N.Y. General Business Law § 359-e: Definitions

§ 359-e. Definitions. Registration requirements.

1. The following terms, whenever used or referred to in this article,

shall have the following meaning unless a different meaning clearly

appears from the context:

(a) A "dealer" shall mean and include any person, firm, association or

corporation engaged in the business of buying and selling securities

from or to the public within or from this state for his or its own

account, through a broker or otherwise, except a bank unless such bank

is considered a dealer under the federal securities exchange act of

1934, but does not include any person, firm, association or corporation

in so far as he or it buys or sells securities for his or its bona fide

investment account, either individually or in some fiduciary capacity.

The term "dealer" shall, except as otherwise provided in this article,

also include a person, firm, association or corporation selling or

offering for sale from or to the public within or from this state

securities issued by it. No person shall be deemed to be a "dealer", as

defined in this subdivision, or a broker, as defined in subdivision (b)

of this section, solely by reason of the fact that he is engaged in the

business of (i) selling, offering for sale, purchasing or offering to

purchase any security or securities to, from or through any bank, dealer

or broker, or to or from any syndicate, corporation or group formed for

the specific purpose of acquiring such securities for resale to the

public directly or through other syndicates or groups, or (ii) any

offer, sale or distribution by an issuer of stock dividends,

nontransferable warrants or transferable warrants exercisable within

ninety days of their issuance to existing stockholders, securities

issued upon conversion of convertible securities and exercise of

warrants and securities issued as part of a recapitalization or

reclassification to existing stockholders of the same issuer, or (iii)

selling, offering for sale, purchasing or offering to purchase any

security or securities on the floor of any securities exchange

registered as a national securities exchange under the securities

exchange act of nineteen hundred thirty-four. No person, firm,

association or corporation shall be deemed to be a "dealer", as defined

in this subdivision, solely by reason of selling or offering for sale

any security or securities to any bank, corporation, savings

institution, trust company, insurance company, investment company, as

defined in the federal investment company act of nineteen hundred forty,

pension or profit-sharing trust, or other financial institution or

institutional buyer, whether the purchaser is acting for himself or

itself or in some fiduciary capacity, as part of a private placement of

securities.

(b) A "broker" shall mean and include any person, firm, association or

corporation, other than a dealer, engaged in the business of effecting

transactions in securities for the account of others within or from this

state, but does not include a bank unless such bank is considered a

broker under the federal securities exchange act of 1934.

(c) A "salesman" shall mean and include every person employed by a

broker or dealer as said terms are defined in this section, for the

purpose of representing such broker or dealer in the sale or purchase of

securities to or from the public within or from this state.

(d) A "principal" shall mean and include every person or firm directly

or indirectly controlling any broker or dealer.

(e) A "bank" shall mean and include a state or national bank, trust

company or savings institution incorporated under the laws and subject

to the examination, supervision and control of any state or of the

United States or of any insular possession thereof.

2. No dealer or broker shall sell or offer for sale to or purchase or

offer to purchase from the public within or from this state, as

principal, or broker, any securities issued or to be issued unless and

until a notice, to be known as the "state notice," containing the name,

business or post office address of such dealer or broker and if a

corporation the state or country of incorporation thereof, and if a

partnership the names of the partners, shall have been filed in the

department of state. Such notice shall be in the following form:

STATE NOTICE

Name(s) of dealer(s), broker(s) ........................................

Business address(es) or post office address(es) (state which)

.........................................................................

If a corporation, the state or country in which incorporated.

.........................................................................

If a partnership, the names of the partners ............................

3. It shall be unlawful for any dealer, broker or salesman to sell or

offer for sale to or purchase or offer to purchase from the public

within or from this state, any securities issued or to be issued, unless

and until such dealer, broker or salesman shall have filed with the

department of law a registration statement as provided herein. A real

estate broker or salesman licensed under article twelve-A of the real

property law who is not acting as a dealer shall be deemed to be in

compliance with such registration statement filing requirements with

respect to the sale of securities constituting cooperative interests in

real estate, including shares of cooperative apartment corporations,

commercial cooperative corporations, condominiums, and interests in

homeowners associations.

(a) The registration statement relating to dealers and brokers, to be

known as the "broker-dealer statement" shall contain such information

pertaining to the business history for the last preceding five years,

criminal record, and educational background of the applicant and his or

its partners, officers, directors or other principals thereof deemed

pertinent by the attorney-general. The attorney-general may prescribe

forms for the use of such applicants.

