§ 11-51-201 — Definitions

Colorado § 11-51-201

• Jurisdiction: Colorado
• Title 11: Financial
• Art.: Securities

Text

As used in this article, unless the context otherwise
requires:

(1) Bank means a banking institution organized under the laws of the
United States, a member bank of the federal reserve system, any other banking
institution or trust company, whether incorporated or not, doing business under the
laws of any state or of the United States, a substantial portion of the business of
which consists of receiving deposits or exercising fiduciary powers similar to those
permitted to national banks under the authority of the comptroller of the currency,
which is supervised and examined by a state or federal authority having supervision
over banks, and which is not operated for the purpose of evading the provisions of
the federal Securities Act of 1933, and a receiver, conservator, or other
liquidating agent of any institution or firm described in this subsection (1).

(2) Broker-dealer means a person engaged in the business of effecting
purchases or sales of securities for the accounts of others or in the business of
purchasing and selling securities for the person's own account. The term does not
include the following:

(a) A sales representative;

(b) An issuer with respect to purchasing and selling the issuer's own
securities;

(c) A bank; or

(d) Any other person or class of persons the securities commissioner
designates by rule or order.

(3) Central registration depository means the computer registration
system known as the central registration depository, which is maintained by the
financial industry regulatory authority and the states that participate in that
system, or any successor system.

(4) Commodity futures trading commission means the commission
established by the federal Commodity Exchange Act.

(5) Depository institution means:

(a) A person that is organized or chartered, or is doing business or holds an
authorization certificate, under the laws of a state or of the United States which
authorize the person to receive deposits, including deposits in savings, share,
certificate, or other deposit accounts, and that is supervised and examined for the
protection of depositors by an official or agency of a state or the United States; and

(b) A trust company or other institution that is authorized by federal or state
law to exercise fiduciary powers of the type a national bank is permitted to exercise
under the authority of the comptroller of the currency and is supervised and
examined by an official or agency of a state or the United States. The term does not
include an insurance company or other organization primarily engaged in the
insurance business.

(5.5) (a) Federal covered adviser means a person who is registered or
required to be registered under section 203 of the federal Investment Advisers Act
of 1940.

(b) Federal covered adviser does not include either a person excepted from
the definition of investment adviser or exempt from registration under the federal
Investment Advisers Act of 1940 solely by reason of the fact such person advises
a local government investment pool trust fund under article 75 of title 24, C.R.S.

(6) Financial or institutional investor means any of the following, whether
acting for itself or others in a fiduciary capacity:

(a) A depository institution;

(b) An insurance company;

(c) A separate account of an insurance company;

(d) An investment company registered under the federal Investment
Company Act of 1940;

(e) A business development company as defined in the federal Investment
Company Act of 1940;

(f) Any private business development company as defined in the federal
Investment Advisers Act of 1940;

(g) An employee pension, profit-sharing, or benefit plan if the plan has total
assets in excess of five million dollars or its investment decisions are made by a
named fiduciary, as defined in the federal Employee Retirement Income Security
Act of 1974, that is a broker-dealer registered under the federal Securities
Exchange Act of 1934, an investment adviser registered or exempt from
registration under the federal Investment Advisers Act of 1940, a depository
institution, or an insurance company;

(h) An entity, but not an individual, a substantial part of whose business
activities consist of investing, purchasing, selling, or trading in securities of more
than one issuer and not of its own issue and that has total assets in excess of five
million dollars as of the end of its latest fiscal year;

(i) A small business investment company licensed by the federal small
business administration under the federal Small Business Investment Act of 1958;
and

(j) Any other institutional buyer.

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

(8) Fraudulent conduct means, for the purposes of section 11-51-410,
conduct within this state which constitutes a willful violation of section 11-51-501 or
conduct outside this state which would constitute a willful violation of section 11-51-501 if it had occurred within this state.

