Public Act 90-0070
HB1168 Enrolled LRB9004729SMdv
AN ACT concerning financial transactions.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Securities Law of 1953 is
amended by changing Sections 2.3, 2.9, 2.10, 2.11, 2.12b,
2.17b, 2.26, 3, 4, 5, 6, 7, 8, 9, 10, 11, 11a, 12, and 13,
and by adding Sections 2.12c, 2.17f, 2.29, 2.30, 2.31, 2.32,
and 2a as follows:
(815 ILCS 5/2.3) (from Ch. 121 1/2, par. 137.2-3)
Sec. 2.3 "Person" means an individual, a corporation, a
partnership, an association, a joint stock company, a limited
liability company, a limited liability partnership, a trust
or any unincorporated organization. As used in this Section,
"trust" includes only a trust where the interest or interests
of the beneficiary or beneficiaries is a security.
(Source: Laws 1961, p. 3663.)
(815 ILCS 5/2.9) (from Ch. 121 1/2, par. 137.2-9)
Sec. 2.9. "Salesperson" means an individual, other than
an issuer or a dealer, employed or appointed or authorized by
a dealer, issuer or controlling person to offer, purchase or
sell securities in this State. The partners or officers of a
dealer or issuer shall not be deemed to be salespersons
within the meaning of this definition if they are not or have
not been regularly engaged in securities offering, purchasing
or selling activities other than transactions for their own
respective accounts. No individual shall be deemed to be a
salesperson solely by reason of effecting transactions in a
covered security to qualified purchasers as described in
Section 18(b)(3) of the Federal 1933 Act, effecting
transactions in a covered security as described in Section
18(b)(4)(D) of the Federal 1933 Act, or engaging in the fact
that such individual is engaged in making offers or effecting
sales of securities to employees of the issuer of such
securities or to employees of the parent or any wholly-owned
subsidiary of such issuer, provided that such individual is
an employee of such issuer, parent or subsidiary who has not
been employed primarily to make such offers or sales and who
receives no special compensation, directly or indirectly, for
or on account of any such offer or sale. "Salesperson" also
means a limited Canadian salesperson.
(Source: P.A. 84-869.)
(815 ILCS 5/2.10) (from Ch. 121 1/2, par. 137.2-10)
Sec. 2.10. "Registered salesperson" means a salesperson
registered under Section 8 of this Act. "Registered
salesperson" also means a registered limited Canadian
salesperson.
(Source: P.A. 80-556.)
(815 ILCS 5/2.11) (from Ch. 121 1/2, par. 137.2-11)
Sec. 2.11. Investment adviser. "Investment adviser"
means any person who, for compensation, engages in this State
in the business of advising others, either directly or
through publications or writings, as to the value of
securities or as to the advisability of investing in,
purchasing, or selling securities or who, in this State for
direct or indirect compensation and as part of a regular
advisory business, issues or promulgates analyses or reports
concerning securities or any financial planner or other
person who, as an integral component of other financially
related services, provides the foregoing investment advisory
services to others for compensation and as part of a business
or who holds himself or herself out as providing the
foregoing investment advisory services to others for
compensation; but "investment adviser" does not include:
(1) a bank or trust company, or the regular employees of
a bank or trust company;
(2) any lawyer, accountant, engineer, geologist or
teacher (i) whose performance of such services is solely
incidental to the practice of his or her profession or (ii)
who:
(A) does not exercise investment discretion with
respect to the assets of clients or maintain custody of
the assets of clients for the purpose of investing those
assets, except when the person is acting as a bona fide
fiduciary in a capacity such as an executor, trustee,
personal representative, estate or trust agent, guardian,
conservator, or person serving in a similar fiduciary
capacity;
(B) does not accept or receive, directly or
indirectly, any commission, fee, or other remuneration
contingent upon the purchase or sale of any specific
security by a client of such person; and
(C) does not advise on the purchase or sale of
specific securities, except that this clause (C) shall
not apply when the advice about specific securities is
based on financial statement analyses or tax
considerations that are reasonably related to and in
connection with the person's profession;
(3) any registered dealer or partner, officer, director
or regular employee of a registered dealer, or registered
salesperson, whose performance of these services, in each
case, is solely incidental to the conduct of the business of
the registered dealer or registered salesperson, as the case
may be, and who receives no special compensation, directly or
indirectly, for such services;
(4) any publisher or regular employee of such publisher
of a bona fide newspaper, news magazine or business or
financial publication of regular and established paid
circulation;
(5) any person whose advice, analyses or reports relate
only to securities which are direct obligations of, or
obligations guaranteed as to principal or interest by, the
United States, any state or any political subdivision of any
state, or any public agency or public instrumentality of any
one or more of the foregoing; or
(5.5) any person who is a federal covered investment
adviser; or
(6) any other persons who are not within the intent of
this Section as the Secretary of State may designate by rules
and regulations or order.
(Source: P.A. 87-463.)
(815 ILCS 5/2.12b) (from Ch. 121 1/2, par. 137.2-12b)
Sec. 2.12b. Investment adviser representative.
"Investment adviser representative" means any partner,
officer, director of (or a person occupying a similar status
or performing similar functions), or other natural person
employed by or associated with an investment adviser, except
clerical or ministerial personnel, who in this State:
(1) makes any recommendations or otherwise renders
advice regarding securities;
(2) manages accounts or portfolios of clients;
(3) determines what recommendation or advice regarding
securities should be given; or
(4) supervises any employee who performs any of the
foregoing.
"Investment adviser representative" does not mean a
federal covered investment adviser, a supervised person of a
federal covered investment adviser, or a person defined by
rule of the Securities and Exchange Commission under Section
203A of the Federal Investment Advisers Act as an investment
adviser representative.
(Source: P.A. 87-463.)
(815 ILCS 5/2.12c new)
Sec. 2.12c. Registered investment adviser
representative. "Registered investment adviser
representative" means an investment adviser representative
registered under Section 8 of this Act.
(815 ILCS 5/2.17b) (from Ch. 121 1/2, par. 137.2-17b)
Sec. 2.17b. Federal 1974 Act. "Federal 1974 Act" means
the Act of Congress of the United States known as the
Commodity Exchange Futures Trading Commission Act of 1974, as
amended.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 5/2.17f new)
Sec. 2.17f. Federal 1996 Act. "Federal 1996 Act" means
the Act of Congress of the United States known as the
National Securities Markets Improvement Act of 1996.
(815 ILCS 5/2.26) (from Ch. 121 1/2, par. 137.2-26)
Sec. 2.26. Mineral investment contract. "Mineral
investment contract" means any investment, account,
agreement, or contract whereby the investor's profits are
dependent upon the transportation, mining, minting, milling,
flotation, refining, hallmarking, sale, resale, or repurchase
of a metal or mineral, even if there is any potential for
profit from fluctuation in the value of the metal or mineral,
except any contract or agreement for the sale or purchase of
a metal or mineral between merchants. Nothing herein shall
affect the jurisdiction or authority of the Commodity Futures
Trading Commission under the Federal 1974 1936 Act or the
application of any provision thereof or regulation thereunder
to any person or transaction subject thereto. The Secretary
of State may, for the purposes of this Section by rules and
regulations, define the term "between merchants".
(Source: P.A. 87-463.)
(815 ILCS 5/2.29 new)
Sec. 2.29 Covered security. "Covered security" means
any security that is a covered security under Section 18(b)
of the Federal 1933 Act or rules or regulations promulgated
thereunder.
(815 ILCS 5/2.30 new)
Sec. 2.30. Federal covered investment adviser. "Federal
covered investment adviser" means a person who is (i)
registered under Section 203 of the Federal 1940 Investment
Advisers Act or (ii) is excluded from the definition of
"investment adviser" under Section 202(a)(11) of the Federal
1940 Investment Advisers Act.
(815 ILCS 5/2.31 new)
Sec. 2.31. Limited Canadian salesperson. "Limited
Canadian salesperson" means a salesperson who is a resident
of Canada, has no office or other physical presence in this
State, and complies with conditions specified by the
Secretary of State through rule or order.
(815 ILCS 5/2.32 new)
Sec. 2.32. Limited Canadian dealer. "Limited Canadian
dealer" means a dealer who is a resident of Canada, has no
office or other physical presence in this State, and complies
with conditions specified by the Secretary of State through
rule or order.
(815 ILCS 5/2a new)
Sec. 2a. Notification filing requirements of issuers of
any covered security and payment of fees. All issuers of any
covered security (except any security listed or authorized
for listing on the New York Stock Exchange or American Stock
Exchange or listed on the National Market System of the
Nasdaq Stock Market (or any successor to such entities), or
listed or authorized for listing on a national securities
exchange (or tier or segment thereof) that has listing
standards that the federal Securities and Exchange Commission
by rule (on its own initiative or on the basis of petition)
has determined are substantially similar to the listing
standards applicable to any security described in this
Section, or is a security of the same issuer that is equal in
seniority or that is a senior security described in this
Section) shall annually file a notification with the
Secretary of State in such form and manner as prescribed by
rule or order and pay the notification filing fee established
under Section 11a of this Act which shall not be returnable
in any event.
