State of Illinois
92nd General Assembly
Legislation

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[ Introduced ][ Enrolled ][ Senate Amendment 001 ]


92_SB0575eng

 
SB575 Engrossed                                LRB9206482ARgc

 1        AN ACT concerning business transactions.

 2        Be it  enacted  by  the  People  of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.  The  Illinois  Securities  Law  of  1953  is
 5    amended by changing Sections 2.1, 8, 11, and 14 as follows:

 6        (815 ILCS 5/2.1) (from Ch. 121 1/2, par. 137.2-1)
 7        Sec. 2.1.  Security. "Security" means  any  note,  stock,
 8    treasury  stock,  bond,  debenture, evidence of indebtedness,
 9    certificate   of   interest   or   participation    in    any
10    profit-sharing   agreement,   collateral-trust   certificate,
11    preorganization  certificate  or  subscription,  transferable
12    share,    investment   contract,   investment   fund   share,
13    face-amount    certificate,     voting-trust     certificate,
14    certificate   of   deposit,  certificate  of  deposit  for  a
15    security, fractional undivided interest in oil, gas or  other
16    mineral  lease,  right  or  royalty, any put, call, straddle,
17    option, or privilege on any security, certificate of deposit,
18    or group or  index  of  securities  (including  any  interest
19    therein  or  based  on  the value thereof), or any put, call,
20    straddle, option, or privilege entered into,  on  a  national
21    securities  exchange  relating  to  foreign  currency, or, in
22    general, any interest  or  instrument  commonly  known  as  a
23    "security",  or  any certificate of interest or participation
24    in,  temporary  or  interim  certificate  for,  receipt  for,
25    guarantee  of,  or  warrant  or  right  to  subscribe  to  or
26    purchase, any of the foregoing. "Security" does  not  mean  a
27    mineral  investment  contract  or a mineral deferred delivery
28    contract; provided, however, the Department  shall  have  the
29    authority   to   regulate   these  contracts  as  hereinafter
30    provided.
31    (Source: P.A. 87-463.)
 
SB575 Engrossed             -2-                LRB9206482ARgc
 1        (815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
 2        Sec.  8.   Registration  of  dealers,  limited   Canadian
 3    dealers,  salespersons,  investment  advisers, and investment
 4    adviser representatives.

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

 2        B.  An  application  for  registration  as  a  dealer  or
 3    limited Canadian dealer, executed, verified, or authenticated
 4    by  or  on  behalf  of the applicant, shall be filed with the
 5    Secretary of State, in such form as the  Secretary  of  State
 6    may  by rule, regulation or order prescribe, setting forth or
 7    accompanied by:
 8             (1)  The name and  address  of  the  applicant,  the
 9        location  of its principal business office and all branch
10        offices, if any, and the date of its organization;
11             (2)  A statement  of  any  other  Federal  or  state
12        licenses  or  registrations  which  have been granted the
13        applicant and whether any such licenses or  registrations
14        have  ever been refused, cancelled, suspended, revoked or
15        withdrawn;
16             (3)  The  assets  and  all  liabilities,   including
17        contingent liabilities of the applicant, as of a date not
18        more than 60 days prior to the filing of the application;
19             (4) (a)  A   brief   description  of  any  civil  or
20        criminal  proceeding  of  which  fraud  is  an  essential
21        element pending against the  applicant  and  whether  the
22        applicant  has ever been convicted of a felony, or of any
23        misdemeanor of which fraud is an essential element;
24             (b)  A list setting forth the  name,  residence  and
25        business  address and a 10 year occupational statement of
26        each  principal  of  the  applicant   and   a   statement
27        describing  briefly  any civil or criminal proceedings of
28        which fraud is an essential element pending  against  any
29        such principal and the facts concerning any conviction of
30        any  such principal of a felony, or of any misdemeanor of
31        which fraud is an essential element;
32             (5)  If the applicant is a corporation:  a  list  of
33        its  officers  and  directors setting forth the residence
34        and business address  of  each;  a  10-year  occupational
 
SB575 Engrossed             -4-                LRB9206482ARgc
 1        statement  of  each  such  officer  or  director;  and  a
 2        statement   describing  briefly  any  civil  or  criminal
 3        proceedings  of  which  fraud  is  an  essential  element
 4        pending against each such officer  or  director  and  the
 5        facts   concerning  any  conviction  of  any  officer  or
 6        director of a felony, or  of  any  misdemeanor  of  which
 7        fraud is an essential element;
 8             (6)  If  the  applicant  is a sole proprietorship, a
 9        partnership, limited liability company, an unincorporated
10        association or any similar form of business organization:
11        the  name,  residence  and  business   address   of   the
12        proprietor or of each partner, member, officer, director,
13        trustee  or  manager;  the  limitations,  if  any, of the
14        liability of each such individual; a 10-year occupational
15        statement of each such individual; a statement describing
16        briefly any civil or criminal proceedings of which  fraud
17        is   an  essential  element  pending  against  each  such
18        individual and the facts concerning any conviction of any
19        such individual of a felony, or  of  any  misdemeanor  of
20        which fraud is an essential element;
21             (7)  Such additional information as the Secretary of
22        State may by rule or regulation prescribe as necessary to
23        determine   the   applicant's  financial  responsibility,
24        business repute and qualification to act as a dealer.
25             (8) (a)  No  applicant  shall   be   registered   or
26        re-registered  as  a  dealer  or  limited Canadian dealer
27        under this Section unless and until each principal of the
28        dealer  has  passed  an  examination  conducted  by   the
29        Secretary  of  State or a self-regulatory organization of
30        securities dealers or similar person,  which  examination
31        has  been  designated by the Secretary  of State by rule,
32        regulation or order to be satisfactory  for  purposes  of
33        determining   whether   the   applicant   has  sufficient
34        knowledge of the securities business  and  laws  relating
 
SB575 Engrossed             -5-                LRB9206482ARgc
 1        thereto to act as a registered dealer. Any dealer who was
 2        registered on September 30, 1963, and has continued to be
 3        so  registered;  and  any  principal  of  any  registered
 4        dealer,   who   was   acting  in  such  capacity  on  and
 5        continuously since September 30, 1963; and any individual
 6        who has previously passed a securities dealer examination
 7        administered by the Secretary of State or any examination
 8        designated by the Secretary of State to  be  satisfactory
 9        for  purposes  of  determining  whether the applicant has
10        sufficient knowledge of the securities business and  laws
11        relating  thereto  to act as a registered dealer by rule,
12        regulation or order, shall not be  required  to  pass  an
13        examination in order to continue to act in such capacity.
14        The Secretary of State may by order waive the examination
15        requirement   for  any  principal  of  an  applicant  for
16        registration under this subsection B  who  has  had  such
17        experience   or  education  relating  to  the  securities
18        business as may be determined by the Secretary  of  State
19        to  be  the  equivalent of such examination.  Any request
20        for such a waiver shall be filed with  the  Secretary  of
21        State  in  such  form  as  may  be  prescribed by rule or
22        regulation.
23             (b)  Unless an applicant is a  member  of  the  body
24        corporate  known  as  the  Securities Investor Protection
25        Corporation established pursuant to the Act  of  Congress
26        of  the  United  States  known as the Securities Investor
27        Protection Act of  1970,  as  amended,  a  member  of  an
28        association   of   dealers   registered   as  a  national
29        securities association pursuant to  Section  15A  of  the
30        Federal  1934  Act,  or  a  member  of  a self-regulatory
31        organization  or  stock  exchange  in  Canada  which  the
32        Secretary of State has designated by rule  or  order,  an
33        applicant shall not be registered or re-registered unless
34        and  until  there  is  filed  with the Secretary of State
 
SB575 Engrossed             -6-                LRB9206482ARgc
 1        evidence that such applicant has in effect  insurance  or
 2        other  equivalent  protection  for  each client's cash or
 3        securities held by such  applicant,  and  an  undertaking
 4        that   such  applicant  will  continually  maintain  such
 5        insurance  or  other  protection  during  the  period  of
 6        registration or re-registration.  Such insurance or other
 7        protection shall be  in  a  form  and  amount  reasonably
 8        prescribed   by   the  Secretary  of  State  by  rule  or
 9        regulation.
10             (9)  The  application  for  the  registration  of  a
11        dealer or limited Canadian dealer  shall  be  accompanied
12        by  a filing fee and a fee for each branch office in this
13        State, in each case in the amount established pursuant to
14        Section  11a  of  this  Act,  which  fees  shall  not  be
15        returnable in any event.
16             (10)  The Secretary of State shall notify the dealer
17        or  limited  Canadian dealer by written notice (which may
18        be  by  electronic  or  facsimile  transmission)  of  the
19        effectiveness of the registration as  a  dealer  in  this
20        State.
21             (11)  Any  change  which  renders no longer accurate
22        any  information  contained  in   any   application   for
23        registration  or  re-registration  of a dealer or limited
24        Canadian dealer shall be reported  to  the  Secretary  of
25        State  within  10  business  days after the occurrence of
26        such change;  but in respect to  assets  and  liabilities
27        only materially adverse changes need be reported.

28        C.  Any   registered  dealer,  limited  Canadian  dealer,
29    issuer,  or  controlling  person  desiring  to   register   a
30    salesperson  shall  file an application with the Secretary of
31    State, in such form as the Secretary of State may by rule  or
32    regulation  prescribe,  which  the salesperson is required by
33    this Section to provide to the dealer, issuer, or controlling
34    person,  executed,  verified,   or   authenticated   by   the
 
SB575 Engrossed             -7-                LRB9206482ARgc
 1    salesperson setting forth or accompanied 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,  or  withdrawn,  barred,
 8        limited,  or  otherwise  adversely  affected in a similar
 9        manner or whether the salesperson has ever been  censured
10        or expelled;
11             (3)  the  nature  of  employment with, and names and
12        addresses of, employers of the  salesperson  for  the  10
13        years immediately preceding the date of application;
14             (4)  a  brief  description  of any civil or criminal
15        proceedings  of  which  fraud  is  an  essential  element
16        pending  against  the  salesperson,   and   whether   the
17        salesperson  has  ever  been convicted of a felony, or of
18        any misdemeanor of which fraud is an essential element;
19             (5)  such additional information as the Secretary of
20        State may by  rule,  regulation  or  order  prescribe  as
21        necessary  to determine the salesperson's business repute
22        and qualification to act as a salesperson; and
23             (6)  no   individual   shall   be   registered    or
24        re-registered  as a salesperson under this Section unless
25        and until  such  individual  has  passed  an  examination
26        conducted  by the Secretary of State or a self-regulatory
27        organization of securities  dealers  or  similar  person,
28        which examination has been designated by the Secretary of
29        State by rule, regulation or order to be satisfactory for
30        purposes   of   determining  whether  the  applicant  has
31        sufficient knowledge of the securities business and  laws
32        relating thereto to act as a registered salesperson.
33             Any   salesperson   who   was  registered  prior  to
34        September  30,  1963,  and  has  continued   to   be   so
 
SB575 Engrossed             -8-                LRB9206482ARgc
 1        registered,   and   any   individual  who  has  passed  a
 2        securities salesperson examination  administered  by  the
 3        Secretary  of  State  or an examination designated by the
 4        Secretary of State by rule, regulation  or  order  to  be
 5        satisfactory  for  purposes  of  determining  whether the
 6        applicant has  sufficient  knowledge  of  the  securities
 7        business and laws relating thereto to act as a registered
 8        salesperson, shall not be required to pass an examination
 9        in  order  to  continue  to  act  as  a  salesperson. The
10        Secretary of State may by  order  waive  the  examination
11        requirement for any applicant for registration under this
12        subsection  C  who  has  had such experience or education
13        relating to the securities business as may be  determined
14        by  the  Secretary  of State to be the equivalent of such
15        examination.  Any request for  such  a  waiver  shall  be
16        filed  with the Secretary of State in such form as may be
17        prescribed by rule, regulation or order.
18             (7)  The   application   for   registration   of   a
19        salesperson shall be accompanied by a filing  fee  and  a
20        Securities  Audit  and  Enforcement Fund fee, each in the
21        amount established pursuant to Section 11a of  this  Act,
22        which shall not be returnable in any event.
23             (8)  Any change which renders no longer accurate any
24        information contained in any application for registration
25        or  re-registration as a salesperson shall be reported to
26        the Secretary of State within 10 business  days after the
27        occurrence  of  such  change.  If  the   activities   are
28        terminated which rendered an individual a salesperson for
29        the  dealer,  issuer  or  controlling person, the dealer,
30        issuer or controlling person, as the case may be,   shall
31        notify the Secretary of State, in writing, within 30 days
32        of  the  salesperson's cessation of activities, using the
33        appropriate termination notice form.
34             (9)  A registered salesperson may  transfer  his  or
 
SB575 Engrossed             -9-                LRB9206482ARgc
 1        her  registration  under this Section 8 for the unexpired
 2        term  thereof  from  one  registered  dealer  or  limited
 3        Canadian dealer to another by the giving of notice of the
 4        transfer by the new registered dealer or limited Canadian
 5        dealer to the Secretary of State in such form and subject
 6        to such conditions as the Secretary  of  State  shall  by
 7        rule  or regulation prescribe.  The new registered dealer
 8        or  limited  Canadian  dealer  shall  promptly  file   an
 9        application  for  registration  of  such  salesperson  as
10        provided  in this subsection C, accompanied by the filing
11        fee prescribed by paragraph (7) of this subsection C.

12        C-5.  Except with respect to federal  covered  investment
13    advisers  whose  only  clients  are  investment  companies as
14    defined in the Federal 1940 Act, other  investment  advisers,
15    federal  covered  investment  advisers, or any similar person
16    which the Secretary of State may prescribe by rule or  order,
17    a  federal  covered  investment  adviser  shall file with the
18    Secretary of State, prior to  acting  as  a  federal  covered
19    investment adviser in this State, such documents as have been
20    filed  with  the  Securities  and  Exchange Commission as the
21    Secretary of State by  rule  or  order  may  prescribe.   The
22    notification of a federal covered investment adviser shall be
23    accompanied by a notification filing fee established pursuant
24    to  Section 11a of this Act, which shall not be returnable in
25    any  event.   Every  person  acting  as  a  federal   covered
26    investment  adviser  in  this State shall file a notification
27    filing and pay an annual notification filing fee  established
28    pursuant to Section 11a of this Act, which is not  returnable
29    in  any  event.   The  failure  to file any such notification
30    shall constitute a violation of subsection D of Section 12 of
31    this Act, subject to the penalties enumerated in  Section  14
32    of  this  Act. Until October 10, 1999 or other date as may be
33    legally permissible, a federal covered investment adviser who
34    fails to file the notification or refuses to pay the fees  as
 
SB575 Engrossed             -10-               LRB9206482ARgc
 1    required  by  this subsection shall register as an investment
 2    adviser with the Secretary of State under Section 8  of  this
 3    Act.  The  civil  remedies  provided  for  in subsection A of
 4    Section 13 of this Act and the civil remedies  of  rescission
 5    and appointment of receiver, conservator, ancillary receiver,
 6    or  ancillary  conservator  provided  for  in subsection F of
 7    Section 13 of this Act shall not  be  available  against  any
 8    person by reason of the failure to file any such notification
 9    or  to pay the notification fee or on account of the contents
10    of any such notification.

