101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3439

 

Introduced 2/14/2020, by Sen. Rachelle Crowe

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 5/2.1  from Ch. 121 1/2, par. 137.2-1
815 ILCS 5/8  from Ch. 121 1/2, par. 137.8
815 ILCS 5/11  from Ch. 121 1/2, par. 137.11
815 ILCS 5/11.7 new
815 ILCS 5/12  from Ch. 121 1/2, par. 137.12
815 ILCS 5/12.5 new
815 ILCS 5/14  from Ch. 121 1/2, par. 137.14
815 ILCS 5/2.14 rep.

    Amends the Illinois Securities Law of 1953. Eliminates reference to face amount certificate contracts. Provides that, in addition to existing disciplinary penalties, the registrations of dealers and advisers may be limited or conditioned for failure to comply with statutory requirements. Provides that administrative actions may be brought by the Secretary of State within 3 years from the time the Secretary of State had notice of facts that, in the exercise of reasonable diligence would lead to actual knowledge of the violation. Removes provision barring administrative actions 5 years after the date on which the alleged violation occurred. Establishes protections against the financial exploitation of persons 60 years of age or older and persons subject to the Illinois Adult Protective Services Act. Requires certain licensees to report incidents of potential exploitation.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3439LRB101 16542 JLS 65926 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Securities Law of 1953 is amended
5by changing Sections 2.1, 8, 11, 12, and 14 and by adding
6Sections 11.7 and 12.5 as follows:
 
7    (815 ILCS 5/2.1)  (from Ch. 121 1/2, par. 137.2-1)
8    Sec. 2.1. Security. "Security" means any note, stock,
9treasury stock, bond, debenture, evidence of indebtedness,
10certificate of interest or participation in any profit-sharing
11agreement, collateral-trust certificate, preorganization
12certificate or subscription, transferable share, investment
13contract, viatical investment, investment fund share,
14face-amount certificate, voting-trust certificate, certificate
15of deposit for a security, fractional undivided interest in
16oil, gas or other mineral lease, right or royalty, any put,
17call, straddle, option, or privilege on any security,
18certificate of deposit, or group or index of securities
19(including any interest therein or based on the value thereof),
20or any put, call, straddle, option, or privilege entered into,
21relating to foreign currency, or, in general, any interest or
22instrument commonly known as a "security", or any certificate
23of interest or participation in, temporary or interim

 

 

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1certificate for, receipt for, guarantee of, or warrant or right
2to subscribe to or purchase, any of the foregoing. "Security"
3does not mean a mineral investment contract or a mineral
4deferred delivery contract; provided, however, the Department
5shall have the authority to regulate these contracts as
6hereinafter provided.
7(Source: P.A. 96-736, eff. 7-1-10.)
 
8    (815 ILCS 5/8)  (from Ch. 121 1/2, par. 137.8)
9    Sec. 8. Registration of dealers, limited Canadian dealers,
10Internet portals, salespersons, investment advisers, and
11investment adviser representatives.
 
12    A. Except as otherwise provided in this subsection A, every
13dealer, limited Canadian dealer, salesperson, investment
14adviser, and investment adviser representative shall be
15registered as such with the Secretary of State. No dealer or
16salesperson need be registered as such when offering or selling
17securities in transactions exempted by subsection A, B, C, D,
18E, G, H, I, J, K, M, O, P, Q, R or S of Section 4 of this Act,
19provided that such dealer or salesperson is not regularly
20engaged in the business of offering or selling securities in
21reliance upon the exemption set forth in subsection G or M of
22Section 4 of this Act. No dealer, issuer or controlling person
23shall employ a salesperson unless such salesperson is
24registered as such with the Secretary of State or is employed

 

 

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1for the purpose of offering or selling securities solely in
2transactions exempted by subsection A, B, C, D, E, G, H, I, J,
3K, L, M, O, P, Q, R or S of Section 4 of this Act; provided that
4such salesperson need not be registered when effecting
5transactions in this State limited to those transactions
6described in Section 15(h)(2) of the Federal 1934 Act or
7engaging in the offer or sale of securities in respect of which
8he or she has beneficial ownership and is a controlling person.
9The Secretary of State may, by rule, regulation or order and
10subject to such terms, conditions, and fees as may be
11prescribed in such rule, regulation or order, exempt from the
12registration requirements of this Section 8 any investment
13adviser, if the Secretary of State shall find that such
14registration is not necessary in the public interest by reason
15of the small number of clients or otherwise limited character
16of operation of such investment adviser.
 
17    B. An application for registration as a dealer or limited
18Canadian dealer, executed, verified, or authenticated by or on
19behalf of the applicant, shall be filed with the Secretary of
20State, in such form as the Secretary of State may by rule,
21regulation or order prescribe, setting forth or accompanied by:
22        (1) The name and address of the applicant, the location
23    of its principal business office and all branch offices, if
24    any, and the date of its organization;
25        (2) A statement of any other Federal or state licenses

 

 

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1    or registrations which have been granted the applicant and
2    whether any such licenses or registrations have ever been
3    refused, cancelled, suspended, revoked or withdrawn;
4        (3) The assets and all liabilities, including
5    contingent liabilities of the applicant, as of a date not
6    more than 60 days prior to the filing of the application;
7        (4)(a) A brief description of any civil or criminal
8    proceeding of which fraud is an essential element pending
9    against the applicant and whether the applicant has ever
10    been convicted of a felony, or of any misdemeanor of which
11    fraud is an essential element;
12        (b) A list setting forth the name, residence and
13    business address and a 10 year occupational statement of
14    each principal of the applicant and a statement describing
15    briefly any civil or criminal proceedings of which fraud is
16    an essential element pending against any such principal and
17    the facts concerning any conviction of any such principal
18    of a felony, or of any misdemeanor of which fraud is an
19    essential element;
20        (5) If the applicant is a corporation: a list of its
21    officers and directors setting forth the residence and
22    business address of each; a 10-year occupational statement
23    of each such officer or director; and a statement
24    describing briefly any civil or criminal proceedings of
25    which fraud is an essential element pending against each
26    such officer or director and the facts concerning any

 

 

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1    conviction of any officer or director of a felony, or of
2    any misdemeanor of which fraud is an essential element;
3        (6) If the applicant is a sole proprietorship, a
4    partnership, limited liability company, an unincorporated
5    association or any similar form of business organization:
6    the name, residence and business address of the proprietor
7    or of each partner, member, officer, director, trustee or
8    manager; the limitations, if any, of the liability of each
9    such individual; a 10-year occupational statement of each
10    such individual; a statement describing briefly any civil
11    or criminal proceedings of which fraud is an essential
12    element pending against each such individual and the facts
13    concerning any conviction of any such individual of a
14    felony, or of any misdemeanor of which fraud is an
15    essential element;
16        (7) Such additional information as the Secretary of
17    State may by rule or regulation prescribe as necessary to
18    determine the applicant's financial responsibility,
19    business repute and qualification to act as a dealer.
20        (8)(a) No applicant shall be registered or
21    re-registered as a dealer or limited Canadian dealer under
22    this Section unless and until each principal of the dealer
23    has passed an examination conducted by the Secretary of
24    State or a self-regulatory organization of securities
25    dealers or similar person, which examination has been
26    designated by the Secretary of State by rule, regulation or

 

 

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1    order to be satisfactory for purposes of determining
2    whether the applicant has sufficient knowledge of the
3    securities business and laws relating thereto to act as a
4    registered dealer. Any dealer who was registered on
5    September 30, 1963, and has continued to be so registered;
6    and any principal of any registered dealer, who was acting
7    in such capacity on and continuously since September 30,
8    1963; and any individual who has previously passed a
9    securities dealer examination administered by the
10    Secretary of State or any examination designated by the
11    Secretary of State to be satisfactory for purposes of
12    determining whether the applicant has sufficient knowledge
13    of the securities business and laws relating thereto to act
14    as a registered dealer by rule, regulation or order, shall
15    not be required to pass an examination in order to continue
16    to act in such capacity. The Secretary of State may by
17    order waive the examination requirement for any principal
18    of an applicant for registration under this subsection B
19    who has had such experience or education relating to the
20    securities business as may be determined by the Secretary
21    of State to be the equivalent of such examination. Any
22    request for such a waiver shall be filed with the Secretary
23    of State in such form as may be prescribed by rule or
24    regulation.
25        (b) Unless an applicant is a member of the body
26    corporate known as the Securities Investor Protection

 

 

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1    Corporation established pursuant to the Act of Congress of
2    the United States known as the Securities Investor
3    Protection Act of 1970, as amended, a member of an
4    association of dealers registered as a national securities
5    association pursuant to Section 15A of the Federal 1934
6    Act, or a member of a self-regulatory organization or stock
7    exchange in Canada which the Secretary of State has
8    designated by rule or order, an applicant shall not be
9    registered or re-registered unless and until there is filed
10    with the Secretary of State evidence that such applicant
11    has in effect insurance or other equivalent protection for
12    each client's cash or securities held by such applicant,
13    and an undertaking that such applicant will continually
14    maintain such insurance or other protection during the
15    period of registration or re-registration. Such insurance
16    or other protection shall be in a form and amount
17    reasonably prescribed by the Secretary of State by rule or
18    regulation.
19        (9) The application for the registration of a dealer or
20    limited Canadian dealer shall be accompanied by a filing
21    fee and a fee for each branch office in this State, in each
22    case in the amount established pursuant to Section 11a of
23    this Act, which fees shall not be returnable in any event.
24        (10) The Secretary of State shall notify the dealer or
25    limited Canadian dealer by written notice (which may be by
26    electronic or facsimile transmission) of the effectiveness

 

 

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1    of the registration as a dealer in this State.
2        (11) Any change which renders no longer accurate any
3    information contained in any application for registration
4    or re-registration of a dealer or limited Canadian dealer
5    shall be reported to the Secretary of State within 10
6    business days after the occurrence of such change; but in
7    respect to assets and liabilities only materially adverse
8    changes need be reported.
 