Anything in this Act to the contrary notwithstanding,
until October 10, 1999 or other date as may be legally
permissible, the refusal to file the notification or pay the
fee by an issuer of any covered security (except issuers of
securities which are being sold under Regulation D, Section
506 of the Federal 1933 Act) after written notice by the
Secretary of State (which may be by United States Postal
Service, facsimile or electronic transmission or other
similar means), shall require the issuer or his, her, or its
designee to file an application for registration with the
Secretary of State under subsection A or B of Section 5, 6,
or 7 of this Act and pay the registration fee established
under Section 11a of this Act which shall not be returnable
in any event. The failure to file any such notification
shall constitute a violation of subsection D of Section 12 of
this Act, subject to the penalties enumerated in Section 14
of this Act. The civil remedies provided for in subsection A
of Section 13 of this Act and the civil remedies of
rescission and appointment of a receiver, conservator,
ancillary receiver, or ancillary conservator provided for in
subsection F of Section 13 of this Act shall not be available
against any person by reason of the failure to file any such
notification or to pay the notification fee.
(815 ILCS 5/3) (from Ch. 121 1/2, par. 137.3)
Sec. 3. The provisions of Sections 2a, 5, 6 and 7 of
this Act shall not apply to any of the following securities:
A. Any security (including a revenue obligation) issued
or guaranteed by the United States, any state, any political
subdivision of a state, or any agency or corporation or other
instrumentality of any one or more of the foregoing, or any
certificate of deposit for any such security.
B. Any security issued or guaranteed by Canada, any
Canadian province, any political subdivision of any such
province, any agency or corporation or other instrumentality
of one or more of the foregoing, or any other foreign
government with which the United States then maintains
diplomatic relations, if the security is recognized as a
valid obligation by the issuer or guarantor.
C. (1) Any security issued by and representing an
interest in or a debt of, or guaranteed by, any bank or
savings bank organized under the laws of the United States,
or any bank, savings bank, savings institution or trust
company organized and supervised under the laws of any state,
or any interest or participation in any common trust fund or
similar fund maintained by any such bank, savings bank,
savings institution or trust company exclusively for the
collective investment and reinvestment of assets contributed
thereto by such bank, savings bank, savings institution or
trust company or any affiliate thereof, in its capacity as
fiduciary, trustee, executor, administrator or guardian.
(2) Any security issued or guaranteed to both principal
and interest by an international bank of which the United
States is a member.
D. (1) Any security issued by and representing an
interest in or a debt of, or guaranteed by, any federal
savings and loan association, or any savings and loan
association or building and loan association organized and
supervised under the laws of any state.
(2) Any security issued or guaranteed by any federal
credit union or any credit union, industrial loan
association, or similar organization organized and supervised
under the laws of any state.
E. Any security issued or guaranteed by any railroad,
other common carrier, public utility or holding company where
such issuer or guarantor is subject to the jurisdiction of
the Interstate Commerce Commission or successor entity, or is
a registered holding company under the Public Utility Holding
Company Act of 1935 or a subsidiary of such a company within
the meaning of that Act, or is regulated in respect of its
rates and charges by a governmental authority of the United
States or any state, or is regulated in respect of the
issuance or guarantee of the security by a governmental
authority of the United States, any state, Canada, or any
Canadian province.
F. Equipment trust certificates in respect of equipment
leased or conditionally sold to a person, if securities
issued by such person would be exempt under subsection E of
this Section.
G. Any security which at the time of sale is listed or
approved for listing upon notice of issuance on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc., the
Pacific Stock Exchange, Inc., the Chicago Stock Exchange,
Inc., the Chicago Board of Trade, the Philadelphia Stock
Exchange, Inc., the Chicago Board Options Exchange,
Incorporated, the Nasdaq National Market System of the Nasdaq
Stock Market, or any other exchange, automated quotation
system or board of trade which the Secretary of State, by
rule or regulation, deems to have substantially equivalent
standards for listing or designation as required by any such
exchange, automated quotation system or board of trade; and
securities senior or of substantially equal rank, both as to
dividends or interest and upon liquidation, to securities so
listed or designated; and warrants and rights to purchase any
of the foregoing; provided, however, that this subsection G
shall not apply to investment fund shares or securities of
like character, which are being continually offered at a
price or prices determined in accordance with a prescribed
formula.
The Secretary of State may, after notice and opportunity
for hearing, revoke the exemption afforded by this
subparagraph with respect to any securities by issuing an
order if the Secretary of State finds that the further sale
of the securities in this State would work or tend to work a
fraud on purchasers of the securities.
H. Any security issued by a person organized and
operated not for pecuniary profit and exclusively for
religious, educational, benevolent, fraternal, agricultural,
charitable, athletic, professional, trade, social or
reformatory purposes, or as a chamber of commerce or local
industrial development corporation, or for more than one of
said purposes and no part of the net earnings of which inures
to the benefit of any private stockholder or member.
I. Instruments evidencing indebtedness under an
agreement for the acquisition of property under contract of
conditional sale.
J. A note secured by a first mortgage upon tangible
personal or real property when such mortgage is made,
assigned, sold, transferred and delivered with such note or
other written obligation secured by such mortgage, either to
or for the benefit of the purchaser or lender; or bonds or
notes not more than 10 in number secured by a first mortgage
upon the title in fee simple to real property if the
aggregate principal amount secured by such mortgage does not
exceed $500,000 and also does not exceed 75% of the fair
market value of such real property.
K. A note or notes not more than 10 in number secured by
a junior mortgage lien if the aggregate principal amount of
the indebtedness represented thereby does not exceed 50% of
the amount of the then outstanding prior lien indebtedness
and provided that the total amount of the indebtedness
(including the indebtedness represented by the subject junior
mortgage note or notes) shall not exceed 90% of the fair
market value of the property securing such indebtedness; and
provided further that each such note or notes shall bear
across the face thereof the following legend in letters at
least as large as 12 point type: "THIS NOTE IS SECURED BY A
JUNIOR MORTGAGE".
L. Any negotiable promissory note or draft, bill of
exchange or bankers' acceptance which arises out of a current
transaction or the proceeds of which have been or are to be
used for current transactions, and which evidences an
obligation to pay cash within 9 months of the date of
issuance exclusive of days of grace, or any renewal of such
note, draft, bill or acceptance which is likewise limited, or
any guarantee of such note, draft, bill or acceptance or of
any such renewal, provided that the note, draft, bill, or
acceptance is a negotiable security eligible for discounting
by banks that are members of the Federal Reserve System. Any
instrument exempted under this subsection from the
requirement of Sections 5, 6, and 7 of this Act shall bear
across the face thereof the following legend in letters at
least as large as 12 point type: "THIS INSTRUMENT IS NEITHER
GUARANTEED, NOR IS THE ISSUANCE THEREOF REGULATED BY ANY
AGENCY OR DEPARTMENT OF THE STATE OF ILLINOIS OR THE UNITED
STATES.". However, the foregoing legend shall not be
required with respect to any such instrument:
(i) sold to a person described in subsection C or H
of Section 4 of this Act;
(ii) sold to a "Qualified Institutional Buyer" as
that term is defined in Rule 144a adopted under the
Securities Act of 1933;
(iii) where the minimum initial subscription for
the purchase of such instrument is $100,000 or more; or
(iv) issued by an issuer that has any class of
securities registered under Section 12 of the Securities
Exchange Act of 1934 or has any outstanding class of
indebtedness rated in one of the 3 highest categories by
a rating agency designated by the Department;
M. Any security issued by and representing an interest
in or a debt of, or guaranteed by, any insurance company
organized under the laws of any state.
N. Any security issued pursuant to (i) a written
compensatory benefit plan (including without limitation, any
purchase, savings, option, bonus, stock appreciation, profit
sharing, thrift, incentive, pension, or similar plan) and
interests in such plans established by one or more of the
issuers thereof or its parents or majority-owned subsidiaries
for the participation of their employees, directors, general
partners, trustees (where the issuer is a business trust),
officers, or consultants or advisers of such issuers or its
parents or majority-owned subsidiaries, provided that bona
fide services are rendered by consultants or advisers and
those services are not in connection with the offer and sale
of securities in a capital-raising transaction or (ii) a
written contract relating to the compensation of any such
person.
O. Any option, put, call, spread or straddle issued by a
clearing agency registered as such under the Federal 1934
Act, if the security, currency, commodity, or other interest
underlying the option, put, call, spread or straddle is not
required to be registered under Section 5.
