regulations promulgated thereunder or both or (iv)
18    has failed to maintain and enforce written procedures to
19    supervise the types of business in which it engages and to
20    supervise the activities of its salespersons that are
21    reasonably designed to achieve compliance with applicable
22    securities laws and regulations;
23        (f) in the case of an investment adviser, has failed
24    reasonably to supervise the advisory activities of any of
25    its investment adviser representatives or employees and
26    the failure has permitted or facilitated a violation of

 

 

SB1758 Enrolled- 33 -LRB101 10278 AMC 55383 b

1    Section 12 of this Act;
2        (g) has violated any of the provisions of this Act;
3        (h) has made any material misrepresentation to the
4    Secretary of State in connection with any information
5    deemed necessary by the Secretary of State to determine a
6    dealer's, limited Canadian dealer's, or investment
7    adviser's financial responsibility or a dealer's, limited
8    Canadian dealer's, investment adviser's, salesperson's, or
9    investment adviser representative's business repute or
10    qualifications, or has refused to furnish any such
11    information requested by the Secretary of State;
12        (i) has had a license or registration under any Federal
13    or State law regulating securities, commodity futures
14    contracts, or stock futures contracts refused, cancelled,
15    suspended, withdrawn, revoked, or otherwise adversely
16    affected in a similar manner;
17        (j) has had membership in or association with any
18    self-regulatory organization registered under the Federal
19    1934 Act or the Federal 1974 Act suspended, revoked,
20    refused, expelled, cancelled, barred, limited in any
21    capacity, or otherwise adversely affected in a similar
22    manner arising from any fraudulent or deceptive act or a
23    practice in violation of any rule, regulation or standard
24    duly promulgated by the self-regulatory organization;
25        (k) has had any order entered against it after notice
26    and opportunity for hearing by a securities agency of any

 

 

SB1758 Enrolled- 34 -LRB101 10278 AMC 55383 b

1    state, any foreign government or agency thereof, the
2    Securities and Exchange Commission, or the Federal
3    Commodities Futures Trading Commission arising from any
4    fraudulent or deceptive act or a practice in violation of
5    any statute, rule or regulation administered or
6    promulgated by the agency or commission;
7        (l) in the case of a dealer or limited Canadian dealer,
8    fails to maintain a minimum net capital in an amount which
9    the Secretary of State may by rule or regulation require;
10        (m) has conducted a continuing course of dealing of
11    such nature as to demonstrate an inability to properly
12    conduct the business of the dealer, limited Canadian
13    dealer, salesperson, investment adviser, or investment
14    adviser representative;
15        (n) has had, after notice and opportunity for hearing,
16    any injunction or order entered against it or license or
17    registration refused, cancelled, suspended, revoked,
18    withdrawn, limited, or otherwise adversely affected in a
19    similar manner by any state or federal body, agency or
20    commission regulating banking, insurance, finance or small
21    loan companies, real estate or mortgage brokers or
22    companies, if the action resulted from any act found by the
23    body, agency or commission to be a fraudulent or deceptive
24    act or practice in violation of any statute, rule or
25    regulation administered or promulgated by the body, agency
26    or commission;

 

 

SB1758 Enrolled- 35 -LRB101 10278 AMC 55383 b

1        (o) has failed to file a return, or to pay the tax,
2    penalty or interest shown in a filed return, or to pay any
3    final assessment of tax, penalty or interest, as required
4    by any tax Act administered by the Illinois Department of
5    Revenue, until such time as the requirements of that tax
6    Act are satisfied;
7        (p) (blank);
8        (q) has failed to maintain the books and records
9    required under this Act or rules or regulations promulgated
10    under this Act or under any requirements established by the
11    Securities and Exchange Commission or a self-regulatory
12    organization;
13        (r) has refused to allow or otherwise impeded designees
14    of the Secretary of State from conducting an audit,
15    examination, inspection, or investigation provided for
16    under Section 8 or 11 of this Act;
17        (s) has failed to maintain any minimum net capital or
18    bond requirement set forth in this Act or any rule or
19    regulation promulgated under this Act;
20        (t) has refused the Secretary of State or his or her
21    designee access to any office or location within an office
22    to conduct an investigation, audit, examination, or
23    inspection;
24        (u) has advised or caused a public pension fund or
25    retirement system established under the Illinois Pension
26    Code to make an investment or engage in a transaction not