9    C. Any registered dealer, limited Canadian dealer, issuer,
10or controlling person desiring to register a salesperson shall
11file an application with the Secretary of State, in such form
12as the Secretary of State may by rule or regulation prescribe,
13which the salesperson is required by this Section to provide to
14the dealer, issuer, or controlling person, executed, verified,
15or authenticated by the salesperson setting forth or
16accompanied by:
17        (1) the name, residence and business address of the
18    salesperson;
19        (2) whether any federal or State license or
20    registration as dealer, limited Canadian dealer, or
21    salesperson has ever been refused the salesperson or
22    cancelled, suspended, revoked, withdrawn, barred, limited,
23    or otherwise adversely affected in a similar manner or
24    whether the salesperson has ever been censured or expelled;
25        (3) the nature of employment with, and names and

 

 

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1    addresses of, employers of the salesperson for the 10 years
2    immediately preceding the date of application;
3        (4) a brief description of any civil or criminal
4    proceedings of which fraud is an essential element pending
5    against the salesperson, and whether the salesperson has
6    ever been convicted of a felony, or of any misdemeanor of
7    which fraud is an essential element;
8        (5) such additional information as the Secretary of
9    State may by rule, regulation or order prescribe as
10    necessary to determine the salesperson's business repute
11    and qualification to act as a salesperson; and
12        (6) no individual shall be registered or re-registered
13    as a salesperson under this Section unless and until such
14    individual has passed an examination conducted by the
15    Secretary of State or a self-regulatory organization of
16    securities dealers or similar person, which examination
17    has been designated by the Secretary of State by rule,
18    regulation or order to be satisfactory for purposes of
19    determining whether the applicant has sufficient knowledge
20    of the securities business and laws relating thereto to act
21    as a registered salesperson.
22        Any salesperson who was registered prior to September
23    30, 1963, and has continued to be so registered, and any
24    individual who has passed a securities salesperson
25    examination administered by the Secretary of State or an
26    examination designated by the Secretary of State by rule,

 

 

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1    regulation or order to be satisfactory for purposes of
2    determining whether the applicant has sufficient knowledge
3    of the securities business and laws relating thereto to act
4    as a registered salesperson, shall not be required to pass
5    an examination in order to continue to act as a
6    salesperson. The Secretary of State may by order waive the
7    examination requirement for any applicant for registration
8    under this subsection C who has had such experience or
9    education relating to the securities business as may be
10    determined by the Secretary of State to be the equivalent
11    of such examination. Any request for such a waiver shall be
12    filed with the Secretary of State in such form as may be
13    prescribed by rule, regulation or order.
14        (7) The application for registration of a salesperson
15    shall be accompanied by a filing fee and a Securities Audit
16    and Enforcement Fund fee, each in the amount established
17    pursuant to Section 11a of this Act, which shall not be
18    returnable in any event.
19        (8) Any change which renders no longer accurate any
20    information contained in any application for registration
21    or re-registration as a salesperson shall be reported to
22    the Secretary of State within 10 business days after the
23    occurrence of such change. If the activities are terminated
24    which rendered an individual a salesperson for the dealer,
25    issuer or controlling person, the dealer, issuer or
26    controlling person, as the case may be, shall notify the

 

 

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1    Secretary of State, in writing, within 30 days of the
2    salesperson's cessation of activities, using the
3    appropriate termination notice form.
4        (9) A registered salesperson may transfer his or her
5    registration under this Section 8 for the unexpired term
6    thereof from one registered dealer or limited Canadian
7    dealer to another by the giving of notice of the transfer
8    by the new registered dealer or limited Canadian dealer to
9    the Secretary of State in such form and subject to such
10    conditions as the Secretary of State shall by rule or
11    regulation prescribe. The new registered dealer or limited
12    Canadian dealer shall promptly file an application for
13    registration of such salesperson as provided in this
14    subsection C, accompanied by the filing fee prescribed by
15    paragraph (7) of this subsection C.
 
16    C-5. Except with respect to federal covered investment
17advisers whose only clients are investment companies as defined
18in the Federal 1940 Act, other investment advisers, federal
19covered investment advisers, or any similar person which the
20Secretary of State may prescribe by rule or order, a federal
21covered investment adviser shall file with the Secretary of
22State, prior to acting as a federal covered investment adviser
23in this State, such documents as have been filed with the
24Securities and Exchange Commission as the Secretary of State by
25rule or order may prescribe. The notification of a federal

 

 

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1covered investment adviser shall be accompanied by a
2notification filing fee established pursuant to Section 11a of
3this Act, which shall not be returnable in any event. Every
4person acting as a federal covered investment adviser in this
5State shall file a notification filing and pay an annual
6notification filing fee established pursuant to Section 11a of
7this Act, which is not returnable in any event. The failure to
8file any such notification shall constitute a violation of
9subsection D of Section 12 of this Act, subject to the
10penalties enumerated in Section 14 of this Act. Until October
1110, 1999 or other date as may be legally permissible, a federal
12covered investment adviser who fails to file the notification
13or refuses to pay the fees as required by this subsection shall
14register as an investment adviser with the Secretary of State
15under Section 8 of this Act. The civil remedies provided for in
16subsection A of Section 13 of this Act and the civil remedies
17of rescission and appointment of receiver, conservator,
18ancillary receiver, or ancillary conservator provided for in
19subsection F of Section 13 of this Act shall not be available
20against any person by reason of the failure to file any such
21notification or to pay the notification fee or on account of
22the contents of any such notification.
 
23    D. An application for registration as an investment
24adviser, executed, verified, or authenticated by or on behalf
25of the applicant, shall be filed with the Secretary of State,

 

 

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1in such form as the Secretary of State may by rule or
2regulation prescribe, setting forth or accompanied by:
3        (1) The name and form of organization under which the
4    investment adviser engages or intends to engage in
5    business; the state or country and date of its
6    organization; the location of the adviser's principal
7    business office and branch offices, if any; the names and
8    addresses of the adviser's principal, partners, officers,
9    directors, and persons performing similar functions or, if
10    the investment adviser is an individual, of the individual;
11    and the number of the adviser's employees who perform
12    investment advisory functions;
13        (2) The education, the business affiliations for the
14    past 10 years, and the present business affiliations of the
15    investment adviser and of the adviser's principal,
16    partners, officers, directors, and persons performing
17    similar functions and of any person controlling the
18    investment adviser;
19        (3) The nature of the business of the investment
20    adviser, including the manner of giving advice and
21    rendering analyses or reports;
22        (4) The nature and scope of the authority of the
23    investment adviser with respect to clients' funds and
24    accounts;
25        (5) The basis or bases upon which the investment
26    adviser is compensated;

 

 

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1        (6) Whether the investment adviser or any principal,
2    partner, officer, director, person performing similar
3    functions or person controlling the investment adviser (i)
4    within 10 years of the filing of the application has been
5    convicted of a felony, or of any misdemeanor of which fraud
6    is an essential element, or (ii) is permanently or
7    temporarily enjoined by order or judgment from acting as an
8    investment adviser, underwriter, dealer, principal or
9    salesperson, or from engaging in or continuing any conduct
10    or practice in connection with any such activity or in
11    connection with the purchase or sale of any security, and
12    in each case the facts relating to the conviction, order or
13    judgment;
14        (7)(a) A statement as to whether the investment adviser
15    is engaged or is to engage primarily in the business of
16    rendering investment supervisory services; and
17        (b) A statement that the investment adviser will
18    furnish his, her, or its clients with such information as
19    the Secretary of State deems necessary in the form
20    prescribed by the Secretary of State by rule or regulation;
21        (8) Such additional information as the Secretary of
22    State may, by rule, regulation or order prescribe as
23    necessary to determine the applicant's financial
24    responsibility, business repute and qualification to act
25    as an investment adviser.
26        (9) No applicant shall be registered or re-registered

 

 

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1    as an investment adviser under this Section unless and
2    until each principal of the applicant who is actively
3    engaged in the conduct and management of the applicant's
4    advisory business in this State has passed an examination
5    or completed an educational program conducted by the
6    Secretary of State or an association of investment advisers
7    or similar person, which examination or educational
8    program has been designated by the Secretary of State by
9    rule, regulation or order to be satisfactory for purposes
10    of determining whether the applicant has sufficient
11    knowledge of the securities business and laws relating
12    thereto to conduct the business of a registered investment
13    adviser.
14        Any person who was a registered investment adviser
15    prior to September 30, 1963, and has continued to be so
16    registered, and any individual who has passed an investment
17    adviser examination administered by the Secretary of
18    State, or passed an examination or completed an educational
19    program designated by the Secretary of State by rule,
20    regulation or order to be satisfactory for purposes of
21    determining whether the applicant has sufficient knowledge
22    of the securities business and laws relating thereto to
23    conduct the business of a registered investment adviser,
24    shall not be required to pass an examination or complete an
25    educational program in order to continue to act as an
26    investment adviser. The Secretary of State may by order

 

 

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1    waive the examination or educational program requirement
2    for any applicant for registration under this subsection D
3    if the principal of the applicant who is actively engaged
4    in the conduct and management of the applicant's advisory
5    business in this State has had such experience or education
6    relating to the securities business as may be determined by
7    the Secretary of State to be the equivalent of the
8    examination or educational program. Any request for a
9    waiver shall be filed with the Secretary of State in such
10    form as may be prescribed by rule or regulation.
11        (10) No applicant shall be registered or re-registered
12    as an investment adviser under this Section 8 unless the
13    application for registration or re-registration is
14    accompanied by an application for registration or
15    re-registration for each person acting as an investment
16    adviser representative on behalf of the adviser and a
17    Securities Audit and Enforcement Fund fee that shall not be
18    returnable in any event is paid with respect to each
19    investment adviser representative.
20        (11) The application for registration of an investment
21    adviser shall be accompanied by a filing fee and a fee for
22    each branch office in this State, in each case in the
23    amount established pursuant to Section 11a of this Act,
24    which fees shall not be returnable in any event.
25        (12) The Secretary of State shall notify the investment
26    adviser by written notice (which may be by electronic or

 

 

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1    facsimile transmission) of the effectiveness of the
2    registration as an investment adviser in this State.
3        (13) Any change which renders no longer accurate any
4    information contained in any application for registration
5    or re-registration of an investment adviser shall be
6    reported to the Secretary of State within 10 business days
7    after the occurrence of the change. In respect to assets
8    and liabilities of an investment adviser that retains
9    custody of clients' cash or securities or accepts
10    pre-payment of fees in excess of $500 per client and 6 or
11    more months in advance only materially adverse changes need
12    be reported by written notice (which may be by electronic
13    or facsimile transmission) no later than the close of
14    business on the second business day following the discovery
15    thereof.
16        (14) Each application for registration as an
17    investment adviser shall become effective automatically on
18    the 45th day following the filing of the application,
19    required documents or information, and payment of the
20    required fee unless (i) the Secretary of State has
21    registered the investment adviser prior to that date or
22    (ii) an action with respect to the applicant is pending
23    under Section 11 of this Act.
 