P. Any security which meets all of the following
conditions:
(1) If the issuer is not organized under the laws
of the United States or a state, it has appointed a duly
authorized agent in the United States for service of
process and has set forth the name and address of the
agent in its prospectus.
(2) A class of the issuer's securities is required
to be and is registered under Section 12 of the Federal
1934 Act, and has been so registered for the three years
immediately preceding the offering date.
(3) Neither the issuer nor a significant subsidiary
has had a material default during the last seven years,
or for the period of the issuer's existence if less than
seven years, in the payment of (i) principal, interest,
dividend, or sinking fund installment on preferred stock
or indebtedness for borrowed money, or (ii) rentals under
leases with terms of three years or more.
(4) The issuer has had consolidated net income,
before extraordinary items and the cumulative effect of
accounting changes, of at least $1,000,000 in four of its
last five fiscal years including its last fiscal year;
and if the offering is of interest bearing securities,
has had for its last fiscal year, net income, before
deduction for income taxes and depreciation, of at least
1-1/2 times the issuer's annual interest expense, giving
effect to the proposed offering and the intended use of
the proceeds. For the purposes of this clause "last
fiscal year" means the most recent year for which audited
financial statements are available, provided that such
statements cover a fiscal period ended not more than 15
months from the commencement of the offering.
(5) If the offering is of stock or shares other
than preferred stock or shares, the securities have
voting rights and the rights include (i) the right to
have at least as many votes per share, and (ii) the right
to vote on at least as many general corporate decisions,
as each of the issuer's outstanding classes of stock or
shares, except as otherwise required by law.
(6) If the offering is of stock or shares, other
than preferred stock or shares, the securities are owned
beneficially or of record, on any date within six months
prior to the commencement of the offering, by at least
1,200 persons, and on that date there are at least
750,000 such shares outstanding with an aggregate market
value, based on the average bid price for that day, of at
least $3,750,000. In connection with the determination
of the number of persons who are beneficial owners of the
stock or shares of an issuer, the issuer or dealer may
rely in good faith for the purposes of this clause upon
written information furnished by the record owners.
(7) The issuer meets the conditions specified in
paragraphs (2), (3) and (4) of this subsection P if
either the issuer or the issuer and the issuer's
predecessor, taken together, meet such conditions and if:
(a) the succession was primarily for the purpose of
changing the state of incorporation of the predecessor or
forming a holding company and the assets and liabilities
of the successor at the time of the succession were
substantially the same as those of the predecessor; or
(b) all predecessors met such conditions at the time of
succession and the issuer has continued to do so since
the succession.
Q. Any security appearing on the List of OTC Margin
Stocks published by the Board of Governors of the Federal
Reserve System; any other securities of the same issuer which
are of senior or substantially equal rank; any securities
called for by subscription rights or warrants so listed or
approved; or any warrants or rights to purchase or subscribe
to any of the foregoing.
R. Any security issued by a bona fide agricultural
cooperative operating in this State that is organized under
the laws of this State or as a foreign cooperative
association organized under the law of another state that has
been duly qualified to transact business in this State.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 5/4) (from Ch. 121 1/2, par. 137.4)
Sec. 4. Exempt transactions. The provisions of Sections
2a, 5, 6 and 7 of this Act shall not apply to any of the
following transactions, except where otherwise specified in
this Section 4:
A. Any offer or sale, whether through a dealer or
otherwise, of securities by a person who is not an issuer,
underwriter, dealer or controlling person in respect of such
securities, and who, being the bona fide owner of such
securities, disposes thereof for his or her own account;
provided, that such offer or sale is not made directly or
indirectly for the benefit of the issuer or of an underwriter
or controlling person.
B. Any offer, sale, issuance or exchange of securities
of the issuer to or with security holders of the issuer
except to or with persons who are security holders solely by
reason of holding transferable warrants, transferable
options, or similar transferable rights of the issuer, if no
commission or other remuneration is paid or given directly or
indirectly for or on account of the procuring or soliciting
of such sale or exchange (other than a fee paid to
underwriters based on their undertaking to purchase any
securities not purchased by security holders in connection
with such sale or exchange).
C. Any offer, sale or issuance of securities to any
corporation, bank, savings bank, savings institution, savings
and loan association, trust company, insurance company,
building and loan association, or dealer; to a pension fund,
pension trust, or employees' profit sharing trust, other
financial institution or institutional investor, any
government or political subdivision or instrumentality
thereof, whether the purchaser is acting for itself or in
some fiduciary capacity; to any partnership or other
association engaged as a substantial part of its business or
operations in purchasing or holding securities; to any trust
in respect of which a bank or trust company is trustee or
co-trustee; to any entity in which at least 90% of the equity
is owned by persons described under subsection C, H, or S of
this Section 4; to any employee benefit plan within the
meaning of Title I of the Federal ERISA Act if (i) the
investment decision is made by a plan fiduciary as defined in
Section 3(21) of the Federal ERISA Act and such plan
fiduciary is either a bank, savings and loan association,
insurance company, registered investment adviser or an
investment adviser registered under the Federal 1940
Investment Advisers Act, or (ii) the plan has total assets in
excess of $5,000,000, or (iii) in the case of a self-directed
plan, investment decisions are made solely by persons that
are described under subsection C, D, H or S of this Section
4; to any plan established and maintained by, and for the
benefit of the employees of, any state or political
subdivision or agency or instrumentality thereof if such plan
has total assets in excess of $5,000,000; or to any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, any Massachusetts or similar business
trust, or any partnership, if such organization, trust, or
partnership has total assets in excess of $5,000,000.
D. The Secretary of State is granted authority to create
by rule or regulation a limited offering transactional
exemption that furthers the objectives of compatibility with
federal exemptions and uniformity among the states. The
Secretary of State shall prescribe by rule or regulation the
amount of the fee for filing any report required under this
subsection, but the fee shall not be less than the minimum
amount nor more than the maximum amount established under
Section 11a of this Act and shall not be returnable in any
event.
E. Any offer or sale of securities by an executor,
administrator, guardian, receiver or trustee in insolvency or
bankruptcy, or at any judicial sale, or at a public sale by
auction held at an advertised time and place, or the offer or
sale of securities in good faith and not for the purpose of
avoiding the provisions of this Act by a pledgee of
securities pledged for a bona fide debt.
F. Any offer or sale by a registered dealer, either as
principal or agent, of any securities (except face amount
certificate contracts and investment fund shares) at a price
reasonably related to the current market price of such
securities, provided:
(1)(a) the securities are issued and outstanding;
(b) the issuer is required to file reports pursuant
to Section 13 or Section 15(d) of the Federal 1934 Act
and has been subject to such requirements during the 90
day period immediately preceding the date of the offer or
sale, or is an issuer of a security covered by Section
12(g)(2)(B) or (G) of the Federal 1934 Act;
(c) the dealer has a reasonable basis for believing
that the issuer is current in filing the reports required
to be filed at regular intervals pursuant to the
provisions of Section 13 or Section 15(d), as the case
may be, of the Federal 1934 Act, or in the case of
insurance companies exempted from Section 12(g) of the
Federal 1934 Act by subparagraph 12(g)(2)(G) thereof, the
annual statement referred to in Section 12(g)(2)(G)(i) of
the Federal 1934 Act; and
(d) the dealer has in its records, and makes
reasonably available upon request to any person
expressing an interest in a proposed transaction in the
securities, the issuer's most recent annual report filed
pursuant to Section 13 or 15(d), as the case may be, of
the Federal 1934 Act or the annual statement in the case
of an insurance company exempted from Section 12(g) of
the Federal 1934 Act by subparagraph 12(g)(2)(G) thereof,
together with any other reports required to be filed at
regular intervals under the Federal 1934 Act by the
issuer after such annual report or annual statement;
provided that the making available of such reports
pursuant to this subparagraph, unless otherwise
represented, shall not constitute a representation by the
dealer that the information is true and correct, but
shall constitute a representation by the dealer that the
information is reasonably current; or
(2)(a) prior to any offer or sale, an application
for the authorization thereof and a report as set forth
under sub-paragraph (d) of this paragraph (2) has been
filed by any registered dealer with and approved by the
Secretary of State pursuant to such rules and regulations
as the Secretary of State may prescribe;
(b) the Secretary of State shall have the power by
order to refuse to approve any application or report
filed pursuant to this paragraph (2) if
(i) the application or report does not comply
with the provisions of this paragraph (2), or
(ii) the offer or sale of such securities
would work or tend to work a fraud or deceit, or
(iii) the issuer or the applicant has violated
any of the provisions of this Act;
(c) each application and report filed pursuant to
this paragraph (2) shall be accompanied by a filing fee
and an examination fee in the amount established pursuant
to Section 11a of this Act, which shall not be returnable
in any event;
(d) there shall be submitted to the Secretary of
State no later than 120 days following the end of the
issuer's fiscal year, each year during the period of the
authorization, one copy of a report which shall contain a
balance sheet and income statement prepared as of the
issuer's most recent fiscal year end certified by an
independent certified public accountant, together with
such current information concerning the securities and
the issuer thereof as the Secretary of State may
prescribe by rule or regulation or order;
(e) prior to any offer or sale of securities under
the provisions of this paragraph (2), each registered
dealer participating in the offer or sale of such
securities shall provide upon request of prospective
purchasers of such securities a copy of the most recent
report required under the provisions of sub-paragraph (d)
of this paragraph (2);
(f) approval of an application filed pursuant to
this paragraph (2) of subsection F shall expire 5 years
after the date of the granting of the approval, unless
said approval is sooner terminated by (1) suspension or
revocation by the Secretary of State in the same manner
as is provided for in subsections E, F and G of Section
11 of this Act, or (2) the applicant filing with the
Secretary of State an affidavit to the effect that (i)
the subject securities have become exempt under Section 3
of this Act or (ii) the applicant no longer is capable of
acting as the applicant and stating the reasons therefor
or (iii) the applicant no longer desires to act as the
applicant. In the event of the filing of an affidavit
under either preceding sub-division (ii) or (iii) the
Secretary of State may authorize a substitution of
applicant upon the new applicant executing the
application as originally filed. However, the
aforementioned substituted execution shall have no effect
upon the previously determined date of expiration of
approval of the application. Notwithstanding the
provisions of this subparagraph (f), approvals granted
under this paragraph (2) of subsection F prior to the
effective date of this Act shall be governed by the
provisions of this Act in effect on such date of
approval; and
(g) no person shall be considered to have violated
Section 5 of this Act by reason of any offer or sale
effected in reliance upon an approval granted under this
paragraph (2) after a termination thereof under the
foregoing subparagraph (f) if official notice of such
termination has not been circulated generally to dealers
by the Secretary of State and if such person sustains the
burden of proof that he or she did not know, and in the
exercise of reasonable care, could not have known, of the
termination; or
(3) the securities, or securities of the same
class, are the subject of an existing registration under
Section 5 of this Act.