 

 

SB1758 Enrolled- 36 -LRB101 10278 AMC 55383 b

1    authorized by that Code;
2        (v) if a corporation, limited liability company, or
3    limited liability partnership has been suspended,
4    canceled, revoked, or has failed to register as a foreign
5    corporation, limited liability company, or limited
6    liability partnership with the Secretary of State;
7        (w) is permanently or temporarily enjoined by any court
8    of competent jurisdiction, including any state, federal,
9    or foreign government, from engaging in or continuing any
10    conduct or practice involving any aspect of the securities
11    or commodities business or in any other business where the
12    conduct or practice enjoined involved investments,
13    franchises, insurance, banking, or finance;
14    (2) If the Secretary of State finds that any registrant or
15applicant for registration is no longer in existence or has
16ceased to do business as a dealer, limited Canadian dealer,
17Internet portal, salesperson, investment adviser, or
18investment adviser representative, or is subject to an
19adjudication as a person under legal disability or to the
20control of a guardian, or cannot be located after reasonable
21search, or has failed after written notice to pay to the
22Secretary of State any additional fee prescribed by this
23Section or specified by rule or regulation, the Secretary of
24State may by order cancel the registration or application.
25    (3) Withdrawal of an application for registration or
26withdrawal from registration as a dealer, limited Canadian

 

 

SB1758 Enrolled- 37 -LRB101 10278 AMC 55383 b

1dealer, salesperson, investment adviser, or investment adviser
2representative becomes effective 30 days after receipt of an
3application to withdraw or within such shorter period of time
4as the Secretary of State may determine, unless any proceeding
5is pending under Section 11 of this Act when the application is
6filed or a proceeding is instituted within 30 days after the
7application is filed. If a proceeding is pending or instituted,
8withdrawal becomes effective at such time and upon such
9conditions as the Secretary of State by order determines. If no
10proceeding is pending or instituted and withdrawal
11automatically becomes effective, the Secretary of State may
12nevertheless institute a revocation or suspension proceeding
13within 2 years after withdrawal became effective and enter a
14revocation or suspension order as of the last date on which
15registration was effective.
 
16    F. The Secretary of State shall make available upon request
17the date that each dealer, investment adviser, salesperson, or
18investment adviser representative was granted registration,
19together with the name and address of the dealer, limited
20Canadian dealer, or issuer on whose behalf the salesperson is
21registered, and all orders of the Secretary of State denying or
22abandoning an application, or suspending or revoking
23registration, or censuring the persons. The Secretary of State
24may designate by rule, regulation or order the statements,
25information or reports submitted to or filed with him or her

 

 

SB1758 Enrolled- 38 -LRB101 10278 AMC 55383 b

1pursuant to this Section 8 which the Secretary of State
2determines are of a sensitive nature and therefore should be
3exempt from public disclosure. Any such statement, information
4or report shall be deemed confidential and shall not be
5disclosed to the public except upon the consent of the person
6filing or submitting the statement, information or report or by
7order of court or in court proceedings.
 
8    G. The registration or re-registration of a dealer or
9limited Canadian dealer and of all salespersons registered upon
10application of the dealer or limited Canadian dealer shall
11expire on the next succeeding anniversary date of the
12registration or re-registration of the dealer; and the
13registration or re-registration of an investment adviser and of
14all investment adviser representatives registered upon
15application of the investment adviser shall expire on the next
16succeeding anniversary date of the registration of the
17investment adviser; provided, that the Secretary of State may
18by rule or regulation prescribe an alternate date which any
19dealer registered under the Federal 1934 Act or a member of any
20self-regulatory association approved pursuant thereto, a
21member of a self-regulatory organization or stock exchange in
22Canada, or any investment adviser may elect as the expiration
23date of its dealer or limited Canadian dealer and salesperson
24registrations, or the expiration date of its investment adviser
25registration, as the case may be. A registration of a