24    D-5. A registered investment adviser or federal covered
25investment adviser desiring to register an investment adviser

 

 

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1representative shall file an application with the Secretary of
2State, in the form as the Secretary of State may by rule or
3order prescribe, which the investment adviser representative
4is required by this Section to provide to the investment
5adviser, executed, verified, or authenticated by the
6investment adviser representative and setting forth or
7accompanied by:
8        (1) The name, residence, and business address of the
9    investment adviser representative;
10        (2) A statement whether any federal or state license or
11    registration as a dealer, salesperson, investment adviser,
12    or investment adviser representative has ever been
13    refused, canceled, suspended, revoked or withdrawn;
14        (3) The nature of employment with, and names and
15    addresses of, employers of the investment adviser
16    representative for the 10 years immediately preceding the
17    date of application;
18        (4) A brief description of any civil or criminal
19    proceedings, of which fraud is an essential element,
20    pending against the investment adviser representative and
21    whether the investment adviser representative has ever
22    been convicted of a felony or of any misdemeanor of which
23    fraud is an essential element;
24        (5) Such additional information as the Secretary of
25    State may by rule or order prescribe as necessary to
26    determine the investment adviser representative's business

 

 

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1    repute or qualification to act as an investment adviser
2    representative;
3        (6) Documentation that the individual has passed an
4    examination conducted by the Secretary of State, an
5    organization of investment advisers, or similar person,
6    which examination has been designated by the Secretary of
7    State by rule or order to be satisfactory for purposes of
8    determining whether the applicant has sufficient knowledge
9    of the investment advisory or securities business and laws
10    relating to that business to act as a registered investment
11    adviser representative; and
12        (7) A Securities Audit and Enforcement Fund fee
13    established under Section 11a of this Act, which shall not
14    be returnable in any event.
15    The Secretary of State may by order waive the examination
16requirement for an applicant for registration under this
17subsection D-5 who has had the experience or education relating
18to the investment advisory or securities business as may be
19determined by the Secretary of State to be the equivalent of
20the examination. A request for a waiver shall be filed with the
21Secretary of State in the form as may be prescribed by rule or
22order.
23    A change that renders no longer accurate any information
24contained in any application for registration or
25re-registration as an investment adviser representative must
26be reported to the Secretary of State within 10 business days

 

 

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1after the occurrence of the change. If the activities that
2rendered an individual an investment adviser representative
3for the investment adviser are terminated, the investment
4adviser shall notify the Secretary of State in writing (which
5may be by electronic or facsimile transmission), within 30 days
6of the investment adviser representative's termination, using
7the appropriate termination notice form as the Secretary of
8State may prescribe by rule or order.
9    A registered investment adviser representative may
10transfer his or her registration under this Section 8 for the
11unexpired term of the registration from one registered
12investment adviser to another by the giving of notice of the
13transfer by the new investment adviser to the Secretary of
14State in the form and subject to the conditions as the
15Secretary of State shall prescribe. The new registered
16investment adviser shall promptly file an application for
17registration of the investment adviser representative as
18provided in this subsection, accompanied by the Securities
19Audit and Enforcement Fund fee prescribed by paragraph (7) of
20this subsection D-5.
 
21    E. (1) Subject to the provisions of subsection F of Section
2211 of this Act, the registration of a dealer, limited Canadian
23dealer, salesperson, investment adviser, or investment adviser
24representative may be denied, suspended, conditioned, limited,
25or revoked if the Secretary of State finds that the dealer,

 

 

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1limited Canadian dealer, Internet portal, salesperson,
2investment adviser, or investment adviser representative or
3any principal officer, director, partner, member, trustee,
4manager or any person who performs a similar function of the
5dealer, limited Canadian dealer, Internet portal, or
6investment adviser:
7        (a) has been convicted of any felony during the 10 year
8    period preceding the date of filing of any application for
9    registration or at any time thereafter, or of any
10    misdemeanor of which fraud is an essential element;
11        (b) has engaged in any unethical practice in connection
12    with any security, or in any fraudulent business practice;
13        (c) has failed to account for any money or property, or
14    has failed to deliver any security, to any person entitled
15    thereto when due or within a reasonable time thereafter;
16        (d) in the case of a dealer, limited Canadian dealer,
17    or investment adviser, is insolvent;
18        (e) in the case of a dealer, limited Canadian dealer,
19    salesperson, or registered principal of a dealer or limited
20    Canadian dealer (i) has failed reasonably to supervise the
21    investment advisory or securities activities of any of its
22    salespersons or other employees and the failure has
23    permitted or facilitated a violation of Section 12 of this
24    Act or (ii) is offering or selling or has offered or sold
25    securities in this State through a salesperson other than a
26    registered salesperson, or, in the case of a salesperson,

 

 

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1    is selling or has sold securities in this State for a
2    dealer, limited Canadian dealer, issuer or controlling
3    person with knowledge that the dealer, limited Canadian
4    dealer, issuer or controlling person has not complied with
5    the provisions of this Act or (iii) has failed reasonably
6    to supervise the implementation of compliance measures
7    following notice by the Secretary of State of noncompliance
8    with the Act or with the regulations promulgated thereunder
9    or both or (iv) has failed to maintain and enforce written
10    procedures to supervise the types of business in which it
11    engages and to supervise the activities of its salespersons
12    that are reasonably designed to achieve compliance with
13    applicable securities laws and regulations;
14        (f) in the case of an investment adviser, has (1)
15    failed reasonably to supervise the advisory activities of
16    any of its investment adviser representatives or employees
17    and the failure has permitted or facilitated a violation of
18    Section 12 of this Act or (2) failed to maintain and
19    enforce written policies and procedures to supervise the
20    types of business in which it engages;
21        (g) has violated any of the provisions of this Act;
22        (h) has made any material misrepresentation to the
23    Secretary of State in connection with any information
24    deemed necessary by the Secretary of State to determine a
25    dealer's, limited Canadian dealer's, or investment
26    adviser's financial responsibility or a dealer's, limited

 

 

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1    Canadian dealer's, investment adviser's, salesperson's, or
2    investment adviser representative's business repute or
3    qualifications, or has refused to furnish any such
4    information requested by the Secretary of State;
5        (i) has had a license or registration under any Federal
6    or State law regulating securities, commodity futures
7    contracts, or stock futures contracts refused, cancelled,
8    suspended, withdrawn, revoked, or otherwise adversely
9    affected in a similar manner;
10        (j) has had membership in or association with any
11    self-regulatory organization registered under the Federal
12    1934 Act or the Federal 1974 Act suspended, revoked,
13    refused, expelled, cancelled, barred, limited in any
14    capacity, or otherwise adversely affected in a similar
15    manner arising from any fraudulent or deceptive act or a
16    practice in violation of any rule, regulation or standard
17    duly promulgated by the self-regulatory organization;
18        (k) has had any order entered against it after notice
19    and opportunity for hearing by a securities agency of any
20    state, any foreign government or agency thereof, the
21    Securities and Exchange Commission, or the Federal
22    Commodities Futures Trading Commission arising from any
23    fraudulent or deceptive act or a practice in violation of
24    any statute, rule or regulation administered or
25    promulgated by the agency or commission;
26        (l) in the case of a dealer or limited Canadian dealer,

 

 

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1    fails to maintain a minimum net capital in an amount which
2    the Secretary of State may by rule or regulation require;
3        (m) has conducted a continuing course of dealing of
4    such nature as to demonstrate an inability to properly
5    conduct the business of the dealer, limited Canadian
6    dealer, salesperson, investment adviser, or investment
7    adviser representative;
8        (n) has had, after notice and opportunity for hearing,
9    any injunction or order entered against it or license or
10    registration refused, cancelled, suspended, revoked,
11    withdrawn, limited, or otherwise adversely affected in a
12    similar manner by any state or federal body, agency or
13    commission regulating banking, insurance, finance or small
14    loan companies, real estate or mortgage brokers or
15    companies, if the action resulted from any act found by the
16    body, agency or commission to be a fraudulent or deceptive
17    act or practice in violation of any statute, rule or
18    regulation administered or promulgated by the body, agency
19    or commission;
20        (o) has failed to file a return, or to pay the tax,
21    penalty or interest shown in a filed return, or to pay any
22    final assessment of tax, penalty or interest, as required
23    by any tax Act administered by the Illinois Department of
24    Revenue, until such time as the requirements of that tax
25    Act are satisfied;
26        (p) (blank);

 

 

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1        (q) has failed to maintain the books and records
2    required under this Act or rules or regulations promulgated
3    under this Act or under any requirements established by the
4    Securities and Exchange Commission or a self-regulatory
5    organization;
6        (r) has refused to allow or otherwise impeded designees
7    of the Secretary of State from conducting an audit,
8    examination, inspection, or investigation provided for
9    under Section 8 or 11 of this Act;
10        (s) has failed to maintain any minimum net capital or
11    bond requirement set forth in this Act or any rule or
12    regulation promulgated under this Act;
13        (t) has refused the Secretary of State or his or her
14    designee access to any office or location within an office
15    to conduct an investigation, audit, examination, or
16    inspection;
17        (u) has advised or caused a public pension fund or
18    retirement system established under the Illinois Pension
19    Code to make an investment or engage in a transaction not
20    authorized by that Code;
21        (v) if a corporation, limited liability company, or
22    limited liability partnership has been suspended,
23    canceled, revoked, or has failed to register as a foreign
24    corporation, limited liability company, or limited
25    liability partnership with the Secretary of State;
26        (w) is permanently or temporarily enjoined by any court

 

 

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1    of competent jurisdiction, including any state, federal,
2    or foreign government, from engaging in or continuing any
3    conduct or practice involving any aspect of the securities
4    or commodities business or in any other business where the
5    conduct or practice enjoined involved investments,
6    franchises, insurance, banking, or finance;
7    (2) If the Secretary of State finds that any registrant or
8applicant for registration is no longer in existence or has
9ceased to do business as a dealer, limited Canadian dealer,
10Internet portal, salesperson, investment adviser, or
11investment adviser representative, or is subject to an
12adjudication as a person under legal disability or to the
13control of a guardian, or cannot be located after reasonable
14search, or has failed after written notice to pay to the
15Secretary of State any additional fee prescribed by this
16Section or specified by rule or regulation, the Secretary of
17State may by order cancel the registration or application.
18    (3) Withdrawal of an application for registration or
19withdrawal from registration as a dealer, limited Canadian
20dealer, salesperson, investment adviser, or investment adviser
21representative becomes effective 30 days after receipt of an
22application to withdraw or within such shorter period of time
23as the Secretary of State may determine, unless any proceeding
24is pending under Section 11 of this Act when the application is
25filed or a proceeding is instituted within 30 days after the
26application is filed. If a proceeding is pending or instituted,

 

 

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1withdrawal becomes effective at such time and upon such
2conditions as the Secretary of State by order determines. If no
3proceeding is pending or instituted and withdrawal
4automatically becomes effective, the Secretary of State may
5nevertheless institute a revocation or suspension proceeding
6within 2 years after withdrawal became effective and enter a
7revocation or suspension order as of the last date on which
8registration was effective.
 
