§ 359-E — Definitions

New York § 359-E

• Jurisdiction: New York
• Law GBS: General Business
• Art. 23-A: Fraudulent Practices In Respect to Stocks, Bonds and Other Securities

Text

§ 359-e. Definitions. Registration requirements.\n 1. The following terms, whenever used or referred to in this article,\nshall have the following meaning unless a different meaning clearly\nappears from the context:\n (a) A "dealer" shall mean and include any person, firm, association or\ncorporation engaged in the business of buying and selling securities\nfrom or to the public within or from this state for his or its own\naccount, through a broker or otherwise, except a bank unless such bank\nis considered a dealer under the federal securities exchange act of\n1934, but does not include any person, firm, association or corporation\nin so far as he or it buys or sells securities for his or its bona fide\ninvestment account, either individually or in some fiduciary capacity.\nThe term "dealer" shall, except as otherwise provided in this article,\nalso include a person, firm, association or corporation selling or\noffering for sale from or to the public within or from this state\nsecurities issued by it. No person shall be deemed to be a "dealer", as\ndefined in this subdivision, or a broker, as defined in subdivision (b)\nof this section, solely by reason of the fact that he is engaged in the\nbusiness of (i) selling, offering for sale, purchasing or offering to\npurchase any security or securities to, from or through any bank, dealer\nor broker, or to or from any syndicate, corporation or group formed for\nthe specific purpose of acquiring such securities for resale to the\npublic directly or through other syndicates or groups, or (ii) any\noffer, sale or distribution by an issuer of stock dividends,\nnontransferable warrants or transferable warrants exercisable within\nninety days of their issuance to existing stockholders, securities\nissued upon conversion of convertible securities and exercise of\nwarrants and securities issued as part of a recapitalization or\nreclassification to existing stockholders of the same issuer, or (iii)\nselling, offering for sale, purchasing or offering to purchase any\nsecurity or securities on the floor of any securities exchange\nregistered as a national securities exchange under the securities\nexchange act of nineteen hundred thirty-four. No person, firm,\nassociation or corporation shall be deemed to be a "dealer", as defined\nin this subdivision, solely by reason of selling or offering for sale\nany security or securities to any bank, corporation, savings\ninstitution, trust company, insurance company, investment company, as\ndefined in the federal investment company act of nineteen hundred forty,\npension or profit-sharing trust, or other financial institution or\ninstitutional buyer, whether the purchaser is acting for himself or\nitself or in some fiduciary capacity, as part of a private placement of\nsecurities.\n (b) A "broker" shall mean and include any person, firm, association or\ncorporation, other than a dealer, engaged in the business of effecting\ntransactions in securities for the account of others within or from this\nstate, but does not include a bank unless such bank is considered a\nbroker under the federal securities exchange act of 1934.\n (c) A "salesman" shall mean and include every person employed by a\nbroker or dealer as said terms are defined in this section, for the\npurpose of representing such broker or dealer in the sale or purchase of\nsecurities to or from the public within or from this state.\n (d) A "principal" shall mean and include every person or firm directly\nor indirectly controlling any broker or dealer.\n (e) A "bank" shall mean and include a state or national bank, trust\ncompany or savings institution incorporated under the laws and subject\nto the examination, supervision and control of any state or of the\nUnited States or of any insular possession thereof.\n 2. No dealer or broker shall sell or offer for sale to or purchase or\noffer to purchase from the public within or from this state, as\nprincipal, or broker, any securities issued or to be issued unless and\nuntil a notice, to be known as the "state notice," containing the name,\nbusiness or post office address of such dealer or broker and if a\ncorporation the state or country of incorporation thereof, and if a\npartnership the names of the partners, shall have been filed in the\ndepartment of state. Such notice shall be in the following form:\n STATE NOTICE\nName(s) of dealer(s), broker(s) ........................................\nBusiness address(es) or post office address(es) (state which)\n.........................................................................\nIf a corporation, the state or country in which incorporated.\n.........................................................................\nIf a partnership, the names of the partners ............................