 

 

SB1758 Enrolled- 39 -LRB101 10278 AMC 55383 b

1salesperson registered upon application of an issuer or
2controlling person shall expire on the next succeeding
3anniversary date of the registration, or upon termination or
4expiration of the registration of the securities, if any,
5designated in the application for his or her registration or
6the alternative date as the Secretary may prescribe by rule or
7regulation. Subject to paragraph (9) of subsection C of this
8Section 8, a salesperson's registration also shall terminate
9upon cessation of his or her employment, or termination of his
10or her appointment or authorization, in each case by the person
11who applied for the salesperson's registration, provided that
12the Secretary of State may by rule or regulation prescribe an
13alternate date for the expiration of the registration.
 
14    H. Applications for re-registration of dealers, limited
15Canadian dealers, Internet portals, salespersons, investment
16advisers, and investment adviser representatives shall be
17filed with the Secretary of State prior to the expiration of
18the then current registration and shall contain such
19information as may be required by the Secretary of State upon
20initial application with such omission therefrom or addition
21thereto as the Secretary of State may authorize or prescribe.
22Each application for re-registration of a dealer, limited
23Canadian dealer, Internet portal, or investment adviser shall
24be accompanied by a filing fee, each application for
25re-registration as a salesperson shall be accompanied by a

 

 

SB1758 Enrolled- 40 -LRB101 10278 AMC 55383 b

1filing fee and a Securities Audit and Enforcement Fund fee
2established pursuant to Section 11a of this Act, and each
3application for re-registration as an investment adviser
4representative shall be accompanied by a Securities Audit and
5Enforcement Fund fee established under Section 11a of this Act,
6which shall not be returnable in any event. Notwithstanding the
7foregoing, applications for re-registration of dealers,
8limited Canadian dealers, Internet portals, and investment
9advisers may be filed within 30 days following the expiration
10of the registration provided that the applicant pays the annual
11registration fee together with an additional amount equal to
12the annual registration fee and files any other information or
13documents that the Secretary of State may prescribe by rule or
14regulation or order. Any application filed within 30 days
15following the expiration of the registration shall be
16automatically effective as of the time of the earlier
17expiration provided that the proper fee has been paid to the
18Secretary of State.
19    Each registered dealer, limited Canadian dealer, Internet
20portal, or investment adviser shall continue to be registered
21if the registrant changes his, her, or its form of organization
22provided that the dealer or investment adviser files an
23amendment to his, her, or its application not later than 30
24days following the occurrence of the change and pays the
25Secretary of State a fee in the amount established under
26Section 11a of this Act.
 

 

 

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1    I. (1) (a) Every registered dealer, limited Canadian
2dealer, Internet portal, and investment adviser shall make and
3keep for such periods, such accounts, correspondence,
4memoranda, papers, books and records as the Secretary of State
5may by rule or regulation prescribe. All records so required
6shall be preserved for 3 years unless the Secretary of State by
7rule, regulation or order prescribes otherwise for particular
8types of records.
9    (b) Every registered dealer, limited Canadian dealer,
10Internet portal, and investment adviser shall provide to the
11Secretary of State, upon request, such accounts,
12correspondence, memoranda, papers, books, and records as the
13Secretary of State may by rule or regulation prescribe, that it
14possesses and that it preserves for periods of longer than 3
15years.
16    (2) Every registered dealer, limited Canadian dealer,
17Internet portal, and investment adviser shall file such
18financial reports as the Secretary of State may by rule or
19regulation prescribe.
20    (3) All the books and records referred to in paragraph (1)
21of this subsection I are subject at any time or from time to
22time to such reasonable periodic, special or other audits,
23examinations, or inspections by representatives of the
24Secretary of State, within or without this State, as the
25Secretary of State deems necessary or appropriate in the public

 

 

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1interest or for the protection of investors.
2    (4) At the time of an audit, examination, or inspection,
3the Secretary of State, by his or her designees, may conduct an
4interview of any person employed or appointed by or affiliated
5with a registered dealer, limited Canadian dealer, Internet
6portal, or investment advisor, provided that the dealer,
7limited Canadian dealer, Internet portal, or investment
8advisor shall be given reasonable notice of the time and place
9for the interview. At the option of the dealer, limited
10Canadian dealer, Internet portal, or investment advisor, a
11representative of the dealer or investment advisor with
12supervisory responsibility over the individual being
13interviewed may be present at the interview.
 