9    F. The Secretary of State shall make available upon request
10the date that each dealer, investment adviser, salesperson, or
11investment adviser representative was granted registration,
12together with the name and address of the dealer, limited
13Canadian dealer, or issuer on whose behalf the salesperson is
14registered, and all orders of the Secretary of State denying or
15abandoning an application, or suspending or revoking
16registration, or censuring the persons. The Secretary of State
17may designate by rule, regulation or order the statements,
18information or reports submitted to or filed with him or her
19pursuant to this Section 8 which the Secretary of State
20determines are of a sensitive nature and therefore should be
21exempt from public disclosure. Any such statement, information
22or report shall be deemed confidential and shall not be
23disclosed to the public except upon the consent of the person
24filing or submitting the statement, information or report or by
25order of court or in court proceedings.
 

 

 

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1    G. The registration or re-registration of a dealer or
2limited Canadian dealer and of all salespersons registered upon
3application of the dealer or limited Canadian dealer shall
4expire on the next succeeding anniversary date of the
5registration or re-registration of the dealer; and the
6registration or re-registration of an investment adviser and of
7all investment adviser representatives registered upon
8application of the investment adviser shall expire on the next
9succeeding anniversary date of the registration of the
10investment adviser; provided, that the Secretary of State may
11by rule or regulation prescribe an alternate date which any
12dealer registered under the Federal 1934 Act or a member of any
13self-regulatory association approved pursuant thereto, a
14member of a self-regulatory organization or stock exchange in
15Canada, or any investment adviser may elect as the expiration
16date of its dealer or limited Canadian dealer and salesperson
17registrations, or the expiration date of its investment adviser
18registration, as the case may be. A registration of a
19salesperson registered upon application of an issuer or
20controlling person shall expire on the next succeeding
21anniversary date of the registration, or upon termination or
22expiration of the registration of the securities, if any,
23designated in the application for his or her registration or
24the alternative date as the Secretary may prescribe by rule or
25regulation. Subject to paragraph (9) of subsection C of this

 

 

SB3439- 29 -LRB101 16542 JLS 65926 b

1Section 8, a salesperson's registration also shall terminate
2upon cessation of his or her employment, or termination of his
3or her appointment or authorization, in each case by the person
4who applied for the salesperson's registration, provided that
5the Secretary of State may by rule or regulation prescribe an
6alternate date for the expiration of the registration.
 
7    H. Applications for re-registration of dealers, limited
8Canadian dealers, Internet portals, salespersons, investment
9advisers, and investment adviser representatives shall be
10filed with the Secretary of State prior to the expiration of
11the then current registration and shall contain such
12information as may be required by the Secretary of State upon
13initial application with such omission therefrom or addition
14thereto as the Secretary of State may authorize or prescribe.
15Each application for re-registration of a dealer, limited
16Canadian dealer, Internet portal, or investment adviser shall
17be accompanied by a filing fee, each application for
18re-registration as a salesperson shall be accompanied by a
19filing fee and a Securities Audit and Enforcement Fund fee
20established pursuant to Section 11a of this Act, and each
21application for re-registration as an investment adviser
22representative shall be accompanied by a Securities Audit and
23Enforcement Fund fee established under Section 11a of this Act,
24which shall not be returnable in any event. Notwithstanding the
25foregoing, applications for re-registration of dealers,

 

 

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1limited Canadian dealers, Internet portals, and investment
2advisers may be filed within 30 days following the expiration
3of the registration provided that the applicant pays the annual
4registration fee together with an additional amount equal to
5the annual registration fee and files any other information or
6documents that the Secretary of State may prescribe by rule or
7regulation or order. Any application filed within 30 days
8following the expiration of the registration shall be
9automatically effective as of the time of the earlier
10expiration provided that the proper fee has been paid to the
11Secretary of State.
12    Each registered dealer, limited Canadian dealer, Internet
13portal, or investment adviser shall continue to be registered
14if the registrant changes his, her, or its form of organization
15provided that the dealer or investment adviser files an
16amendment to his, her, or its application not later than 30
17days following the occurrence of the change and pays the
18Secretary of State a fee in the amount established under
19Section 11a of this Act.
 
20    I. (1)(a) Every registered dealer, limited Canadian
21dealer, Internet portal, and investment adviser shall make and
22keep for such periods, such accounts, correspondence,
23memoranda, papers, books and records as the Secretary of State
24may by rule or regulation prescribe. All records so required
25shall be preserved for 3 years unless the Secretary of State by

 

 

SB3439- 31 -LRB101 16542 JLS 65926 b

1rule, regulation or order prescribes otherwise for particular
2types of records.
3    (b) Every registered dealer, limited Canadian dealer,
4Internet portal, and investment adviser shall provide to the
5Secretary of State, upon request, such accounts,
6correspondence, memoranda, papers, books, and records as the
7Secretary of State may by rule or regulation prescribe, that it
8possesses and that it preserves for periods of longer than 3
9years.
10    (2) Every registered dealer, limited Canadian dealer,
11Internet portal, and investment adviser shall file such
12financial reports as the Secretary of State may by rule or
13regulation prescribe.
14    (3) All the books and records referred to in paragraph (1)
15of this subsection I are subject at any time or from time to
16time to such reasonable periodic, special or other audits,
17examinations, or inspections by representatives of the
18Secretary of State, within or without this State, as the
19Secretary of State deems necessary or appropriate in the public
20interest or for the protection of investors.
21    (4) At the time of an audit, examination, or inspection,
22the Secretary of State, by his or her designees, may conduct an
23interview of any person employed or appointed by or affiliated
24with a registered dealer, limited Canadian dealer, Internet
25portal, or investment advisor, provided that the dealer,
26limited Canadian dealer, Internet portal, or investment

 

 

SB3439- 32 -LRB101 16542 JLS 65926 b

1advisor shall be given reasonable notice of the time and place
2for the interview. At the option of the dealer, limited
3Canadian dealer, Internet portal, or investment advisor, a
4representative of the dealer or investment advisor with
5supervisory responsibility over the individual being
6interviewed may be present at the interview.
 
7    J. The Secretary of State may require by rule or regulation
8the payment of an additional fee for the filing of information
9or documents required to be filed by this Section which have
10not been filed in a timely manner. The Secretary of State may
11also require by rule or regulation the payment of an
12examination fee for administering any examination which it may
13conduct pursuant to subsection B, C, D, or D-5 of this Section
148.
 
15    K. The Secretary of State may declare any application for
16registration or limited registration under this Section 8
17abandoned by order if the applicant fails to pay any fee or
18file any information or document required under this Section 8
19or by rule or regulation for more than 30 days after the
20required payment or filing date. The applicant may petition the
21Secretary of State for a hearing within 15 days after the
22applicant's receipt of the order of abandonment, provided that
23the petition sets forth the grounds upon which the applicant
24seeks a hearing.
 

 

 

SB3439- 33 -LRB101 16542 JLS 65926 b

1    L. Any document being filed pursuant to this Section 8
2shall be deemed filed, and any fee being paid pursuant to this
3Section 8 shall be deemed paid, upon the date of actual receipt
4thereof by the Secretary of State or his or her designee.
 
5    M. (Blank).
6(Source: P.A. 100-872, eff. 8-14-18; 101-563, eff. 8-23-19.)
 
7    (815 ILCS 5/11)  (from Ch. 121 1/2, par. 137.11)
8    Sec. 11. Duties and powers of the Secretary of State.
9    A. (1) The administration of this Act is vested in the
10Secretary of State, who may from time to time make, amend and
11rescind such rules and regulations as may be necessary to carry
12out this Act, including rules and regulations governing
13procedures of registration, statements, applications and
14reports for various classes of securities, persons and matters
15within his or her jurisdiction and defining any terms, whether
16or not used in this Act, insofar as the definitions are not
17inconsistent with this Act. The rules and regulations adopted
18by the Secretary of State under this Act shall be effective in
19the manner provided for in the Illinois Administrative
20Procedure Act.
21    (2) Among other things, the Secretary of State shall have
22authority, for the purposes of this Act, to prescribe the form
23or forms in which required information shall be set forth,

 

 

SB3439- 34 -LRB101 16542 JLS 65926 b

1accounting practices, the items or details to be shown in
2balance sheets and earning statements, and the methods to be
3followed in the preparation of accounts, in the appraisal or
4valuation of assets and liabilities, in the determination of
5depreciation and depletion, in the differentiation of
6recurring and non-recurring income, in the differentiation of
7investment and operating income, and in the preparation of
8consolidated balance sheets or income accounts of any person,
9directly or indirectly, controlling or controlled by the
10issuer, or any person under direct or indirect common control
11with the issuer.
12    (3) No provision of this Act imposing any liability shall
13apply to any act done or omitted in good faith in conformity
14with any rule or regulation of the Secretary of State under
15this Act, notwithstanding that the rule or regulation may,
16after the act or omission, be amended or rescinded or be
17determined by judicial or other authority to be invalid for any
18reason.
19    (4) The Securities Department of the Office of the
20Secretary of State shall be deemed a criminal justice agency
21for purposes of all federal and state laws and regulations and,
22in that capacity, shall be entitled to access to any
23information available to criminal justice agencies and has the
24power to appoint special agents to conduct all investigations,
25searches, seizures, arrests, and other duties imposed under the
26provisions of any law administered by the Department. The

 

 

SB3439- 35 -LRB101 16542 JLS 65926 b

1special agents have and may exercise all the powers of peace
2officers solely for the purpose of enforcing provisions of this
3Act.
4    The Director must authorize to each special agent employed
5under this Section a distinct badge that, on its face, (i)
6clearly states that the badge is authorized by the Department
7and (ii) contains a unique and identifying number.
8    Special agents shall comply with all training requirements
9established for law enforcement officers by provisions of the
10Illinois Police Training Act.
11    (5) The Secretary of State, by rule, may conditionally or
12unconditionally exempt any person, security, or transaction,
13or any class or classes of persons, securities, or transactions
14from any provision of Section 5, 6, 7, 8, 8a, or 9 of this Act
15or of any rule promulgated under these Sections, to the extent
16that such exemption is necessary or appropriate in the public
17interest, and is consistent with the protection of investors.
18    B. The Secretary of State may, anything in this Act to the
19contrary notwithstanding, require financial statements and
20reports of the issuer, dealer, Internet portal, salesperson,
21investment adviser, or investment adviser representative as
22often as circumstances may warrant. In addition, the Secretary
23of State may secure information or books and records from or
24through others and may make or cause to be made investigations
25respecting the business, affairs, and property of the issuer of
26securities, any person involved in the sale or offer for sale,

 

 