11        D.  An application  for  registration  as  an  investment
12    adviser, executed, verified, or authenticated by or on behalf
13    of the applicant, shall be filed with the Secretary of State,
14    in  such  form  as  the  Secretary  of  State  may by rule or
15    regulation prescribe, setting forth or accompanied by:
16             (1)  The name and form of organization  under  which
17        the  investment  adviser  engages or intends to engage in
18        business;  the  state  or  country  and   date   of   its
19        organization;  the  location  of  the adviser's principal
20        business office and branch offices, if any; the names and
21        addresses of the adviser's principal, partners, officers,
22        directors, and persons performing similar  functions  or,
23        if  the  investment  adviser  is  an  individual,  of the
24        individual; and the number of the adviser's employees who
25        perform investment advisory functions;
26             (2)  The education, the  business  affiliations  for
27        the  past 10 years, and the present business affiliations
28        of the investment adviser and of the adviser's principal,
29        partners, officers,  directors,  and  persons  performing
30        similar  functions  and  of  any  person  controlling the
31        investment adviser;
32             (3)  The nature of the business  of  the  investment
33        adviser,  including  the  manner  of  giving  advice  and
34        rendering analyses or reports;
 
SB575 Engrossed             -11-               LRB9206482ARgc
 1             (4)  The  nature  and  scope of the authority of the
 2        investment adviser with respect  to  clients'  funds  and
 3        accounts;
 4             (5)  The  basis  or  bases upon which the investment
 5        adviser is compensated;
 6             (6)  Whether   the   investment   adviser   or   any
 7        principal, partner, officer, director, person  performing
 8        similar  functions  or  person controlling the investment
 9        adviser  (i)  within  10  years  of  the  filing  of  the
10        application has been convicted of a  felony,  or  of  any
11        misdemeanor  of  which  fraud is an essential element, or
12        (ii) is permanently or temporarily enjoined by  order  or
13        judgment   from   acting   as   an   investment  adviser,
14        underwriter, dealer, principal or  salesperson,  or  from
15        engaging  in  or  continuing  any  conduct or practice in
16        connection with any such activity or in  connection  with
17        the  purchase  or  sale of any security, and in each case
18        the facts relating to the conviction, order or judgment;
19             (7) (a)  A statement as to  whether  the  investment
20        adviser  is  engaged  or  is  to  engage primarily in the
21        business of rendering  investment  supervisory  services;
22        and
23             (b)  A  statement  that  the investment adviser will
24        furnish his, her, or its clients with such information as
25        the Secretary  of  State  deems  necessary  in  the  form
26        prescribed   by   the  Secretary  of  State  by  rule  or
27        regulation;
28             (8)  Such additional information as the Secretary of
29        State may, by rule,  regulation  or  order  prescribe  as
30        necessary   to   determine   the   applicant's  financial
31        responsibility, business repute and qualification to  act
32        as an investment adviser.
33             (9)  No    applicant    shall   be   registered   or
34        re-registered as an investment adviser under this Section
 
SB575 Engrossed             -12-               LRB9206482ARgc
 1        unless and until each principal of the applicant  who  is
 2        actively  engaged  in  the  conduct and management of the
 3        applicant's advisory business in this State has passed an
 4        examination or completed an educational program conducted
 5        by the Secretary of State or an association of investment
 6        advisers  or  similar  person,   which   examination   or
 7        educational  program has been designated by the Secretary
 8        of State by rule, regulation or order to be  satisfactory
 9        for  purposes  of  determining  whether the applicant has
10        sufficient knowledge of the securities business and  laws
11        relating  thereto to conduct the business of a registered
12        investment adviser.
13             Any person who was a registered  investment  adviser
14        prior  to  September 30, 1963, and has continued to be so
15        registered,  and  any  individual  who  has   passed   an
16        investment   adviser   examination  administered  by  the
17        Secretary of State, or passed an examination or completed
18        an educational program designated  by  the  Secretary  of
19        State by rule, regulation or order to be satisfactory for
20        purposes   of   determining  whether  the  applicant  has
21        sufficient knowledge of the securities business and  laws
22        relating  thereto to conduct the business of a registered
23        investment adviser, shall not  be  required  to  pass  an
24        examination  or  complete an educational program in order
25        to  continue  to  act  as  an  investment  adviser.   The
26        Secretary of State may by order waive the examination  or
27        educational  program  requirement  for  any applicant for
28        registration under this subsection D if the principal  of
29        the  applicant who is actively engaged in the conduct and
30        management of the applicant's advisory business  in  this
31        State  has  had  such experience or education relating to
32        the securities business  as  may  be  determined  by  the
33        Secretary   of   State   to  be  the  equivalent  of  the
34        examination or educational program.  Any  request  for  a
 
SB575 Engrossed             -13-               LRB9206482ARgc
 1        waiver shall be filed with the Secretary of State in such
 2        form as may be prescribed by rule or regulation.
 3             (10)  No    applicant   shall   be   registered   or
 4        re-registered as an investment adviser under this Section
 5        8   unless   the   application   for   registration    or
 6        re-registration  is  accompanied  by  an  application for
 7        registration or re-registration for each person acting as
 8        an investment adviser representative  on  behalf  of  the
 9        adviser  and  a Securities Audit and Enforcement Fund fee
10        that shall not be returnable in any event  is  paid  with
11        respect to each investment adviser representative.
12             (11)  The   application   for   registration  of  an
13        investment adviser shall be accompanied by a  filing  fee
14        and  a  fee for each branch office in this State, in each
15        case in the amount established pursuant to Section 11a of
16        this Act, which fees  shall  not  be  returnable  in  any
17        event.
18             (12)  The   Secretary  of  State  shall  notify  the
19        investment adviser by written notice  (which  may  be  by
20        electronic    or    facsimile    transmission)   of   the
21        effectiveness  of  the  registration  as  an   investment
22        adviser in this State.
23             (13)  Any  change  which  renders no longer accurate
24        any  information  contained  in   any   application   for
25        registration  or re-registration of an investment adviser
26        shall be reported to the Secretary  of  State  within  10
27        business  days  after  the  occurrence of the change.  In
28        respect  to  assets  and  liabilities  of  an  investment
29        adviser  that  retains  custody  of  clients'   cash   or
30        securities  or  accepts  pre-payment of fees in excess of
31        $500 per client and 6 or  more  months  in  advance  only
32        materially  adverse  changes  need be reported by written
33        notice  (which  may  be  by   electronic   or   facsimile
34        transmission)  no later than the close of business on the
 
SB575 Engrossed             -14-               LRB9206482ARgc
 1        second business day following the discovery thereof.
 2             (14)  Each  application  for  registration   as   an
 3        investment  adviser  shall become effective automatically
 4        on the 45th day following the filing of the  application,
 5        required  documents  or  information,  and payment of the
 6        required fee  unless  (i)  the  Secretary  of  State  has
 7        registered  the  investment adviser prior to that date or
 8        (ii) an action with respect to the applicant  is  pending
 9        under Section 11 of this Act.

10        D-5.  A  registered investment adviser or federal covered
11    investment  adviser    desiring  to  register  an  investment
12    adviser representative shall file  an  application  with  the
13    Secretary of State, in the form as the Secretary of State may
14    by  rule  or  order  prescribe,  which the investment adviser
15    representative is required by this Section to provide to  the
16    investment  adviser,  executed, verified, or authenticated by
17    the investment adviser representative and  setting  forth  or
18    accompanied by:
19             (1)  The  name,  residence,  and business address of
20        the investment  adviser representative;
21             (2)  A  statement  whether  any  federal  or   state
22        license   or   registration  as  a  dealer,  salesperson,
23        investment adviser, or investment adviser  representative
24        has  ever  been  refused, canceled, suspended, revoked or
25        withdrawn;
26             (3)  The nature of employment with,  and  names  and
27        addresses  of,    employers  of  the  investment  adviser
28        representative for the 10 years immediately preceding the
29        date of application;
30             (4)  A  brief  description  of any civil or criminal
31        proceedings, of which  fraud  is  an  essential  element,
32        pending against the investment adviser representative and
33        whether  the  investment  adviser representative has ever
34        been convicted of a felony or of any misdemeanor of which
 
SB575 Engrossed             -15-               LRB9206482ARgc
 1        fraud is an essential element;
 2             (5)  Such additional information as the Secretary of
 3        State may by rule or  order  prescribe  as  necessary  to
 4        determine   the   investment   adviser   representative's
 5        business  repute or qualification to act as an investment
 6        adviser representative;
 7             (6)  Documentation that the individual has passed an
 8        examination conducted  by  the  Secretary  of  State,  an
 9        organization  of  investment advisers, or similar person,
10        which examination has been designated by the Secretary of
11        State by rule or order to be satisfactory for purposes of
12        determining  whether  the    applicant   has   sufficient
13        knowledge   of  the  investment  advisory  or  securities
14        business and laws relating to that business to act  as  a
15        registered investment  adviser representative; and
16             (7)  A  Securities  Audit  and  Enforcement Fund fee
17        established under Section 11a of this  Act,  which  shall
18        not be returnable in any event.
19        The Secretary of State may by order waive the examination
20    requirement  for  an  applicant  for  registration under this
21    subsection D-5  who  has  had  the  experience  or  education
22    relating to the investment advisory or securities business as
23    may  be  determined  by  the  Secretary  of  State  to be the
24    equivalent of the examination.  A request for a waiver  shall
25    be  filed  with  the Secretary of State in the form as may be
26    prescribed by rule or order.
27        A change that renders no longer accurate any  information
28    contained   in   any      application   for  registration  or
29    re-registration as an investment adviser representative  must
30    be reported to the Secretary of State within 10 business days
31    after  the  occurrence of the change.  If the activities that
32    rendered an individual an investment  adviser  representative
33    for  the  investment  adviser  are terminated, the investment
34    adviser shall notify the Secretary of State in writing (which
 
SB575 Engrossed             -16-               LRB9206482ARgc
 1    may be by electronic or facsimile  transmission),  within  30
 2    days  of the investment adviser representative's termination,
 3    using  the  appropriate  termination  notice  form   as   the
 4    Secretary of State may prescribe by rule or order.
 5        A   registered   investment  adviser  representative  may
 6    transfer his or her registration under this Section 8 for the
 7    unexpired  term  of  the  registration  from  one  registered
 8    investment adviser to another by the giving of notice of  the
 9    transfer  by  the  new investment adviser to the Secretary of
10    State in the form  and  subject  to  the  conditions  as  the
11    Secretary  of  State  shall  prescribe.    The new registered
12    investment adviser shall promptly  file  an  application  for
13    registration  of  the  investment  adviser  representative as
14    provided in this subsection, accompanied  by  the  Securities
15    Audit and Enforcement Fund fee prescribed by paragraph (7) of
16    this subsection D-5.

17        E. (1)  Subject  to  the  provisions  of  subsection F of
18    Section 11 of this Act, the registration of a dealer, limited
19    Canadian  dealer,   salesperson,   investment   adviser,   or
20    investment adviser representative may be denied, suspended or
21    revoked  if  the  Secretary  of  State finds that the dealer,
22    limited Canadian dealer, salesperson, investment adviser,  or
23    investment  adviser  representative or any principal officer,
24    director, partner, member, trustee, manager or any person who
25    performs a similar function of the dealer,  limited  Canadian
26    dealer, or investment adviser:
27             (a)  has  been convicted of any felony during the 10
28        year  period  preceding  the  date  of  filing   of   any
29        application  for  registration or at any time thereafter,
30        or of any misdemeanor of  which  fraud  is  an  essential
31        element;
32             (b)  has  engaged  in  any unethical practice in the
33        offer or sale of securities or in any fraudulent business
34        practice;
 
SB575 Engrossed             -17-               LRB9206482ARgc
 1             (c)  has  failed  to  account  for  any   money   or
 2        property,  or  has failed to deliver any security, to any
 3        person entitled thereto when due or within  a  reasonable
 4        time thereafter;
 5             (d)  in  the  case  of  a  dealer,  limited Canadian
 6        dealer, or investment adviser, is insolvent;
 7             (e)  in the  case  of  a  dealer,  limited  Canadian
 8        dealer,  salesperson, or registered principal of a dealer
 9        or limited Canadian dealer (i) has failed  reasonably  to
10        supervise   the  securities  activities  of  any  of  its
11        salespersons and the failure has permitted or facilitated
12        a violation of Section 12 of this Act or (ii) is offering
13        or selling or has offered  or  sold  securities  in  this
14        State  through  a  salesperson  other  than  a registered
15        salesperson, or, in the case of a salesperson, is selling
16        or has sold  securities  in  this  State  for  a  dealer,
17        limited  Canadian  dealer,  issuer  or controlling person
18        with knowledge that the dealer, limited Canadian  dealer,
19        issuer  or  controlling  person has not complied with the
20        provisions of this Act or (iii) has failed reasonably  to
21        supervise   the  implementation  of  compliance  measures
22        following  notice  by   the   Secretary   of   State   of
23        noncompliance  with  the  Act  or  with  the  regulations
24        promulgated  thereunder  or  both  or  (iv) has failed to
25        maintain and enforce written procedures to supervise  the
26        types  of  business  in which it engages and to supervise
27        the activities of its salespersons  that  are  reasonably
28        designed to achieve compliance with applicable securities
29        laws and regulations;
30             (f)  in  the  case  of  an  investment  adviser, has
31        failed reasonably to supervise the advisory activities of
32        any  of  its  investment   adviser   representatives   or
33        employees  and the failure has permitted or facilitated a
34        violation of Section 12 of this Act;
 
SB575 Engrossed             -18-               LRB9206482ARgc
 1             (g)  has violated any of the provisions of this Act;
 2             (h)  has made any material misrepresentation to  the
 3        Secretary  of  State  in  connection with any information
 4        deemed necessary by the Secretary of State to determine a
 5        dealer's,  limited  Canadian  dealer's,   or   investment
 6        adviser's financial responsibility or a dealer's, limited
 7        Canadian  dealer's,  investment adviser's, salesperson's,
 8        or investment adviser representative's business repute or
 9        qualifications,  or  has  refused  to  furnish  any  such
10        information requested by the Secretary of State;
11             (i)  has had a license  or  registration  under  any
12        Federal  or  State  law  regulating  the offer or sale of
13        securities  or  commodity  futures  contracts,   refused,
14        cancelled, suspended, or withdrawn, revoked, or otherwise
15        adversely affected in a similar manner;
16             (j)  has  been suspended or expelled from or refused
17        had membership in or association with or limited  in  any
18        capacity  by  any self-regulatory organization registered
19        under the Federal  1934  Act  or  the  Federal  1974  Act
20        suspended, revoked, refused, expelled, cancelled, barred,
21        limited  in any capacity, or otherwise adversely affected
22        in a  similar  manner  arising  from  any  fraudulent  or
23        deceptive  act  or  a  practice in violation of any rule,
24        regulation  or   standard   duly   promulgated   by   the
25        self-regulatory organization;
26             (k)  has  had  any  order  entered  against it after
27        notice and opportunity for hearing by a securities agency
28        of any state, any foreign government or  agency  thereof,
29        the  Securities  and  Exchange Commission, or the Federal
30        Commodities Futures Trading Commission arising  from  any
31        fraudulent or deceptive act or a practice in violation of
32        any   statute,   rule   or   regulation  administered  or
33        promulgated by the agency or commission;
34             (l)  in the case of a  dealer  or  limited  Canadian
 
SB575 Engrossed             -19-               LRB9206482ARgc
 1        dealer,  fails  to  maintain  a minimum net capital in an
 2        amount which the  Secretary  of  State  may  by  rule  or
 3        regulation require;
 4             (m)  has conducted a continuing course of dealing of
 5        such  nature  as  to demonstrate an inability to properly
 6        conduct the business  of  the  dealer,  limited  Canadian
 7        dealer,  salesperson,  investment  adviser, or investment
 8        adviser representative;
 9             (n)  has  had,  after  notice  and  opportunity  for
10        hearing, any injunction or order entered  against  it  or
11        license  or  registration  refused, cancelled, suspended,
12        revoked, withdrawn, or limited,  or  otherwise  adversely
13        affected  in  a  similar  manner  by any state or federal
14        body, agency or commission regulating banking, insurance,
15        finance or small loan companies, real estate or  mortgage
16        brokers or companies, if the action resulted from any act
17        found   by  the  body,  agency  or  commission  to  be  a
18        fraudulent or deceptive act or practice in  violation  of
19        any   statute,   rule   or   regulation  administered  or
20        promulgated by the body, agency or commission;
21             (o)  has failed to file a return, or to pay the tax,
22        penalty or interest shown in a filed return,  or  to  pay
23        any  final  assessment  of  tax,  penalty or interest, as
24        required by any tax  Act  administered  by  the  Illinois
25        Department   of   Revenue,   until   such   time  as  the
26        requirements of that tax Act are satisfied;
27             (p)  in the case  of  a  natural  person  who  is  a
28        dealer,  limited Canadian dealer, salesperson, investment
29        adviser,  or  investment  adviser   representative,   has
30        defaulted  on  an  educational  loan  guaranteed  by  the
31        Illinois Student Assistance Commission, until the natural
32        person has established a satisfactory repayment record as
33        determined by the Illinois Student Assistance Commission;
34             (q)  has  failed  to  maintain the books and records
 
SB575 Engrossed             -20-               LRB9206482ARgc
 1        required  under  this  Act  or   rules   or   regulations
 2        promulgated under this Act within a reasonable time after
 3        receiving notice of any deficiency;
 4             (r)  has  refused  to  allow  or  otherwise  impeded
 5        designees  of  the  Secretary of State from conducting an
 6        audit, examination, inspection, or investigation provided
 7        for under Section 8 or 11 of this Act;
 8             (s)  has failed to maintain any minimum net  capital
 9        or  bond requirement set forth in this Act or any rule or
10        regulation promulgated under this Act;
11             (t)  has refused the Secretary of State  or  his  or
12        her  designee  access to any office or location within an
13        office to conduct an investigation,  audit,  examination,
14        or inspection;
15             (u)  has  advised or caused a public pension fund or
16        retirement system established under the Illinois  Pension
17        Code to make an investment or engage in a transaction not
18        authorized by that Code;.
19             (v)  if a corporation, limited liability company, or
20        limited  liability  partnership   has   been   suspended,
21        canceled, revoked, or has failed to register as a foreign
22        corporation,   limited   liability  company,  or  limited
23        liability partnership with the Secretary of State;
24             (w)  is permanently or temporarily enjoined  by  any
25        court  of  competent  jurisdiction,  including any state,
26        federal, or  foreign  government,  from  engaging  in  or
27        continuing  any  conduct or practice involving any aspect
28        of the securities or commodities business or in any other
29        business where the conduct or practice enjoined  involved
30        investments, franchises, insurance, banking, or finance;
31        (2)  If  the Secretary of State finds that any registrant
32    or applicant for registration is no longer  in  existence  or
33    has  ceased  to  do  business  as  a dealer, limited Canadian
34    dealer,  salesperson,  investment  adviser,   or   investment
 
SB575 Engrossed             -21-               LRB9206482ARgc
 1    adviser representative, or is subject to an adjudication as a
 2    person  under  legal  disability  or  to  the  control  of  a
 3    guardian,  or  cannot  be located after reasonable search, or
 4    has failed after written notice to pay to  the  Secretary  of
 5    State  any  additional  fee  prescribed  by  this  Section or
 6    specified by rule or regulation, or if a natural person,  has
 7    defaulted  on  an educational loan guaranteed by the Illinois
 8    Student Assistance Commission, the Secretary of State may  by
 9    order cancel the registration or application.
10        (3)  Withdrawal  of  an  application  for registration or
11    withdrawal from registration as a  dealer,  limited  Canadian
12    dealer,   salesperson,   investment  adviser,  or  investment
13    adviser  representative  becomes  effective  30  days   after
14    receipt  of an application to withdraw or within such shorter
15    period of time as  the  Secretary  of  State  may  determine,
16    unless any proceeding is pending under Section 11 of this Act
17    when  the  application is filed or a proceeding is instituted
18    within  30  days  after  the  application  is  filed.   If  a
19    proceeding  is  pending  or  instituted,  withdrawal  becomes
20    effective at such  time  and  upon  such  conditions  as  the
21    Secretary  of State by order determines.  If no proceeding is
22    pending or instituted and  withdrawal  automatically  becomes
23    effective,  the Secretary of State may nevertheless institute
24    a revocation or suspension proceeding within  2  years  after
25    withdrawal   became  effective  and  enter  a  revocation  or
26    suspension order as of the last date  on  which  registration
27    was effective.

