§ 17-4-401 — Broker-dealers registration requirement and exemptions

(a) It is unlawful for a person to transact business in
this state as a broker-dealer unless the person is registered
under this act as a broker-dealer or is exempt from registration
as a broker-dealer under subsection (b) or (d) of this section.
(b) The following persons are exempt from the registration
requirement of subsection (a) of this section:
(i) A broker-dealer without a place of business in
this state if its only transactions effected in this state are
exclusively with or through:
(A) The issuer of the securities involved in the
transactions;
(B) A broker-dealer registered as a
broker-dealer under this act or not required to be registered as
a broker-dealer under this act;
(C) An institutional investor;
(D) A nonaffiliated federal covered investment
adviser with investments under management in excess of one
hundred million dollars ($100,000,000.00) acting for the account
of others pursuant to discretionary authority in a signed
record;
(E) A bona fide preexisting customer whose
principal place of residence is not in this state and the person
is registered as a broker-dealer under the Securities Exchange
Act of 1934 or not required to be registered under the
Securities Exchange Act of 1934 and is registered under the
securities act of the state in which the customer maintains a
principal place of residence;
(F) A bona fide preexisting customer whose
principal place of residence is in this state but was not
present in this state when the customer relationship was
established, if:
(I) The broker-dealer is registered under
the Securities Exchange Act of 1934 or not required to be
registered under the Securities Exchange Act of 1934 and is
registered under the securities laws of the state in which the
customer relationship was established and where the customer had
maintained a principal place of residence; and
(II) Within forty-five (45) days after the
customer's first transaction in this state, the person files an
application for registration as a broker-dealer in this state
and a further transaction is not effected more than seventy-five
(75) days after the date on which the application is filed, or,
if earlier, the date on which the secretary of state notifies
the person that the secretary of state has denied the
application for registration or has stayed the pendency of the
application for good cause.
(G) Not more than one (1) customer in this state
during the previous twelve (12) months, in addition to those
customers specified in subparagraphs (A) through (F) and under
subparagraph (H) of this paragraph, if the broker-dealer is
registered under the Securities Exchange Act of 1934 or not
required to be registered under the Securities Exchange Act of
1934 and is registered under the securities act of the state in
which the broker-dealer has its principal place of business; and
(H) Any other person exempted by rule adopted or
order issued under this act.
(ii) A person that deals solely in United States
government securities and is supervised as a dealer in
government securities by the board of governors of the federal
reserve system, the comptroller of the currency, the federal
deposit insurance corporation, or the office of thrift
supervision.
(c) It is unlawful for a broker-dealer, or for an issuer
engaged in offering, offering to purchase, purchasing, or
selling securities in this state, directly or indirectly, to
employ or associate with an individual to engage in an activity
related to securities transactions in this state if the
registration of the individual is suspended or revoked or the
individual is barred from employment or association with a
broker-dealer, an issuer, an investment adviser, or a federal
covered investment adviser by an order of the secretary of state
under this act, the securities and exchange commission, or a
self-regulatory organization. A broker-dealer or issuer does not
violate this subsection if the broker-dealer or issuer did not
know and in the exercise of reasonable care could not have
known, of the suspension, revocation, or bar. Upon request from
a broker-dealer or issuer and for good cause, an order under
this act may modify or waive, in whole or in part, the
application of the prohibitions of this subsection to the
broker-dealer.
(d) A rule adopted or order issued under this act may
permit:
(i) A broker-dealer that is registered in Canada or
other foreign jurisdiction and that does not have a place of
business in this state to effect transactions in securities with
or for, or attempt to effect the purchase or sale of any
securities by:
(A) An individual from Canada or other foreign
jurisdiction who is temporarily present in this state and with
whom the broker-dealer had a bona fide customer relationship
before the individual entered the United States;
(B) An individual from Canada or other foreign
jurisdiction who is present in this state and whose transactions
are in a self-directed tax advantaged retirement plan of which
the individual is the holder or contributor in that foreign
jurisdiction; or
(C) An individual who is present in this state,
with whom the broker-dealer customer relationship arose while
the individual was temporarily or permanently resident in Canada
or the other foreign jurisdiction.
(ii) An agent who represents a broker-dealer that is
exempt under this subsection to effect transactions in
securities or attempt to effect the purchase or sale of
securities in this state as permitted for a broker-dealer
described in paragraph (i) of this subsection.