SB3439- 36 -LRB101 16542 JLS 65926 b

1purchase or offer to purchase of any mineral investment
2contract, mineral deferred delivery contract, or security and
3of dealers, Internet portals, salespersons, investment
4advisers, and investment adviser representatives that are
5registered or are the subject of an application for
6registration under this Act. The costs of an investigation
7shall be borne by the registrant or the applicant, provided
8that the registrant or applicant shall not be obligated to pay
9the costs without his, her or its consent in advance.
10    C. Whenever it shall appear to the Secretary of State,
11either upon complaint or otherwise, that this Act, or any rule
12or regulation prescribed under authority thereof, has been or
13is about to be violated, he or she may, in his or her
14discretion, do one or more of the following:
15        (1) require or permit the person to file with the
16    Secretary of State a statement in writing under oath, or
17    otherwise, as to all the facts and circumstances concerning
18    the subject matter which the Secretary of State believes to
19    be in the public interest to investigate, audit, examine,
20    or inspect;
21        (2) conduct an investigation, audit, examination, or
22    inspection as necessary or advisable for the protection of
23    the interests of the public; and
24        (3) appoint investigators to conduct all
25    investigations, searches, seizures, arrests, and other
26    duties imposed under the provisions of any law administered

 

 

SB3439- 37 -LRB101 16542 JLS 65926 b

1    by the Department. The Director must authorize to each
2    investigator employed under this Section a distinct badge
3    that, on its face, (i) clearly states that the badge is
4    authorized by the Department and (ii) contains a unique and
5    identifying number.
6    D. (1) For the purpose of all investigations, audits,
7examinations, or inspections which in the opinion of the
8Secretary of State are necessary and proper for the enforcement
9of this Act, the Secretary of State or a person designated by
10him or her is empowered to administer oaths and affirmations,
11subpoena witnesses, take evidence, and require, by subpoena or
12other lawful means provided by this Act or the rules adopted by
13the Secretary of State, the production of any books and
14records, papers, or other documents which the Secretary of
15State or a person designated by him or her deems relevant or
16material to the inquiry.
17    (2) The Secretary of State or a person designated by him or
18her is further empowered to administer oaths and affirmations,
19subpoena witnesses, take evidence, and require the production
20of any books and records, papers, or other documents in this
21State at the request of a securities agency of another state,
22if the activities constituting the alleged violation for which
23the information is sought would be in violation of Section 12
24of this Act if the activities had occurred in this State.
25    (3) The Circuit Court of any County of this State, upon
26application of the Secretary of State or a person designated by

 

 

SB3439- 38 -LRB101 16542 JLS 65926 b

1him or her may order the attendance of witnesses, the
2production of books and records, papers, accounts and documents
3and the giving of testimony before the Secretary of State or a
4person designated by him or her; and any failure to obey the
5order may be punished by the Circuit Court as a contempt
6thereof.
7    (4) The fees of subpoenaed witnesses under this Act for
8attendance and travel shall be the same as fees of witnesses
9before the Circuit Courts of this State, to be paid when the
10witness is excused from further attendance, provided, the
11witness is subpoenaed at the instance of the Secretary of
12State; and payment of the fees shall be made and audited in the
13same manner as other expenses of the Secretary of State.
14    (5) Whenever a subpoena is issued at the request of a
15complainant or respondent as the case may be, the Secretary of
16State may require that the cost of service and the fee of the
17witness shall be borne by the party at whose instance the
18witness is summoned.
19    (6) The Secretary of State shall have power at his or her
20discretion, to require a deposit to cover the cost of the
21service and witness fees and the payment of the legal witness
22fee and mileage to the witness served with subpoena.
23    (7) A subpoena issued under this Act shall be served in the
24same manner as a subpoena issued out of a circuit court.
25    (8) The Secretary of State may in any investigation,
26audits, examinations, or inspections cause the taking of

 

 

SB3439- 39 -LRB101 16542 JLS 65926 b

1depositions of persons residing within or without this State in
2the manner provided in civil actions under the laws of this
3State.
4    E. Anything in this Act to the contrary notwithstanding:
5        (1) If the Secretary of State shall find that the offer
6    or sale or proposed offer or sale or method of offer or
7    sale of any securities by any person, whether exempt or
8    not, in this State, is fraudulent, or would work or tend to
9    work a fraud or deceit, or is being offered or sold in
10    violation of Section 12, or there has been a failure or
11    refusal to submit any notification filing or fee required
12    under this Act, the Secretary of State may by written order
13    prohibit or suspend the offer or sale of securities by that
14    person or deny or revoke the registration of the securities
15    or the exemption from registration for the securities.
16        (2) If the Secretary of State shall find that any
17    person has violated subsection C, D, E, F, G, H, I, J, or K
18    of Section 12 of this Act, the Secretary of State may by
19    written order temporarily or permanently prohibit or
20    suspend the person from offering or selling any securities,
21    any mineral investment contract, or any mineral deferred
22    delivery contract in this State, provided that any person
23    who is the subject of an order of permanent prohibition may
24    petition the Secretary of State for a hearing to present
25    evidence of rehabilitation or change in circumstances
26    justifying the amendment or termination of the order of

 

 

SB3439- 40 -LRB101 16542 JLS 65926 b

1    permanent prohibition.
2        (3) If the Secretary of State shall find that any
3    person is engaging or has engaged in the business of
4    selling or offering for sale securities as a dealer,
5    Internet portal, or salesperson or is acting or has acted
6    as an investment adviser, investment adviser
7    representative, or federal covered investment adviser,
8    without prior thereto and at the time thereof having
9    complied with the registration or notice filing
10    requirements of this Act, the Secretary of State may by
11    written order prohibit or suspend the person from engaging
12    in the business of selling or offering for sale securities,
13    or acting as an investment adviser, investment adviser
14    representative, or federal covered investment adviser, in
15    this State.
16        (4) In addition to any other sanction or remedy
17    contained in this subsection E, the Secretary of State,
18    after finding that any provision of this Act has been
19    violated, may impose a fine as provided by rule, regulation
20    or order not to exceed $10,000 for each violation of this
21    Act, may issue an order of public censure against the
22    violator, and may charge as costs of investigation all
23    reasonable expenses, including attorney's fees and witness
24    fees.
25    F. (1) The Secretary of State shall not deny, suspend or
26revoke the registration of securities, suspend or revoke the

 

 

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1registration of a dealer, Internet portal, salesperson,
2investment adviser, or investment adviser representative,
3prohibit or suspend the offer or sale of any securities,
4prohibit or suspend any person from offering or selling any
5securities in this State, prohibit or suspend a dealer or
6salesperson from engaging in the business of selling or
7offering for sale securities, prohibit or suspend a person from
8acting as an investment adviser or federal covered investment
9adviser, or investment adviser representative, impose any fine
10for violation of this Act, issue an order of public censure, or
11enter into an agreed settlement except after an opportunity for
12hearing upon not less than 10 days notice given by personal
13service or registered mail or certified mail, return receipt
14requested, to the person or persons concerned. Such notice
15shall state the date and time and place of the hearing and
16shall contain a brief statement of the proposed action of the
17Secretary of State and the grounds for the proposed action. A
18failure to appear at the hearing or otherwise respond to the
19allegations set forth in the notice of hearing shall constitute
20an admission of any facts alleged therein and shall constitute
21sufficient basis to enter an order.
22    (2) Anything herein contained to the contrary
23notwithstanding, the Secretary of State may temporarily
24prohibit or suspend, for a maximum period of 90 days, by an
25order effective immediately, the offer or sale or registration
26of securities, the registration of a dealer, Internet portal,

 

 

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1salesperson, investment adviser, or investment adviser
2representative, or the offer or sale of securities by any
3person, or the business of rendering investment advice, without
4the notice and prior hearing in this subsection prescribed, if
5the Secretary of State shall in his or her opinion, based on
6credible evidence, deem it necessary to prevent an imminent
7violation of this Act or to prevent losses to investors which
8the Secretary of State reasonably believes will occur as a
9result of a prior violation of this Act. Immediately after
10taking action without such notice and hearing, the Secretary of
11State shall deliver a copy of the temporary order to the
12respondent named therein by personal service or registered mail
13or certified mail, return receipt requested. The temporary
14order shall set forth the grounds for the action and shall
15advise that the respondent may request a hearing, that the
16request for a hearing will not stop the effectiveness of the
17temporary order and that respondent's failure to request a
18hearing within 30 days after the date of the entry of the
19temporary order shall constitute an admission of any facts
20alleged therein and shall constitute sufficient basis to make
21the temporary order final. Any provision of this paragraph (2)
22to the contrary notwithstanding, the Secretary of State may not
23pursuant to the provisions of this paragraph (2) suspend the
24registration of a dealer, limited Canadian dealer,
25salesperson, investment adviser, or investment adviser
26representative based upon sub-paragraph (n) of paragraph (l) of

 

 

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1subsection E of Section 8 of this Act or revoke the
2registration of securities or revoke the registration of any
3dealer, salesperson, investment adviser representative, or
4investment adviser.
5    (3) The Secretary of State may issue a temporary order
6suspending or delaying the effectiveness of any registration of
7securities under subsection A or B of Section 5, 6 or 7 of this
8Act subsequent to and upon the basis of the issuance of any
9stop, suspension or similar order by the Securities and
10Exchange Commission with respect to the securities which are
11the subject of the registration under subsection A or B of
12Section 5, 6 or 7 of this Act, and the order shall become
13effective as of the date and time of effectiveness of the
14Securities and Exchange Commission order and shall be vacated
15automatically at such time as the order of the Securities and
16Exchange Commission is no longer in effect.
17    (4) When the Secretary of State finds that an application
18for registration as a dealer, Internet portal, salesperson,
19investment adviser, or investment adviser representative
20should be denied, the Secretary of State may enter an order
21denying the registration. Immediately after taking such
22action, the Secretary of State shall deliver a copy of the
23order to the respondent named therein by personal service or
24registered mail or certified mail, return receipt requested.
25The order shall state the grounds for the action and that the
26matter will be set for hearing upon written request filed with

 

 

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1the Secretary of State within 30 days after the receipt of the
2request by the respondent. The respondent's failure to request
3a hearing within 30 days after receipt of the order shall
4constitute an admission of any facts alleged therein and shall
5make the order final. If a hearing is held, the Secretary of
6State shall affirm, vacate, or modify the order.
7    (5) The findings and decision of the Secretary of State
8upon the conclusion of each final hearing held pursuant to this
9subsection shall be set forth in a written order signed on
10behalf of the Secretary of State by his or her designee and
11shall be filed as a public record. All hearings shall be held
12before a person designated by the Secretary of State, and
13appropriate records thereof shall be kept.
14    (6) Notwithstanding the foregoing, the Secretary of State,
15after notice and opportunity for hearing, may at his or her
16discretion enter into an agreed settlement, stipulation or
17consent order with a respondent in accordance with the
18provisions of the Illinois Administrative Procedure Act. The
19provisions of the agreed settlement, stipulation or consent
20order shall have the full force and effect of an order issued
21by the Secretary of State.
22    (7) Anything in this Act to the contrary notwithstanding,
23whenever the Secretary of State finds that a person is
24currently expelled from, refused membership in or association
25with, or limited in any material capacity by a self-regulatory
26organization registered under the Federal 1934 Act or the