28        F.  The  Secretary  of  State  shall  make available upon
29    request  the  date  that  each  dealer,  investment  adviser,
30    salesperson, or investment adviser representative was granted
31    registration, together with  the  name  and  address  of  the
32    dealer,  limited  Canadian  dealer, or issuer on whose behalf
33    the  salesperson  is  registered,  and  all  orders  of   the
34    Secretary  of  State denying or abandoning an application, or
 
SB575 Engrossed             -22-               LRB9206482ARgc
 1    suspending  or  revoking  registration,  or   censuring   the
 2    persons.    The  Secretary  of  State  may designate by rule,
 3    regulation or order the statements,  information  or  reports
 4    submitted  to  or  filed  with  him  or  her pursuant to this
 5    Section 8 which the Secretary of State determines  are  of  a
 6    sensitive  nature  and therefore should be exempt from public
 7    disclosure.  Any such statement, information or report  shall
 8    be  deemed  confidential  and  shall  not be disclosed to the
 9    public except upon  the  consent  of  the  person  filing  or
10    submitting  the  statement, information or report or by order
11    of court or in court proceedings.

12        G.  The registration or re-registration of  a  dealer  or
13    limited  Canadian  dealer  and of all salespersons registered
14    upon application of the dealer  or  limited  Canadian  dealer
15    shall  expire  on the next succeeding anniversary date of the
16    registration  or  re-registration  of  the  dealer;  and  the
17    registration or re-registration of an investment adviser  and
18    of  all  investment  adviser  representatives registered upon
19    application of the investment adviser  shall  expire  on  the
20    next  succeeding  anniversary date of the registration of the
21    investment adviser; provided, that the Secretary of State may
22    by rule or regulation prescribe an alternate date  which  any
23    dealer  registered  under the Federal 1934 Act or a member of
24    any self-regulatory association approved pursuant thereto,  a
25    member of a self-regulatory organization or stock exchange in
26    Canada, or any investment adviser may elect as the expiration
27    date of its dealer or limited Canadian dealer and salesperson
28    registrations,  or  the  expiration  date  of  its investment
29    adviser registration, as the case may be.  A registration  of
30    a  salesperson  registered  upon  application of an issuer or
31    controlling  person  shall  expire  on  the  next  succeeding
32    anniversary date of the registration, or upon termination  or
33    expiration  of  the  registration  of the securities, if any,
34    designated in the application for his or her registration  or
 
SB575 Engrossed             -23-               LRB9206482ARgc
 1    the  alternative  date as the Secretary may prescribe by rule
 2    or regulation.  Subject to paragraph (9) of subsection  C  of
 3    this  Section  8,  a  salesperson's  registration  also shall
 4    terminate  upon  cessation  of  his  or  her  employment,  or
 5    termination of his or her appointment  or  authorization,  in
 6    each  case  by  the  person who applied for the salesperson's
 7    registration, provided that the Secretary  of  State  may  by
 8    rule  or  regulation  prescribe  an  alternate  date  for the
 9    expiration of the registration.

10        H.  Applications for re-registration of dealers,  limited
11    Canadian  dealers,  salespersons,  investment  advisers,  and
12    investment  adviser  representatives  shall be filed with the
13    Secretary of State  prior  to  the  expiration  of  the  then
14    current  registration  and  shall contain such information as
15    may be required  by  the  Secretary  of  State  upon  initial
16    application  with such omission therefrom or addition thereto
17    as the Secretary of State may authorize or  prescribe.   Each
18    application for re-registration of a dealer, limited Canadian
19    dealer,  or  investment  adviser  shall  be  accompanied by a
20    filing  fee,  each  application  for  re-registration  as   a
21    salesperson  shall  be  accompanied  by  a  filing  fee and a
22    Securities  Audit  and  Enforcement  Fund   fee   established
23    pursuant to Section 11a of this Act, and each application for
24    re-registration as an investment adviser representative shall
25    be accompanied by a Securities Audit and Enforcement Fund fee
26    established under Section 11a of this Act, which shall not be
27    returnable  in  any  event.   Notwithstanding  the foregoing,
28    applications for re-registration of dealers, limited Canadian
29    dealers, and investment advisers may be filed within 30  days
30    following  the  expiration  of the registration provided that
31    the applicant pays the annual registration fee together  with
32    an additional amount equal to the annual registration fee and
33    files  any  other information or documents that the Secretary
34    of State may prescribe by rule or regulation or  order.   Any
 
SB575 Engrossed             -24-               LRB9206482ARgc
 1    application  filed within 30 days following the expiration of
 2    the registration shall be automatically effective as  of  the
 3    time  of  the earlier expiration provided that the proper fee
 4    has been paid to the Secretary of State.
 5        Each  registered  dealer,  limited  Canadian  dealer,  or
 6    investment adviser shall continue to  be  registered  if  the
 7    registrant  changes  his,  her,  or  its form of organization
 8    provided that the  dealer  or  investment  adviser  files  an
 9    amendment  to  his, her, or its application not later than 30
10    days following the occurrence of  the  change  and  pays  the
11    Secretary  of  State  a  fee  in the amount established under
12    Section 11a of this Act.

13        I. (1)  Every registered dealer, limited Canadian dealer,
14    and investment adviser shall make and keep for such  periods,
15    such  accounts,  correspondence, memoranda, papers, books and
16    records as the Secretary of State may by rule  or  regulation
17    prescribe.   All records so required shall be preserved for 3
18    years unless the Secretary of State by  rule,  regulation  or
19    order prescribes otherwise for particular types of records.
20        (2)  Every  registered  dealer,  limited Canadian dealer,
21    and investment adviser shall file such financial  reports  as
22    the Secretary of State may by rule or regulation prescribe.
23        (3)  All  the  books and records referred to in paragraph
24    (1) of this subsection I are subject at any time or from time
25    to time to such reasonable periodic, special or other audits,
26    examinations,  or  inspections  by  representatives  of   the
27    Secretary  of  State,  within  or  without this State, as the
28    Secretary of State deems  necessary  or  appropriate  in  the
29    public interest or for the protection of investors.
30        (4)  At the time of an audit, examination, or inspection,
31    the  Secretary of State, by his or her designees, may conduct
32    an interview of  any  person  employed  or  appointed  by  or
33    affiliated with a registered dealer, limited Canadian dealer,
34    or  investment  advisor,  provided  that  the dealer, limited
 
SB575 Engrossed             -25-               LRB9206482ARgc
 1    Canadian  dealer,  or  investment  advisor  shall  be   given
 2    reasonable  notice  of  the time and place for the interview.
 3    At the option of the  dealer,  limited  Canadian  dealer,  or
 4    investment   advisor,  a  representative  of  the  dealer  or
 5    investment advisor with supervisory responsibility  over  the
 6    individual being interviewed may be present at the interview.

 7        J.  The  Secretary  of  State  may  require  by  rule  or
 8    regulation the payment of an additional fee for the filing of
 9    information or documents required to be filed by this Section
10    which  have not been filed in a timely manner.  The Secretary
11    of State may also require by rule or regulation  the  payment
12    of an examination fee for administering any examination which
13    it may conduct pursuant to subsection B, C, D, or D-5 of this
14    Section 8.

15        K.  The  Secretary  of  State may declare any application
16    for registration or limited registration under this Section 8
17    abandoned by order if the applicant fails to pay any  fee  or
18    file  any information or document required under this Section
19    8 or by rule or regulation for more than 30  days  after  the
20    required  payment or filing date.  The applicant may petition
21    the Secretary of State for a hearing within 15 days after the
22    applicant's receipt of the  order  of  abandonment,  provided
23    that  the  petition  sets  forth  the  grounds upon which the
24    applicant seeks a hearing.

25        L.  Any document being filed pursuant to this  Section  8
26    shall  be  deemed  filed,  and any fee being paid pursuant to
27    this Section 8 shall be deemed paid, upon the date of  actual
28    receipt  thereof  by  the  Secretary  of  State or his or her
29    designee.

30        M.  The Secretary of State shall provide to the  Illinois
31    Student  Assistance Commission annually or at mutually agreed
32    periodic intervals the names and social security  numbers  of
 
SB575 Engrossed             -26-               LRB9206482ARgc
 1    natural persons registered under subsections B, C, D, and D-5
 2    of  this Section.  The Illinois Student Assistance Commission
 3    shall determine if any student loan defaulter  is  registered
 4    as   a  dealer,  limited  Canadian  dealer,  salesperson,  or
 5    investment  adviser   under   this   Act   and   report   its
 6    determination  to  the  Secretary  of  State  or  his  or her
 7    designee.
 8    (Source: P.A.  90-70,  eff.  7-8-97;  90-507,  eff.  8-22-97;
 9    90-655, eff. 7-30-98; 91-809, eff. 1-1-01.)

10        (815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
11        Sec. 11.  Duties and powers of the Secretary of State.
12        A. (1)  The  administration  of this Act is vested in the
13    Secretary of State, who may from time to time make, amend and
14    rescind such rules and regulations as  may  be  necessary  to
15    carry out this Act, including rules and regulations governing
16    procedures  of  registration,  statements,  applications  and
17    reports  for  various  classes  of  securities,  persons  and
18    matters  within  his  or  her  jurisdiction  and defining any
19    terms, whether or not  used  in  this  Act,  insofar  as  the
20    definitions  are  not  inconsistent with this Act.  The rules
21    and regulations adopted by the Secretary of State under  this
22    Act  shall  be  effective  in  the manner provided for in the
23    Illinois Administrative Procedure Act.
24        (2)  Among other things, the  Secretary  of  State  shall
25    have  authority,  for  the purposes of this Act, to prescribe
26    the form or forms in which required information shall be  set
27    forth, accounting practices, the items or details to be shown
28    in  balance sheets and earning statements, and the methods to
29    be followed in the preparation of accounts, in the  appraisal
30    or  valuation of assets and liabilities, in the determination
31    of depreciation and  depletion,  in  the  differentiation  of
32    recurring and non-recurring income, in the differentiation of
33    investment  and  operating  income, and in the preparation of
 
SB575 Engrossed             -27-               LRB9206482ARgc
 1    consolidated balance sheets or income accounts of any person,
 2    directly or indirectly,  controlling  or  controlled  by  the
 3    issuer, or any person under direct or indirect common control
 4    with the issuer.
 5        (3)  No  provision  of  this  Act  imposing any liability
 6    shall apply to any act done  or  omitted  in  good  faith  in
 7    conformity  with  any  rule or regulation of the Secretary of
 8    State under  this  Act,  notwithstanding  that  the  rule  or
 9    regulation  may,  after  the  act  or omission, be amended or
10    rescinded or be determined by judicial or other authority  to
11    be invalid for any reason.
12        (4)  The  Securities  Department  of  the  Office  of the
13    Secretary of State shall be deemed a criminal justice  agency
14    for  purposes  of  all federal and state laws and regulations
15    and, in that capacity, shall be entitled  to  access  to  any
16    information available to criminal justice agencies.
17        (5)  The  Secretary  of State, by rule, may conditionally
18    or  unconditionally   exempt   any   person,   security,   or
19    transaction,  or any class or classes of persons, securities,
20    or transactions from any provision of Section 5, 6, 7, 8, 8a,
21    or 9 of this Act or  of  any  rule  promulgated  under  these
22    Sections,  to  the extent that such exemption is necessary or
23    appropriate in the public interest, and  is  consistent  with
24    the protection of investors.
25        B.  The  Secretary  of State may, anything in this Act to
26    the contrary notwithstanding,  require  financial  statements
27    and reports of the issuer, dealer, salesperson, or investment
28    adviser  as often as circumstances may warrant.  In addition,
29    the Secretary of State may secure information  or  books  and
30    records  from  or  through others and may make or cause to be
31    made investigations respecting  the  business,  affairs,  and
32    property  of the issuer of securities, any person involved in
33    the sale or offer for sale, purchase or offer to purchase  of
34    any  mineral  investment  contract, mineral deferred delivery
 
SB575 Engrossed             -28-               LRB9206482ARgc
 1    contract, or  security  and  of  dealers,  salespersons,  and
 2    investment advisers that are registered or are the subject of
 3    an application for registration under this Act.  The costs of
 4    an  investigation  shall  be  borne  by the registrant or the
 5    applicant, provided that the registrant  or  applicant  shall
 6    not  be  obligated  to  pay the costs without his, her or its
 7    consent in advance.
 8        C.  Whenever it shall appear to the Secretary  of  State,
 9    either  upon  complaint  or  otherwise, that this Act, or any
10    rule or regulation prescribed under  authority  thereof,  has
11    been or is about to be violated, he or she may, in his or her
12    discretion, do one or both of the following:
13             (1)  require  or  permit the person to file with the
14        Secretary of State a statement in writing under oath,  or
15        otherwise,   as   to  all  the  facts  and  circumstances
16        concerning the subject  matter  which  the  Secretary  of
17        State   believes   to   be  in  the  public  interest  to
18        investigate, audit, examine, or inspect; and
19             (2)  conduct an investigation,  audit,  examination,
20        or   inspection    as  necessary  or  advisable  for  the
21        protection of the interests of the public.
22        D. (1)  For the purpose of  all  investigations,  audits,
23    examinations,  or  inspections  which  in  the opinion of the
24    Secretary  of  State  are  necessary  and  proper   for   the
25    enforcement  of  this Act, the Secretary of State or a person
26    designated by him or her is empowered to administer oaths and
27    affirmations, subpoena witnesses, take evidence, and require,
28    by subpoena or other lawful means provided by this Act or the
29    rules adopted by the Secretary of State,  the  production  of
30    any  books  and records, papers, or other documents which the
31    Secretary of State or a person designated by him or her deems
32    relevant or material to the inquiry.
33        (2)  The Secretary of State or a person designated by him
34    or  her  is  further  empowered  to  administer   oaths   and
 
SB575 Engrossed             -29-               LRB9206482ARgc
 1    affirmations,  subpoena witnesses, take evidence, and require
 2    the production of any books and  records,  papers,  or  other
 3    documents in this State at the request of a securities agency
 4    of  another state, if the activities constituting the alleged
 5    violation for which the information is  sought  would  be  in
 6    violation  of  Section  12  of this Act if the activities had
 7    occurred in this State.
 8        (3)  The Circuit Court of any County of this State,  upon
 9    application  of the Secretary of State or a person designated
10    by him or her may order  the  attendance  of  witnesses,  the
11    production   of  books  and  records,  papers,  accounts  and
12    documents and the giving of testimony before the Secretary of
13    State or a person designated by him or her; and  any  failure
14    to  obey  the order may be punished by the Circuit Court as a
15    contempt thereof.
16        (4)  The fees of subpoenaed witnesses under this Act  for
17    attendance  and travel shall be the same as fees of witnesses
18    before the Circuit Courts of this State, to be paid when  the
19    witness  is  excused  from  further attendance, provided, the
20    witness is subpoenaed at the instance  of  the  Secretary  of
21    State;  and  payment of the fees shall be made and audited in
22    the same manner as other expenses of the Secretary of State.
23        (5)  Whenever a subpoena is issued at the  request  of  a
24    complainant  or  respondent as the case may be, the Secretary
25    of State may require that the cost of service and the fee  of
26    the witness shall be borne by the party at whose instance the
27    witness is summoned.
28        (6)  The  Secretary  of  State shall have power at his or
29    her discretion, to require a deposit to cover the cost of the
30    service and witness fees and the payment of the legal witness
31    fee and mileage to the witness served with subpoena.
32        (7)  A subpoena issued under this Act shall be served  in
33    the same manner as a subpoena issued out of a circuit court.
34        (8)  The  Secretary  of  State  may in any investigation,
 
SB575 Engrossed             -30-               LRB9206482ARgc
 1    audits, examinations, or  inspections  cause  the  taking  of
 2    depositions  of persons residing within or without this State
 3    in the manner provided in civil actions  under  the  laws  of
 4    this State.
 5        E.  Anything in this Act to the contrary notwithstanding:
 6             (1)  If  the  Secretary of State shall find that the
 7        offer or sale or proposed offer  or  sale  or  method  of
 8        offer  or  sale  of any securities by any person, whether
 9        exempt or not, in this State,  is  fraudulent,  or  would
10        work  or  tend  to  work  a  fraud or deceit, or is being
11        offered or sold in violation of Section 12, or there  has
12        been  a  failure  or  refusal  to submit any notification
13        filing or fee required under this Act, the  Secretary  of
14        State  may by written order prohibit or suspend the offer
15        or sale of securities by that person or  deny  or  revoke
16        the  registration of the securities or the exemption from
17        registration for the securities.
18             (2)  If the Secretary of State shall find  that  any
19        person has violated subsection C, D, E, F, G, H, I, J, or
20        K  of  Section 12 of this Act, the Secretary of State may
21        by written order temporarily or permanently  prohibit  or
22        suspend   the   person   from  offering  or  selling  any
23        securities,  any  mineral  investment  contract,  or  any
24        mineral  deferred  delivery  contract  in   this   State,
25        provided  that  any person who is the subject of an order
26        of permanent prohibition may petition  the  Secretary  of
27        State for a hearing to present evidence of rehabilitation
28        or  change  in  circumstances justifying the amendment or
29        termination of the order of permanent prohibition.
30             (3)  If the Secretary of State shall find  that  any
31        person  is  engaging  or  has  engaged in the business of
32        selling or offering for sale securities as  a  dealer  or
33        salesperson  or  is  acting or has acted as an investment
34        adviser, investment adviser  representative,  or  federal
 