The exemption provided in this subsection F shall apply
only if the offer or sale is made in good faith and not for
the purpose of avoiding any of the provisions of this Act,
and only if the offer or sale is not made for the direct or
indirect benefit of the issuer of the securities, or the
controlling person in respect of such issuer.
G. (1) Any offer, sale or issuance of a security,
whether to residents or to non-residents of this State,
where:
(a) all sales of such security to residents of this
State (including the most recent such sale) within the
immediately preceding 12-month period have been made to
not more than 35 persons or have involved an aggregate
sales price of not more than $1,000,000 $500,000;
(b) such security is not offered or sold by means
of any general advertising or general solicitation in
this State; and
(c) no commission, discount, or other remuneration
exceeding 20% of the sale price of such security, if sold
to a resident of this State, is paid or given directly or
indirectly for or on account of such sales.
(2) In computing the number of resident purchasers or
the aggregate sales price under paragraph (1) (a) above,
there shall be excluded any purchaser or dollar amount of
sales price, as the case may be, with respect to any security
which at the time of its sale was exempt under Section 3 or
was registered under Section 5, 6 or 7 or was sold in a
transaction exempt under other subsections of this Section 4.
(3) A prospectus or preliminary prospectus with respect
to a security for which a registration statement is pending
or effective under the Federal 1933 Act shall not be deemed
to constitute general advertising or general solicitation in
this State as such terms are used in paragraph (1) (b) above,
provided that such prospectus or preliminary prospectus has
not been sent or otherwise delivered to more than 150
residents of this State.
(4) The Secretary of State shall by rule or regulation
require the filing of a report or reports of sales made to
residents of this State in reliance upon the exemption
provided by this subsection G and prescribe the form of such
report and the time within which such report shall be filed.
Such report shall set forth the name and address of the
issuer and of the controlling person, if the sale was for the
direct or indirect benefit of such person, the total amount
of the securities sold under this subsection G to residents
of this State, the names and addresses of the resident
purchasers, a representation that sales of such securities
were not made to residents of this State in excess of those
permitted by this subsection G, and any other information
deemed necessary by the Secretary of State to enforce
compliance with this subsection G. The Secretary of State
shall prescribe by rule or regulation the amount of the fee
for filing any such report, but such fee shall not be less
than the minimum amount nor more than the maximum amount
established pursuant to Section 11a of this Act, which and
shall not be returnable in any event. The Secretary of State
may impose, in such cases as he or she may deem appropriate,
a penalty for failure to file any such report in a timely
manner, but no such penalty shall exceed an amount equal to
five times the filing fee. The contents of any such report
or portion thereof may shall be deemed confidential by the
Secretary of State by rule or order and if so deemed shall
not be disclosed to the public except by order of court or in
court proceedings. The failure to file any such report shall
not affect the availability of such exemption, but such
failure to file any such report shall constitute a violation
of subsection D of Section 12 of this Act, subject to the
penalties enumerated in Section 14 of this Act. The civil
remedies provided for in subsection A of Section 13 of this
Act and the civil remedies of rescission and appointment of a
receiver, conservator, ancillary receiver or ancillary
conservator provided for in subsection F of Section 13 of
this Act shall not be available against any person by reason
of the failure to file any such report or on account of the
contents of any such report.
H. Any offer, sale or issuance of a security to (1) any
natural person who has, or is reasonably believed by the
person relying upon this subsection H to have, a net worth or
joint net worth with that person's spouse, at the time of the
offer, sale or issuance, in excess of $1,000,000, or (2) any
natural person who had, or is reasonably believed by the
person relying upon this subsection H to have had, an income
or joint income with that person's spouse, in excess of
$200,000 in each of the two most recent years and who
reasonably expects, or is reasonably expected to have, an
income in excess of $200,000 in the current year, or (3) any
person that is not a natural person and in which at least 90%
of the equity interest is owned by persons who meet either of
the tests set forth in clauses (1) or (2) of this subsection
H; provided that such security is not offered or sold by
means of any general advertising or general solicitation in
this State.
I. Any offer, sale or issuance of securities to or for
the benefit of security holders of any person incident to a
vote by such security holders pursuant to such person's
organizational document or any applicable statute of the
jurisdiction of such person's organization, on a merger,
consolidation, reclassification of securities, or sale or
transfer of assets in consideration of or exchange for
securities of the same or another person.
J. Any offer, sale or issuance of securities in exchange
for one or more outstanding securities, claims or property
interests, or partly in such exchange and partly for cash,
where such offer, sale or issuance is incident to a
reorganization, recapitalization, readjustment, composition
or settlement of a claim, as approved by a court of competent
jurisdiction of the United States, or any state.
K. Any offer, sale or issuance of securities for
patronage, or as patronage refunds, or in connection with
marketing agreements by cooperative associations organized
exclusively for agricultural, producer, marketing,
purchasing, or consumer purposes; and the sale of
subscriptions for or shares of stock of cooperative
associations organized exclusively for agricultural,
producer, marketing, purchasing, or consumer purposes, if no
commission or other remuneration is paid or given directly or
indirectly for or on account of such subscription, sale or
resale, and if any person does not own beneficially more than
5% of the aggregate amount of issued and outstanding capital
stock of such cooperative association.
L. Offers for sale or solicitations of offers to buy
(but not the acceptance thereof), of securities which are the
subject of a pending registration statement filed under the
Federal 1933 Act and which are the subject of a pending
application for registration under this Act.
M. Any offer or sale of preorganization subscriptions
for any securities prior to the incorporation, organization
or formation of any issuer under the laws of the United
States, or any state, or the issuance by such issuer, after
its incorporation, organization or formation, of securities
pursuant to such preorganization subscriptions, provided the
number of subscribers does not exceed 25 and either (1) no
commission or other remuneration is paid or given directly or
indirectly for or on account of such sale or sales or
issuance, or (2) if any commission or other remuneration is
paid or given directly or indirectly for or on account of
such sale or sales or issuance, the securities are not
offered or sold by any means of general advertising or
general solicitation in this State.
N. The execution of orders for purchase of securities by
a registered salesperson and dealer, provided such persons
act as agent for the purchaser, have made no solicitation of
the order to purchase the securities, have no direct interest
in the sale or distribution of the securities ordered,
receive no commission, profit, or other compensation other
than the commissions involved in the purchase and sale of the
securities and deliver to the purchaser written confirmation
of the order which clearly identifies the commissions paid to
the registered dealer.