 

 

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1Federal 1974 Act because of a fraudulent or deceptive act or a
2practice in violation of a rule, regulation, or standard duly
3promulgated by the self-regulatory organization, the Secretary
4of State may, at his or her discretion, enter a Summary Order
5of Prohibition, which shall prohibit the offer or sale of any
6securities, mineral investment contract, or mineral deferred
7delivery contract by the person in this State. The order shall
8take effect immediately upon its entry. Immediately after
9taking the action the Secretary of State shall deliver a copy
10of the order to the named Respondent by personal service or
11registered mail or certified mail, return receipt requested. A
12person who is the subject of an Order of Prohibition may
13petition the Secretary of State for a hearing to present
14evidence of rehabilitation or change in circumstances
15justifying the amendment or termination of the Order of
16Prohibition.
17    G. No administrative action shall be brought by the
18Secretary of State for relief under this Act or upon or because
19of any of the matters for which relief is granted by this Act
20after the earlier to occur of (i) 3 years from the date upon
21which the Secretary of State had notice of facts which in the
22exercise of reasonable diligence would lead to actual knowledge
23of the alleged violation of the Act, or (ii) 5 years from the
24date on which the alleged violation occurred.
25    H. The action of the Secretary of State in denying,
26suspending, or revoking the registration of a dealer, Internet

 

 

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1portal, limited Canadian dealer, salesperson, investment
2adviser, or investment adviser representative, in prohibiting
3any person from engaging in the business of offering or selling
4securities as a dealer, limited Canadian dealer, or
5salesperson, in prohibiting or suspending the offer or sale of
6securities by any person, in prohibiting a person from acting
7as an investment adviser, federal covered investment adviser,
8or investment adviser representative, in denying, suspending,
9or revoking the registration of securities, in prohibiting or
10suspending the offer or sale or proposed offer or sale of
11securities, in imposing any fine for violation of this Act, or
12in issuing any order shall be subject to judicial review in the
13Circuit Courts of Cook or Sangamon Counties in this State. The
14Administrative Review Law shall apply to and govern every
15action for the judicial review of final actions or decisions of
16the Secretary of State under this Act.
17    I. Notwithstanding any other provisions of this Act to the
18contrary, whenever it shall appear to the Secretary of State
19that any person is engaged or about to engage in any acts or
20practices which constitute or will constitute a violation of
21this Act or of any rule or regulation prescribed under
22authority of this Act, the Secretary of State may at his or her
23discretion, through the Attorney General take any of the
24following actions:
25        (1) File a complaint and apply for a temporary
26    restraining order without notice, and upon a proper showing

 

 

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1    the court may enter a temporary restraining order without
2    bond, to enforce this Act.
3        (2) File a complaint and apply for a preliminary or
4    permanent injunction, and, after notice and a hearing and
5    upon a proper showing, the court may grant a preliminary or
6    permanent injunction and may order the defendant to make an
7    offer of rescission with respect to any sales or purchases
8    of securities, mineral investment contracts, or mineral
9    deferred delivery contracts determined by the court to be
10    unlawful under this Act.
11        (3) Seek the seizure of assets when probable cause
12    exists that the assets were obtained by a defendant through
13    conduct in violation of Section 12, paragraph F, G, I, J,
14    K, or L of this Act, and thereby subject to a judicial
15    forfeiture hearing as required under this Act.
16            (a) In the event that such probable cause exists
17        that the subject of an investigation who is alleged to
18        have committed one of the relevant violations of this
19        Act has in his possession assets obtained as a result
20        of the conduct giving rise to the violation, the
21        Secretary of State may seek a seizure warrant in any
22        circuit court in Illinois.
23            (b) In seeking a seizure warrant, the Secretary of
24        State, or his or her designee, shall submit to the
25        court a sworn affidavit detailing the probable cause
26        evidence for the seizure, the location of the assets to

 

 

SB3439- 48 -LRB101 16542 JLS 65926 b

1        be seized, the relevant violation under Section 12 of
2        this Act, and a statement detailing any known owners or
3        interest holders in the assets.
4            (c) Seizure of the assets shall be made by any
5        peace officer upon process of the seizure warrant
6        issued by the court. Following the seizure of assets
7        under this Act and pursuant to a seizure warrant,
8        notice of seizure, including a description of the
9        seized assets, shall immediately be returned to the
10        issuing court. Seized assets shall be maintained
11        pending a judicial forfeiture hearing in accordance
12        with the instructions of the court.
13            (d) In the event that management of seized assets
14        becomes necessary to prevent the devaluation,
15        dissipation, or otherwise to preserve the property,
16        the court shall have jurisdiction to appoint a
17        receiver, conservator, ancillary receiver, or
18        ancillary conservator for that purpose, as provided in
19        item (2) of this subsection.
20        (4) Seek the forfeiture of assets obtained through
21    conduct in violation of Section 12, paragraph F, G, H, I,
22    J, K, or L when authorized by law. A forfeiture must be
23    ordered by a circuit court or an action brought by the
24    Secretary of State as provided for in this Act, under a
25    verified complaint for forfeiture.
26            (a) In the event assets have been seized pursuant

 

 

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1        to this Act, forfeiture proceedings shall be
2        instituted by the Attorney General within 45 days of
3        seizure.
4            (b) Service of the complaint filed under the
5        provisions of this Act shall be made in the manner as
6        provided in civil actions in this State.
7            (c) Only an owner of or interest holder in the
8        property may file an answer asserting a claim against
9        the property. For purposes of this Section, the owner
10        or interest holder shall be referred to as claimant.
11            (d) The answer must be signed by the owner or
12        interest holder under penalty of perjury and must set
13        forth:
14                (i) the caption of the proceedings as set forth
15            on the notice of pending forfeiture and the name of
16            the claimant;
17                (ii) the address at which the claimant will
18            accept mail;
19                (iii) the nature and extent of the claimant's
20            interest in the property;
21                (iv) the date, identity of the transferor, and
22            circumstances of the claimant's acquisition of the
23            interest in the property;
24                (v) the names and addresses of all other
25            persons known to have an interest in the property;
26                (vi) the specific provisions of this Act

 

 

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1            relied on in asserting that the property is not
2            subject to forfeiture;
3                (vii) all essential facts supporting each
4            assertion; and
5                (viii) the precise relief sought.
6            (e) The answer must be filed with the court within
7        45 days after service of the complaint.
8            (f) A property interest is exempt from forfeiture
9        under this Act if its owner or interest holder
10        establishes by a preponderance of evidence that the
11        owner or interest holder:
12                (i) is not legally accountable for the conduct
13            giving rise to the forfeiture, did not acquiesce in
14            it, and did not know and could not reasonably have
15            known of the conduct or that the conduct was likely
16            to occur;
17                (ii) with respect to conveyances, did not hold
18            the property jointly or in common with a person
19            whose conduct gave rise to the forfeiture;
20                (iii) does not hold the property for the
21            benefit of or as a nominee for any person whose
22            conduct gave rise to its forfeiture and the owner
23            or interest holder acquires it as a bona fide
24            purchaser for value without knowingly taking part
25            in the conduct giving rise to the forfeiture; or
26                (iv) acquired the interest after the

 

 

SB3439- 51 -LRB101 16542 JLS 65926 b

1            commencement of the conduct giving rise to its
2            forfeiture and the owner or interest holder
3            acquired the interest as a mortgagee, secured
4            creditor, lienholder, or bona fide purchaser for
5            value without knowledge of the conduct that gave
6            rise to the forfeiture.
7            (g) The hearing must be held within 60 days after
8        the answer is filed unless continued for good cause.
9            (h) During the probable cause portion of the
10        judicial in rem proceeding wherein the Secretary of
11        State presents its case-in-chief, the court must
12        receive and consider, among other things, any relevant
13        hearsay evidence and information. The laws of evidence
14        relating to civil actions shall apply to all other
15        portions of the judicial in rem proceeding.
16            (i) The Secretary of State shall show the existence
17        of probable cause for forfeiture of the property. If
18        the Secretary of State shows probable cause, the
19        claimant has the burden of showing by a preponderance
20        of the evidence that the claimant's interest in the
21        property is not subject to forfeiture.
22            (j) If the Secretary of State does not show the
23        existence of probable cause or a claimant has an
24        interest that is exempt under subdivision I (4)(d) of
25        this Section, the court shall order the interest in the
26        property returned or conveyed to the claimant and shall

 

 

SB3439- 52 -LRB101 16542 JLS 65926 b

1        order all other property forfeited to the Secretary of
2        State pursuant to all provisions of this Act. If the
3        Secretary of State does show the existence of probable
4        cause and the claimant does not establish by a
5        preponderance of the evidence that the claimant has an
6        interest that is exempt under subsection D herein, the
7        court shall order all the property forfeited to the
8        Secretary of State pursuant to the provisions of the
9        Section.
10            (k) A defendant convicted in any criminal
11        proceeding is precluded from later denying the
12        essential allegations of the criminal offense of which
13        the defendant was convicted in any proceeding for
14        violations of the Act giving rise to forfeiture of
15        property herein regardless of the pendency of an appeal
16        from that conviction. However, evidence of the
17        pendency of an appeal is admissible.
18            (l) An acquittal or dismissal in a criminal
19        proceeding for violations of the Act giving rise to the
20        forfeiture of property herein shall not preclude civil
21        proceedings under this provision; however, for good
22        cause shown, on a motion by the Secretary of State, the
23        court may stay civil forfeiture proceedings during the
24        criminal trial for a related criminal indictment or
25        information alleging violation of the provisions of
26        Section 12 of the Illinois Securities Law of 1953.

