N.Y. Insurance Law § 1204: Sale of insurance securities

§ 1204. Sale of insurance securities. (a) Subject to the provisions of

subsection (e) hereof, no person, firm, association or corporation shall

in this state sell or propose to sell to the public any security issued

by any insurer not authorized to do business in this state, unless

licensed to do so under this section. In this subsection and in

subsection (b) hereof, "insurer" includes any corporation whose

securities are to be sold or offered for sale (except by exchange for

shares or assets and except securities issued upon a merger in

conversion of securities of a merging company) primarily to acquire,

organize or finance the operations of another insurer not authorized to

do business in this state which is, or as a result of applying the

proceeds of such offering will be, a subsidiary of such corporation.

(b) The superintendent may issue a license to a named person, firm,

association or corporation to sell and propose to sell to the public in

this state the specified securities of a specified insurer or other

company subject to subsection (a) hereof. The applicant for such a

license shall submit a written application, subscribed by the applicant

and affirmed by him as true under the penalties of perjury and

containing such information as the superintendent may require, including

the following: the name, residence address, business address in this

state and previous business experience of the applicant and of such

insurer and of his or its officers, members and employees, and

information as to their trustworthiness; a copy of every security to be

offered for sale; a statement in detail as to the insurer's financial

condition, plans and purposes, the amount and par value of securities

and their selling price, the manner in which the proceeds of sale are to

be used, the rate of commissions to be paid for the sale of securities,

the salaries to be paid to the insurer's officers, and the safeguards to

be provided against diversion of proceeds from such plans and purposes.

Before issuing any such license the superintendent may make such

examination of the affairs of the proposed licensee and of such insurer

as he deems expedient. The superintendent may refuse to issue such

license, or may after notice and hearing revoke such license, if in his

judgment such refusal or revocation will best promote the interests of

the people of this state. Such license shall be for a term of one year

unless sooner revoked. No license to sell or to propose to sell

securities of any foreign or alien insurer shall be issued unless such

insurer is qualified to obtain a license to do an insurance business in

this state or, in the case of a corporation described in subsection (a)

hereof, unless the insurer subsidiary is so qualified.

(c) No person, firm, association or corporation shall in this state

issue, circulate or distribute any advertisement, circular, letter or

other public announcement in connection with the sale or proposed sale

to the public in this state of any securities of any insurer unless a

copy of such announcement has been filed with the superintendent and

approved by him. The superintendent may approve any such announcement

if, after such examination or investigation as he sees fit, he finds it

is not false, misleading or likely to deceive the public. In this

subsection, "insurer" shall include any corporation whose securities are

to be sold or offered for sale (except by exchange for shares or assets

and other than securities issued upon a merger in conversion of

securities of a merging company) primarily to acquire, organize or

finance the operations of another insurer which is, or as a result of

applying the proceeds of such offering will be, a subsidiary of such

corporation; provided that examination or investigation of any such

corporation shall be limited to matters relating to the operations of

the insurance subsidiary.

(d) Every such license to sell or propose to sell the securities of an

insurer shall state conspicuously in bold-face type: "The issuance of

this license by the superintendent of financial services of New York

does not constitute a recommendation of these securities." No person,

firm, association or corporation shall represent that the superintendent

or the department of financial services or the state of New York has

recommended any securities for purchase. The superintendent may in his

discretion require the insertion in any public announcement to be

approved by him of a statement that such approval does not constitute a

recommendation of the securities therein referred to.

(e) This section shall not apply to the selling or proposing to sell

securities after one year from the first date upon which the security

was offered to the public in this state, except that subsections (c) and

(d) hereof shall apply to any insurer authorized to do business in this

state and to any other corporation described in subsection (c) hereof.

(f) (1) This section shall not apply to annuities or agreements to

provide for annuities issued or to be issued by an authorized insurer

pursuant to section four thousand two hundred forty of this chapter.

(2) The superintendent may by order or regulation exempt any other

security or class thereof from all or part of this section on such terms

and conditions as he deems appropriate upon a finding that its

application thereto is not necessary to protect the public.