O. Any offer, sale or issuance of securities, other than
fractional undivided interests in an oil, gas or other
mineral lease, right or royalty, for the direct or indirect
benefit of the issuer thereof, or of a controlling person,
whether through a dealer (acting either as principal or
agent) or otherwise, if the securities sold, immediately
following the sale or sales, together with securities already
owned by the purchaser, would constitute 50% or more of the
equity interest of any one issuer, provided that the number
of purchasers is not more than 5 and provided further that no
commission, discount or other remuneration exceeding 15% of
the aggregate sale price of the securities is paid or given
directly or indirectly for or on account of the sale or
sales.
P. Any offer, sale or issuance of securities (except
face amount certificate contracts and investment fund shares)
issued by and representing an interest in an issuer which is
a business corporation incorporated under the laws of this
State, the purposes of which are to provide capital and
supervision solely for the redevelopment of blighted urban
areas located in a municipality in this State and whose
assets are located entirely within that municipality,
provided: (1) no commission, discount or other remuneration
is paid or given directly or indirectly for or on account of
the sale or sales of such securities; (2) the aggregate
amount of any securities of the issuer owned of record or
beneficially by any one person will not exceed the lesser of
$5,000 or 4% of the equity capitalization of the issuer; (3)
the officers and directors of the corporation have been bona
fide residents of the municipality not less than 3 years
immediately preceding the effectiveness of the offering sheet
for the securities under this subsection P; and (4) the
issuer files with the Secretary of State an offering sheet
descriptive of the securities setting forth:
(a) the name and address of the issuer;
(b) the title and total amount of securities to be
offered;
(c) the price at which the securities are to be
offered; and
(d) such additional information as the Secretary of
State may prescribe by rule and regulation.
The Secretary of State shall within a reasonable time
examine the offering sheet so filed and, unless the Secretary
of State shall make a determination that the offering sheet
so filed does not conform to the requirements of this
subsection P, shall declare the offering sheet to be
effective, which offering sheet shall continue effective for
a period of 12 months from the date it becomes effective.
The fee for examining the offering sheet shall be as
established pursuant to Section 11a of this Act, and shall
not be returnable in any event. The Secretary of State shall
by rule or regulation require the filing of a report or
reports of sales made to residents of this State in reliance
upon the exemption provided by this subsection P and
prescribe the form of such report and the time within which
such report shall be filed. The Secretary of State shall
prescribe by rule or regulation the amount of the fee for
filing any such report, but such fee shall not be less than
the minimum amount nor more than the maximum amount
established pursuant to Section 11a of this Act, and shall
not be returnable in any event. The Secretary of State may
impose, in such cases as he or she may deem appropriate, a
penalty for failure to file any such report in a timely
manner, but no such penalty shall exceed an amount equal to
five times the filing fee. The contents of any such report
shall be deemed confidential and shall not be disclosed to
the public except by order of court or in court proceedings.
The failure to file any such report shall not affect the
availability of such exemption, but such failure to file any
such report shall constitute a violation of subsection D of
Section 12 of this Act, subject to the penalties enumerated
in Section 14 of this Act. The civil remedies provided for
in subsection A of Section 13 of this Act and the civil
remedies of rescission and appointment of a receiver,
conservator, ancillary receiver or ancillary conservator
provided for in subsection F of Section 13 of this Act shall
not be available against any person by reason of the failure
to file any such report or on account of the contents of any
such report.
Q. Any isolated transaction, whether effected by a
dealer or not.
R. Any offer, sale or issuance of a security to any
person who purchases at least $150,000 of the securities
being offered, where the purchaser's total purchase price
does not, or it is reasonably believed by the person relying
upon this subsection R that said purchase price does not,
exceed 20 percent of the purchaser's net worth at the time of
sale, or if a natural person a joint net worth with that
person's spouse, for one or any combination of the following:
(i) cash, (ii) securities for which market quotations are
readily available, (iii) an unconditional obligation to pay
cash or securities for which quotations are readily
available, which obligation is to be discharged within five
years of the sale of the securities to the purchaser, or (iv)
the cancellation of any indebtedness owed by the issuer to
the purchaser; provided that such security is not offered or
sold by means of any general advertising or general
solicitation in this State.
S. Any offer, sale or issuance of a security to any
person who is, or who is reasonably believed by the person
relying upon this subsection S to be, a director, executive
officer, or general partner of the issuer of the securities
being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer. For
purposes of this subsection S, "executive officer" shall mean
the president, any vice president in charge of a principal
business unit, division or function (such as sales,
administration or finance), any other officer who performs a
policy making function, or any other person who performs
similar policy making functions for the issuer. Executive
officers of subsidiaries may be deemed executive officers of
the issuer if they perform such policy making functions for
the issuer.
A document being filed pursuant to this Section 4 shall
be deemed filed, and any fee paid pursuant to this Section 4
shall be deemed paid, upon the date of actual receipt thereof
by the Secretary of State.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
(815 ILCS 5/5) (from Ch. 121 1/2, par. 137.5)
Sec. 5. Registration of Securities. All securities
except those set forth under Section 2a of this Act, or those
exempt under Section 3 of this Act, or those offered or sold
in transactions exempt under Section 4 of this Act, or face
amount certificate contracts required to be registered under
Section 6 of this Act, or investment fund shares required to
be registered under Section 7 of this Act, shall be
registered either by coordination or by qualification, as
hereinafter in this Section provided, prior to their offer or
sale in this State.
A. Registration by Coordination.
(1) Securities which are being or have been
registered under the Federal 1933 Act may be registered
by coordination in the manner provided in this subsection
A, if the effective date of the registration under the
Federal 1933 Act is not more than 30 days before the
filing with the Secretary of State.
(2) Securities may be registered by coordination by
the filing with the Secretary of State by the issuer, by
a controlling person or by a registered dealer of:
(a) One copy of the registration statement
(without exhibits) descriptive of the securities on
file with the Securities and Exchange Commission in
its most recent form as of the date of the initial
filing under this subsection A.;
(b) An application, in such form and executed,
verified, or authenticated by such person as the
Secretary of State shall by rule or regulation
prescribe, setting forth the title and the total
amount of securities to be offered, the amount of
securities and the proposed maximum aggregate price
thereof to be offered in this State under this
subsection A and, if the applicant is electing the
date of effectiveness of a post-effective amendment
as its effective date as provided in Section 2.13 of
this Act, specifying such date as the effective date
for purposes of registration under this subsection
A;
(c) An undertaking to forward to the Secretary
of State, in writing (which may be by electronic
telegraphic or facsimile transmission), any and all
subsequent amendments of and supplements to the
registration statement not later than the 7th day
after the forwarding thereof to the Securities and
Exchange Commission, or such longer period as the
Secretary of State may permit by rule, regulation or
order; and
(d) If the applicant is not a registered
dealer, the name of at least one registered dealer
for the securities being registered under this
subsection A (except that, in the case of securities
being offered and sold on a delayed or continuous
basis pursuant to Rule 415 under the Federal 1933
Act, 17 C.F.R. Section 230.415, or any similar or
successor rule thereto as may be designated by the
Secretary of State by rule or regulation, the name
of the registered dealer may be furnished no later
than the close of business on the second business
day following the commencement of sales of the
registered securities in this State) or a written
statement setting forth the method of offer and sale
in this State of the securities being registered in
compliance with Section 8 of this Act.
(3) Registration of securities by coordination
shall take effect automatically as of the effective date
of the registration statement (or post-effective
amendment) filed under the Federal 1933 Act, provided
that on the effective date, the information required by
sub-paragraphs (a), (b), and (d) and the undertaking
required by sub-paragraph (c) of paragraph (2) of this
subsection A have been on file with the Secretary of
State for at least 10 business days, or such shorter
period as the Secretary of State may permit by rule,
regulation or order. If, however, the time period
referred to in the preceding sentence shall not have
expired on the effective date of the registration
statement (or post-effective amendment) filed under the
Federal 1933 Act, registration of such securities by
coordination shall, upon the expiration of such time
period, take effect automatically as of the effective
date of the registration statement (or post-effective
amendment) filed under the Federal 1933 Act.
(4) If the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this subsection A
are not filed with the Secretary of State prior to the
effective date of the registration statement (or
post-effective amendment) filed under the Federal 1933
Act, any registration of securities by coordination under
this subsection A shall take effect automatically as soon
as all of the following conditions have been satisfied:
(a) the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this
subsection A have been on file with the Secretary of
State for 10 business days, or for such shorter
period as the Secretary of State may permit by rule,
regulation or order;
(b) the registration statement or
post-effective amendment filed under the Federal
1933 Act is then in effect; and
(c) the prospectus then on file with the
Secretary of State satisfies the requirements of
Section 10(a)(3) of the Federal 1933 Act.