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

(9.5) (a) (I) Investment adviser means any person who, for compensation,
engages in the business of advising others, either directly or through publications
or writings, as to the value of securities or as to the advisability of investing in,
purchasing, or selling securities, or who, for compensation and as part of a regular
business, issues or promulgates analyses or reports concerning securities.

(II) Investment adviser includes financial planners or other persons who, as
an integral component of other financially related services, provide investment
advisory services to others for compensation and as a part of a business or who
hold themselves out as providing investment advisory services to others for
compensation.

(b) Investment adviser does not include:

(I) A federal covered adviser;

(II) A publisher of a bona fide newspaper, magazine, or business or financial
publication with a regular paid circulation;

(III) A publisher of a securities advisory newsletter with a regular and paid
circulation who does not provide advice to subscribers on their specific investment
situations;

(IV) An author of material included in a newspaper, magazine, publication, or
newsletter who does not otherwise come within the definition of an investment
adviser or investment adviser representative;

(V) An investment adviser representative;

(VI) A licensed broker-dealer or sales representative for a licensed broker-dealer whose performance of investment advisory services is solely incidental to
the conduct of the person's business as a broker-dealer and who receives no
special compensation for such services;

(VII) A depository institution or a person employed by or directly associated
with a depository institution;

(VIII) Any lawyer, accountant, engineer, or teacher whose performance of
such services is solely incidental to the practice of that person's profession;

(IX) A person who provides investment advisory services solely while acting
as an investment banker or business broker on behalf of one or more parties to, and
in connection with, a transaction or proposed transaction for the transfer of a
controlling interest in a business enterprise;

(X) An official, employee, or representative of the United States, an
individual state, a political subdivision of an individual state, or an agency or a
corporate or other instrumentality of the United States or an individual state, while
acting in such person's official capacity on behalf of such entity;

(XI) A licensed real estate broker or salesperson whose advice to clients
relates only to the investment or acquisition of real property or an interest in real
property; or

(XII) Any other person or class of persons excluded by rule or order of the
securities commissioner.

(9.6) (a) Investment adviser representative with respect to an investment
adviser means an individual who has a place of business in this state; who is a
partner, officer, or director of an investment adviser; who occupies a status similar
to or performs functions similar to those of a partner, officer, or director for an
investment adviser; or who is employed or otherwise associated with an investment
adviser who:

(I) Makes recommendations or otherwise renders advice to clients regarding
securities;

(II) Manages securities accounts or portfolios for clients;

(III) Determines which recommendation or advice regarding securities should
be given to clients; or

(IV) Supervises employees of, or persons otherwise associated with, an
investment adviser or a federal covered adviser who perform any of the duties
specified in this paragraph (a).

(b) Investment adviser representative for a federal covered adviser means
any individual with a place of business in this state who is an investment adviser
representative as defined by the securities and exchange commission in rule
203A-3 promulgated under the federal Investment Advisers Act of 1940.

(c) The term investment adviser representative does not include:

(I) A licensed sales representative for a licensed broker-dealer whose
performance of investment advisory services is solely incidental to the conduct of
business as a sales representative and who receives no special consideration in
connection with providing such services; or

(II) Any other individual or class of individuals excluded by rule or order of
the securities commissioner.

(9.7) Investment advisory services means those activities performed by a
person in connection with such person's engaging in any of the activities described
in paragraph (a) of subsection (9.5) of this section, including such activities by a
federal covered adviser or an investment adviser representative for a federal
covered adviser.

(10) Issuer means any person who issues or proposes to issue any security;
except that, with respect to certificates of deposit, voting-trust certificates, or
collateral-trust certificates or with respect to certificates of interest or shares in an
unincorporated investment trust not having a board of directors or persons
performing similar functions or of the fixed, restricted management, or unit type,
the term issuer means the person performing the acts and assuming the duties of
depositor or manager pursuant to the provisions of the trust or other agreement or
instrument under which such securities are issued; except that, in the case of an
unincorporated association which provides by its articles for limited liability of any
or all of its members or in the case of a trust, committee, or other legal entity, the
trustees or members thereof shall not be individually liable as issuers of any
security issued by the association, trust, committee, or other legal entity; except
that, with respect to equipment-trust certificates or like securities, the term
issuer means the person by whom the equipment or property is or is to be used;
and except that, with respect to fractional undivided interests in oil, gas, or other
mineral rights, the term issuer means the owner of any such right or of any
interest in such right (whether whole or fractional) who creates fractional interests
therein for the purpose of offering them for sale.