(b) The registration statement relating to salesmen, to be known as

the "salesman's statement," shall contain such information pertaining to

the business history for the last preceding five years, criminal record

and educational background of the applicant deemed pertinent by the

attorney-general. The attorney-general may prescribe forms for use of

such applicants and, as a condition of registration, shall require that

prior to the filing of such a registration statement any such applicant

shall undertake and successfully complete the uniform securities agent

state law examination ("series 63") or the uniform combined state law

examination ("series 66") as administered by or on behalf of the North

American Securities Administrators Association, Inc. (NASAA) by any

national securities association or national securities exchange;

provided that, if an applicant registers with the attorney-general

solely for the purpose of selling condominiums, shares of cooperative

apartment corporations or commercial cooperative corporations, interests

in homeowners associations or interests in timeshare projects, such

applicant shall not be required to undertake the aforementioned

examination as a condition of registration.

(c) The registration of brokers, dealers and salesmen shall be for

periods of four years commencing on January fifth, nineteen hundred

sixty. Such statements for brokers, dealers or salesmen shall be filed

every four years within sixty days prior to the expiration of the four

year period, provided that previously filed statements shall continue to

be effective for a period of ninety days following the end of the four

year period. Initial statements for those having no previous filing may

be made at any time and shall be effective from the date of filing for a

period of four years. All statements filed pursuant to prior provisions

of law shall remain in effect until January fifth, nineteen hundred

sixty.

4. The attorney-general may by rule or order provide for the filing of

supplemental statements prescribed by him which shall contain such

information as the attorney-general may deem necessary to keep

reasonably current the information on file.

5. The department of law shall collect the following fees: (a) twelve

hundred dollars for each broker-dealer's statement; (b) twelve hundred

dollars for each broker-dealer's statement filed by a person, firm,

association or corporation selling or offering for sale from or to the

public within or from this state securities issued by it for any amount

in excess of five hundred thousand dollars; (c) three hundred dollars

for each broker-dealer's statement filed by a person, firm, association

or corporation selling or offering for sale from or to the public within

or from this state securities issued by it for any amount of five

hundred thousand dollars or less; (d) three hundred dollars for each

broker-dealer's statement filed by a person, firm, association or

corporation solely for the purpose of selling or offering for sale from

or to the public within or from this state securities consisting of

condominiums, shares of cooperative apartment corporations or commercial

cooperative corporations, interests in homeowners associations or

interests in timeshare projects, plus fifteen dollars for each partner,

officer, director or principal of any such firm, association or

corporation; (e) one hundred fifty dollars for each salesman's

statement; (f) thirty dollars for each supplemental statement; (g) three

hundred dollars for each application granted pursuant to subdivision two

of section three hundred fifty-nine-f of this article; and (h) two

hundred twenty-five dollars for the issuance of a "no filing required

letter"; these fees shall obtain for both original statements and their

renewals. No fee, however, shall be collected for filing a supplemental

statement by a salesman cancelling his prior registration as such

salesman.

Any partner, officer, director or principal who is named as such in a

broker-dealer statement and who shall act as a salesman for such broker

or dealer, shall not be required to register as a salesman.

6. Any false statement of a material fact contained in any such

broker-dealer or salesman's statement or supplemental statement or in

any certificate attached thereto shall constitute a violation of this

section within the meaning of section three hundred fifty-nine-g of this

article.

7. Any person, partnership, corporation, company, trust or association

representing in any manner that the state, the department of law or any

officer thereof has recommended the purchase of any stocks, bonds, or

other securities, in advertising or offering such stocks, bonds or other

securities for sale shall be guilty of a misdemeanor punishable as

provided in subdivision two of section three hundred fifty-nine-g of

this article.

8. After this subdivision as hereby amended takes effect no dealer

shall sell or offer for sale to the public within this state as

principal or agent, any securities issued or to be issued which are not

exempted from the provisions of this subdivision by section three

hundred and fifty-nine-f hereof unless and until such dealer shall cause

to be filed a "further state notice" containing the information, other

than the names of partners, required to be published by subdivision two

of this section, but opposite the heading "name of dealer", if the

person or persons causing such notice to be filed are acting pursuant to

the provisions of this subdivision, there shall be added either the

words "syndicate manager" or "syndicate managers" as the case may be;

and in addition thereto and as part of each such further state notice

the name of the security or securities, name, post office address and

state or country of incorporation or organization of the corporation,

association, common law trust or similar organization issuing or to

issue the security or securities to be sold or offered for sale, in the

following form:

FURTHER STATE NOTICE

Name of security or securities .........................................