\n 3. It shall be unlawful for any dealer, broker or salesman to sell or\noffer for sale to or purchase or offer to purchase from the public\nwithin or from this state, any securities issued or to be issued, unless\nand until such dealer, broker or salesman shall have filed with the\ndepartment of law a registration statement as provided herein. A real\nestate broker or salesman licensed under article twelve-A of the real\nproperty law who is not acting as a dealer shall be deemed to be in\ncompliance with such registration statement filing requirements with\nrespect to the sale of securities constituting cooperative interests in\nreal estate, including shares of cooperative apartment corporations,\ncommercial cooperative corporations, condominiums, and interests in\nhomeowners associations.\n (a) The registration statement relating to dealers and brokers, to be\nknown as the "broker-dealer statement" shall contain such information\npertaining to the business history for the last preceding five years,\ncriminal record, and educational background of the applicant and his or\nits partners, officers, directors or other principals thereof deemed\npertinent by the attorney-general. The attorney-general may prescribe\nforms for the use of such applicants.\n (b) The registration statement relating to salesmen, to be known as\nthe "salesman's statement," shall contain such information pertaining to\nthe business history for the last preceding five years, criminal record\nand educational background of the applicant deemed pertinent by the\nattorney-general. The attorney-general may prescribe forms for use of\nsuch applicants and, as a condition of registration, shall require that\nprior to the filing of such a registration statement any such applicant\nshall undertake and successfully complete the uniform securities agent\nstate law examination ("series 63") or the uniform combined state law\nexamination ("series 66") as administered by or on behalf of the North\nAmerican Securities Administrators Association, Inc. (NASAA) by any\nnational securities association or national securities exchange;\nprovided that, if an applicant registers with the attorney-general\nsolely for the purpose of selling condominiums, shares of cooperative\napartment corporations or commercial cooperative corporations, interests\nin homeowners associations or interests in timeshare projects, such\napplicant shall not be required to undertake the aforementioned\nexamination as a condition of registration.\n (c) The registration of brokers, dealers and salesmen shall be for\nperiods of four years commencing on January fifth, nineteen hundred\nsixty. Such statements for brokers, dealers or salesmen shall be filed\nevery four years within sixty days prior to the expiration of the four\nyear period, provided that previously filed statements shall continue to\nbe effective for a period of ninety days following the end of the four\nyear period. Initial statements for those having no previous filing may\nbe made at any time and shall be effective from the date of filing for a\nperiod of four years. All statements filed pursuant to prior provisions\nof law shall remain in effect until January fifth, nineteen hundred\nsixty.\n 4. The attorney-general may by rule or order provide for the filing of\nsupplemental statements prescribed by him which shall contain such\ninformation as the attorney-general may deem necessary to keep\nreasonably current the information on file.\n 5. The department of law shall collect the following fees: (a) twelve\nhundred dollars for each broker-dealer's statement; (b) twelve hundred\ndollars for each broker-dealer's statement filed by a person, firm,\nassociation or corporation selling or offering for sale from or to the\npublic within or from this state securities issued by it for any amount\nin excess of five hundred thousand dollars; (c) three hundred dollars\nfor each broker-dealer's statement filed by a person, firm, association\nor corporation selling or offering for sale from or to the public within\nor from this state securities issued by it for any amount of five\nhundred thousand dollars or less; (d) three hundred dollars for each\nbroker-dealer's statement filed by a person, firm, association or\ncorporation solely for the purpose of selling or offering for sale from\nor to the public within or from this state securities consisting of\ncondominiums, shares of cooperative apartment corporations or commercial\ncooperative corporations, interests in homeowners associations or\ninterests in timeshare projects, plus fifteen dollars for each partner,\nofficer, director or principal of any such firm, association or\ncorporation; (e) one hundred fifty dollars for each salesman's\nstatement; (f) thirty dollars for each supplemental statement; (g) three\nhundred dollars for each application granted pursuant to subdivision two\nof section three hundred fifty-nine-f of this article; and (h) two\nhundred twenty-five dollars for the issuance of a "no filing required\nletter"; these fees shall obtain for both original statements and their\nrenewals. No fee, however, shall be collected for filing a supplemental\nstatement by a salesman cancelling his prior registration as such\nsalesman.