SB575 Engrossed             -31-               LRB9206482ARgc
 1        covered  investment adviser, without prior thereto and at
 2        the time thereof having complied with the registration or
 3        notice filing requirements of this Act, the Secretary  of
 4        State may by written order prohibit or suspend the person
 5        from  engaging in the business of selling or offering for
 6        sale securities, or  acting  as  an  investment  adviser,
 7        investment  adviser  representative,  or  federal covered
 8        investment adviser, in this State.
 9             (4)  In addition to any  other  sanction  or  remedy
10        contained  in  this subsection E, the Secretary of State,
11        after finding that any provision of  this  Act  has  been
12        violated,   may  impose  a  fine  as  provided  by  rule,
13        regulation or  order  not  to  exceed  $10,000  for  each
14        violation  of  this Act, and may issue an order of public
15        censure against the violator, and may charge as costs  of
16        investigation    all   reasonable   expenses,   including
17        attorney's fees and witness fees.
18        F. (1)  The Secretary of State shall not deny, suspend or
19    revoke  the registration of securities, suspend or revoke the
20    registration of a dealer, salesperson or investment  adviser,
21    prohibit  or  suspend  the  offer  or sale of any securities,
22    prohibit or suspend any person from offering or  selling  any
23    securities  in  this  State,  prohibit or suspend a dealer or
24    salesperson from engaging  in  the  business  of  selling  or
25    offering  for  sale  securities, prohibit or suspend a person
26    from acting as  an  investment  adviser  or  federal  covered
27    investment  adviser,  impose  any  fine for violation of this
28    Act, issue an order of  public  censure,  or  enter  into  an
29    agreed  settlement  except  after  an opportunity for hearing
30    upon not less than 10 days notice given by  personal  service
31    or    registered  mail  or  certified  mail,  return  receipt
32    requested, to the person or persons concerned.   Such  notice
33    shall  state  the  date and time and place of the hearing and
34    shall contain a brief statement of the proposed action of the
 
SB575 Engrossed             -32-               LRB9206482ARgc
 1    Secretary of State and the grounds for the  proposed  action.
 2    A  failure  to  appear at the hearing or otherwise respond to
 3    the allegations set forth in  the  notice  of  hearing  shall
 4    constitute  an  admission  of  any  facts alleged therein and
 5    shall constitute sufficient basis to enter an order.
 6        (2)  Anything   herein   contained   to   the    contrary
 7    notwithstanding,  the  Secretary  of  State  may  temporarily
 8    prohibit  or  suspend, for a maximum period of 90 days, by an
 9    order  effective  immediately,   the   offer   or   sale   or
10    registration  of  securities,  the  registration of a dealer,
11    salesperson,  investment  adviser,  or   investment   adviser
12    representative,  or  the  offer  or sale of securities by any
13    person, or  the  business  of  rendering  investment  advice,
14    without  the  notice  and  prior  hearing  in this subsection
15    prescribed, if the Secretary of State shall  in  his  or  her
16    opinion,  based  on  credible  evidence, deem it necessary to
17    prevent an imminent violation  of  this  Act  or  to  prevent
18    losses  to  investors which the Secretary of State reasonably
19    believes will occur as a result of a prior violation of  this
20    Act.  Immediately after taking action without such notice and
21    hearing,  the  Secretary of State shall deliver a copy of the
22    temporary order to the respondent named therein  by  personal
23    service  or registered mail or certified mail, return receipt
24    requested.  The temporary order shall set forth  the  grounds
25    for  the  action  and  shall  advise  that the respondent may
26    request a hearing as soon as reasonably practicable, that the
27    request for a hearing will not stop the effectiveness of  the
28    temporary  order  and  that respondent's failure to request a
29    hearing within 30 days after the date of  the  entry  of  the
30    temporary  order  shall  constitute an admission of any facts
31    alleged therein and shall constitute sufficient basis to make
32    the temporary order final.  Any provision of  this  paragraph
33    (2)  to  the contrary notwithstanding, the Secretary of State
34    may not pursuant to the  provisions  of  this  paragraph  (2)
 
SB575 Engrossed             -33-               LRB9206482ARgc
 1    suspend  the  registration  of  a  dealer,  limited  Canadian
 2    dealer,   salesperson,   investment  adviser,  or  investment
 3    adviser  representative  based  upon  sub-paragraph  (n)   of
 4    paragraph  (l)  of  subsection  E of Section 8 of this Act or
 5    revoke  the  registration  of  securities   or   revoke   the
 6    registration  of  any dealer, salesperson, investment adviser
 7    representative, or investment adviser.
 8        (3)  The Secretary of State may issue a  temporary  order
 9    suspending  or delaying the effectiveness of any registration
10    of securities under subsection A or B of Section 5, 6 or 7 of
11    this Act subsequent to and upon the basis of the issuance  of
12    any  stop,  suspension or similar order by the Securities and
13    Exchange Commission with respect to the securities which  are
14    the  subject  of  the registration under subsection A or B of
15    Section 5, 6 or 7 of this Act, and  the  order  shall  become
16    effective  as  of  the  date and time of effectiveness of the
17    Securities and Exchange Commission order and shall be vacated
18    automatically at such time as the order of the Securities and
19    Exchange Commission is no longer in effect.
20        (4)  When  the  Secretary  of   State   finds   that   an
21    application  for  registration  as  a  dealer, salesperson or
22    investment adviser should be denied, the Secretary  of  State
23    may  enter  an  order  denying the registration.  Immediately
24    after taking  such  action,  the  Secretary  of  State  shall
25    deliver  a  copy of the order to the respondent named therein
26    by personal service or registered  mail  or  certified  mail,
27    return  receipt requested.  The order shall state the grounds
28    for the action and that the matter will be  set  for  hearing
29    upon written request filed with the Secretary of State within
30    30  days  after the receipt of the request by the respondent.
31    The respondent's failure to request a hearing within 30  days
32    after  receipt  of the order shall constitute an admission of
33    any facts alleged therein and shall make the order final.  If
34    a hearing is held,  the  Secretary  of  State  shall  affirm,
 
SB575 Engrossed             -34-               LRB9206482ARgc
 1    vacate, or modify the order.
 2        (5)  The  findings and decision of the Secretary of State
 3    upon the conclusion of each final hearing  held  pursuant  to
 4    this  subsection shall be set forth in a written order signed
 5    on behalf of the Secretary of State by his  or  her  designee
 6    and shall be filed as a public record.  All hearings shall be
 7    held  before  a  person designated by the Secretary of State,
 8    and appropriate records thereof shall be kept.
 9        (6)  Notwithstanding  the  foregoing,  the  Secretary  of
10    State, after notice and opportunity for hearing, may  at  his
11    or   her   discretion   enter   into  an  agreed  settlement,
12    stipulation or consent order with a respondent in  accordance
13    with  the provisions of the Illinois Administrative Procedure
14    Act.  The provisions of the agreed settlement, stipulation or
15    consent order shall have the full  force  and  effect  of  an
16    order issued by the Secretary of State.
17        (7)  Anything    in    this    Act    to   the   contrary
18    notwithstanding, whenever the Secretary of State finds that a
19    person is currently expelled from, refused membership  in  or
20    association  with,  or  limited in any material capacity by a
21    self-regulatory organization  registered  under  the  Federal
22    1934  Act  or the Federal 1974 Act because of a fraudulent or
23    deceptive  act  or  a  practice  in  violation  of  a   rule,
24    regulation,    or    standard   duly   promulgated   by   the
25    self-regulatory organization, the Secretary of State may,  at
26    his  or her discretion, enter a Summary Order of Prohibition,
27    which shall prohibit the offer or  sale  of  any  securities,
28    mineral  investment  contract,  or  mineral deferred delivery
29    contract by the person in this State.  The order  shall  take
30    effect  immediately upon its entry.  Immediately after taking
31    the action the Secretary of State shall deliver a copy of the
32    order  to  the  named  Respondent  by  personal  service   or
33    registered  mail or certified mail, return receipt requested.
34    A person who is the subject of an Order  of  Prohibition  may
 
SB575 Engrossed             -35-               LRB9206482ARgc
 1    petition  the  Secretary  of  State  for a hearing to present
 2    evidence  of  rehabilitation  or  change   in   circumstances
 3    justifying  the  amendment  or  termination  of  the Order of
 4    Prohibition.
 5        G.  No administrative action  shall  be  brought  by  the
 6    Secretary  of  State  for  relief  under  this Act or upon or
 7    because of any of the matters for which relief is granted  by
 8    this  Act  after the earlier to occur of (i) 3 years from the
 9    date upon which the Secretary of State had  notice  of  facts
10    which  in  the exercise of reasonable diligence would lead to
11    actual knowledge of the alleged violation of the Act, or (ii)
12    5  years  from  the  date  on  which  the  alleged  violation
13    occurred.
14        H.  The action of the  Secretary  of  State  in  denying,
15    suspending, or revoking the registration of a dealer, limited
16    Canadian   dealer,   salesperson,   investment   adviser,  or
17    investment adviser representative, in prohibiting any  person
18    from   engaging  in  the  business  of  offering  or  selling
19    securities  as  a  dealer,  limited   Canadian   dealer,   or
20    salesperson,  in  prohibiting or suspending the offer or sale
21    of securities by any person, in  prohibiting  a  person  from
22    acting  as  an investment adviser, federal covered investment
23    adviser, or investment adviser  representative,  in  denying,
24    suspending,  or  revoking  the registration of securities, in
25    prohibiting or suspending the offer or sale or proposed offer
26    or sale of securities, in imposing any fine for violation  of
27    this  Act,  or  in  issuing  any  order  shall  be subject to
28    judicial review in  the  Circuit  Courts  Court  of  Cook  or
29    Sangamon   any   Counties   county   in   this   State.   The
30    Administrative Review Law shall apply  to  and  govern  every
31    action  for the judicial review of final actions or decisions
32    of the Secretary of State under this Act.
33        I.  Notwithstanding any other provisions of this  Act  to
34    the  contrary,  whenever  it shall appear to the Secretary of
 
SB575 Engrossed             -36-               LRB9206482ARgc
 1    State that any person is engaged or about to  engage  in  any
 2    acts  or  practices  which  constitute  or  will constitute a
 3    violation of this Act or of any rule or regulation prescribed
 4    under authority of this Act, the Secretary of  State  may  at
 5    his or her discretion, through the Attorney General:
 6             (1)  file  a  complaint  and  apply  for a temporary
 7        restraining order  without  notice,  and  upon  a  proper
 8        showing the court may enter a temporary restraining order
 9        without bond, to enforce this Act; and
10             (2)  file a complaint and apply for a preliminary or
11        permanent injunction, and, after notice and a hearing and
12        upon  a proper showing, the court may grant a preliminary
13        or permanent injunction and may order  the  defendant  to
14        make  an offer of rescission with respect to any sales or
15        purchases of securities, mineral investment contracts, or
16        mineral deferred delivery  contracts  determined  by  the
17        court to be unlawful under this Act.
18        The  court shall further have jurisdiction and authority,
19    in addition to the penalties and other remedies in  this  Act
20    provided,  to enter an order for the appointment of the court
21    or a person as a receiver, conservator, ancillary receiver or
22    ancillary conservator for the defendant  or  the  defendant's
23    assets  located  in  this  State,  or to require restitution,
24    damages or disgorgement of profits on behalf of the person or
25    persons injured by  the  act  or  practice  constituting  the
26    subject  matter  of  the action, and may assess costs against
27    the defendant for the use of the  State;  provided,  however,
28    that  the  civil  remedies of rescission and appointment of a
29    receiver,  conservator,  ancillary  receiver   or   ancillary
30    conservator  shall  not  be  available  against any person by
31    reason of the failure to file with the Secretary of State, or
32    on account of the contents of, any report  of  sale  provided
33    for  in  subsection  G  or  P  of Section 4, paragraph (2) of
34    subsection D of  Sections  5  and  6,  or  paragraph  (2)  of
 
SB575 Engrossed             -37-               LRB9206482ARgc
 1    subsection  F  of Section 7 of this Act. Appeals may be taken
 2    as in other civil cases.
 3        J.  In no case shall the Secretary of State,  or  any  of
 4    his or her employees or agents, in the administration of this
 5    Act,  incur any official or personal liability by instituting
 6    an injunction or other proceeding or by  denying,  suspending
 7    or  revoking  the registration of a dealer or salesperson, or
 8    by  denying,  suspending  or  revoking  the  registration  of
 9    securities or prohibiting the offer or sale of securities, or
10    by suspending or prohibiting any  person  from  acting  as  a
11    dealer,  limited  Canadian  dealer,  salesperson,  investment
12    adviser,   or   investment  adviser  representative  or  from
13    offering or selling securities.
14        K.  No provision  of  this  Act  shall  be  construed  to
15    require or to authorize the Secretary of State to require any
16    investment  adviser  or  federal  covered  investment adviser
17    engaged  in  rendering  investment  supervisory  services  to
18    disclose the identity, investments, or affairs of any  client
19    of  the  investment  adviser  or  federal  covered investment
20    adviser, except insofar as the disclosure may be necessary or
21    appropriate  in  a  particular  proceeding  or  investigation
22    having as its object the enforcement of this Act.
23        L.  Whenever,  after  an  examination,  investigation  or
24    hearing, the Secretary of State deems it of  public  interest
25    or  advantage,  he or she may certify a record to the State's
26    Attorney of the  county  in  which  the  act  complained  of,
27    examined  or  investigated occurred.  The State's Attorney of
28    that county within 90 days after receipt of the record  shall
29    file  a  written  statement at the Office of the Secretary of
30    State, which statement shall set forth the action taken  upon
31    the  record,  or  if no action has been taken upon the record
32    that fact, together  with  the  reasons  therefor,  shall  be
33    stated.
34        M.  The Secretary of State may initiate, take, pursue, or
 
SB575 Engrossed             -38-               LRB9206482ARgc
 1    prosecute any action authorized or permitted under Section 6d
 2    of the Federal 1974 Act.
 3        N. (1)  Notwithstanding  any provision of this Act to the
 4    contrary,    to     encourage     uniform     interpretation,
 5    administration,  and  enforcement  of  the provisions of this
 6    Act, the Secretary of State may cooperate with the securities
 7    agencies or administrators of one or  more  states,  Canadian
 8    provinces  or territories, or another country, the Securities
 9    and  Exchange  Commission,  the  Commodity  Futures   Trading
10    Commission,  the  Securities Investor Protection Corporation,
11    any self-regulatory organization, and  any  governmental  law
12    enforcement or regulatory agency.
13        (2)  The  cooperation authorized by paragraph (1) of this
14    subsection includes, but is not limited to, the following:
15             (a)  establishing  or  participating  in  a  central
16        depository or depositories for  registration  under  this
17        Act and for documents or records required under this Act;
18             (b)  making  a joint audit, inspection, examination,
19        or investigation;
20             (c)  holding a joint administrative hearing;
21             (d)  filing  and  prosecuting  a  joint   civil   or
22        criminal proceeding;
23             (e)  sharing and exchanging personnel;
24             (f)  sharing    and   exchanging   information   and
25        documents; or
26             (g)  issuing any joint statement or policy.
27    (Source: P.A. 90-70, eff. 7-8-97; 91-809, eff. 1-1-01.)

28        (815 ILCS 5/14) (from Ch. 121 1/2, par. 137.14)
29        Sec. 14.  Sentence.
30        A.  Any person who violates  any  of  the  provisions  of
31    subsection  A,  B,  C, or D of Section 12 or paragraph (3) of
32    subsection K of Section 12 of this Act shall be guilty  of  a
33    Class  4  felony. A misdemeanor; provided that if such person
 
SB575 Engrossed             -39-               LRB9206482ARgc
 1    commits such offense with knowledge of the existence, meaning
 2    or application of the respective subsection  as  provided  in
 3    Section  4-3(c) of the Criminal Code of 1961, or, in the case
 4    of a failure to comply with the terms of  any  order  of  the
 5    Secretary  of State as provided under subsection D of Section
 6    12 of this Act, with  knowledge  of  the  existence  of  such
 7    order, such person shall be guilty of a Class 4 felony.
 8        B.  Any  person  who  violates  any  of the provisions of
 9    subsection E, F, G, H, I, or J, or paragraph (1)  or  (2)  of
10    subsection  K  of Section 12 of this Act shall be guilty of a
11    Class 3 felony.
12        B-5.  A person who violates a provision of subsection  E,
13    F,  G,  H, I, or J or paragraph (1) or (2) of subsection K of
14    Section 12 of this Act by use of a plan, program, or campaign
15    that is conducted  using  one  or  more  telephones  for  the
16    purpose  of  inducing  the  purchase or sale of securities is
17    guilty of a Class 2 felony.
18        B-10.  A  person  who  in  the  course  of  violating   a
19    provision  of subsection E, F, G, H, I, or J or paragraph (1)
20    or (2) of subsection K of Section 12 of this  Act  induces  a
21    person  60  years  of  age  or  older  to  purchase  or  sell
22    securities is guilty of a Class 2 felony.
23        C.  No prosecution for violation of any provision of this
24    Act  shall  bar  or  be  barred  by  any  prosecution for the
25    violation of any other provision of this Act or of any  other
26    statute;  but  all  prosecutions under this Act or based upon
27    any provision of this Act must be commenced  within  3  years
28    after  the  violation  upon  which such prosecution is based;
29    provided however,  that  if  the  accused  has  intentionally
30    concealed  evidence  of a violation of subsection E, F, G, H,
31    I, J, or  K  of  Section  12  of  this  Act,  the  period  of
32    limitation  prescribed  herein  shall  be  extended  up to an
33    additional 2  years  after  the  proper  prosecuting  officer
34    becomes  aware  of the offense but in no such event shall the
 
SB575 Engrossed             -40-               LRB9206482ARgc
 1    period of limitation so extended be more than 2 years  beyond
 2    the expiration of the period otherwise applicable.
 3        D.  For  the  purposes  of this Act all persons who shall
 4    sell or offer for sale, or who shall  purchase  or  offer  to
 5    purchase,  securities  in violation of the provisions of this
 6    Act, or who shall in any manner knowingly authorize,  aid  or
 7    assist  in any unlawful sale or offering for sale or unlawful
 8    purchase or offer to purchase shall be deemed equally guilty,
 9    and may be tried and punished in the  county  in  which  said
10    unlawful  sale  or  offering for sale or unlawful purchase or
11    offer to purchase was made, or in the  county  in  which  the
12    securities  so  sold  or  offered for sale or so purchased or
13    offered to be purchased were  delivered  or  proposed  to  be
14    delivered  to the purchaser thereof or by the seller thereof,
15    as the case may be.
16        E.  Any person who shall be convicted of a second or  any
17    subsequent  offense  specified  in  subsection A, B, C, D, or
18    paragraph (3) of subsection K of Section 12 of this Act shall
19    be guilty of a Class 3 felony, and any person  who  shall  be
20    convicted  of a second or any subsequent offense specified in
21    subsection E, F, G, H, I, J,  or  paragraph  (1)  or  (2)  of
22    subsection  K  of Section 12 of this Act shall be guilty of a
23    Class 2 felony.
24        F.  If any person referred to in this Section  is  not  a
25    natural  person, it may upon conviction of a first offense be
26    fined up to  $25,000,  and  if  convicted  of  a  second  and
27    subsequent  offense,  may be fined up to $50,000, in addition
28    to any other sentence authorized by law.
29        G.  This Act shall not be construed to repeal  or  affect
30    any  law  now  in  force  relating  to  the  organization  of
31    corporations  in  this  State or the admission of any foreign
32    corporation to do business in this State.
33        H.  For the purposes of this Act, all persons who sell or
34    offer for sale, or who purchase  or  offer  to  purchase  any
 
SB575 Engrossed             -41-               LRB9206482ARgc
 1    mineral  investment  contract  or  mineral  deferred delivery
 2    contract in violation of the provisions of this Act  or  who,
 3    in  any  manner,  knowingly  authorize, aid, or assist in any
 4    unlawful sale or offer for sale or unlawful purchase or offer
 5    to  purchase  any  mineral  investment  contract  or  mineral
 6    deferred delivery contract shall be deemed equally guilty and
 7    may be tried and punished in the county in which the unlawful
 8    sale or offer for sale  or  unlawful  purchase  or  offer  to
 9    purchase  any mineral investment contract or mineral deferred
10    delivery contract was made or in  the  county  in  which  the
11    mineral  investment  contract  or  mineral  deferred delivery
12    contract so sold or offered  for  sale  or  so  purchased  or
13    offered  to  be  purchased  was  delivered  or proposed to be
14    delivered to the purchaser thereof or by the seller  thereof,
15    as the case may be, or in Sangamon County.
16    (Source: P.A. 90-667, eff. 7-30-98.)