Name of issuer of securities ...........................................

Post Office address of issuer of securities ............................

The state or country in which organized ................................

Two or more dealers may jointly file such further state notice

required by this subdivision, and a dealer or exchange must file a

further state notice for each issue about to be offered which has not

heretofore been published by the issuer. A syndicate manager or

co-manager with an office in this state may file on behalf of an entire

syndicate.

9. A broker-dealer or salesman registration statement or any other

document is filed when it is received in the New York city office of the

attorney-general.

10. The attorney-general may from time to time in the public interest

make, amend, and rescind such forms as are necessary to carry out the

provisions of this act, including forms governing registration

statements and applications. For the purpose of forms, the

attorney-general may classify securities, persons and matters within his

jurisdiction, and may prescribe different forms and requirements for

different classes.

11. It is unlawful for any broker or dealer to employ a salesman

unless the salesman is registered. The registration of a salesman is

suspended during any period when he is not associated with a particular

broker or dealer registered under this act or a particular issuer. When

a salesman begins or terminates a connection with a broker or dealer, or

begins or terminates those activities which make him a salesman, the

salesman as well as the broker or dealer shall promptly notify the

attorney-general.

12. All persons, including partners, officers, directors and salesmen

employed by a member or a member organization of a national securities

exchange, a national securities association, or any other broker-dealer,

registered with the federal securities exchange commission or any broker

or dealer required to be registered with the department of law pursuant

to this article except those dealers required to be registered solely by

reason of the fact that they are engaged in selling or offering for sale

securities issued by themselves, and any employee of a clearing

corporation affiliated with any such registered national securities

exchange or with any national securities association registered with the

federal securities exchange commission, employed on or after September

first, nineteen hundred sixty-nine, who are regularly employed within

the state of New York shall, as a condition of employment, be

fingerprinted. Every set of fingerprints taken pursuant to this

subdivision shall be promptly submitted to the attorney general for

appropriate processing, except that individuals fingerprinted in

compliance with the rules of the securities and exchange commission need

not file with the attorney general so long as records of those

fingerprints, as well as information received in response to their

filing, are available to the attorney general for inspection. The

department of law shall collect from a member or member organization of

a national securities exchange, a national securities association, or

any registered broker-dealer as described above or a clearing

corporation affiliated with any such registered national securities

exchange or with any such registered national securities association

submitting fingerprints to the attorney general for processing a fee in

the amount prescribed therefor by the division of criminal justice

services for each set of fingerprints submitted. Failure to comply with

this section shall be deemed a violation of and a fraudulent practice

within the meaning of this article.

12-a. Any employee of a national securities exchange or national

securities association registered with the federal securities and

exchange commission, and any employee of a clearing corporation or

securities information processor affiliated with any such registered

national securities exchange or national securities association, and who

are regularly employed within the state of New York, shall, as a

condition of employment, be fingerprinted. Every national securities

exchange, national securities association, clearing corporation or

securities information processor that is required to submit fingerprints

pursuant to this section shall also obtain fingerprints from any

individual not employed by such organization who provides services to

such organization within the state of New York provided that the

individual has access to records including electronic records, as

defined by section three hundred two of the state technology law, or

other material or secure buildings or secure property, which place the

security of such organization at risk.

Every set of fingerprints taken pursuant to this subdivision shall be

promptly submitted to the federal bureau of investigation for the

purpose of a nationwide criminal history check. Such reports received

from the federal bureau of investigation shall be kept confidential,

although the contents of any such report may be disclosed to exchange

officials involved in personnel and security matters, to the attorney

general, to law enforcement authorities and to the securities and

exchange commission. Unless inconsistent with federal law, fingerprints

supplied by such employee or employment applicant shall be returned to

such person upon termination or denial of such employment. Fingerprints

supplied by such other individuals providing services shall be returned

upon completion of such services.

12-b. Any employee of a designated contract market, as that term is

defined in the Commodity Exchange Act, under the authority of the

federal Commodity Futures Trading Commission, and any employee of a

derivatives clearing organization, as that term is defined under the

Commodity Exchange Act, that is affiliated with any such designated

contract market, and who are regularly employed within the state of New

York, shall, as a condition of employment, be fingerprinted. Every

designated contract market and derivatives clearing organization that is

required to submit fingerprints pursuant to this section shall also

obtain fingerprints from any individual not employed by such

organization who provides services to such organization within the state

of New York provided that the individual has access to records including

electronic records, as defined by section three hundred two of the state

technology law, or other material or secure buildings or secure

property, which place the security of such organization at risk.