14    J. The Secretary of State may require by rule or regulation
15the payment of an additional fee for the filing of information
16or documents required to be filed by this Section which have
17not been filed in a timely manner. The Secretary of State may
18also require by rule or regulation the payment of an
19examination fee for administering any examination which it may
20conduct pursuant to subsection B, C, D, or D-5 of this Section
218.
 
22    K. The Secretary of State may declare any application for
23registration or limited registration under this Section 8
24abandoned by order if the applicant fails to pay any fee or

 

 

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1file any information or document required under this Section 8
2or by rule or regulation for more than 30 days after the
3required payment or filing date. The applicant may petition the
4Secretary of State for a hearing within 15 days after the
5applicant's receipt of the order of abandonment, provided that
6the petition sets forth the grounds upon which the applicant
7seeks a hearing.
 
8    L. Any document being filed pursuant to this Section 8
9shall be deemed filed, and any fee being paid pursuant to this
10Section 8 shall be deemed paid, upon the date of actual receipt
11thereof by the Secretary of State or his or her designee.
 
12    M. (Blank).
13(Source: P.A. 99-182, eff. 1-1-16; 100-872, eff. 8-14-18.)
 
14    (815 ILCS 5/12)  (from Ch. 121 1/2, par. 137.12)
15    Sec. 12. Violation. It shall be a violation of the
16provisions of this Act for any person:
17        A. To offer or sell any security except in accordance
18    with the provisions of this Act.
19        B. To deliver to a purchaser any security required to
20    be registered under Section 5, Section 6 or Section 7
21    hereof unless accompanied or preceded by a prospectus that
22    meets the requirements of the pertinent subsection of
23    Section 5 or of Section 6 or of Section 7.

 

 

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1        C. To act as a dealer, Internet portal, salesperson,
2    investment adviser, or investment adviser representative,
3    unless registered as such, where such registration is
4    required, under the provisions of this Act.
5        D. To fail to file with the Secretary of State any
6    application, report or document required to be filed under
7    the provisions of this Act or any rule or regulation made
8    by the Secretary of State pursuant to this Act or to fail
9    to comply with the terms of any order of the Secretary of
10    State issued pursuant to Section 11 hereof.
11        E. To make, or cause to be made, (1) in any sworn
12    testimony before the Secretary of State or the Illinois
13    Securities Department within the Office of the Secretary,
14    or application, report or document filed under this Act or
15    any rule or regulation made by the Secretary of State
16    pursuant to this Act, any statement which was false or
17    misleading with respect to any material fact or (2) any
18    statement to the effect that a security (other than a
19    security issued by the State of Illinois) has been in any
20    way endorsed or approved by the Secretary of State or the
21    State of Illinois.
22        F. To engage in any transaction, practice or course of
23    business in connection with the sale or purchase of
24    securities which works or tends to work a fraud or deceit
25    upon the purchaser or seller thereof.
26        G. To obtain money or property through the sale of

 

 