17        Section  10.  The  Illinois  Loan  Brokers Act of 1995 is
18    amended by changing Sections 15-5.15, 15-5.20, 15-20,  15-25,
19    15-45, 15-50, 15-85 and by adding Section 15-95 as follows:

20        (815 ILCS 175/15-5.15)
21        Sec. 15-5.15.  Loan broker.
22        (a)  "Loan  Broker" means any person who, in return for a
23    fee, commission,  or  other  compensation  from  any  person,
24    promises  to  procure  a  loan  for  any person or assist any
25    person in procuring a loan  from  any  third  party,  or  who
26    promises  to  consider  whether  or not to make a loan to any
27    person.
28        (b)  Loan broker does not include any of the following:
29             (1)  Any bank, savings bank, trust company,  savings
30        and loan association, credit union or any other financial
31        institution  regulated by any agency of the United States
32        or authorized to do business in this State.
 
SB575 Engrossed             -42-               LRB9206482ARgc
 1             (2)  Any person authorized to sell and service loans
 2        for the federal  National  Mortgage  Association  or  the
 3        federal  Home Loan Mortgage Corporation, issue securities
 4        backed by the Government National  Mortgage  Association,
 5        make  loans  insured by the federal Department of Housing
 6        and Urban  Development,  make  loans  guaranteed  by  the
 7        federal    Veterans   Administration,   or   act   as   a
 8        correspondent of loans insured by the federal  Department
 9        of  Housing  and  Urban  Development or guaranteed by the
10        federal Veterans Administration.
11             (3)  Any insurance producer or company authorized to
12        do business in this State.
13             (4)  Any person arranging financing for the sale  of
14        the person's product.
15             (5)  Any person authorized to conduct business under
16        the Residential Mortgage License Act of 1987.
17             (6)  Any  person  authorized  to do business in this
18        State  and  regulated  by  the  Department  of  Financial
19        Institutions or the Office of Banks and Real Estate.
20    (Source: P.A. 89-209, eff. 1-1-96; 89-508, eff. 7-3-96.)

21        (815 ILCS 175/15-5.20)
22        Sec. 15-5.20. Person.  "Person" means  an  individual,  a
23    corporation, trust, limited liability company, partnership, a
24    joint   stock   company,   limited   liability   partnership,
25    incorporated  or  unincorporated  association,  or  any other
26    entity.
27    (Source: P.A. 89-209, eff. 1-1-96.)

28        (815 ILCS 175/15-20)
29        Sec. 15-20.  Renewal of registration.
30        (a)  A loan broker  may  not  continue  engaging  in  the
31    business  of  loan brokering unless the broker's registration
32    is  renewed  annually.   A  loan  broker  shall   renew   the
 
SB575 Engrossed             -43-               LRB9206482ARgc
 1    registration  by filing with the Secretary of State, at least
 2    30  days  before  the  expiration  of  the  registration,  an
 3    application containing any information the Secretary of State
 4    may require by rule or regulation or order  to  indicate  any
 5    material   change  from  the  information  contained  in  the
 6    applicant's original application or any previous application.
 7        (b)  An application for renewal must be accompanied by  a
 8    filing  fee  in  the  amount  specified  in subsection (a) of
 9    Section 15-25 of this Act.  The application and  fee  is  not
10    returnable in any event.
11        (c)  Notwithstanding   the  foregoing,  applications  for
12    renewal of registration  of loan brokers may be filed  within
13    30   days   following  the    expiration  of the registration
14    provided that the applicant pays the annual registration  fee
15    together  with  an  additional  amount  equal  to  the annual
16    registration   fee   and   files  any  other  information  or
17    documents that the Secretary  of  State  may   prescribe   by
18    rule   or  order.   Any  application  filed  within  30  days
19    following  the  expiration  of  the   registration  shall  be
20    automatically  effective  as  of  the  time  of  the  earlier
21    expiration provided that the proper fee has been paid  to the
22    Secretary of State.
23    (Source: P.A. 89-209, eff. 1-1-96.)

24        (815 ILCS 175/15-25)
25        Sec. 15-25.  Fees and funds; accounting  and  deposit  in
26    Securities Audit and Enforcement Fund.
27        (a)  the  Secretary  of State shall by rule or regulation
28    impose   and   shall   collect   fees   necessary   for   the
29    administration of this Act including,  but  not  limited  to,
30    fees for the following purposes:
31             (1)  filing an application pursuant to Section 15-15
32        of this Act;
33             (2)  examining  an  application  pursuant to Section
 
SB575 Engrossed             -44-               LRB9206482ARgc
 1        15-15 or Section 15-20 of this Act;
 2             (3)  registering a loan broker pursuant  to  Section
 3        15-15 of this Act;
 4             (4)  renewing registration of a loan broker pursuant
 5        to Section 15-20 of this Act; or
 6             (5)  failure  to file or file timely any document or
 7        information required under this Act;.
 8             (6)  acceptance of service of  process  pursuant  to
 9        Section 15-95;
10             (7)  issuance  of  certification pursuant to Section
11        15-50; or
12             (8)  late  registration  fee  pursuant  to   Section
13        15-20(c).
14        (b)  The  Secretary  of State may, by rule or regulation,
15    raise or lower any fee imposed by this Act, and which  he  or
16    she is authorized by law to collect under this Act.
17        (c)  All  fees  and funds accruing for the administration
18    of this Act shall be accounted for by the Secretary of  State
19    and  shall  be  deposited  with the State Treasurer who shall
20    deposit them in the Securities Audit and Enforcement Fund.
21    (Source: P.A. 89-209, eff. 1-1-96.)

22        (815 ILCS 175/15-45)
23        Sec. 15-45.  Powers  of  Secretary  of  State;  privilege
24    against self-incrimination; admissibility into evidence.
25        (a)  The Secretary of State may do the following:
26             (1)  Adopt  rules  and regulations to implement this
27        Act.
28             (2)  Make investigations and examinations:
29                  (A)  in connection  with  any  application  for
30             registration  of any loan broker or any registration
31             already granted; or
32                  (B)  whenever it appears to  the  Secretary  of
33             State, upon the basis of a complaint or information,
 
SB575 Engrossed             -45-               LRB9206482ARgc
 1             that reasonable grounds exist for the belief that an
 2             investigation   or   examination   is  necessary  or
 3             advisable for the more complete  protection  of  the
 4             interests of the public.
 5             (3)  Charge as costs of investigation or examination
 6        all  reasonable  expenses,  including a per diem prorated
 7        upon the salary of any employee and actual traveling  and
 8        hotel  expenses.   All reasonable expenses are to be paid
 9        by  the  party  or   parties   under   investigation   or
10        examination.
11             (4)  Issue  notices  and orders, including cease and
12        desist notices and orders, after making an  investigation
13        or  examination  under item (2) of subsection (a) of this
14        Section.  The Secretary of State may also bring an action
15        to prohibit  a  person  from  violating  this  Act.   The
16        Secretary  of State shall notify the person that an order
17        or notice has been issued, the reasons for it and that  a
18        hearing  will be set in accordance with the provisions of
19        the  Illinois  Administrative  Procedure  Act  after  the
20        Secretary of State receives a written  request  from  the
21        person requesting a hearing.
22             (5)  Sign   all   orders,  official  certifications,
23        documents or papers issued under this Act or delegate the
24        authority to sign any  of  those  items  to  his  or  her
25        designee.
26             (6)  Hold and conduct hearings.
27             (7)  Hear evidence.
28             (8)  Conduct  inquiries  with  or  without hearings.
29        Inquiries shall include oral  and  written  requests  for
30        information.  A  failure  to respond to a written request
31        for information may be deemed  a violation  of  this  Act
32        and  the Secretary of State may issue notices and orders,
33        including cease and desist notices  and  orders,  against
34        the violators.
 
SB575 Engrossed             -46-               LRB9206482ARgc
 1             (9)  Receive   reports  of  investigators  or  other
 2        officers or employees of the State  of  Illinois  or  any
 3        municipal  corporation or governmental subdivision within
 4        the State.
 5             (10)  (Blank). Administer oaths or cause them to  be
 6        administered.
 7             (11)  (Blank). Subpoena witnesses and compel them to
 8        attend and testify.
 9             (12)  (Blank).   Compel  the  production  of  books,
10        records and other documents.
11             (13)  Order depositions to be taken of  any  witness
12        residing  within  or  without the State.  The depositions
13        shall be taken  in  the  manner  prescribed  by  law  for
14        depositions  in  civil actions and made returnable to the
15        Secretary of State.
16             (14) For the purpose of all investigations,  audits,
17        examinations,  or inspections that, in the opinion of the
18        Secretary of State are necessary  and    proper  for  the
19        enforcement  of  this  Act,  the  Secretary of State or a
20        person  designated  by  him  or  her  is  empowered    to
21        administer  oaths  and  affirmations, subpoena witnesses,
22        take evidence, and require by subpoena  or  other  lawful
23        means  provided  by  this Act or the rules adopted by the
24        Secretary of  State  the  production  of  any  books  and
25        records,  papers, or other  documents that  the Secretary
26        of State or a person  designated  by  him  or  her  deems
27        relevant or material to the inquiry.
28        (b)  If  any  person  refuses  to  obey a subpoena issued
29    under this Act, the Secretary of State may  make  application
30    to any court of competent jurisdiction to order the person to
31    appear  before the Secretary of State and produce documentary
32    evidence or give evidence as directed in the  subpoena.   The
33    failure  to  obey  the order of the court shall be subject to
34    punishment by the court as contempt of court.
 
SB575 Engrossed             -47-               LRB9206482ARgc
 1        (c)  No person shall be excused  from  complying  with  a
 2    subpoena  on  the  ground  that  the  testimony  or  evidence
 3    required  may  tend  to incriminate the person or subject the
 4    person to a penalty or  forfeiture.   No  individual  may  be
 5    prosecuted  or subject to any penalty or forfeiture for or on
 6    account  of  any  transaction,  matter  or  thing  which  the
 7    individual is compelled to testify or produce evidence, after
 8    claiming the privilege against self-incrimination.   However,
 9    the  individual  so  testifying  shall  not  be  exempt  from
10    prosecution  and  punishment  for  perjury  committed  in  so
11    testifying.
12        (d)  In any prosecution, action, suit or proceeding based
13    upon  or  arising out of this Act, the Secretary of State may
14    sign a certificate showing compliance or non-compliance  with
15    this  Act  by  any  loan broker.  This shall constitute prima
16    facie evidence of compliance or non-compliance with this  Act
17    and shall be admissible in evidence in any court.
18        (e)  Whenever  it  shall appear to the Secretary of State
19    that any person is engaged or about to engage in any acts  or
20    practices  which constitute or will constitute a violation of
21    this Act, or of  any  rule  or  regulation  prescribed  under
22    authority  of  this Act, the Secretary of State may at his or
23    her discretion, through the Attorney General:
24             (1)  File a complaint  and  apply  for  a  temporary
25        restraining  order  without  notice,  and  upon  a proper
26        showing the court may enter a temporary restraining order
27        without a bond, to enforce this Act.
28             (2)  File a complaint and apply for a preliminary or
29        permanent injunction, and, after notice and  hearing  and
30        upon  a proper showing, the court may grant a preliminary
31        or permanent injunction and may order  the  defendant  to
32        make  an offer of rescission with respect to any contract
33        for loan brokerage services determined by the court to be
34        unlawful under this Act.
 
SB575 Engrossed             -48-               LRB9206482ARgc
 1        (f)  The  court  shall  further  have  jurisdiction   and
 2    authority, in addition to the penalties and other remedies in
 3    this  Act  provided, to enter an order for the appointment of
 4    the court or a person as a receiver,  conservator,  ancillary
 5    receiver  or  ancillary  conservator for the defendant or the
 6    defendant's assets located  in  this  State,  or  to  require
 7    restitution,  damages or disgorgement of profits on behalf of
 8    the  person  or  persons  injured  by  the  act  or  practice
 9    constituting the subject matter of the action, and may assess
10    costs and attorneys fees against the defendant for the use of
11    the State.
12    (Source: P.A. 90-70, eff. 7-8-97; 91-357, eff. 7-29-99.)

13        (815 ILCS 175/15-50)
14        Sec. 15-50.  Evidentiary matters.
15        (a)  Certified copies of documents or records  admissible
16    in  actions  or  proceedings  under  this Act.  Copies of any
17    statement or document filed with the Secretary of State,  and
18    copies of any records of the Secretary of State, certified to
19    by  the Secretary of State are admissible in any prosecution,
20    action, suit or proceeding based upon, or arising out  of  or
21    under,  the  provisions of this Act to the same effect as the
22    original of the statement, document or  record  would  be  if
23    actually produced.
24        (b)  In any action, administrative, civil, or criminal, a
25    certificate  under the seal of the State of Illinois,  signed
26    by  the  Secretary  of State,  attesting  to  the  filing  of
27    or  the  absence of the filing of any document or record with
28    the Secretary of State  under  this  Act,   shall  constitute
29    prima  facie  evidence of the filing or of the absence of the
30    filing,    and  shall  be  admissible  in  evidence  in   any
31    administrative, criminal, or civil action.
32        (c)  Any certificate pursuant to subsection (a) or (b) of
33    this  Section  shall  be  furnished by the Secretary of State
 
SB575 Engrossed             -49-               LRB9206482ARgc
 1    upon  application  therefor in  the  form and in  the  manner
 2    prescribed  by  the  Secretary of State by rule, and shall be
 3    accompanied by payment  of  a   non-refundable  certification
 4    fee  in   the  amount  specified  by  rule  or  order  of the
 5    Secretary of State.
 6    (Source: P.A. 89-209, eff. 1-1-96.)

 7        (815 ILCS 175/15-85)
 8        Sec. 15-85.  Fraudulent and prohibited acts.
 9        (a)  A loan  broker  shall  not,  in  connection  with  a
10    contract  for  the services of a loan broker, either directly
11    or indirectly, do any of the following:
12             (1) (a)  Employ any device,  scheme  or  article  to
13        defraud.
14             (2) (b)  Make  any  untrue  statements of a material
15        fact or omit to state a material fact necessary in  order
16        to   make   the   statements   made,   in  the  light  of
17        circumstances under which they are made, not misleading.
18             (3) (c)  Engage in any act, practice  or  course  of
19        business  that  operates  or  would operate as a fraud or
20        deceit upon any person.
21        (b)  A  loan  broker  shall  not   either   directly   or
22    indirectly do any of the following:
23             (1)  act as a loan broker without registration under
24        this Act unless exempt under the Act;
25             (2) fail to file with the  Secretary  of  State  any
26        application,  report,  document, or answer required to be
27        filed under the provisions of this Act or any  rule  made
28        by  the  Secretary of State pursuant to this Act, or fail
29        to comply with the terms of any order issued pursuant  to
30        this Act or any  rules made by the Secretary of State;
31             (3) fail to keep or maintain any records as required
32        under  the provisions of this Act or any rule made by the
33        Secretary of State pursuant to this Act.
 
SB575 Engrossed             -50-               LRB9206482ARgc
 1    (Source: P.A. 89-209, eff. 1-1-96.)