\n Any partner, officer, director or principal who is named as such in a\nbroker-dealer statement and who shall act as a salesman for such broker\nor dealer, shall not be required to register as a salesman.\n 6. Any false statement of a material fact contained in any such\nbroker-dealer or salesman's statement or supplemental statement or in\nany certificate attached thereto shall constitute a violation of this\nsection within the meaning of section three hundred fifty-nine-g of this\narticle.\n 7. Any person, partnership, corporation, company, trust or association\nrepresenting in any manner that the state, the department of law or any\nofficer thereof has recommended the purchase of any stocks, bonds, or\nother securities, in advertising or offering such stocks, bonds or other\nsecurities for sale shall be guilty of a misdemeanor punishable as\nprovided in subdivision two of section three hundred fifty-nine-g of\nthis article.\n 8. After this subdivision as hereby amended takes effect no dealer\nshall sell or offer for sale to the public within this state as\nprincipal or agent, any securities issued or to be issued which are not\nexempted from the provisions of this subdivision by section three\nhundred and fifty-nine-f hereof unless and until such dealer shall cause\nto be filed a "further state notice" containing the information, other\nthan the names of partners, required to be published by subdivision two\nof this section, but opposite the heading "name of dealer", if the\nperson or persons causing such notice to be filed are acting pursuant to\nthe provisions of this subdivision, there shall be added either the\nwords "syndicate manager" or "syndicate managers" as the case may be;\nand in addition thereto and as part of each such further state notice\nthe name of the security or securities, name, post office address and\nstate or country of incorporation or organization of the corporation,\nassociation, common law trust or similar organization issuing or to\nissue the security or securities to be sold or offered for sale, in the\nfollowing form:\n FURTHER STATE NOTICE\nName of security or securities .........................................\nName of issuer of securities ...........................................\nPost Office address of issuer of securities ............................\nThe state or country in which organized ................................\n Two or more dealers may jointly file such further state notice\nrequired by this subdivision, and a dealer or exchange must file a\nfurther state notice for each issue about to be offered which has not\nheretofore been published by the issuer. A syndicate manager or\nco-manager with an office in this state may file on behalf of an entire\nsyndicate.\n 9. A broker-dealer or salesman registration statement or any other\ndocument is filed when it is received in the New York city office of the\nattorney-general.\n 10. The attorney-general may from time to time in the public interest\nmake, amend, and rescind such forms as are necessary to carry out the\nprovisions of this act, including forms governing registration\nstatements and applications. For the purpose of forms, the\nattorney-general may classify securities, persons and matters within his\njurisdiction, and may prescribe different forms and requirements for\ndifferent classes.\n 11. It is unlawful for any broker or dealer to employ a salesman\nunless the salesman is registered. The registration of a salesman is\nsuspended during any period when he is not associated with a particular\nbroker or dealer registered under this act or a particular issuer. When\na salesman begins or terminates a connection with a broker or dealer, or\nbegins or terminates those activities which make him a salesman, the\nsalesman as well as the broker or dealer shall promptly notify the\nattorney-general.\n 12. All persons, including partners, officers, directors and salesmen\nemployed by a member or a member organization of a national securities\nexchange, a national securities association, or any other broker-dealer,\nregistered with the federal securities exchange commission or any broker\nor dealer required to be registered with the department of law pursuant\nto this article except those dealers required to be registered solely by\nreason of the fact that they are engaged in selling or offering for sale\nsecurities issued by themselves, and any employee of a clearing\ncorporation affiliated with any such registered national securities\nexchange or with any national securities association registered with the\nfederal securities exchange commission, employed on or after September\nfirst, nineteen hundred sixty-nine, who are regularly employed within\nthe state of New York shall, as a condition of employment, be\nfingerprinted. Every set of fingerprints taken pursuant to this\nsubdivision shall be promptly submitted to the attorney general for\nappropriate processing, except that individuals fingerprinted in\ncompliance with the rules of the securities and exchange