 

 

SB3439- 53 -LRB101 16542 JLS 65926 b

1        Property subject to forfeiture under this Section
2        shall not be subject to return or release by a court
3        exercising jurisdiction over a criminal case involving
4        the seizure of the property unless the return or
5        release is consented to by the Secretary of State.
6            (m) All property declared forfeited under this Act
7        vests in the State on the commission of the conduct
8        giving rise to forfeiture together with the proceeds of
9        the property after that time. Any such property or
10        proceeds subsequently transferred to any person remain
11        subject to forfeiture and thereafter shall be ordered
12        forfeited unless the transferee claims and establishes
13        in a hearing under the provisions of this Act that the
14        transferee's interest is exempt under the Act. Any
15        assets forfeited to the State shall be disposed of in
16        following manner:
17                (i) all forfeited property and assets shall be
18            liquidated by the Secretary of State in accordance
19            with all laws and rules governing the disposition
20            of such property;
21                (ii) the Secretary of State shall provide the
22            court at the time the property and assets are
23            declared forfeited a verified statement of
24            investors subject to the conduct giving rise to the
25            forfeiture;
26                (iii) after payment of any costs of sale,

 

 

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1            receivership, storage, or expenses for
2            preservation of the property seized, other costs
3            to the State, and payment to claimants for any
4            amount deemed exempt from forfeiture, the proceeds
5            from liquidation shall be distributed pro rata to
6            investors subject to the conduct giving rise to the
7            forfeiture; and
8                (iv) any proceeds remaining after all verified
9            investors have been made whole shall be
10            distributed 25% to the Securities Investors
11            Education Fund, 25% to the Securities Audit and
12            Enforcement Fund, 25% to the Attorney General or
13            any State's Attorney bringing criminal charges for
14            the conduct giving rise to the forfeiture, and 25%
15            to other law enforcement agencies participating in
16            the investigation of the criminal charges for the
17            conduct giving rise to the forfeiture. In the event
18            that no other law enforcement agencies are
19            involved in the investigation of the conduct
20            giving rise to the forfeiture, then the portion to
21            other law enforcement agencies shall be
22            distributed to the Securities Investors Education
23            Fund.
24            (n) The Secretary of State shall notify by
25        certified mail, return receipt requested, all known
26        investors in the matter giving rise to the forfeiture

 

 

SB3439- 55 -LRB101 16542 JLS 65926 b

1        of the forfeiture proceeding and sale of assets
2        forfeited arising from the violations of this Act, and
3        shall further publish notice in a paper of general
4        circulation in the district in which the violations
5        were prosecuted. The notice to investors shall
6        identify the name, address, and other identifying
7        information about any defendant prosecuted for
8        violations of this Act that resulted in forfeiture and
9        sale of property, the offense for which the defendant
10        was convicted, and that the court has ordered
11        forfeiture and sale of property for claims of investors
12        who incurred losses or damages as a result of the
13        violations. Investors may then file a claim in a form
14        prescribed by the Secretary of State in order to share
15        in disbursement of the proceeds from sale of the
16        forfeited property. Investor claims must be filed with
17        the Secretary of State within 30 days after receipt of
18        the certified mail return receipt, or within 30 days
19        after the last date of publication of the general
20        notice in a paper of general circulation in the
21        district in which the violations were prosecuted,
22        whichever occurs last.
23            (o) A civil action under this subsection must be
24        commenced within 5 years after the last conduct giving
25        rise to the forfeiture became known or should have
26        become known or 5 years after the forfeitable property

 

 

SB3439- 56 -LRB101 16542 JLS 65926 b

1        is discovered, whichever is later, excluding time
2        during which either the property or claimant is out of
3        this State or in confinement or during which criminal
4        proceedings relating to the same conduct are in
5        progress.
6            (p) If property is seized for evidence and for
7        forfeiture, the time periods for instituting judicial
8        forfeiture proceedings shall not begin until the
9        property is no longer necessary for evidence.
10            (q) Notwithstanding other provisions of this Act,
11        the Secretary of State and a claimant of forfeitable
12        property may enter into an agreed-upon settlement
13        concerning the forfeitable property in such an amount
14        and upon such terms as are set out in writing in a
15        settlement agreement.
16            (r) Nothing in this Act shall apply to property
17        that constitutes reasonable bona fide attorney's fees
18        paid to an attorney for services rendered or to be
19        rendered in the forfeiture proceeding or criminal
20        proceeding relating directly thereto when the property
21        was paid before its seizure and before the issuance of
22        any seizure warrant or court order prohibiting
23        transfer of the property and when the attorney, at the
24        time he or she received the property, did not know that
25        it was property subject to forfeiture under this Act.
26    The court shall further have jurisdiction and authority, in

 

 

SB3439- 57 -LRB101 16542 JLS 65926 b

1addition to the penalties and other remedies in this Act
2provided, to enter an order for the appointment of the court or
3a person as a receiver, conservator, ancillary receiver or
4ancillary conservator for the defendant or the defendant's
5assets located in this State, or to require restitution,
6damages or disgorgement of profits on behalf of the person or
7persons injured by the act or practice constituting the subject
8matter of the action, and may assess costs against the
9defendant for the use of the State; provided, however, that the
10civil remedies of rescission and appointment of a receiver,
11conservator, ancillary receiver or ancillary conservator shall
12not be available against any person by reason of the failure to
13file with the Secretary of State, or on account of the contents
14of, any report of sale provided for in subsection G or P of
15Section 4, paragraph (2) of subsection D of Sections 5 and 6,
16or paragraph (2) of subsection F of Section 7 of this Act.
17Appeals may be taken as in other civil cases.
18    I-5. Property forfeited under this Section is subject to
19reporting under the Seizure and Forfeiture Reporting Act.
20    J. In no case shall the Secretary of State, or any of his
21or her employees or agents, in the administration of this Act,
22incur any official or personal liability by instituting an
23injunction or other proceeding or by denying, suspending or
24revoking the registration of a dealer or salesperson, or by
25denying, suspending or revoking the registration of securities
26or prohibiting the offer or sale of securities, or by

 

 

SB3439- 58 -LRB101 16542 JLS 65926 b

1suspending or prohibiting any person from acting as a dealer,
2limited Canadian dealer, salesperson, investment adviser, or
3investment adviser representative or from offering or selling
4securities.
5    K. No provision of this Act shall be construed to require
6or to authorize the Secretary of State to require any
7investment adviser or federal covered investment adviser
8engaged in rendering investment supervisory services to
9disclose the identity, investments, or affairs of any client of
10the investment adviser or federal covered investment adviser,
11except insofar as the disclosure may be necessary or
12appropriate in a particular proceeding or investigation having
13as its object the enforcement of this Act.
14    L. Whenever, after an examination, investigation or
15hearing, the Secretary of State deems it of public interest or
16advantage, he or she may certify a record to the State's
17Attorney of the county in which the act complained of, examined
18or investigated occurred. The State's Attorney of that county
19within 90 days after receipt of the record shall file a written
20statement at the Office of the Secretary of State, which
21statement shall set forth the action taken upon the record, or
22if no action has been taken upon the record that fact, together
23with the reasons therefor, shall be stated.
24    M. The Secretary of State may initiate, take, pursue, or
25prosecute any action authorized or permitted under Section 6d
26of the Federal 1974 Act.

 

 

SB3439- 59 -LRB101 16542 JLS 65926 b

1    N. (1) Notwithstanding any provision of this Act to the
2contrary, to encourage uniform interpretation, administration,
3and enforcement of the provisions of this Act, the Secretary of
4State may cooperate with the securities agencies or
5administrators of one or more states, Canadian provinces or
6territories, or another country, the North American Securities
7Administrators Association, the Securities and Exchange
8Commission, the Commodity Futures Trading Commission, the
9Securities Investor Protection Corporation, any
10self-regulatory organization, and any governmental law
11enforcement or regulatory agency.
12    (2) The cooperation authorized by paragraph (1) of this
13subsection includes, but is not limited to, the following:
14        (a) establishing or participating in a central
15    depository or depositories for registration under this Act
16    and for documents or records required under this Act;
17        (b) making a joint audit, inspection, examination, or
18    investigation;
19        (c) holding a joint administrative hearing;
20        (d) filing and prosecuting a joint civil or criminal
21    proceeding;
22        (e) sharing and exchanging personnel;
23        (f) sharing and exchanging information and documents;
24    or
25        (g) issuing any joint statement or policy.
26(Source: P.A. 99-182, eff. 1-1-16; 100-512, eff. 7-1-18;

 

 

SB3439- 60 -LRB101 16542 JLS 65926 b

1100-699, eff. 8-3-18.)
 
2    (815 ILCS 5/11.7 new)
3    Sec. 11.7. Vulnerable adult protection.
4    (a) As used in this Section:
5    "Eligible adult" means (1) a person 60 years of age or
6older or (2) a person subject to the Adult Protective Services
7Act.
8    "Financial exploitation" means (1) the wrongful or
9unauthorized taking, withholding, appropriation, or use of
10money, assets, or property of an eligible adult or (2) any act
11or omission taken by a person, including through the use of a
12power of attorney, guardianship, or conservatorship of an
13eligible adult, to:
14        (A) obtain control, through deception, intimidation or
15    undue influence, over the eligible adult's money, assets,
16    or property to deprive the eligible adult of the ownership,
17    use, benefit, or possession of his or her money, assets, or
18    property; or
19        (B) convert money, assets, or property of the eligible
20    adult to deprive such eligible adult of the ownership, use,
21    benefit, or possession of his or her money, assets, or
22    property.
23    "Qualified individual" means any salesperson, investment
24adviser, investment adviser representative, or person who
25serves in a supervisory, compliance, legal, or investor

 

 

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1protection capacity for a broker-dealer or investment adviser.
2    (b) Disclosures to governmental agency. If a qualified
3individual reasonably believes that financial exploitation of
4an eligible adult may have occurred, may have been attempted,
5or is being attempted, the qualified individual shall notify a
6governmental agency or agent thereof responsible for adult
7protective services and the Illinois Securities Department
8(collectively the "Agencies").
9    (c) Third-party disclosures. If a qualified individual
10reasonably believes that financial exploitation of an eligible
11adult may have occurred, may have been attempted, or is being
12attempted, the qualified individual may notify any third party
13that is reasonably associated with the eligible adult or
14otherwise permitted by law. Disclosure may not be made to any
15designated third party that is suspected of financial
16exploitation or other abuse of the eligible adult.
17    (d) Delaying transactions or disbursements.
18        (1) A broker-dealer or investment adviser may delay a
19    transaction or disbursement from an account of an eligible
20    adult or an account on which an eligible adult is a
21    beneficiary if:
22            (A) the broker-dealer, investment adviser, or
23        qualified individual reasonably believes, after
24        initiating an internal review of the requested
25        transaction or disbursement, that the requested
26        transaction or disbursement may result in financial

 

 

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1        exploitation of an eligible adult; and
2            (B) the broker-dealer or investment adviser:
3                (i) immediately, but in no event more than 2
4            business days after the date on which the
5            broker-dealer or investment adviser first delayed
6            the transaction or disbursement of the funds,
7            provides written notification of the delay and the
8            reason for the delay to all parties authorized to
9            transact business on the account, unless any such
10            party is reasonably believed to have engaged in
11            suspected or attempted financial exploitation of
12            the eligible adult;
13                (ii) immediately, but in no event more than 2
14            business days after the date on which the
15            transaction or disbursement was first delayed,
16            notifies the Agencies; and
17                (iii) continues its internal review of the
18            suspected or attempted financial exploitation of
19            the eligible adult, as necessary, and provides
20            updates to the Agencies upon request.
21        (2) Any delay of a transaction or disbursement as
22    authorized by this Section shall expire upon the sooner of:
23            (A) a determination by the broker-dealer or
24        investment adviser that the transaction or
25        disbursement will not result in financial exploitation
26        of the eligible adult; or