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

(11.5) Online intermediary means a person:

(a) Acting pursuant to section 11-51-308.5 as an intermediary in a transaction
involving the offer through a website of securities for the account of an issuer; and

(b) Who does not:

(I) Offer investment advice or recommendations;

(II) Solicit purchases, sales, or offers to buy the securities offered or
displayed on its website;

(III) Compensate employees, agents, or other persons for such solicitation or
based on the sale of securities displayed or referenced on its website;

(IV) Hold, manage, possess, or otherwise handle purchaser funds or
securities;

(V) Act as an exchange or listing or quotation service for the offer or sale of
securities by third parties; or

(VI) Engage in such other activities as the securities commissioner, by rule,
determines is inappropriate.

(12) Person means an individual, a corporation, a partnership, an
association, an estate, a joint-stock company, a trust where the interests of the
beneficiaries are evidenced by a security, an unincorporated organization, a
government, a governmental subdivision or agency, or any other legal entity.

(12.5) Place of business for investment adviser representatives shall have
the same meaning as defined by the securities and exchange commission in rule
203A-3 promulgated under the federal Investment Advisers Act of 1940.

(13) (a) Sale or sell includes every contract of sale of, contract to sell, or
disposition of a security or interest in a security for value. Offer to sell includes
every attempt or offer to dispose of, or solicitation of an offer to buy, a security or
interest in a security for value.

(b) Purchase or buy includes every contract of purchase of, contract to
buy, or acquisition of a security or interest in a security for value. Offer to
purchase includes every attempt or offer to acquire, or solicitation of an offer to
sell, a security or interest in a security for value.

(c) Offer means an offer to sell or an offer to purchase.

(d) Any security given or delivered with, or as a bonus on account of, any
purchase of securities or any other thing is considered to constitute part of the
subject of the purchase and to have been offered, sold, and purchased for value.

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

(f) Every sale or offer of a warrant or right to purchase or subscribe to
another security of the same or another issuer, as well as every sale or offer of a
security which gives the holder a present or future right or privilege to convert into
another security of the same or another issuer, is considered to include an offer of
the other security.

(g) An offer, offer to sell, offer to purchase, sale, and purchase shall
be deemed to be involved so far as the security holders of a corporation or other
person are concerned where, pursuant to statutory provisions of the jurisdiction
under which such corporation or other person is organized, or pursuant to provisions
contained in its articles of incorporation or similar controlling instruments, or
otherwise, there is submitted for the vote or consent of such security holders a plan
or agreement for the following:

(I) A reclassification of securities of such corporation or other person, other
than a stock split, reverse stock split, or change in par value, which involves the
substitution of a security for another security;

(II) A statutory merger or consolidation or similar plan of acquisition in which
securities of such corporation or other person held by such security holders will
become or be exchanged for securities of any other person, except where the sole
purpose of the transaction is to change an issuer's domicile; or

(III) A transfer of assets of such corporation or other person to another
person, in consideration of the issuance of securities of such other person or any of
its affiliates, if:

(A) Such plan or agreement provides for dissolution of the corporation or
other person whose security holders are voting or consenting;

(B) Such plan or agreement provides for a pro rata or similar distribution of
such securities to the security holders voting or consenting;

(C) The board of directors or similar representative of such corporation or
other person adopts resolutions relative to sub-subparagraph (A) or (B) of this
subparagraph (III) within one year after taking of such vote or consent; or

(D) The transfer of assets is a part of a preexisting plan for distribution of
such securities, notwithstanding the provisions of sub-subparagraph (A), (B), or (C)
of this subparagraph (III).