commission need\nnot file with the attorney general so long as records of those\nfingerprints, as well as information received in response to their\nfiling, are available to the attorney general for inspection. The\ndepartment of law shall collect from a member or member organization of\na national securities exchange, a national securities association, or\nany registered broker-dealer as described above or a clearing\ncorporation affiliated with any such registered national securities\nexchange or with any such registered national securities association\nsubmitting fingerprints to the attorney general for processing a fee in\nthe amount prescribed therefor by the division of criminal justice\nservices for each set of fingerprints submitted. Failure to comply with\nthis section shall be deemed a violation of and a fraudulent practice\nwithin the meaning of this article.\n 12-a. Any employee of a national securities exchange or national\nsecurities association registered with the federal securities and\nexchange commission, and any employee of a clearing corporation or\nsecurities information processor affiliated with any such registered\nnational securities exchange or national securities association, and who\nare regularly employed within the state of New York, shall, as a\ncondition of employment, be fingerprinted. Every national securities\nexchange, national securities association, clearing corporation or\nsecurities information processor that is required to submit fingerprints\npursuant to this section shall also obtain fingerprints from any\nindividual not employed by such organization who provides services to\nsuch organization within the state of New York provided that the\nindividual has access to records including electronic records, as\ndefined by section three hundred two of the state technology law, or\nother material or secure buildings or secure property, which place the\nsecurity of such organization at risk.\n Every set of fingerprints taken pursuant to this subdivision shall be\npromptly submitted to the federal bureau of investigation for the\npurpose of a nationwide criminal history check. Such reports received\nfrom the federal bureau of investigation shall be kept confidential,\nalthough the contents of any such report may be disclosed to exchange\nofficials involved in personnel and security matters, to the attorney\ngeneral, to law enforcement authorities and to the securities and\nexchange commission. Unless inconsistent with federal law, fingerprints\nsupplied by such employee or employment applicant shall be returned to\nsuch person upon termination or denial of such employment. Fingerprints\nsupplied by such other individuals providing services shall be returned\nupon completion of such services.\n 12-b. Any employee of a designated contract market, as that term is\ndefined in the Commodity Exchange Act, under the authority of the\nfederal Commodity Futures Trading Commission, and any employee of a\nderivatives clearing organization, as that term is defined under the\nCommodity Exchange Act, that is affiliated with any such designated\ncontract market, and who are regularly employed within the state of New\nYork, shall, as a condition of employment, be fingerprinted. Every\ndesignated contract market and derivatives clearing organization that is\nrequired to submit fingerprints pursuant to this section shall also\nobtain fingerprints from any individual not employed by such\norganization who provides services to such organization within the state\nof New York provided that the individual has access to records including\nelectronic records, as defined by section three hundred two of the state\ntechnology law, or other material or secure buildings or secure\nproperty, which place the security of such organization at risk.\n Every set of fingerprints taken pursuant to this subdivision shall be\npromptly submitted to the federal bureau of investigation for the\npurpose of a nationwide criminal history check. Such reports received\nfrom the federal bureau of investigation shall be kept confidential,\nalthough the contents of any such report may be disclosed to designated\ncontract market or derivatives clearing organization officials involved\nin personnel and security matters, to the attorney general, to law\nenforcement authorities and to the Commodity Futures Trading Commission.\nUnless inconsistent with federal law, fingerprints supplied by such\nemployee or employment applicant shall be returned to such person upon\ntermination or denial of such employment. Fingerprints supplied by such\nother individuals providing services shall be returned upon completion\nof such services.