 2        (815 ILCS 175/15-95 new)
 3        Sec. 15-95. Service of process.
 4        (a)  A person acting as a loan broker, unless exempt from
 5    registration under this Act, shall constitute an  appointment
 6    of  the  Secretary  of  State,  or  his  or her successors in
 7    Office, by the person  to be the true and lawful attorney for
 8    the person upon whom may be served all lawful process in  any
 9    action  or  proceeding against the person, arising out of his
10    or her activities as a loan broker.
11        (b)  Service of process under this Section shall be  made
12    by serving a copy upon the Secretary of State or any employee
13    in his or her Office designated  by the Secretary of State to
14    accept  such  service  for  him or her, provided notice and a
15    copy of the process are, within 10 days of receipt,  sent  by
16    registered  mail or certified mail, return receipt requested,
17    by the plaintiff to the defendant, at the last known  address
18    of  the  defendant.   The  filing fee for service of  process
19    under  this Section  is  non-refundable  and  is  the  amount
20    established  in  Section 15-25 of this Act.  The Secretary of
21    State shall keep a record of all such  processes  that  shall
22    show the day of the service.

23        Section 15.  The Illinois Business Brokers Act of 1995 is
24    amended  by  changing  Sections 10-5.20, 10-20, 10-25, 10-40,
25    10-45, 10-50, 10-55, 10-85 and by adding  Section  10-125  as
26    follows:

27        (815 ILCS 307/10-5.20)
28        Sec.  10-5.20.   Person.  "Person" means an individual, a
29    corporation, a partnership, an  association,  a  joint  stock
30    company,  a  limited  liability  company, a limited liability
31    partnership, a trust, or any unincorporated organization,  or
 
SB575 Engrossed             -51-               LRB9206482ARgc
 1    any other entity.
 2    (Source: P.A. 89-209, eff. 1-1-96.)

 3        (815 ILCS 307/10-20)
 4        Sec. 10-20.  Renewal of registration.
 5        (a)  A  business  broker may not continue engaging in the
 6    business  of   business   brokering   unless   the   broker's
 7    registration  is  renewed  annually.  A business broker shall
 8    renew the registration by filing with the Secretary of State,
 9    at least 30 days before the expiration of  the  registration,
10    an  application  containing  any information the Secretary of
11    State may require to indicate any material  change  from  the
12    information contained in the applicant's original application
13    or any previous application.
14        (b)  An  application for renewal must be accompanied by a
15    filing fee in the  amount  specified  in  subsection  (a)  of
16    Section 10-25 of this Act, and shall not be returnable in any
17    event.
18        (c)  Notwithstanding   the  foregoing,  applications  for
19    renewal of registration  of business  brokers  may  be  filed
20    within   30    days    following   the    expiration  of  the
21    registration provided that  the  applicant  pays  the  annual
22    registration  fee together with an additional amount equal to
23    the  annual    registration   fee   and   files   any   other
24    information  or  documents  that  the  Secretary of State may
25    prescribe  by  rule or order.  Any application  filed  within
26    30  days  following the expiration of the  registration shall
27    be automatically effective as of  the  time  of  the  earlier
28    expiration provided that the proper fee has been paid  to the
29    Secretary of State.
30    (Source: P.A. 89-209, eff. 1-1-96.)

31        (815 ILCS 307/10-25)
32        Sec. 10-25.  Fees and funds.  All fees and funds accruing
 
SB575 Engrossed             -52-               LRB9206482ARgc
 1    for  the administration of this Act shall be accounted for by
 2    the Secretary of State and shall be deposited with the  State
 3    Treasurer  who shall deposit them in the Securities Audit and
 4    Enforcement Fund.
 5        (a)  The Secretary of State shall, by rule or regulation,
 6    impose and collect fees necessary for the  administration  of
 7    this  Act,  including  but  not  limited  to,  fees  for  the
 8    following purposes:
 9             (1)  filing an application pursuant to Section 10-10
10        of this Act;
11             (2)  examining  an  application pursuant to Sections
12        10-10 and 10-20 of this Act;
13             (3)  registering a  business  broker  under  Section
14        10-10 of this Act;
15             (4)  renewing  registration  of  a  business  broker
16        pursuant to Section 10-20 of this Act;
17             (5)  failure  to file or file timely any document or
18        information required under this Act;
19             (6)  (Blank);.
20             (7)  acceptance of service of  process  pursuant  to
21        Section 10-125;
22             (8)  issuance  of  certification pursuant to Section
23        10-50; and
24             (9)  late  registration  fee  pursuant  to   Section
25        10-20(c).
26        (b)  The  Secretary  of State may, by rule or regulation,
27    raise or lower any fee imposed by, and which  he  or  she  is
28    authorized by law to collect under, this Act.
29    (Source:  P.A.  90-70,  eff.  7-8-97;  91-194,  eff. 7-20-99;
30    91-534, eff. 1-1-00; 91-809, eff. 1-1-01.)

31        (815 ILCS 307/10-40)
32        Sec.  10-40.   Denial,  suspension   or   revocation   of
33    registration; orders and hearing.
 
SB575 Engrossed             -53-               LRB9206482ARgc
 1        (a)  The  Secretary  of State may deny, suspend or revoke
 2    the registration of a business broker if the business broker:
 3             (1)  Is insolvent.
 4             (2)  Has violated any provision of this Act.
 5             (3)  Has filed  with  the  Secretary  of  State  any
 6        document or statement containing any false representation
 7        of a material fact or omitting to state a material fact.
 8             (4)  Has  been convicted, within 10 years before the
 9        date of the application, renewal or review, of any  crime
10        involving fraud or deceit.
11             (5)  Has  been  found by any court or agency, within
12        10 years before the date of the application, renewal,  or
13        review,  to  have engaged in any activity involving fraud
14        or deceit.
15        (b)  The Secretary of State may not enter a  final  order
16    denying,  suspending,  or  revoking  the  registration  of  a
17    business  broker  without  prior  notice  to  all  interested
18    parties,  opportunity  for  a hearing and written findings of
19    fact and conclusions of law.  The Secretary of State  may  by
20    summary order deny, suspend, or revoke a registration pending
21    final  determination  of  any  proceeding under this Section.
22    Upon the entry of a summary order,  the  Secretary  of  State
23    shall promptly notify all interested parties that it has been
24    entered,  of the reasons for the summary order and, that upon
25    receipt by the Secretary of State of a written request from a
26    party, the matter will be set  for  hearing  which  shall  be
27    conducted  in  accordance with the provisions of the Illinois
28    Administrative Procedure Act.  If  no  hearing  is  requested
29    within  30 days of the date of entry of the order and none is
30    ordered by the Secretary of State, the  respondent's  failure
31    to  request  a  hearing  shall constitute an admission of any
32    facts alleged therein and shall constitute a sufficient basis
33    to make the order final and it shall remain remains in effect
34    until it is modified or vacated by the  Secretary  of  State.
 
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 1    If a hearing is requested or ordered, the Secretary of State,
 2    after  notice of the hearing has been given to all interested
 3    persons and the hearing has been held, may modify  or  vacate
 4    the order or extend it until final determination.
 5    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

 6        (815 ILCS 307/10-45)
 7        Sec.  10-45.   Powers  of  Secretary  of State; privilege
 8    against self-incrimination; admissibility into evidence.
 9        (a)  The Secretary of State may do the following:
10             (1)  Adopt rules and regulations to  implement  this
11        Act.
12             (2)  Conduct investigations and examinations:
13                  (A)  In  connection  with  any  application for
14             registration  of  any   business   broker   or   any
15             registration already granted; or
16                  (B)  Whenever  it  appears  to the Secretary of
17             State, upon the basis of a complaint or information,
18             that reasonable grounds exist for the belief that an
19             investigation  or  examination   is   necessary   or
20             advisable  for  the  more complete protection of the
21             interests of the public.
22             (3)  Charge as costs of investigation or examination
23        all reasonable expenses, including a  per  diem  prorated
24        upon  the salary of any employee and actual traveling and
25        hotel expenses.  All reasonable expenses are to  be  paid
26        by   the   party   or   parties  under  investigation  or
27        examination.
28             (4)  Issue notices and orders, including  cease  and
29        desist  notices and orders, after making an investigation
30        or examination under paragraph (2) of subsection  (a)  of
31        this  Section.   The Secretary of State may also bring an
32        action to prohibit a person from violating this Act.  The
33        Secretary  of State shall notify the person that an order
 
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 1        or notice has been issued, the reasons for it and that  a
 2        hearing  will be set in accordance with the provisions of
 3        the  Illinois  Administrative  Procedure  Act  after  the
 4        Secretary of State receives a written  request  from  the
 5        person requesting a hearing.
 6             (5)  Sign   all   orders,  official  certifications,
 7        documents or papers issued under this Act or delegate the
 8        authority to sign any  of  those  items  to  his  or  her
 9        designee.
10             (6)  Hold and conduct hearings.
11             (7)  Hear evidence.
12             (8)  Conduct inquiries with or without hearings.
13             (9)  Receive   reports  of  investigators  or  other
14        officers or employees of the State  of  Illinois  or  any
15        municipal  corporation or governmental subdivision within
16        the State.
17             (10)  (Blank). Administer oaths or cause them to  be
18        administered.
19             (11)  (Blank). Subpoena witnesses and compel them to
20        attend and testify.
21             (12)  (Blank).   Compel  the  production  of  books,
22        records and other documents.
23             (13)  Order depositions to be taken of  any  witness
24        residing  within  or  without the State.  The depositions
25        shall be taken  in  the  manner  prescribed  by  law  for
26        depositions  in  civil actions and made returnable to the
27        Secretary of State.
28             (14)  For  the  purposes  of   all   investigations,
29        audits, examinations, or inspections which in the opinion
30        of  the  Secretary  of State are necessary and proper for
31        the enforcement of this Act, the Secretary of State or  a
32        person   designated   by  him  or  her  is  empowered  to
33        administer oaths and  affirmations,  subpoena  witnesses,
34        take  evidence,  and  require by subpoena or other lawful
 
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 1        means provided by this law or such rules and  regulations
 2        adopted  by  the Secretary of State the production of any
 3        books and records, papers, or other  documents  that  the
 4        Secretary  of  State or a person designated by him or her
 5        deems relevant or material to the injury.
 6        (b)  If any person refuses  to  obey  a  subpoena  issued
 7    under  this  Act, the Secretary of State may make application
 8    to any court of competent jurisdiction to order the person to
 9    appear before the Secretary of State and produce  documentary
10    evidence  or  give evidence as directed in the subpoena.  The
11    failure to obey the order of the court shall  be  subject  to
12    punishment by the court as contempt of court.
13        (c)  No  person  shall  be  excused from complying with a
14    subpoena  on  the  ground  that  the  testimony  or  evidence
15    required may tend to incriminate the person  or  subject  the
16    person  to  a  penalty  or  forfeiture.  No individual may be
17    prosecuted or subject to any penalty or forfeiture for or  on
18    account  of  any  transaction,  matter  or  thing  which  the
19    individual is compelled to testify or produce evidence, after
20    claiming  the privilege against self-incrimination.  However,
21    the  individual  so  testifying  shall  not  be  exempt  from
22    prosecution  and  punishment  for  perjury  committed  in  so
23    testifying.
24        (d)  In any prosecution, action, suit or proceeding based
25    upon or arising out of this Act, the Secretary of  State  may
26    sign  a certificate showing compliance or non-compliance with
27    this Act by any business broker.  This shall constitute prima
28    facie evidence of compliance or non-compliance with this  Act
29    and  shall  be admissible in evidence in any court to enforce
30    this Act.
31        (e)  Whenever it shall appear to the Secretary  of  State
32    that  any person is engaged or about to engage in any acts or
33    practices which constitute or will constitute a violation  of
34    this  Act,  or  of  any  rule  or regulation prescribed under
 
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 1    authority of this Act, the Secretary of State may at  his  or
 2    her discretion, through the Attorney General:
 3             (1)  File  a  complaint  and  apply  for a temporary
 4        restraining order  without  notice,  and  upon  a  proper
 5        showing the court may enter a temporary restraining order
 6        without a bond, to enforce this Act.
 7             (2)  File a complaint and apply for a preliminary or
 8        permanent  injunction,  and, after notice and hearing and
 9        upon a proper showing, the court may grant a  preliminary
10        or  permanent  injunction  and may order the defendant to
11        make an offer of rescission with respect to any  contract
12        for  business  brokerage services determined by the court
13        to be unlawful under this Act.
14        (f)  The  court  shall  further  have  jurisdiction   and
15    authority, in addition to the penalties and other remedies in
16    this  Act  provided, to enter an order for the appointment of
17    the court or a person as a receiver,  conservator,  ancillary
18    receiver  or  ancillary  conservator for the defendant or the
19    defendant's assets located  in  this  State,  or  to  require
20    restitution  or  damages  on  behalf of the person or persons
21    injured by the  act  or  practice  constituting  the  subject
22    matter  of  the  action,  and  may  assess  costs against the
23    defendant for the use of the State.
24        (g)  No provision of this Act  imposing  liability  shall
25    apply  to any act done or omitted in good faith in conformity
26    with any rule of the  Secretary  of  State  under  this  Act,
27    notwithstanding  that  such  rule  may,  after  such  act  or
28    omission,  be  amended  or  rescinded  or  be  determined  by
29    judicial or other authority to be invalid for any reason.
30    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

31        (815 ILCS 307/10-50)
32        Sec.  10-50.  Certified  copies  of  documents or records
33    admissible in actions or proceedings under this Act.
 
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 1        (a)  Copies of any statement or document filed  with  the
 2    Secretary  of  State,  and  copies  of  any  records  of  the
 3    Secretary  of  State,  certified to by the Secretary of State
 4    are admissible in any prosecution, action, suit or proceeding
 5    based upon, or arising out of or  under,  the  provisions  of
 6    this Act to the same effect as the original of the statement,
 7    document or record would be if actually produced.
 8        (b)  In any action, administrative, civil, or criminal, a
 9    certificate  under  the seal of the State of Illinois, signed
10    by the Secretary of State, attesting to the filing of or  the
11    absence  of  any  filing  of  any document or record with the
12    Secretary of State under this  Act,  shall  constitute  prima
13    facie  evidence  of  such  filing  or  of  the absence of the
14    filing,  and  shall  be  admissible  in   evidence   in   any
15    administrative, criminal, or civil action.
16        (c)  Any certificate pursuant to subsection (a) or (b) of
17    this  Section  shall  be  furnished by the Secretary of State
18    upon  an  application  therefor  in  the  form   and   manner
19    prescribed  by  the  Secretary of State by rule, and shall be
20    accompanied by payment of a non-refundable certification  fee
21    in  the amount specified by rule or by order of the Secretary
22    of State.
23    (Source: P.A. 89-209, eff. 1-1-96.)

24        (815 ILCS 307/10-55)
25        Sec.    10-55.    Violations;    administrative    fines;
26    enforcement.
27        (a)  If the Secretary of State determines,  after  notice
28    and  opportunity  for  a  hearing, that a person has violated
29    this Act, the Secretary of State may in addition to all other
30    remedies, impose an administrative fine upon the person in an
31    amount not to exceed $10,000 for each violation.
32        (b)  The Secretary of State may bring an  action  in  the
33    circuit  court  of Sangamon or Cook county to enforce payment
 
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 1    of fines imposed under this Section.
 2        (c)  If the Secretary of State shall find that any person
 3    has violated any provision of  this  Act,  the  Secretary  of
 4    State  may,  by  written  order  temporarily  or  permanently
 5    prohibit  or  suspend  such  person from acting as a business
 6    broker.
 7        (d)  If the Secretary of State shall find,  after  notice
 8    and opportunity for hearing, that any person is acting or has
 9    acted  as  a business broker as defined in Section 10-5.10 of
10    this Act, without prior thereto or at the time thereof having
11    complied with the registration requirements of this Act,  the
12    Secretary  of  State may by written order prohibit or suspend
13    such person from acting as a business broker in this State.
14        (e)  Anything   herein   contained   to   the    contrary
15    notwithstanding,  the  Secretary  of  State  may  temporarily
16    prohibit  or  suspend, for a maximum period of 90 days, by an
17    order effective immediately, the registration of  a  business
18    broker  or  the  business  of  providing  business  brokerage
19    services,  without notice and prior hearing, if the Secretary
20    of State shall in his or her  opinion,  based  upon  credible
21    evidence,  deem it necessary to prevent an imminent violation
22    of this Act  or  to  prevent  losses  to  clients  which  the
23    Secretary of State reasonably believes will occur as a result
24    of  a  prior  violation of this Act. Immediately after taking
25    action without such notice  and  hearing,  the  Secretary  of
26    State  shall  deliver  a  copy  of the temporary order to the
27    respondent named therein by personal  service  or  registered
28    mail  or  certified  mail,  return  receipt  requested.   The
29    temporary  order  shall  set forth the grounds for the action
30    and shall advise that the respondent may request a hearing as
31    soon as  reasonably  practicable,  that  the  request  for  a
32    hearing  will  not  stop  the  effectiveness of the temporary
33    order and that respondent's  failure  to  request  a  hearing
34    within  30  days after the date of the entry of the temporary
 
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 1    order, shall constitute an admission  of  any  facts  alleged
 2    therein and shall make the temporary order final.  A business
 3    broker whose registration has been suspended pursuant to this
 4    Section  may  request  the  Secretary  of State permission to
 5    continue to receive payment for any  executory  contracts  at
 6    the  time  of  any  suspension and to continue to perform its
 7    obligation  thereunder.   The  decision  to  grant  or   deny
 8    permission  to receive payment for any executory contracts or
 9    perform any  obligation  thereunder  shall  be  at  the  sole
10    discretion of the Secretary of State and shall not be subject
11    to review under the Administrative Review Law.
12        (f)  The  Secretary  of State may issue a temporary order
13    suspending or delaying the effectiveness of any  registration
14    of  a  business  broker under this Act subsequent to and upon
15    the basis of the issuance of any stop, suspension or  similar
16    order  by any agency of the United States regulating business
17    brokers or any state or federal courts with  respect  to  the
18    person who is the subject of the registration under this Act,
19    and such order shall become effective as of the date and time
20    of  effectiveness  of  the agency or court order and shall be
21    vacated automatically at such time as the order of the agency
22    or court order is no longer in effect.
23    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