(5) The applicant shall furnish to the Secretary of
State written notice (which may be by electronic,
telegraphic, or facsimile transmission) confirming the
date of effectiveness and the title of the securities
registered under the Federal 1933 Act, final pricing
information, the total amount of securities registered
under the Federal 1933 Act, and the amount registered in
this State if different than the amounts then on file
with the Secretary of State, no later than the close of
business on the second business day following the date on
which the registration statement becomes effective under
the Federal 1933 Act.
(6) No action by the Secretary of State shall be
necessary to evidence the effectiveness of the
registration by coordination under this subsection A.
The Secretary of State may, at his or her discretion,
provide a statement attesting to such registration, which
statement shall be in such form as the Secretary of State
may deem appropriate.
(7) Notwithstanding the foregoing, the issuer,
controlling person or registered dealer who filed the
application set forth in subparagraph (b) of paragraph
(2) of this subsection A may request, in writing (which
may be by electronic, telegraphic, or facsimile
transmission) prior to or upon notice of effectiveness
under the Federal 1933 Act, a waiver of automatic
effectiveness of the registration of securities and the
Secretary of State may, at his or her discretion, grant
such waiver of automatic effectiveness. Upon the grant
by the Secretary of State of the request of waiver of
automatic effectiveness, such registration of securities
shall become effective automatically on the date that the
issuer, controlling person or registered dealer who filed
the application set forth in subparagraph (b) of
paragraph (2) of this subsection A notifies the Secretary
of State in writing.
B. Registration by Qualification. Securities may be
registered by qualification in the manner provided in this
subsection B.
(1) An application for registration by
qualification shall be made by the issuer, by a
controlling person or by a registered dealer together
with the examination fee established pursuant to Section
11a of this Act, which is not returnable in any event.
Such application shall be executed, verified, or
authenticated by the applicant and filed with the
Secretary of State. The application shall set forth:
(a) The name and address of the issuer;
(b) The title and total amount of the
securities to be offered;
(c) The amount of the securities to be offered
in this State;
(d) The price at which the securities are to
be offered, or the method by which such price is to
be determined, provided that such price or method
may be furnished by written notice (which may be by
electronic, telegraphic, or facsimile transmission)
to the Secretary of State subsequent to the filing
of the application but prior to registration of the
securities under this Law; and
(e) The aggregate underwriting commissions,
remuneration or discount.
(2) If the issuer, dealer, or controlling person
has not filed a registration statement that is then in
effect under the Federal 1933 Act, there shall be filed
with the application:
(a) (Blank); If the issuer is a corporation, a
copy of its charter or articles of incorporation as
then in effect, unless then on file with the
Secretary of State; if other than a corporation, a
copy of all instruments, if any, by which the issuer
was created and all amendments thereto;
(b) (Blank); A copy of the by-laws, or other
code of regulations, if any, of the issuer;
(c) A copy of the indenture or other
instrument, if any, under which the securities are
to be or have been issued;
(d) A specimen copy of the securities or a
copy of the form of the instrument to evidence the
securities;
(e) An opinion of counsel as to the legality
of the securities;
(f) A copy of the underwriting and selling
agreements, if any;
(g) An undertaking to file promptly (no later
than 2 business days after the occurrence of any
event which requires a material change in the
prospectus) with the Secretary of State all
amendments of and supplements to the prospectus as
theretofore filed under this subsection B, together
with any additional information, document or
undertaking which the Secretary of State, at his or
her discretion, deems material, accompanied by the
amendment filing fee established pursuant to Section
11a of this Act or, in lieu thereof, a notification
in writing that all offers and sales of the
securities have been suspended pending the filing
with the Secretary of State of such amendment of or
supplement to the prospectus; and
(h) A written statement setting forth the name
of at least one registered dealer for the securities
being registered under this subsection B, or an
application for registration of a salesperson or a
written statement setting forth the method of offer
and sale in this State of the securities being
registered in compliance with Section 8 of this Act.
(3) In addition, there shall be filed with the
application such additional information and material in
such form as the Secretary of State may by rule,
regulation or order prescribe and a prospectus which
contains but is not limited to the following:
(a) The date and form of organization of the
issuer;
(b) A brief description of the business
conducted and intended to be conducted by the issuer
and by its subsidiaries and the general development
of such business during the past 5 years or such
shorter period as the issuer and such subsidiaries
may have been in existence;
(c) The location and general character of the
physical properties of the issuer and of its
subsidiaries;
(d) The authorized and issued capitalization
of the issuer and a description of the securities
being registered and of all authorized securities;
(e) The proposed method of sale of the
securities, the price thereof to the public or the
method by which such price is to be computed, and
the underwriting and selling discounts and
commissions;
(f) The intended use by the issuer of the
proceeds of the securities;
(g) The names and addresses of all of the
issuer's officers and directors, or persons
performing similar functions, their business
experience during the preceding 5 years and the
remuneration paid to each by the issuer and its
subsidiaries during the fiscal year last past and
proposed to be paid for the then current fiscal
year;
(h) The names and addresses of all persons
owning of record, and of all persons owning
beneficially, to the extent known to the applicant,
10% or more of any class of equity securities of the
issuer, and the percentage owned by each;
(i) A brief description of any pending
material legal proceeding, and of any material legal
proceeding known to be contemplated by governmental
authorities, involving the issuer or its
subsidiaries;
(j) The following financial statements of the
issuer:
(i) A balance sheet as of a date
within 135 days prior to the date of
submitting the application. If such
balance sheet is not certified by an
independent certified public accountant,
the prospectus shall also contain a
balance sheet certified by an independent
certified public accountant as of the
close of the issuer's last fiscal year,
unless such fiscal year ended within 135
days prior to the time of filing the
application, in which case the certified
balance sheet may be as of the end of the
preceding fiscal year.
(ii) An income statement for each of
the issuer's 3 fiscal years (or for the
period of existence of the issuer if less
than 3 years) next preceding the date of
the certified balance sheet and for the
period, if any, between the date of the
certified balance sheet and the date of
the most recent balance sheet. Such
statement shall be certified by an
independent certified public accountant
for the periods ending with the date of
the certified balance sheet.
(iii) An analysis of each surplus
account of the issuer for each period for
which an income statement is filed,
certified by an independent certified
public accountant for the periods for
which certified income statements are
filed.
(iv) An analysis (which need not be
certified to by independent certified
public accountants and which may be in
narrative form if desired by the
applicant) of all surplus accounts of the
issuer for a period beginning on a date
not less than 8 years prior to the date of
the certified balance sheet required by
the above sub-division (i) of this
sub-paragraph (j), or from the date of the
organization of the issuer, whichever is
later, and ending on the day before the
first day of the earliest period covered
by the analysis of surplus accounts
furnished pursuant to the above
sub-division (iii) of this sub-paragraph
(j); and
(k) If the issuer owns more than 50% of the
voting securities of one or more entities, there
shall also be included in the prospectus either (i)
like financial statements for each such entity, or
(ii) like consolidated financial statements for the
issuer and such entities;
(l) Anything in sub-paragraphs (j) and (k) of
this paragraph (3) to the contrary notwithstanding,
the financial statements contained in the prospectus
need not be certified by an independent certified
public accountant if the securities being registered
under this subsection B are covered by a
Notification under Regulation A or an Offering Sheet
under Regulation D adopted pursuant to the Federal
1933 Act or any other regulation so adopted which
the Secretary of State may by rule or regulation or
by order determine to have filing or disclosure
requirements substantially similar to such
Regulation A or Regulation D unless the financial
statements furnished pursuant to any such Federal
regulation are required to be or are certified by an
independent certified public accountant.
(4) If the securities being registered under this
subsection B are certificates of deposit, voting trust
certificates, collateral-trust certificates, certificates
of interest, fractional interests in oil, gas or other
mineral rights of unincorporated issuers or like
securities, the prospectus may omit such of the foregoing
items in sub-paragraphs (a) through (k) of paragraph (3)
of this subsection B, but shall include such pertinent
information, as the Secretary of State may by rule,
regulation or order prescribe; such prospectus shall
contain a description of the properties and businesses
from which such certificates, shares or interests derive
value.
(5) The Secretary of State may, upon written
request by the applicant and where consistent with the
protection of investors, permit the omission of one or
more of the financial statements required by this
subsection B or the filing in substitution therefor of
appropriate financial statements of comparable character
or permit the omission of any of the information required
by this subsection B. The Secretary of State may also by
written notice require the filing of other financial
statements or information in addition to, or in
substitution for, the financial statements or information
required by this subsection B in any case where such
additional financial statements or information is
necessary or appropriate for an adequate presentation of
the financial condition of any issuer or otherwise
required for fair disclosure respecting the business and
property of any issuer.