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1    securities by means of any untrue statement of a material
2    fact or any omission to state a material fact necessary in
3    order to make the statements made, in the light of the
4    circumstances under which they were made, not misleading.
5        H. To sign or circulate any statement, prospectus, or
6    other paper or document required by any provision of this
7    Act or pertaining to any security knowing or having
8    reasonable grounds to know any material representation
9    therein contained to be false or untrue.
10        I. To employ any device, scheme or artifice to defraud
11    in connection with the sale or purchase of any security,
12    directly or indirectly.
13        J. When acting as an investment adviser, investment
14    adviser representative, or federal covered investment
15    adviser, by any means or instrumentality, directly or
16    indirectly:
17        (1) To employ any device, scheme or artifice to defraud
18        any client or prospective client;
19            (2) To engage in any transaction, practice, or
20        course of business which operates as a fraud or deceit
21        upon any client or prospective client; or
22            (3) To engage in any act, practice, or course of
23        business which is fraudulent, deceptive or
24        manipulative. The Secretary of State shall for the
25        purposes of this paragraph (3), by rules and
26        regulations, define and prescribe means reasonably

 

 

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1        designed to prevent such acts, practices, and courses
2        of business as are fraudulent, deceptive, or
3        manipulative.
4        K. When offering or selling any mineral investment
5    contract or mineral deferred delivery contract:
6        (1) To employ any device, scheme, or artifice to
7        defraud any customer, prospective customer, or
8        offeree;
9        (2) To engage in any transaction, practice, or course
10        of business that operates as a fraud or deceit upon any
11        customer, prospective customer, or offeree; or
12        (3) To engage in any act, practice, or course of
13        business that is fraudulent, deceptive, or
14        manipulative. The Secretary of State shall for the
15        purposes of this paragraph (3), by rules and
16        regulations, define and prescribe means reasonably
17        designed to prevent acts, practices, and courses of
18        business as are fraudulent, deceptive, or
19        manipulative.
20        L. To knowingly influence, coerce, manipulate, or
21    mislead any person engaged in the preparation or audit of
22    financial statements or appraisals to be used in the offer
23    or sale of securities for the purpose of rendering such
24    financial statements or appraisals materially misleading.
25(Source: P.A. 99-182, eff. 1-1-16.)
 

 

 

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1    Section 15. The Payday Loan Reform Act is amended by
2changing Section 2-5 as follows:
 
3    (815 ILCS 122/2-5)
4    Sec. 2-5. Loan terms.
5    (a) Without affecting the right of a consumer to prepay at
6any time without cost or penalty, no payday loan may have a
7minimum term of less than 13 days.
8    (b) Except for an installment payday loan as defined in
9this Section, no payday loan may be made to a consumer if the
10loan would result in the consumer being indebted to one or more
11payday lenders for a period in excess of 45 consecutive days.
12Except as provided under subsection (c) of this Section and
13Section 2-40, if a consumer has or has had loans outstanding
14for a period in excess of 45 consecutive days, no payday lender
15may offer or make a loan to the consumer for at least 7
16calendar days after the date on which the outstanding balance
17of all payday loans made during the 45 consecutive day period
18is paid in full. For purposes of this subsection, the term
19"consecutive days" means a series of continuous calendar days
20in which the consumer has an outstanding balance on one or more
21payday loans; however, if a payday loan is made to a consumer
22within 6 days or less after the outstanding balance of all
23loans is paid in full, those days are counted as "consecutive
24days" for purposes of this subsection.
25    (c) Notwithstanding anything in this Act to the contrary, a

 

 

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1payday loan shall also include any installment loan otherwise
2meeting the definition of payday loan contained in Section
31-10, but that has a term agreed by the parties of not less
4than 112 days and not exceeding 180 days; hereinafter an
5"installment payday loan". The following provisions shall
6apply:
7        (i) Any installment payday loan must be fully
8    amortizing, with a finance charge calculated on the
9    principal balances scheduled to be outstanding and be
10    repayable in substantially equal and consecutive
11    installments, according to a payment schedule agreed by the
12    parties with not less than 13 days and not more than one
13    month between payments; except that the first installment
14    period may be longer than the remaining installment periods
15    by not more than 15 days, and the first installment payment
16    may be larger than the remaining installment payments by
17    the amount of finance charges applicable to the extra days.
18    In calculating finance charges under this subsection, when
19    the first installment period is longer than the remaining
20    installment periods, the amount of the finance charges
21    applicable to the extra days shall not be greater than
22    $15.50 per $100 of the original principal balance divided
23    by the number of days in a regularly scheduled installment
24    period and multiplied by the number of extra days
25    determined by subtracting the number of days in a regularly
26    scheduled installment period from the number of days in the