24        (815 ILCS 307/10-85)
25        Sec. 10-85. Fraudulent and prohibited acts.
26        (a)  A business broker shall not, in  connection  with  a
27    contract  for  the  services  of  a  business  broker, either
28    directly or indirectly, do any of the following:
29             (1)  Employ  any  device,  scheme  or   article   to
30        defraud.
31             (2)  Make  any  untrue statements of a material fact
32        or omit to state a material fact necessary  in  order  to
33        make  the  statements made, in the light of circumstances
 
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 1        under which they are made,  not  misleading,  unless  the
 2        statement  is  made in reasonable reliance on information
 3        provided by the client.
 4             (3)  Engage  in  any  act,  practice  or  course  of
 5        business that operates or would operate  as  a  fraud  or
 6        deceit upon any person.
 7        (b)  A  business  broker  shall  not  either  directly or
 8    indirectly do the following:
 9             (1)  Engage in the business of acting as a  business
10        broker  without registration under this Act unless exempt
11        under the Act.
12             (2)  Fail to file with the Secretary  of  State  any
13        application,  report,  document, or answer required to be
14        filed under the provisions of this Act or any rule   made
15        by the Secretary of State pursuant to this Act or fail to
16        comply  with  the  terms  of any order issued pursuant to
17        this Act or rule or made by the Secretary of State.
18             (3)  Fail to maintain any records as required  under
19        the provisions of this  Act or any rule made by Secretary
20        of State pursuant to this Act.
21    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

22        (815 ILCS 307/10-125 new)
23        Sec. 10-125.  Service of process.
24        (a)  Any  person  acting  as  a  business  broker, unless
25    exempt from registration under this Act, shall constitute  an
26    appointment  of  the  Secretary  of  State,  or  his  or  her
27    successors  in  Office,  by  the  person   to be the true and
28    lawful attorney for the person upon whom may  be  served  all
29    lawful  process  in  any  action  or  proceeding  against the
30    person, arising out of his or her activities  as  a  business
31    broker.
32        (b)  Service  of process under this Section shall be made
33    by serving a copy upon the Secretary of State or any employee
 
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 1    in his or her Office designated  by the Secretary of State to
 2    accept such service for him or her, provided notice  of  such
 3    and  a  copy  of  the process are, within 10 days of receipt,
 4    sent by registered mail or  certified  mail,  return  receipt
 5    requested,  by  the  plaintiff  to the defendant, at the last
 6    known address of the defendant.  The filing fee  for  service
 7    of   process under  this Section is non-refundable and is the
 8    amount  established  in  Section  10-25  of  this  Act.   The
 9    Secretary of State shall keep a record of all such  processes
10    that shall show the day of the service.

11        Section  20.  The  Business Opportunity Sales Law of 1995
12    is amended  by  changing  Sections  5-5.05,  5-5.10,  5-5.15,
13    5-5.30,  5-20,  5-30,  5-35,  5-60, 5-65, 5-95, and by adding
14    Section 5-145 as follows:

15        (815 ILCS 602/5-5.05)
16        Sec.  5-5.05.   Advertising.   "Advertising"  means   any
17    circular,  prospectus, advertisement or other material or any
18    electronic communication including, but not  limited  to,  by
19    radio,   television,   pictures  or  similar  means  used  in
20    connection with an offer or sale of any business opportunity.
21    (Source: P.A. 89-209, eff. 1-1-96.)

22        (815 ILCS 602/5-5.10)
23        Sec. 5-5.10. Business opportunity.
24        (a)  "Business   opportunity"   means   a   contract   or
25    agreement,  between  a  seller  and  purchaser,  express   or
26    implied,  orally or in writing, wherein it is agreed that the
27    seller or a person recommended by the seller shall provide to
28    the purchaser any product, equipment,  supplies  or  services
29    enabling the purchaser to start a business when the purchaser
30    is  required  to  make  a  payment  to the seller or a person
31    recommended by the seller and the seller represents  directly
 
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 1    or  indirectly,  orally  or in writing, any of the following,
 2    that:
 3             (1)  the seller  or  a  person  recommended  by  the
 4        seller  will  provide  or assist the purchaser in finding
 5        locations for the use or operation of  vending  machines,
 6        racks,   display  cases  or  other  similar  devices,  on
 7        premises neither owned nor leased  by  the  purchaser  or
 8        seller;
 9             (2)  the  seller  or  a  person  recommended  by the
10        seller will provide or assist the  purchaser  in  finding
11        outlets  or  accounts  for  the  purchaser's  products or
12        services;
13             (3)  the seller or a person specified by the  seller
14        will   purchase  any  or  all  products  made,  produced,
15        fabricated, grown, bred or modified by the purchaser;
16             (4)  the seller guarantees that the  purchaser  will
17        derive  income  from the business which exceeds the price
18        paid to the seller;
19             (5)  the seller will refund all or part of the price
20        paid to the seller, or repurchase any  of  the  products,
21        equipment  or supplies provided by the seller or a person
22        recommended  by  the  seller,   if   the   purchaser   is
23        dissatisfied with the business; or
24             (6)  the  seller  will  provide  a  marketing  plan,
25        provided  that  this Law shall not apply to the sale of a
26        marketing plan made in conjunction with the licensing  of
27        a  federally registered trademark or federally registered
28        service mark.
29        (b)  "Business opportunity" does not include:
30             (1)  any  offer  or  sale  of  an  ongoing  business
31        operated by the seller and to be sold in its entirety;
32             (2)  any offer or sale of a business opportunity  to
33        an   ongoing  business  where  the  seller  will  provide
34        products,  equipment,  supplies  or  services  which  are
 
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 1        substantially  similar  to   the   products,   equipment,
 2        supplies  or services sold by the purchaser in connection
 3        with the purchaser's ongoing business;
 4             (3)  any offer or sale  of  a  business  opportunity
 5        which   is  a  franchise  as  defined  by  the  Franchise
 6        Disclosure Act of 1987;
 7             (4)  any offer or sale  of  a  business  opportunity
 8        which  is  registered pursuant to the Illinois Securities
 9        Law of 1953;
10             (5)  (blank);
11             (6)  any offer or sale of a business opportunity  by
12        an  executor,  administrator, sheriff, marshal, receiver,
13        trustee in  bankruptcy,  guardian  or  conservator  or  a
14        judicial offer or sale, of a business opportunity; or
15             (7)  cash payments made by a purchaser not exceeding
16        $500  and the payment is made for the not-for-profit sale
17        of sales demonstration equipment, material or samples, or
18        the payment is made for product  inventory  sold  to  the
19        purchaser at a bona fide wholesale price.
20    (Source:  P.A.  90-70,  eff.  7-8-97;  91-357,  eff. 7-29-99;
21    91-809, eff. 1-1-01.)

22        (815 ILCS 602/5-5.15)
23        Sec. 5-5.15.  Marketing  plan.   "Marketing  plan"  means
24    advice  or  training, provided to the purchaser by the seller
25    or  a  person   recommended   by   the   seller,   pertaining
26    specifically   to   the  sale  of  any  enterprise,  product,
27    equipment, supplies or services and the  advice  or  training
28    includes, without limitation but is not limited to, preparing
29    or providing:
30        (1)  Promotional  literature,  brochures,  pamphlets,  or
31    advertising materials;
32        (2)  Training,  regarding  the  promotion,  operation  or
33    management of the business opportunity; or
 
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 1        (3)  Operational,   managerial,  technical  or  financial
 2    guidelines or assistance or continuing technical support.
 3    (Source: P.A. 89-209, eff. 1-1-96.)

 4        (815 ILCS 602/5-5.30)
 5        Sec. 5-5.30.   Person.   "Person"  means  an  individual,
 6    corporation,  trust,  partnership,  a  joint  stock  company,
 7    limited  liability  partnership,  limited  liability company,
 8    incorporated  or  unincorporated  association  or  any  other
 9    entity.
10    (Source: P.A. 89-209, eff. 1-1-96.)

11        (815 ILCS 602/5-20)
12        Sec. 5-20. Burden of proof and evidentiary matters.
13        (a)  In any administrative, civil, or criminal proceeding
14    related to this Law, the burden of proving an  exemption,  an
15    exception  from a definition or an exclusion from this Law is
16    upon the person claiming it.
17        (b)  In any action, administrative, civil, or criminal, a
18    certificate under the seal of the State of  Illinois,  signed
19    by  the Secretary of State, attesting to the filing of or the
20    absence of any filing of any  document  or  record  with  the
21    Secretary  of  State  under  this Act, shall constitute prima
22    facie evidence of such  filing  or  of  the  absence  of  the
23    filing,   and   shall   be  admissible  in  evidence  in  any
24    administrative, criminal, or civil action.
25        (c)  In any administrative, civil,  or  criminal  action,
26    the  Secretary  of  State  may issue a certificate  under the
27    seal of the State of Illinois, signed  by  the  Secretary  of
28    State,  showing  that  any  document  or record is a true and
29    exact copy, photocopy or otherwise, of the record or document
30    on file with the Secretary of State under this Act; and  such
31    certified document or record shall be admissible in  evidence
32    with the same effect as the original document or record would
 
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 1    have if actually produced.
 2        (d)  Any certificate pursuant to subsection (b) or (c) of
 3    this  Section  shall  be  furnished by the Secretary of State
 4    upon  an  application  therefor  in  the  form   and   manner
 5    prescribed  by  the  Secretary of State by rule, and shall be
 6    accompanied by payment of a non-refundable certification  fee
 7    in  the amount specified by rule or by order of the Secretary
 8    of State.
 9    (Source: P.A. 89-209, eff. 1-1-96.)

10        (815 ILCS 602/5-30)
11        Sec. 5-30. Registration.
12        (a)  In order to register  a  business  opportunity,  the
13    seller  shall  file  with  the  Secretary of State one of the
14    following disclosure documents  with  the  appropriate  cover
15    sheet  as  required by subsection (b) of Section 5-35 of this
16    Law,  a  consent  to  service  of  process  as  specified  in
17    subsection (b) of this Section, and the  appropriate  fee  as
18    required  by  subsection  (c)  of  this  Section which is not
19    returnable in any event:
20             (1)  The  Franchise  Offering  Circular  which   the
21        Secretary  of  State may prescribe by rule or regulation;
22        or
23             (2)  A disclosure document prepared pursuant to  the
24        Federal   Trade   Commission   rule  entitled  Disclosure
25        Requirements and Prohibitions Concerning Franchising  and
26        Business  Opportunity Venture, 16 C.F.R. Sec. 436 (1979).
27        The Secretary of State may by rule  or  regulation  adopt
28        any   amendment   to  the  disclosure  document  prepared
29        pursuant to 16 C.F.R. Sec.  436  (1979),  that  has  been
30        adopted by the Federal Trade Commission; or
31             (3)  A  disclosure  document  prepared  pursuant  to
32        subsection (b) of Section 5-35 of this Law.
33        (b)  Every   seller  shall  file,  in  the  form  as  the
 
SB575 Engrossed             -67-               LRB9206482ARgc
 1    Secretary of State  may  prescribe,  an  irrevocable  consent
 2    appointing  the Secretary of State or the successor in office
 3    to be the seller's attorney to receive service of any  lawful
 4    process in any noncriminal suit, action or proceeding against
 5    the   seller   or   the   seller's   successor,  executor  or
 6    administrator which arises under this Law after  the  consent
 7    has been filed, with the same force and validity as if served
 8    personally  on  the person filing the consent. Service may be
 9    made by delivering a copy of the process in the office of the
10    Secretary  of  State,  but  is  not  effective    unless  the
11    plaintiff or petitioner in  a  suit,  action  or  proceeding,
12    forthwith  sends  notice  of  the  service  and a copy of the
13    process by  registered  or  certified  mail,  return  receipt
14    requested,  to  the  defendant's or respondent's most current
15    address  on  file  with  the  Secretary  of  State,  and  the
16    plaintiff's affidavit of compliance with this  subsection  is
17    filed  in  the  case  on  or  before  the  return date of the
18    process, if any, or within such further  time  as  the  court
19    allows.
20        (c)(1)  The   Secretary   of   State  shall  by  rule  or
21        regulation impose and shall collect  fees  necessary  for
22        the administration of this Law including, but not limited
23        to, fees for the following purposes:
24                  (A)  filing  a  disclosure document and renewal
25             fee;
26                  (B)  interpretive opinion fee;.
27                  (C)  acceptance of service of process  pursuant
28             to subsection (b) of Section 5-145;
29                  (D)  issuance   of  certification  pursuant  to
30             Section 5-20; or
31                  (E)  late registration fee pursuant to  Section
32             5-30(g).
33             (2)  The   Secretary   of  State  may,  by  rule  or
34        regulation, raise or lower any fee imposed by, and  which
 
SB575 Engrossed             -68-               LRB9206482ARgc
 1        he or she is authorized by law to collect under this Law.
 2        (d)  A  registration automatically becomes effective upon
 3    the expiration of the 10th full business day after a complete
 4    filing, provided that no order has been issued or  proceeding
 5    pending  under  Section  5-45  of  this Law. The Secretary of
 6    State may by order waive or reduce the time period  prior  to
 7    effectiveness, provided that a complete filing has been made.
 8    The  Secretary of State may by order defer the effective date
 9    until the expiration of the 10th full business day after  the
10    filing of any amendment.
11        (e)  The   registration   is   effective   for  one  year
12    commencing on the date of effectiveness and  may  be  renewed
13    annually  upon  the  filing  of a current disclosure document
14    accompanied  by  any  documents  or  information   that   the
15    Secretary  of  State  may  by  rule  or  regulation  or order
16    require. The annual renewal fee shall be in the  same  amount
17    as   the   initial  registration  fee  as  established  under
18    subsection (c) of Section 5-30 of this Law which shall not be
19    returnable in any event. Failure to renew upon the  close  of
20    the   one   year  period  of  effectiveness  will  result  in
21    expiration of the registration. The Secretary of State may by
22    rule or regulation or order require the  filing  of  a  sales
23    report.
24        (f)  The  Secretary of State may by rule or regulation or
25    order require  the  filing  of  all  proposed  literature  or
26    advertising prior to its use.
27        (g)   Notwithstanding  the  foregoing,  applications  for
28    renewal of registration  of  business  opportunities  may  be
29    filed  within  30   days   following  the  expiration  of the
30    registration provided that  the  applicant  pays  the  annual
31    registration  fee together with an additional amount equal to
32    the annual registration fee and files any  other  information
33    or  documents  that  the  Secretary of State may prescribe by
34    rule  or  order.   Any  application  filed  within  30   days
 
SB575 Engrossed             -69-               LRB9206482ARgc
 1    following  the  expiration  of  the   registration  shall  be
 2    automatically  effective  as  of  the  time  of  the  earlier
 3    expiration  provided that the proper fee has been paid to the
 4    Secretary of State.
 5    (Source: P.A. 89-209, eff. 1-1-96.)

 6        (815 ILCS 602/5-35)
 7        Sec. 5-35. Disclosure requirements.
 8        (a)  It shall be unlawful for any  person  to  offer  or,
 9    sell any business opportunity required to be registered under
10    this  Law unless a written disclosure document as filed under
11    subsection (a) of Section 5-30 of this Law  is  delivered  to
12    each  purchaser  at  least  10  business  days  prior  to the
13    execution  by  a  purchaser  of  any  contract  or  agreement
14    imposing a binding legal obligation on the purchaser  or  the
15    payment  by  a  purchaser  of any consideration in connection
16    with the offer or sale of the business opportunity.
17        (b)  The disclosure document shall  have  a  cover  sheet
18    which   is   entitled,   in  at  least  10-point  bold  type,
19    "DISCLOSURE REQUIRED BY THE STATE  OF  ILLINOIS."  Under  the
20    title  shall  appear  the statement in at least 10-point bold
21    type that "THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES
22    NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE
23    STATE  OF  ILLINOIS.  THE  INFORMATION  CONTAINED   IN   THIS
24    DISCLOSURE  DOCUMENT  HAS NOT BEEN VERIFIED BY THIS STATE. IF
25    YOU HAVE ANY QUESTIONS OR  CONCERNS  ABOUT  THIS  INVESTMENT,
26    SEEK  PROFESSIONAL  ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE
27    ANY PAYMENT. YOU ARE TO  BE  PROVIDED  10  BUSINESS  DAYS  TO
28    REVIEW THIS DOCUMENT BEFORE SIGNING ANY CONTRACT OR AGREEMENT
29    OR   MAKING  ANY  PAYMENT  TO  THE  SELLER  OR  THE  SELLER'S
30    REPRESENTATIVE". The seller's  name  and  principal  business
31    address, along with the date of the disclosure document shall
32    also  be  provided  on  the cover sheet. No other information
33    shall appear on the  cover  sheet.  The  disclosure  document
 
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 1    shall  contain  the  following  information unless the seller
 2    uses a disclosure document as provided in  paragraph  (1)  or
 3    (2) of subsection (a) of Section 5-30 of this Law:
 4             (1)  The  names  and  residential addresses of those
 5        salespersons who will engage in the offer or sale of  the
 6        business opportunity in this State.
 7             (2)  The  name  of the seller, whether the seller is
 8        doing  business  as   an   individual,   partnership   or
 9        corporation;   the  names  under  which  the  seller  has
10        conducted, is conducting or intends to conduct  business;
11        and  the  name  of  any parent or affiliated company that
12        will engage in business transactions with  purchasers  or
13        which will take responsibility for statements made by the
14        seller.
15             (3)  The names, addresses and titles of the seller's
16        officers,    directors,   trustees,   general   managers,
17        principal  executives,  agents,  and  any  other  persons
18        charged with responsibility  for  the  seller's  business
19        activities   relating   to   the  sale  of  the  business
20        opportunity.
21             (4)  Prior  business  experience   of   the   seller
22        relating to business opportunities including:
23                  (A)  The  name,  address,  and a description of
24             any business opportunity previously offered  by  the
25             seller;
26                  (B)  The  length of time the seller has offered
27             each such business opportunity; and
28                  (C)  The  length  of  time   the   seller   has
29             conducted  the  business opportunity currently being
30             offered to the purchaser.
31             (5)  With respect to persons identified in item  (3)
32        of this subsection:
33                  (A)  A  description  of  the  persons' business
34             experience for the  10  year  period  preceding  the
 
SB575 Engrossed             -71-               LRB9206482ARgc
 1             filing   date   of  this  disclosure  document.  The
 2             description  of  business  experience   shall   list
 3             principal occupations and employers; and
 4                  (B)  A  listing of the persons' educational and
 5             professional backgrounds  including,  the  names  of
 6             schools attended and degrees received, and any other
 7             information   that   will   demonstrate   sufficient
 8             knowledge  and  experience  to  perform the services
 9             proposed.
10             (6)  Whether the seller or any person identified  in
11        item (3) of this subsection:
12                  (A)  Has  been  convicted  of  any  felony,  or
13             pleaded  nolo  contendere to a felony charge, or has
14             been  the  subject  of  any   criminal,   civil   or
15             administrative proceedings alleging the violation of
16             any   business   opportunity  law,  securities  law,
17             commodities law, franchise  law,  fraud  or  deceit,
18             embezzlement,  fraudulent  conversion,  restraint of
19             trade,    unfair     or     deceptive     practices,
20             misappropriation    of    property   or   comparable
21             allegations;
22                  (B)  Has filed  in  bankruptcy,  been  adjudged
23             bankrupt, been reorganized due to insolvency, or was
24             an  owner,  principal  officer or general partner or
25             any other  person  that  has  so  filed  or  was  so
26             adjudged  or reorganized during or within the last 7
27             years.
28             (7)  The name of the person identified in  item  (6)
29        of  this  subsection, nature of and parties to the action
30        or  proceeding,  court  or  other  forum,  date  of   the
31        institution  of  the  action,  docket  references  to the
32        action, current status of the action or proceeding, terms
33        and conditions or any order or decree, the  penalties  or
34        damages assessed and terms of settlement.
 