(h) The terms defined in this subsection (13) do not include any bona fide
pledge or loan or any dividend payable by an issuer only in its own securities if
nothing of value is given by stockholders for the dividend.

(14) Sales representative means an individual, other than a broker-dealer,
either authorized to act and acting for a broker-dealer in effecting or attempting to
effect purchases or sales of securities or authorized to act and acting for an issuer
in effecting or attempting to effect purchases or sales of the issuer's own
securities. An individual so acting for an issuer is not a sales representative if the
individual primarily performs, or is intended primarily to perform upon completion of
an offering of the issuer's own securities, substantial duties for or on behalf of the
issuer otherwise than in connection with transactions in the issuer's own securities
and the individual's compensation is not based, in whole or in part, upon the amount
of purchases or sales of the issuer's own securities effected for the issuer. A
partner, officer, or director of a broker-dealer or issuer, or an individual occupying a
similar status or performing similar functions, is a sales representative only if the
individual otherwise comes within the definition.

(15) Securities and exchange commission means the commission
established by the federal Securities Exchange Act of 1934.

(16) Securities commissioner means the commissioner of securities
created by section 11-51-701.

(17) Security means any note; stock; treasury stock; bond; debenture;
evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral-trust certificate; preorganization certificate of
subscription; transferable share; investment contract; viatical settlement
investment; voting-trust certificate; certificate of deposit for a security; certificate
of interest or participation in an oil, gas, or mining title or lease or in payments out
of production under such a title or lease; or, in general, any interest or instrument
commonly known as a security or any certificate of interest or participation in,
temporary or interim certificate for, guarantee of, or warrant or right to subscribe to
or purchase any of the foregoing. Security does not include any insurance or
endowment policy or annuity contract under which an insurance company promises
to pay a sum of money either in a lump sum or periodically for life or some other
specified period. For purposes of this article, an investment contract need not
involve more than one investor nor be limited to those circumstances wherein there
are multiple investors who are joint participants in the same enterprise.

(18) Self-regulatory organization means a national securities exchange
registered under section 6 of the federal Securities Exchange Act of 1934, a
national securities association of broker-dealers registered under section 15A of
the federal Securities Exchange Act of 1934, a clearing agency registered under
section 17A of the federal Securities Exchange Act of 1934, the municipal
securities rule-making board established under section 15B of the federal
Securities Exchange Act of 1934, or a futures association registered under
section 21 of the federal Commodity Exchange Act.

(19) State means any state, territory, or possession of the United States,
the District of Columbia, or Puerto Rico.

(20) Viatical settlement investment means the contractual right to receive
any portion of the death benefit or ownership of a life insurance policy or
certificate, in exchange for consideration that is less than the expected death
benefit of the life insurance policy or certificate. Viatical settlement investment
does not include:

(a) Any transaction between a viator and a viatical settlement provider as
defined by section 10-7-602, C.R.S.;

(b) Any transfer of ownership or beneficial interest in a life insurance policy
from a viatical settlement provider to another viatical settlement provider as
defined by section 10-7-602, C.R.S., or to any legal entity formed solely for the
purpose of holding ownership or beneficial interest in a life insurance policy or
policies;

(c) The bona fide assignment of a life insurance policy to a bank, savings
bank, savings and loan association, savings association, credit union, or other
licensed lending institution as collateral for a loan; or

(d) The exercise of accelerated benefits pursuant to the terms of a life
insurance policy issued in accordance with title 10, C.R.S.

Legislative History

Source: L. 90: Entire article R&RE, p. 702, � 1, effective July 1. L. 98: (5.5), (9.5), (9.6), (9.7), and (12.5) added, p. 547, � 2, effective April 30. L. 2005: (17) amended and (20) added, p. 1324, � 2, effective January 1, 2006. L. 2015: (3) and (20)(c) amended, (SB 15-104), ch. 177, p. 575, � 2, effective May 11; (11.5) added, (HB 15-1246), ch. 98, p. 286, � 2, effective August 5.