Every set of fingerprints taken pursuant to this subdivision shall be

promptly submitted to the federal bureau of investigation for the

purpose of a nationwide criminal history check. Such reports received

from the federal bureau of investigation shall be kept confidential,

although the contents of any such report may be disclosed to designated

contract market or derivatives clearing organization officials involved

in personnel and security matters, to the attorney general, to law

enforcement authorities and to the Commodity Futures Trading Commission.

Unless inconsistent with federal law, fingerprints supplied by such

employee or employment applicant shall be returned to such person upon

termination or denial of such employment. Fingerprints supplied by such

other individuals providing services shall be returned upon completion

of such services.

13. (a) The attorney general may by regulation, rule or order provide

an alternative method of registration by which any dealer, broker or

salesman acting as such or as principal in more than one state or who

engages in multi-state securities offerings may supply the information

otherwise required to be furnished in the state notice, registration

statement, supplemental statements and further state notice mandated by

subdivisions two, three, four and eight of this section. Such

alternative method, when complied with, shall be deemed to fulfill the

filing requirements of subdivisions two, eight and nine of this section,

and shall be in lieu thereof. The regulation, rule or order of the

attorney general may also provide for alternative filing periods and

expiration dates and an alternate method for the payment of fees, to be

known as "in lieu filing fees", which shall be collected pursuant to

such regulation, rule or order of the attorney general in the same

amounts as, and for the same information otherwise required to be

collected for statements filed as specified by subdivision five of this

section.

(b) No alternative method may be provided by the attorney general

which does not have, as its purpose, the facilitation of a central

registration depository whereby brokers, dealers or salesmen can

centrally or simultaneously register and pay fees for all states in

which they plan to transact business which requires registration. The

attorney general is hereby authorized to enter into an agreement or

otherwise facilitate such alternative method with any national

securities association, national securities exchange, national

association of state securities administrators or similar association or

agents thereof to effectuate the provisions of this subdivision.

(c) Any false statement of a material fact contained in any substitute

for a broker-dealer statement or salesman's statement or supplemental

statement which is provided pursuant to the attorney general's

regulation, rule or order specified in paragraph (a) of this

subdivision, shall constitute a violation of this section within the

meaning of section three hundred fifty-nine-g of this article.

(d) It shall be unlawful for any dealer, broker or salesman to sell or

offer for sale to or purchase or offer to purchase from the public

within or from this state, any securities issued or to be issued, unless

and until such dealer, broker or salesman shall have complied with the

requirements of either: (i) the regulation, rule or order of the

attorney general specified in paragraph (a) of this subdivision; or (ii)

the filing of a state notice and registration statement and supplemental

statements and further state notice as applicable to said dealer, broker

or salesman, in accordance with subdivisions two, three, four and eight

of this section.

(e) To the extent inconsistent therewith, the provisions of this

subdivision shall supersede the provisions of any other subdivision of

this section.

14. (a) Definitions. For purposes of this subdivision the following

definitions shall apply:

(i) "Commodity" means, except as otherwise specified by the attorney

general by rule, regulation or order, any agricultural, grain, animal,

chemical, metal or mineral product or byproduct, any gem or gemstone

(whether characterized as precious, semi-precious or otherwise), any

fuel (whether liquid, gaseous or otherwise), any foreign currency, and

any other good, article, or material.

(ii) "Commodity contract" means any account, agreement or contract for

the purchase or sale of, or any option or right to purchase or sell,

primarily for speculation or investment purposes and not for use or

consumption by the offeree or purchaser, one or more commodities,

whether for immediate or subsequent delivery or for storage and whether

or not delivery is intended by the parties, and whether characterized as

a cash contract, deferred shipment or deferred delivery contract,

forward contract, futures contract, installment or margin contract,

leverage contract, option, privilege, indemnity, bid, offer, put, call,

advance guaranty, decline guaranty or otherwise. Any commodity contract

offered for sale or sold to a person other than a producer, processor,

merchant, handler, commercial user or ultimate consumer of the commodity

shall, in the absence of evidence to the contrary, be presumed to be

offered for sale or sold for speculation or investment purposes.

(iii) "Commodity broker-dealer" means any person engaged in the

business of selling or offering to sell commodities through commodity

contracts to the public within or from the state of New York.