 

 

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1            (B) fifteen business days after the date on which
2        the broker-dealer or investment adviser first delayed
3        the transaction or disbursement of the funds, unless
4        either of the Agencies requests that the broker-dealer
5        or investment adviser extend the delay, in which case
6        the delay shall expire no more than 25 business days
7        after the date on which the broker-dealer or investment
8        adviser first delayed the transaction or disbursement
9        of the funds, unless sooner terminated or further
10        extended by either of the Agencies or an order of a
11        court.
12    (e) Records. A broker-dealer or investment adviser shall
13provide access to or copies of records that are relevant to the
14suspected or attempted financial exploitation of an eligible
15adult to Agencies charged with administering state adult
16protective services laws and to law enforcement, either as part
17of a referral to the Agencies or to law enforcement, or upon
18request of the agency or law enforcement pursuant to an
19investigation. The records may include historical records as
20well as records relating to the most recent transaction or
21transactions that may comprise financial exploitation of an
22eligible adult. All records made available to the Agencies
23under this Section shall not be considered a public record.
24Nothing in this provision shall limit or otherwise impede the
25authority of the Illinois Securities Department to access or
26examine the books and records of broker-dealers and investment

 

 

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1advisers as otherwise provided by law.
2    (f) Disclosure to reporting party. Notwithstanding any
3provision of law to the contrary, the Agencies may disclose to
4any notifying qualified person the general status or final
5disposition of any investigation that arose from a report made
6by the qualified person.
7    (g) Liability. The Secretary shall not bring any
8administrative or civil action against a qualified individual,
9broker-dealer, or investment adviser for delaying a
10transaction or disbursement when acting in good faith and
11exercising reasonable care in accordance with this Section.
 
12    (815 ILCS 5/12)  (from Ch. 121 1/2, par. 137.12)
13    Sec. 12. Violation. It shall be a violation of the
14provisions of this Act for any person:
15        A. To offer or sell any security except in accordance
16    with the provisions of this Act.
17        B. To deliver to a purchaser any security required to
18    be registered under Section 5, Section 6 or Section 7
19    hereof unless accompanied or preceded by a prospectus that
20    meets the requirements of the pertinent subsection of
21    Section 5 or of Section 6 or of Section 7.
22        C. To act as a dealer, Internet portal, salesperson,
23    investment adviser, or investment adviser representative,
24    unless registered as such, where such registration is
25    required, under the provisions of this Act.

 

 

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1        D. To fail to file with the Secretary of State any
2    application, report or document required to be filed under
3    the provisions of this Act or any rule or regulation made
4    by the Secretary of State pursuant to this Act or to fail
5    to comply with the terms of any order of the Secretary of
6    State issued pursuant to Section 11 hereof.
7        E. To make, or cause to be made, (1) in any sworn
8    testimony before the Secretary of State or the Illinois
9    Securities Department within the Office of the Secretary,
10    or application, report or document filed under this Act or
11    any rule or regulation made by the Secretary of State
12    pursuant to this Act, any statement which was false or
13    misleading with respect to any material fact or (2) any
14    statement to the effect that a security (other than a
15    security issued by the State of Illinois) has been in any
16    way endorsed or approved by the Secretary of State or the
17    State of Illinois.
18        F. To engage in any transaction, practice or course of
19    business in connection with the sale or purchase of
20    securities which works or tends to work a fraud or deceit
21    upon the purchaser or seller thereof.
22        G. To obtain money or property through the sale of
23    securities by means of any untrue statement of a material
24    fact or any omission to state a material fact necessary in
25    order to make the statements made, in the light of the
26    circumstances under which they were made, not misleading.

 

 

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1        H. To sign or circulate any statement, prospectus, or
2    other paper or document required by any provision of this
3    Act or pertaining to any security knowing or having
4    reasonable grounds to know any material representation
5    therein contained to be false or untrue.
6        I. To employ any device, scheme or artifice to defraud
7    in connection with the sale or purchase of any security,
8    directly or indirectly.
9        J. When acting as an investment adviser, investment
10    adviser representative, or federal covered investment
11    adviser, or in the course of providing investment advice,
12    by any means or instrumentality, directly or indirectly:
13        (1) To employ any device, scheme or artifice to defraud
14        any client or prospective client;
15            (2) To engage in any transaction, practice, or
16        course of business which operates as a fraud or deceit
17        upon any client or prospective client; or
18            (3) To engage in any act, practice, or course of
19        business which is fraudulent, deceptive or
20        manipulative. The Secretary of State shall for the
21        purposes of this paragraph (3), by rules and
22        regulations, define and prescribe means reasonably
23        designed to prevent such acts, practices, and courses
24        of business as are fraudulent, deceptive, or
25        manipulative.
26        K. When offering or selling any mineral investment

 

 

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1    contract or mineral deferred delivery contract:
2        (1) To employ any device, scheme, or artifice to
3        defraud any customer, prospective customer, or
4        offeree;
5        (2) To engage in any transaction, practice, or course
6        of business that operates as a fraud or deceit upon any
7        customer, prospective customer, or offeree; or
8        (3) To engage in any act, practice, or course of
9        business that is fraudulent, deceptive, or
10        manipulative. The Secretary of State shall for the
11        purposes of this paragraph (3), by rules and
12        regulations, define and prescribe means reasonably
13        designed to prevent acts, practices, and courses of
14        business as are fraudulent, deceptive, or
15        manipulative.
16        L. To knowingly influence, coerce, manipulate, or
17    mislead any person engaged in the preparation or audit of
18    financial statements or appraisals to be used in the offer
19    or sale of securities for the purpose of rendering such
20    financial statements or appraisals materially misleading.
21(Source: P.A. 101-563, eff. 8-23-19.)
 
22    (815 ILCS 5/12.5 new)
23    Sec. 12.5. Non-public distribution of information.
24Information and documents obtained or generated by employees of
25the Secretary pursuant to the provisions of Section 11 shall,

 

 

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1unless made a matter of public record, be deemed confidential.
2Confidential information and documents or any other non-public
3records of the Illinois Securities Department shall not be made
4public unless the Secretary or his or her designee authorizes
5the disclosure of the information or the production of the
6documents as not being contrary to the public interest.
7Notices, orders, settlement agreements, and evidence presented
8in administrative hearings shall be considered public records.
9The Illinois Securities Department administrative hearings
10shall be open to the public.
 
11    (815 ILCS 5/14)  (from Ch. 121 1/2, par. 137.14)
12    Sec. 14. Sentence.
13    A. Any person who violates any of the provisions of
14subsection A, B, C, or D of Section 12 or paragraph (3) of
15subsection K of Section 12 of this Act shall be guilty of a
16Class 4 felony.
17    B. Any person who violates any of the provisions of
18subsection E, F, G, H, I, or J, paragraph (1) or (2) of
19subsection K, or subsection L of Section 12 of this Act shall
20be guilty of a Class 3 felony.
21    B-5. A person who violates a provision of subsection E, F,
22G, H, I, or J or paragraph (1) or (2) of subsection K of Section
2312 of this Act by use of a plan, program, or campaign that is
24conducted using one or more telephones for the purpose of
25inducing the purchase or sale of securities is guilty of a

 

 

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1Class 2 felony.
2    B-10. A person who in the course of violating a provision
3of subsection E, F, G, H, I, or J or paragraph (1) or (2) of
4subsection K of Section 12 of this Act induces a person 60
5years of age or older to purchase or sell securities is guilty
6of a Class 2 felony.
7    C. No prosecution for violation of any provision of this
8Act shall bar or be barred by any prosecution for the violation
9of any other provision of this Act or of any other statute; but
10all prosecutions under this Act or based upon any provision of
11this Act must be commenced within 3 years after the violation
12upon which such prosecution is based; provided however, that if
13the accused has intentionally concealed evidence of a violation
14of subsection E, F, G, H, I, J, or K of Section 12 of this Act,
15the period of limitation prescribed herein shall be extended up
16to an additional 2 years after the proper prosecuting officer
17becomes aware of the offense but in no such event shall the
18period of limitation so extended be more than 2 years beyond
19the expiration of the period otherwise applicable.
20    D. For the purposes of this Act all persons who shall sell
21or offer for sale, or who shall purchase or offer to purchase,
22securities in violation of the provisions of this Act, or who
23shall in any manner knowingly authorize, aid or assist in any
24unlawful conduct under this Act shall be deemed equally guilty,
25and may be tried and punished in the county in which said
26unlawful sale or offering for sale or unlawful purchase or

 

 

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1offer to purchase was made, or in the county in which the
2securities so sold or offered for sale or so purchased or
3offered to be purchased were delivered or proposed to be
4delivered to the purchaser thereof or by the seller thereof, as
5the case may be.
6    E. Any person who shall be convicted of a second or any
7subsequent offense specified in subsection A, B, C, D, or
8paragraph (3) of subsection K of Section 12 of this Act shall
9be guilty of a Class 3 felony, and any person who shall be
10convicted of a second or any subsequent offense specified in
11subsection E, F, G, H, I, J, or paragraph (1) or (2) of
12subsection K of Section 12 of this Act shall be guilty of a
13Class 2 felony.
14    F. If any person referred to in this Section is not a
15natural person, it may upon conviction of a first offense be
16fined up to $25,000, and if convicted of a second and
17subsequent offense, may be fined up to $50,000, in addition to
18any other sentence authorized by law.
19    G. This Act shall not be construed to repeal or affect any
20law now in force relating to the organization of corporations
21in this State or the admission of any foreign corporation to do
22business in this State.
23    H. For the purposes of this Act, all persons who sell or
24offer for sale, or who purchase or offer to purchase any
25mineral investment contract or mineral deferred delivery
26contract in violation of the provisions of this Act or who, in

 

 

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1any manner, knowingly authorize, aid, or assist in any unlawful
2sale or offer for sale or unlawful purchase or offer to
3purchase any mineral investment contract or mineral deferred
4delivery contract shall be deemed equally guilty and may be
5tried and punished in the county in which the unlawful sale or
6offer for sale or unlawful purchase or offer to purchase any
7mineral investment contract or mineral deferred delivery
8contract was made or in the county in which the mineral
9investment contract or mineral deferred delivery contract so
10sold or offered for sale or so purchased or offered to be
11purchased was delivered or proposed to be delivered to the
12purchaser thereof or by the seller thereof, as the case may be,
13or in Sangamon County.
14(Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
 
15    (815 ILCS 5/2.14 rep.)
16    Section 10. The Illinois Securities Law of 1953 is amended
17by repealing Section 2.14.