\n 13. (a) The attorney general may by regulation, rule or order provide\nan alternative method of registration by which any dealer, broker or\nsalesman acting as such or as principal in more than one state or who\nengages in multi-state securities offerings may supply the information\notherwise required to be furnished in the state notice, registration\nstatement, supplemental statements and further state notice mandated by\nsubdivisions two, three, four and eight of this section. Such\nalternative method, when complied with, shall be deemed to fulfill the\nfiling requirements of subdivisions two, eight and nine of this section,\nand shall be in lieu thereof. The regulation, rule or order of the\nattorney general may also provide for alternative filing periods and\nexpiration dates and an alternate method for the payment of fees, to be\nknown as "in lieu filing fees", which shall be collected pursuant to\nsuch regulation, rule or order of the attorney general in the same\namounts as, and for the same information otherwise required to be\ncollected for statements filed as specified by subdivision five of this\nsection.\n (b) No alternative method may be provided by the attorney general\nwhich does not have, as its purpose, the facilitation of a central\nregistration depository whereby brokers, dealers or salesmen can\ncentrally or simultaneously register and pay fees for all states in\nwhich they plan to transact business which requires registration. The\nattorney general is hereby authorized to enter into an agreement or\notherwise facilitate such alternative method with any national\nsecurities association, national securities exchange, national\nassociation of state securities administrators or similar association or\nagents thereof to effectuate the provisions of this subdivision.\n (c) Any false statement of a material fact contained in any substitute\nfor a broker-dealer statement or salesman's statement or supplemental\nstatement which is provided pursuant to the attorney general's\nregulation, rule or order specified in paragraph (a) of this\nsubdivision, shall constitute a violation of this section within the\nmeaning of section three hundred fifty-nine-g of this article.\n (d) It shall be unlawful for any dealer, broker or salesman to sell or\noffer for sale to or purchase or offer to purchase from the public\nwithin or from this state, any securities issued or to be issued, unless\nand until such dealer, broker or salesman shall have complied with the\nrequirements of either: (i) the regulation, rule or order of the\nattorney general specified in paragraph (a) of this subdivision; or (ii)\nthe filing of a state notice and registration statement and supplemental\nstatements and further state notice as applicable to said dealer, broker\nor salesman, in accordance with subdivisions two, three, four and eight\nof this section.\n (e) To the extent inconsistent therewith, the provisions of this\nsubdivision shall supersede the provisions of any other subdivision of\nthis section.\n 14. (a) Definitions. For purposes of this subdivision the following\ndefinitions shall apply:\n (i) "Commodity" means, except as otherwise specified by the attorney\ngeneral by rule, regulation or order, any agricultural, grain, animal,\nchemical, metal or mineral product or byproduct, any gem or gemstone\n(whether characterized as precious, semi-precious or otherwise), any\nfuel (whether liquid, gaseous or otherwise), any foreign currency, and\nany other good, article, or material.\n (ii) "Commodity contract" means any account, agreement or contract for\nthe purchase or sale of, or any option or right to purchase or sell,\nprimarily for speculation or investment purposes and not for use or\nconsumption by the offeree or purchaser, one or more commodities,\nwhether for immediate or subsequent delivery or for storage and whether\nor not delivery is intended by the parties, and whether characterized as\na cash contract, deferred shipment or deferred delivery contract,\nforward contract, futures contract, installment or margin contract,\nleverage contract, option, privilege, indemnity, bid, offer, put, call,\nadvance guaranty, decline guaranty or otherwise. Any commodity contract\noffered for sale or sold to a person other than a producer, processor,\nmerchant, handler, commercial user or ultimate consumer of the commodity\nshall, in the absence of evidence to the contrary, be presumed to be\noffered for sale or sold for speculation or investment purposes.\n (iii) "Commodity broker-dealer" means any person engaged in the\nbusiness of selling or offering to sell commodities through commodity\ncontracts to the public within or from the state of New York.\n (iv) "Commodity salesperson" means any person employed by or\nrepresenting a commodity broker-dealer in selling or offering for sale\ncommodities through commodity contracts to the public within or from the\nstate of New York.\n (v) "Commodity investment advisor" means any person who, for\ncompensation, within or from the state of New York, engages in the\nbusiness of advising members of the public, either directly or through\npublications or writings, as to the advisability of investing in,\npurchasing, selling or holding commodity contracts.\n (b) Any person acting as a commodity broker-dealer, commodity\nsalesperson or commodity investment advisor and any person who manages\nor supervises any such broker-dealer, salesperson or investment advisor\nshall file a registration statement with the attorney general as a\ncommodity broker-dealer, commodity salesperson, or commodity investment\nadvisor relating to the activity actually engaged in.