(iv) "Commodity salesperson" means any person employed by or

representing a commodity broker-dealer in selling or offering for sale

commodities through commodity contracts to the public within or from the

state of New York.

(v) "Commodity investment advisor" means any person who, for

compensation, within or from the state of New York, engages in the

business of advising members of the public, either directly or through

publications or writings, as to the advisability of investing in,

purchasing, selling or holding commodity contracts.

(b) Any person acting as a commodity broker-dealer, commodity

salesperson or commodity investment advisor and any person who manages

or supervises any such broker-dealer, salesperson or investment advisor

shall file a registration statement with the attorney general as a

commodity broker-dealer, commodity salesperson, or commodity investment

advisor relating to the activity actually engaged in.

(c) The attorney general may adopt rules and regulations governing the

form and content of such registration statements for each such activity

which may include information pertaining to the business history for the

last preceding five years, record of criminal convictions, litigation

history, and educational background of the registrant and the

registrant's partners, officers, directors or other principals deemed

pertinent by the attorney general and the names of persons employed as

commodity salespersons or commodity investment advisors by the

registrant.

(d) The registration statement shall be effective for a period of one

year from the date of filing.

(e) The attorney general shall by rule or regulation provide for the

method of renewing such registration statements and may require the

filing of supplemental statements which shall contain such information

as the attorney general may deem necessary to keep reasonably current

the information on file.

(f) The attorney general shall collect the following annual fees: one

hundred dollars for each commodity broker-dealer registration statement

or commodity investment advisor registration statement; twenty-five

dollars for each commodity salesperson registration statement; and ten

dollars for each supplemental statement.

(g) The provisions of this subdivision shall not apply to (i) any

person who is a member or member firm of a national securities exchange,

board of trade designated as a contract market by the Commodity Futures

Trading Commission pursuant to the commodity exchange act, as amended,

the National Association of Securities Dealers, Inc., or the National

Futures Association, Inc., or is an affiliate of such a member or member

firm, or employed by such a member or member firm or by an affiliate of

such a member or member firm; (ii) any board of trade designated as a

contract market as aforesaid; (iii) any other person registered,

temporarily licensed, or exempt from registration under the commodity

exchange act, as amended, or the rules and regulations promulgated

thereunder where such registration, license or exemption relates

directly to the activity engaged in; and (iv) any bank or trust company

as defined in this article or any person acting as an employee of any

bank or trust company or any licensed money transmitter or employee

thereof.

(h) In addition to those persons exempt under paragraph (g) of this

subdivision, no person shall be required to register as a commodity

investment advisor pursuant to paragraph (b) of this subdivision who is

(i) a lawyer, accountant, engineer, or teacher who renders investment

advice solely incidental to the practice of his or her profession; (ii)

a broker or dealer in securities or a commodity broker-dealer or a

commodity salesperson who renders investment advice solely incidental to

the conduct of his or her business as a broker or dealer in securities

or a commodity broker-dealer or a commodity salesperson respectively,

and who receives no special compensation for such advice; (iii) a

publisher of, editor of, or writer for a bona fide newspaper or news

magazine, whether published in print or by electronic means; or (iv) a

person who during the course of the preceding twelve months has not

advised more than fifteen persons as to the advisability of investing

in, purchasing, selling or holding commodity contracts and who does not

hold himself out generally to the public as engaging in any of the

activities set forth in subparagraph (iii), (iv) or (v) of paragraph (a)

of this subdivision.

(i) The provisions of this subdivision shall not apply to any contract

or transaction involving the sale of commodities by the owner or lessee

of real property upon which such commodities are grown or raised, the

sale of items by art dealers or licensed auctioneers at public auction

or the sale or resale by a distributor or wholesaler of goods for

consumption by the public.

(j) Any person required to be registered by this subdivision who is

not registered shall be guilty of a misdemeanor punishable as provided

in the penal law.

(k) Any person who engages in a business requiring registration under

this article and who knowingly employs two or more persons for the

purpose of engaging in conduct requiring registration as a commodity

broker-dealer, commodity salesperson or commodity investment advisor

under this article with the knowledge that they are not so registered

shall be guilty of a class E felony.

(l) A violation of this subdivision shall constitute a fraudulent

practice as that term is used in this article.

(m) If any provision of this subdivision or the application thereof to

any persons or circumstances is held invalid, the validity of the

remainder of this subdivision or of the application of such provision to

other persons and circumstances shall not be affected thereby.