 

 

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1    first installment period.
2        (ii) An installment payday loan may be refinanced by a
3    new installment payday loan one time during the term of the
4    initial loan; provided that the total duration of
5    indebtedness on the initial installment payday loan
6    combined with the total term of indebtedness of the new
7    loan refinancing that initial loan, shall not exceed 180
8    days. For purposes of this Act, a refinancing occurs when
9    an existing installment payday loan is paid from the
10    proceeds of a new installment payday loan.
11        (iii) In the event an installment payday loan is paid
12    in full prior to the date on which the last scheduled
13    installment payment before maturity is due, other than
14    through a refinancing, no licensee may offer or make a
15    payday loan to the consumer for at least 2 calendar days
16    thereafter.
17        (iv) No installment payday loan may be made to a
18    consumer if the loan would result in the consumer being
19    indebted to one or more payday lenders for a period in
20    excess of 180 consecutive days. The term "consecutive days"
21    does not include the date on which a consumer makes the
22    final installment payment.
23    (d) (Blank).
24    (e) No lender may make a payday loan to a consumer if the
25total of all payday loan payments coming due within the first
26calendar month of the loan, when combined with the payment

 

 

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1amount of all of the consumer's other outstanding payday loans
2coming due within the same month, exceeds the lesser of:
3        (1) $1,000; or
4        (2) in the case of one or more payday loans, 25% of the
5    consumer's gross monthly income; or
6        (3) in the case of one or more installment payday
7    loans, 22.5% of the consumer's gross monthly income; or
8        (4) in the case of a payday loan and an installment
9    payday loan, 22.5% of the consumer's gross monthly income.
10    No loan shall be made to a consumer who has an outstanding
11balance on 2 payday loans, except that, for a period of 12
12months after March 21, 2011 (the effective date of Public Act
1396-936), consumers with an existing CILA loan may be issued an
14installment loan issued under this Act from the company from
15which their CILA loan was issued.
16    (e-5) Except as provided in subsection (c)(i), no lender
17may charge more than $15.50 per $100 loaned on any payday loan,
18or more than $15.50 per $100 on the initial principal balance
19and on the principal balances scheduled to be outstanding
20during any installment period on any installment payday loan.
21Except for installment payday loans and except as provided in
22Section 2-25, this charge is considered fully earned as of the
23date on which the loan is made. For purposes of determining the
24finance charge earned on an installment payday loan, the
25disclosed annual percentage rate shall be applied to the
26principal balances outstanding from time to time until the loan

 

 

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1is paid in full, or until the maturity date, whichever occurs
2first. No finance charge may be imposed after the final
3scheduled maturity date.
4    When any loan contract is paid in full, the licensee shall
5refund any unearned finance charge. The unearned finance charge
6that is refunded shall be calculated based on a method that is
7at least as favorable to the consumer as the actuarial method,
8as defined by the federal Truth in Lending Act. The sum of the
9digits or rule of 78ths method of calculating prepaid interest
10refunds is prohibited.
11    (f) A lender may not take or attempt to take an interest in
12any of the consumer's personal property to secure a payday
13loan.
14    (g) A consumer has the right to redeem a check or any other
15item described in the definition of payday loan under Section
161-10 issued in connection with a payday loan from the lender
17holding the check or other item at any time before the payday
18loan becomes payable by paying the full amount of the check or
19other item.
20    (h) For the purpose of this Section, "substantially equal
21installment" includes a last regularly scheduled payment that
22may be less than, but no more than 5% larger than, the previous
23scheduled payment according to a disclosed payment schedule
24agreed to by the parties.
25(Source: P.A. 100-201, eff. 8-18-17.)
 

 

 

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1    (815 ILCS 5/2.10a rep.)
2    Section 20. The Illinois Securities Law of 1953 is amended
3by repealing Section 2.10a.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.