(6) The Secretary of State shall within a
reasonable time examine the application and documents
filed with him or her, and unless the Secretary of State
makes a determination that the application and documents
so filed do not conform to the requirements of this
subsection B, or there is a proceeding pending under
Section 11 of this Act, shall register the securities for
offer and sale in this State under this subsection B. If
the securities registered shall not have been sold and
distributed at the expiration of a period of 6 months
following the date of registration, the Secretary of
State may require the filing of such current information
concerning the securities and the issuer thereof as he or
she may by rule, regulation or order prescribe.
(7) The Secretary of State is granted authority to
create by rule or regulation a limited offering
registration provision that furthers the objectives of
compatibility with federal exemptions and uniformity
among the states. The Secretary of State shall prescribe
by rule or regulation the amount of the fees for
examining and filing any documents required under this
subparagraph, but each fee shall not be less than the
minimum amount nor more than the maximum amount
established under Section 11a of this Act and shall not
be returnable in any event.
C. Pending Application, Filing Fee and Oversales of
Securities.
(1) No application shall be deemed to be filed or
pending and no securities covered by such application
shall be deemed to be registered under subsection A of
this Section 5 unless a filing fee has been paid. No
application shall be deemed to be filed or pending and no
securities covered by such application shall be deemed to
be registered under subsection B of this Section 5 unless
the examination fee and filing fee have been paid. The
filing fee payable under the provisions of subsections A
and B of this Section 5 shall be established by rule or
regulation, but in no event shall the fee be less than
the minimum amount nor more than the maximum amount of
filing fee established pursuant to Section 11a of this
Act, and in no case shall such fee be returnable. The
"maximum aggregate price" as used in subsection A of this
Section 5 and in this subsection C shall be the
applicant's bona fide estimate thereof, determined in the
manner prescribed by the Secretary of State by rule or
regulation.
(2) If after an offering of securities is
registered under this Section 5 (except for securities
registered under subsection B of this Section 5 wherein
the entire offering of securities was registered), the
offeror sells or determines that it will sell, prior to
the expiration of the period during which the offeror
intends the registration of the securities together with
any renewals thereof to remain in effect in this State,
an amount of that offering in excess of the amount
registered, the applicant may amend the registration and
register the excess securities by filing an amended
application and paying a filing fee equal to the
difference between the initial filing fee paid and the
filing fee which would have been paid under paragraph (1)
of this subsection C for the entire amount registered
together with an additional fee established pursuant to
Section 11a of this Act. The fees shall not be
returnable in any event. With respect to the excess
securities being registered, the "maximum aggregate
price" shall be the actual sales price of such
securities. Upon receipt of such amended application,
filing fee, and additional fee by the Secretary of
State, registration of the excess securities shall become
effective retroactively to the date of the initial
registration.
D. Effective Period and Sales Reports.
(1) A registration effected under Section 5 of this
Act shall continue effective for a period of one year
from the date of registration or renewal of registration
unless sooner terminated by (1) suspension or revocation
by the Secretary of State; or (2) the applicant filing
with the Secretary of State an affidavit evidencing
either that (a) the securities have been fully sold and
distributed to the public or (b) that it is no longer
desired to offer such securities in this State or (c)
that such securities have become exempt from the
registration requirements under Section 3 or paragraph
(1) of subsection F of Section 4 of this Act.
(2) The Secretary of State may, at his or her
discretion, require each issuer, controlling person or
registered dealer on whose behalf a registration of
securities is effected under this Section 5 to file a
report, in such form and of such content and for such
time period as the Secretary of State may by rule or
regulation prescribe, stating the aggregate dollar amount
of securities sold to Illinois residents. The civil
remedies provided for in subsection A of Section 13 of
this Act and the civil remedies of rescission and
appointment of a receiver, conservator, ancillary
receiver or ancillary conservator provided for in
subsection I of Section 11 and in subsection F and G of
Section 13 of this Act and the civil remedies of
restitution, damages and disgorgement of profits provided
for in subsection I of Section 11 of this Act shall not
be available against any person by reason of the failure
to file any such report or on account of the contents of
any such report.
E. Renewal of Registration. A registration of securities
in effect under subsection A of this Section 5 or subsection
B of this Section 5 if a registration statement or
post-effective amendment is then in effect under the Federal
1933 Act may be renewed for the amount of securities which
remain unsold under such registration as then in effect, by
the issuer, by a controlling person or by a registered dealer
by filing an application for renewal with the Secretary of
State no later than 10 business days prior to the date (or
such lesser period as the Secretary of State may prescribe by
rule or regulation) upon which such registration would
otherwise expire, in such form and executed, verified, or
authenticated by such person as the Secretary of State shall
prescribe by rule or regulation. Such application shall be
accompanied by a prospectus in its most current form together
with a renewal fee equal in amount to a registration fee
calculated in accordance with paragraph (1) of subsection C
of this Section 5 and based upon the amount of securities
initially registered for sale in this State but which remain
unsold; except that the "maximum aggregate price" of such
securities shall be the applicant's bona fide estimate
thereof at the time the application for renewal of
registration is filed with the Secretary of State pursuant to
this subsection E. A renewal of registration of securities
shall take effect as of the date and time that the prior
registration under subsection A of this Section 5 or prior
renewal under this subsection E would otherwise have expired
and thereafter shall be deemed to be a new registration of
the amount of unsold securities specified in the application
for renewal. The Secretary of State may by rule or
regulation prescribe an additional fee for the failure to
file timely an application for renewal and limit the number
of times that a registration may be renewed.
F. The applicant or registrant shall notify the
Secretary of State, by written notice (which may be by
electronic, telegraphic, or facsimile transmission), within 2
business days after its receipt of any stop order, denial,
order to show cause, suspension or revocation order,
injunction or restraining order, or similar order entered or
issued by any state, federal or other regulatory authority or
by any court, concerning the securities which are being or
have been registered in this State or any other securities of
the issuer currently being or proposed to be offered to the
public, if the matter which is the subject of, or the failure
to disclose the existence of, such order would in this State
constitute a violation of subsection E, F, G, H, I or J of
Section 12 of this Act. The obligation contained in this
subsection F shall continue until such time as offers and
sales of the securities registered under this Section 5 are
no longer being made in this State by the applicant or
registrant.
G. Any document being filed pursuant to this Section 5
shall be deemed filed, and any fee being paid pursuant to
this Section 5 shall be deemed paid, upon the date of actual
receipt thereof by the Secretary of State.
H. The Secretary of State may require by rule or
regulation the payment of an additional fee for the filing of
information or documents required to be filed by this Section
5 which have not been filed in a timely manner. Such fees
shall be deposited into the Securities Investors Education
Fund, a special fund hereby created in the State treasury.
The amounts deposited into such Fund shall be used to promote
public awareness of the dangers of securities fraud.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
(815 ILCS 5/6) (from Ch. 121 1/2, par. 137.6)
Sec. 6. Registration of Face Amount Certificate
Contracts. All face amount certificate contracts except
those set forth under Section 2a of this Act, or those exempt
under Section 3 of this Act, or those offered or sold in
transactions exempt under Section 4 of this Act, shall be
registered either by coordination or by qualification, as
hereinafter in this Section provided, prior to their offer or
sale in this State.
A. Registration of Face Amount Certificate Contracts by
Coordination.
(1) Face amount certificate contracts which are
being or have been registered under the Federal 1933 Act
may be registered by coordination in the manner provided
in this subsection A, if the effective date of the
registration under the Federal 1933 Act is not more than
30 days before the filing with the Secretary of State.
(2) Face amount certificate contracts may be
registered by coordination by the filing with the
Secretary of State by the issuer, by a controlling person
or by a registered dealer of:
(a) One copy of the registration statement
(without exhibits) descriptive of the face amount
certificate contracts on file with the Securities
and Exchange Commission in its most recent form as
of the date of the initial filing under this
subsection A;
(b) An application, in such form and executed,
verified, or authenticated by such person as the
Secretary of State shall by rule or regulation
prescribe, setting forth the title of every series,
type or class of face amount certificate contracts
to be offered in this State under this subsection A
and, if the applicant is electing the date of
effectiveness of a post-effective amendment as its
effective date as provided in Section 2.13 of this
Act, specifying such date as the effective date for
purposes of registration under this subsection A;
(c) An undertaking to forward to the Secretary
of State, in writing (which may be by electronic
telegraphic or facsimile transmission), any and all
subsequent amendments of and supplements to the
registration statement not later than the 7th day
after the forwarding thereof to the Securities and
Exchange Commission, or such longer period as the
Secretary of State may permit by rule, regulation or
order; and
(d) If the applicant is not a registered
dealer, the name of at least one registered dealer
for the face amount certificate contracts being
registered under this subsection A or a written
statement setting forth the method of offer and sale
in this State of the face amount certificate
contracts being registered in compliance with
Section 8 of this Act.