\n (c) The attorney general may adopt rules and regulations governing the\nform and content of such registration statements for each such activity\nwhich may include information pertaining to the business history for the\nlast preceding five years, record of criminal convictions, litigation\nhistory, and educational background of the registrant and the\nregistrant's partners, officers, directors or other principals deemed\npertinent by the attorney general and the names of persons employed as\ncommodity salespersons or commodity investment advisors by the\nregistrant.\n (d) The registration statement shall be effective for a period of one\nyear from the date of filing.\n (e) The attorney general shall by rule or regulation provide for the\nmethod of renewing such registration statements and may require the\nfiling of supplemental statements which shall contain such information\nas the attorney general may deem necessary to keep reasonably current\nthe information on file.\n (f) The attorney general shall collect the following annual fees: one\nhundred dollars for each commodity broker-dealer registration statement\nor commodity investment advisor registration statement; twenty-five\ndollars for each commodity salesperson registration statement; and ten\ndollars for each supplemental statement.\n (g) The provisions of this subdivision shall not apply to (i) any\nperson who is a member or member firm of a national securities exchange,\nboard of trade designated as a contract market by the Commodity Futures\nTrading Commission pursuant to the commodity exchange act, as amended,\nthe National Association of Securities Dealers, Inc., or the National\nFutures Association, Inc., or is an affiliate of such a member or member\nfirm, or employed by such a member or member firm or by an affiliate of\nsuch a member or member firm; (ii) any board of trade designated as a\ncontract market as aforesaid; (iii) any other person registered,\ntemporarily licensed, or exempt from registration under the commodity\nexchange act, as amended, or the rules and regulations promulgated\nthereunder where such registration, license or exemption relates\ndirectly to the activity engaged in; and (iv) any bank or trust company\nas defined in this article or any person acting as an employee of any\nbank or trust company or any licensed money transmitter or employee\nthereof.\n (h) In addition to those persons exempt under paragraph (g) of this\nsubdivision, no person shall be required to register as a commodity\ninvestment advisor pursuant to paragraph (b) of this subdivision who is\n(i) a lawyer, accountant, engineer, or teacher who renders investment\nadvice solely incidental to the practice of his or her profession; (ii)\na broker or dealer in securities or a commodity broker-dealer or a\ncommodity salesperson who renders investment advice solely incidental to\nthe conduct of his or her business as a broker or dealer in securities\nor a commodity broker-dealer or a commodity salesperson respectively,\nand who receives no special compensation for such advice; (iii) a\npublisher of, editor of, or writer for a bona fide newspaper or news\nmagazine, whether published in print or by electronic means; or (iv) a\nperson who during the course of the preceding twelve months has not\nadvised more than fifteen persons as to the advisability of investing\nin, purchasing, selling or holding commodity contracts and who does not\nhold himself out generally to the public as engaging in any of the\nactivities set forth in subparagraph (iii), (iv) or (v) of paragraph (a)\nof this subdivision.\n (i) The provisions of this subdivision shall not apply to any contract\nor transaction involving the sale of commodities by the owner or lessee\nof real property upon which such commodities are grown or raised, the\nsale of items by art dealers or licensed auctioneers at public auction\nor the sale or resale by a distributor or wholesaler of goods for\nconsumption by the public.\n (j) Any person required to be registered by this subdivision who is\nnot registered shall be guilty of a misdemeanor punishable as provided\nin the penal law.\n (k) Any person who engages in a business requiring registration under\nthis article and who knowingly employs two or more persons for the\npurpose of engaging in conduct requiring registration as a commodity\nbroker-dealer, commodity salesperson or commodity investment advisor\nunder this article with the knowledge that they are not so registered\nshall be guilty of a class E felony.\n (l) A violation of this subdivision shall constitute a fraudulent\npractice as that term is used in this article.\n (m) If any provision of this subdivision or the application thereof to\nany persons or circumstances is held invalid, the validity of the\nremainder of this subdivision or of the application of such provision to\nother persons and circumstances shall not be affected thereby.\n