SB575 Engrossed             -72-               LRB9206482ARgc
 1             (8)  The initial payment required, or when the exact
 2        amount  cannot  be determined, a detailed estimate of the
 3        amount of the initial payment to be made to the seller.
 4             (9)  A detailed description of the  actual  services
 5        the seller agrees to perform for the purchaser.
 6             (10)  A  detailed  description  of  any training the
 7        seller agrees to provide for the purchaser.
 8             (11)  A detailed description of services the  seller
 9        agrees  to  perform  in  connection with the placement of
10        equipment, products or supplies at a location, as well as
11        any agreement necessary in order  to  locate  or  operate
12        equipment,  products  or  supplies  on a premises neither
13        owned nor leased by the purchaser or seller.
14             (12)  A  detailed  description  of  any  license  or
15        permit that will be necessary in order for the  purchaser
16        to engage in or operate the business opportunity.
17             (13)  The   business   opportunity  seller  that  is
18        required to secure a bond under Section 5-50 of this Law,
19        shall state in the disclosure document  "As  required  by
20        the  State  of  Illinois,  the  seller has secured a bond
21        issued by (insert name and address of surety company),  a
22        surety  company, authorized to do business in this State.
23        Before signing a contract or agreement to  purchase  this
24        business  opportunity,  you  should check with the surety
25        company to determine the bond's current status.".
26             (14)  Any representations made by the seller to  the
27        purchaser  concerning  sales or earnings that may be made
28        from  this  business  opportunity,  including,  but   not
29        limited to:
30                  (A)  The  bases  or assumptions for any actual,
31             average, projected  or  forecasted  sales,  profits,
32             income or earnings;
33                  (B)  The total number of purchasers who, within
34             a  period  of  3 years of the date of the disclosure
 
SB575 Engrossed             -73-               LRB9206482ARgc
 1             document, purchased a business opportunity involving
 2             the product, equipment, supplies or  services  being
 3             offered to the purchaser; and
 4                  (C)  The total number of purchasers who, within
 5             3  years  of  the  date  of the disclosure document,
 6             purchased  a  business  opportunity  involving   the
 7             product,   equipment,  supplies  or  services  being
 8             offered  to  the  purchaser  who,  to  the  seller's
 9             knowledge, have actually received  earnings  in  the
10             amount or range specified.
11             (15)  Any   seller   who  makes  a  guarantee  to  a
12        purchaser  shall  give  a  detailed  description  of  the
13        elements  of  the  guarantee.  Such   description   shall
14        include,  but  shall  not  be  limited  to, the duration,
15        terms,  scope,  conditions   and   limitations   of   the
16        guarantee.
17             (16)  A statement of:
18                  (A)  The total number of business opportunities
19             that are the same or similar in nature to those that
20             have been sold or organized by the seller;
21                  (B)  The  names and addresses of purchasers who
22             have requested  a  refund  or  rescission  from  the
23             seller  within  the last 12 months and the number of
24             those who have received the  refund  or  rescission;
25             and
26                  (C)  The total number of business opportunities
27             the  seller intends to sell in this State within the
28             next 12 months.
29             (17)  A   statement   describing   any   contractual
30        restrictions,  prohibitions   or   limitations   on   the
31        purchaser's  conduct.  Attach  a  copy  of  all  business
32        opportunity  and  other  contracts or agreements proposed
33        for use or  in  use  in  this  State  including,  without
34        limitation,  all lease agreements, option agreements, and
 
SB575 Engrossed             -74-               LRB9206482ARgc
 1        purchase agreements.
 2             (18)  The rights and obligations of the  seller  and
 3        the  purchaser  regarding  termination  of  the  business
 4        opportunity contract or agreement.
 5             (19)  A  statement accurately describing the grounds
 6        upon which the purchaser may  initiate  legal  action  to
 7        terminate the business opportunity contract or agreement.
 8             (20)  A  copy  of  the most recent audited financial
 9        statement of the seller, prepared within 13 months of the
10        first offer in this State, together with a  statement  of
11        any  material  changes  in the financial condition of the
12        seller from that date. The Secretary of State may  accept
13        the  filing  of a reviewed financial statement in lieu of
14        an audited financial statement allow the seller to submit
15        a limited review in order to satisfy the requirements  of
16        this subsection.
17             (21)  A  list  of  the states in which this business
18        opportunity is registered.
19             (22)  A list of the states in which this  disclosure
20        document is on file.
21             (23)  A  list  of  the  states  which  have  denied,
22        suspended  or  revoked  the registration of this business
23        opportunity.
24             (24)  A section entitled "Risk Factors" containing a
25        series  of  short  concise  statements  summarizing   the
26        principal  factors which make this business opportunity a
27        high risk or one of a speculative nature. Each  statement
28        shall  include  a  cross-reference  to  the page on which
29        further information regarding that  risk  factor  can  be
30        found in the disclosure document.
31             (25)  Any additional information as the Secretary of
32        State may require by rule, regulation, or order.
33    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
 
SB575 Engrossed             -75-               LRB9206482ARgc
 1        (815 ILCS 602/5-60)
 2        Sec. 5-60. Investigations and subpoenas.
 3        (a)  The Secretary of State:
 4             (1)  may  make such public or private investigations
 5        within or outside of this State as the Secretary of State
 6        deems necessary  to  determine  whether  any  person  has
 7        violated or is about to violate any provision of this Law
 8        or  any  rule, regulation, or order under this Law, or to
 9        aid in the enforcement of this Law or in the  prescribing
10        of rules and forms under this Law;
11             (2)  may  require  or  permit  any  person to file a
12        statement, under oath or otherwise as  the  Secretary  of
13        State  determines,  as to all the facts and circumstances
14        concerning the matter to be investigated; and
15             (3)  may   publish   information   concerning    any
16        violation  of  this Law or any rule, regulation, or order
17        under this Law.
18        (b)  For the purpose of any investigation  or  proceeding
19    under this Law, the Secretary of State or his or her designee
20    may  administer  oaths  and affirmations, subpoena witnesses,
21    compel  their  attendance,  take  evidence  and  require,  by
22    subpoena or other lawful means provided by this  Act  or  the
23    rules  adopted  by  the Secretary of State, the production of
24    any books, papers, correspondence, memoranda, agreements,  or
25    other documents or records which the Secretary of State deems
26    relevant or material to the inquiry.
27        (c)  In  case  of  contumacy  by,  or  refusal  to obey a
28    subpoena issued to any person,  through  the  Office  of  the
29    Attorney  General  may  bring  an  appropriate  action in any
30    circuit court of the State of Illinois  for  the  purpose  of
31    enforcing the subpoena.
32        (d)  It  shall  be  a violation of the provisions of this
33    Law for any person to fail to  file  with  the  Secretary  of
34    State any report, document, or statement required to be filed
 
SB575 Engrossed             -76-               LRB9206482ARgc
 1    under  the  provisions  of  this Section or to fail to comply
 2    with the terms of any order of the  Secretary of State issued
 3    pursuant to this Law.
 4    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

 5        (815 ILCS 602/5-65)
 6        Sec. 5-65. Remedies. Whenever it appears to the Secretary
 7    of State that any person has engaged in or is about to engage
 8    in any act  or  practice  constituting  a  violation  of  any
 9    provision of this Law or any rule, regulation, or order under
10    this Law, the Secretary of State may:
11             (1)  Issue  an order, anything contained in this Law
12        to the contrary notwithstanding, directing the person  to
13        cease and desist from continuing the act or practice. Any
14        person  named  in  a cease and desist order issued by the
15        Secretary of State may, within 30 days after the date  of
16        the  entry  of  the  order,  file a written request for a
17        hearing with the Secretary of State. If the Secretary  of
18        State  does  not  receive a written request for a hearing
19        within the time specified, the  cease  and  desist  order
20        will  be permanent and the person named in the order will
21        be deemed to have waived all  rights to a hearing.  If  a
22        hearing  is  requested,  the  order  will remain in force
23        until it is modified, vacated, rescinded or  expunged  by
24        the Secretary of State.
25             (1.5)  Prohibit  or suspend the offer or sale of any
26        business opportunity,  prohibit  or  suspend  any  person
27        from  offering  or  selling  any business  opportunities,
28        impose any fine for violation of this Law, issue an order
29        of public  censure, or enter into an agreed settlement or
30        stipulation. No  such  order  may  be    entered  without
31        appropriate  prior  notice  to  all  interested  parties,
32        opportunity for hearing, and written findings of fact and
33        conclusions of law.
 
SB575 Engrossed             -77-               LRB9206482ARgc
 1             (2)  Bring  an  action  in  the circuit court of any
 2        county to enjoin the acts or  practices  and  to  enforce
 3        compliance  with  this  Law  or  any rule, regulation, or
 4        order under this Law. Upon a proper showing  a  permanent
 5        or  temporary  injunction,  restraining order, or writ of
 6        mandamus shall be granted and a receiver  or  conservator
 7        may  be  appointed  for  the defendant or the defendant's
 8        assets or the court may  order  rescission,  which  shall
 9        include restitution plus the legal interest rate, for any
10        sales of business opportunities determined to be unlawful
11        under  this  Law  or any rule, regulation, or order under
12        this Law. The court shall not require  the  Secretary  of
13        State to post a bond.
14             (3)  The  Secretary of State may refer such evidence
15        as may be available concerning violations of this Law  or
16        any  rule,  regulation,  or  order  under this Law to the
17        Attorney General or the appropriate State's Attorney, who
18        may, with or without  such  a  reference,  institute  the
19        appropriate proceedings under this Section.
20             (4)  In  addition  to  any  other sanction or remedy
21        contained in this Section, the Secretary of State,  after
22        finding that any provision of this Law has been violated,
23        may  impose  a  fine as provided by rule or order against
24        the violator not to  exceed $10,000  per  violation,  and
25        may  issue  an  order  of    public  censure  against the
26        violator, and charge as costs of  the  investigation  all
27        reasonable   expenses,   including  attorney's  fees  and
28        witness fees.
29             (5)  Notwithstanding the foregoing, the Secretary of
30        State, after notice and opportunity for hearing,  may  at
31        his  or  her  discretion enter into an agreed settlement,
32        stipulation,  or  consent  order  with  a  respondent  in
33        accordance  with   the   provisions   of   the   Illinois
34        Administrative  Procedure  Act.  The  provisions  of  the
 
SB575 Engrossed             -78-               LRB9206482ARgc
 1        agreed  settlement,  stipulation,  or consent order shall
 2        have the full force and effect of an order issued by  the
 3        Secretary of State.
 4             (6)  The   action  of  the  Secretary  of  State  in
 5        denying, suspending, or  revoking the registration  of  a
 6        business  opportunity,  in  prohibiting  or  suspending a
 7        person from offering or selling  business  opportunities,
 8        in  prohibiting  or  suspending  the  offer  or  sale  of
 9        business   opportunities,   in   imposing  any  fine  for
10        violation of this Law, or in issuing any order  shall  be
11        subject  to  judicial  review  under  the  Administrative
12        Review  Law  which shall apply to and govern every action
13        for the judicial review of final actions or decisions  of
14        the Secretary of State under this Law.
15    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

16        (815 ILCS 602/5-95)
17        Sec. 5-95. Fraudulent and prohibited practices.
18        (a)  It  is  unlawful  for any person, in connection with
19    the offer or sale of any business opportunity in  this  State
20    or any offer or sale pursuant to the exemptions granted under
21    subdivisions   5-10(a),   (c),   (d),  or  (h),  directly  or
22    indirectly:
23             (1)  To employ any device,  scheme  or  artifice  to
24        defraud;
25             (2)  To make any untrue statement of a material fact
26        or to omit to state a material fact necessary in order to
27        make   the   statements   made,   in  the  light  of  the
28        circumstances under which they are made, not  misleading;
29        or
30             (3)  To  engage  in  any  act, practice or course of
31        business which operates or would operate as  a  fraud  or
32        deceit upon any person.
33        (b)  No  person  shall, either directly or indirectly, do
 
SB575 Engrossed             -79-               LRB9206482ARgc
 1    any of the following:
 2             (1) offer or sell any business  opportunity  without
 3        registration under this Act unless the person offering or
 4        selling the opportunity is exempt under the Act;
 5             (2)  fail  to  file  with the Secretary of State any
 6        application, report, document, or answer required  to  be
 7        filed  under  the provisions of this Act or any rule made
 8        by the Secretary of State pursuant to this Act or fail to
 9        comply with the terms of any  order  issued  pursuant  to
10        this  Act or any rules adopted by the Secretary of State;
11        or
12             (3) fail to keep or  maintain  any  records  as   is
13        required  under  the  provisions  of this Act or any rule
14        adopted by the Secretary of State pursuant to this Act.
15    (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)

16        (815 ILCS 602/5-145 new)
17        Sec. 5-145.  Service of process.
18        (a)  The offer or sale of business opportunities in  this
19    State  by  any  person, unless exempt from registration under
20    this Act, shall constitute an appointment of the Secretary of
21    State,  or his or her successors in office, by the person  to
22    be  the true and lawful attorney for the person upon whom may
23    be served all lawful process  in  any  action  or  proceeding
24    against  the  person, arising out of the offer or sale of the
25    securities.
26        (b)  Service of process under this Section shall be  made
27    by serving a copy upon the Secretary of State or any employee
28    in  his or her office designated by the Secretary of State to
29    accept such service for him or her,  provided  notice  and  a
30    copy  of  the process are, within 10 days after receiving the
31    notice and process, sent  by  registered  mail  or  certified
32    mail,  return  receipt  requested,  by  the  plaintiff to the
33    defendant, at the last known address of the  defendant.   The
 
SB575 Engrossed             -80-               LRB9206482ARgc
 1    filing fee for service of process under this Section shall be
 2    as  established  pursuant  to  Section  5-30 of this Act, and
 3    shall not be returnable in any event.  The Secretary of State
 4    shall keep a record of all processes each of which shall show
 5    the day of the service.
 
SB575 Engrossed             -81-               LRB9206482ARgc
 1                                INDEX
 2               Statutes amended in order of appearance
 3    815 ILCS 5/2.1            from Ch. 121 1/2, par. 137.2-1
 4    815 ILCS 5/8              from Ch. 121 1/2, par. 137.8
 5    815 ILCS 5/11             from Ch. 121 1/2, par. 137.11
 6    815 ILCS 5/14             from Ch. 121 1/2, par. 137.14
 7    815 ILCS 175/15-5.15
 8    815 ILCS 175/15-5.20
 9    815 ILCS 175/15-20
10    815 ILCS 175/15-25
11    815 ILCS 175/15-45
12    815 ILCS 175/15-50
13    815 ILCS 175/15-85
14    815 ILCS 175/15-95 new
15    815 ILCS 307/10-5.20
16    815 ILCS 307/10-20
17    815 ILCS 307/10-25
18    815 ILCS 307/10-40
19    815 ILCS 307/10-45
20    815 ILCS 307/10-50
21    815 ILCS 307/10-55
22    815 ILCS 307/10-85
23    815 ILCS 307/10-125 new
24    815 ILCS 602/5-5.05
25    815 ILCS 602/5-5.10
26    815 ILCS 602/5-5.15
27    815 ILCS 602/5-5.30
28    815 ILCS 602/5-20
29    815 ILCS 602/5-30
30    815 ILCS 602/5-35
31    815 ILCS 602/5-60
32    815 ILCS 602/5-65
33    815 ILCS 602/5-95
34    815 ILCS 602/5-145 new

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