(3) Registration of face amount certificate
contracts by coordination shall take effect automatically
as of the effective date of the registration statement
(or post-effective amendment) filed under the Federal
1933 Act, provided that on the effective date, the
information required by sub-paragraphs (a), (b), and (d)
and the undertaking required by sub-paragraph (c) of
paragraph (2) of this subsection A have been on file with
the Secretary of State for at least 10 business days, or
such shorter period as the Secretary of State may permit
by rule, regulation or order. If, however, the time
period referred to in the preceding sentence shall not
have expired on the effective date of the registration
statement (or post-effective amendment) filed under the
Federal 1933 Act, registration of such face amount
certificate contracts by coordination shall, upon the
expiration of such time period, take effect automatically
as of the effective date of the registration statement
(or post-effective amendment) filed under the Federal
1933 Act.
(4) If the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this subsection A
are not filed with the Secretary of State prior to the
effective date of the registration statement (or
post-effective amendment) filed under the Federal 1933
Act, any registration of face amount certificate
contracts by coordination under this subsection A shall
take effect automatically as soon as all of the following
conditions have been satisfied:
(a) the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this
subsection A have been on file with the Secretary of
State for 10 business days, or for such shorter
period as the Secretary of State may permit by rule,
regulation or order;
(b) the registration statement or
post-effective amendment filed under the Federal
1933 Act is then in effect; and
(c) the prospectus then on file with the
Secretary of State satisfies the requirements of
Section 10(a)(3) of the Federal 1933 Act.
(5) The applicant shall furnish to the Secretary of
State written notice (which may be by electronic,
telegraphic, or facsimile transmission) confirming the
date of effectiveness and the title of the face amount
certificate contracts registered under the Federal 1933
Act, no later than the close of business on the second
business day following the date on which registration
becomes effective under the Federal 1933 Act.
(6) No action by the Secretary of State shall be
necessary to evidence the effectiveness of the
registration by coordination under this subsection A.
The Secretary of State may, at his or her discretion,
provide a statement attesting to such registration, which
statement shall be in such form as the Secretary of State
may deem appropriate.
(7) Notwithstanding the foregoing, the issuer,
controlling person or registered dealer who filed the
application set forth in subparagraph (b) of paragraph
(2) of this subsection A may request, in writing (which
may be by electronic, telegraphic, or facsimile
transmission) prior to or upon notice of effectiveness
under the Federal 1933 Act, a waiver of automatic
effectiveness of the registration of the face amount
certificate contracts and the Secretary of State may, at
his or her discretion, grant such waiver of automatic
effectiveness. Upon the grant by the Secretary of State
of the request of waiver of automatic effectiveness, such
registration of the face amount certificate contracts
shall become effective automatically on the date that the
issuer, controlling person or registered dealer who filed
the application set forth in subparagraph (b) of
paragraph (2) of this subsection A notifies the Secretary
of State in writing.
B. Registration of Face Amount Certificate Contracts by
Qualification. Face amount certificate contracts may be
registered by qualification in the manner provided in this
subsection B.
(1) An application for registration by
qualification shall be made by the issuer, by a
controlling person or by a registered dealer together
with the examination fee established pursuant to Section
11a of the Act, which shall not be returnable in any
event. Such application shall be executed, verified, or
authenticated by the applicant and filed with the
Secretary of State. The application shall set forth:
(a) The names and addresses of the persons
creating or sponsoring the face amount certificate
contracts; and
(b) The title of each series, type or class of
face amount certificate contracts to be offered.
(2) If the issuer, dealer, or controlling person
has not filed a registration statement or post-effective
amendment which is then in effect under the Federal 1933
Act, there shall be filed with the application:
(a) Specimen copies of each and every series,
type or class of face amount certificate contract
proposed to be offered in this State, and specimen
copies of each and every form of face amount
certificate contract or other security being issued
or proposed to be offered and issued elsewhere;
(b) (Blank); If the issuer is a corporation, a
copy of its charter or articles of incorporation and
all amendments thereto, unless then on file with the
Secretary of State; or if other than a corporation,
a copy of all instruments, if any, by which the
issuer was created, and all amendments thereto;
(c) (Blank); A copy of the by-laws or other
code of regulations, if any, of the issuer;
(d) An opinion of counsel as to the legality
of the face amount certificate contracts;
(e) An undertaking to file promptly (no later
than 2 business days after the occurrence of any
event which requires a material change in the
prospectus) with the Secretary of State any and all
amendments of and supplements to the prospectus as
theretofore filed under this subsection B, together
with any additional information, document or
undertaking which the Secretary of State at his or
her discretion, deems material, accompanied by the
amendment filing fee established pursuant to Section
11a of this Act or, in lieu thereof, a notification
in writing that all offers and sales of the face
amount certificate contracts have been suspended
pending the filing with the Secretary of State of
such amendment of or supplement to the prospectus;
and
(3) In addition, there shall be filed with the
application such additional information and material in
such form as the Secretary of State may by rule,
regulation or order prescribe and a prospectus which
contains, but is not limited to the following:
(a) The date and form of organization of the
issuer;
(b) A brief description of the business
conducted and intended to be conducted by the issuer
and by its subsidiaries and the general development
of such business during the past 5 years or such
shorter period as the issuer and such subsidiaries
may have been in existence;
(c) The location and general character of the
physical properties of the issuer and of its
subsidiaries;
(d) A complete description of the terms and
conditions of each and every series, type or class
of face amount certificate contracts being issued or
proposed to be offered in this State or elsewhere,
which description shall include appropriate tables
of initial or periodic installment payments required
of the purchaser, surrender or liquidation values,
maturity values, optional plans of extended contract
periods and schedules of annuity payments which may
be elected by a face amount certificate contract
holder;
(e) A schedule of all types of deductions
which may be made from plan payments or the income
therefrom or the avails thereof as charges prior to
distributions to holders of the face amount
certificate contracts;
(f) The names and addresses of all of the
issuer's officers and directors, or persons
performing similar functions, their business
experience during the preceding 5 years and the
remuneration paid to each by the issuer and its
subsidiaries during the fiscal year last past and
proposed to be paid for the then current fiscal
year;
(g) The names and addresses of all persons
owning of record, and of all persons owning
beneficially, to the extent known to the applicant,
10% or more of any class of equity securities of the
issuer, and the percentage owned by each;
(h) A brief description of any pending
material legal proceeding, and of any material legal
proceeding known to be contemplated by governmental
authorities, involving the issuer or its
subsidiaries; and
(i) The following financial statements of the
issuer:
(i) a balance sheet as of a date within
135 days prior to the date application for
registration is received by the Secretary of
State, which balance sheet, if not certified by
an independent certified public accountant,
shall be accompanied by a certified balance
sheet of the issuer as of the close of the last
prior fiscal year;
(ii) a detailed statement of income and
expenses, including income from investments,
service fees, loading and other sources,
operating expenses and provisions for contract
reserves or any additional credits to contract
liabilities, profits realized and losses
sustained in transactions in investments, and
all other charges to operations, for a period
of not less than 3 fiscal years (or for the
period of existence of the issuer if less than
3 years) last preceding the date of the balance
sheet presented under subdivision (i) of this
subparagraph (i), which statement of income and
expenses, if not certified by an independent
certified public accountant, shall be
accompanied by a certified statement of income
and expenses for a period of 3 years last
preceding the uncertified period or periods
presented as and for this subdivision (ii);
(iii) a detailed analysis of each surplus
and reserve account for the same period or
periods covered by subdivision (ii) of this
subparagraph (i), with like requirement for
independent certification; and
(iv) such other financial data as the
Secretary of State may reasonably require in
any specific case or by rule or regulation.
(4) The Secretary of State shall within a
reasonable time examine the application and related
documents filed with him or her and, unless the Secretary
of State makes a determination that the application and
related documents so filed do not conform to the
requirements of this subsection B or there is a
proceeding pending under Section 11 of this Act, shall
upon receipt of the deposit required by subsection G of
this Section 6 and upon receipt of the registration fee
as hereinafter prescribed, register the face amount
certificate contracts, as described by series, type or
class within the application, for offer and sale in this
State under this subsection B.
C. Pending Application and Filing Fee. No application
for registration of face amount certificate contracts shall
be deemed to be filed or pending and no face amount
certificate contracts covered by such application shall be
deemed to be registered under subsection A of this Section 6
unless a filing fee in the amount established pursuant to
Section 11a of this Act has been paid, which shall not be
returnable in any event. No application for registration of
face amount certificate contracts shall be deemed to be filed
or pending and no face amount certificate contracts covered
by such application shall be deemed to be registered under
subsection B of this Section 6 unless the examination fee and
filing fee established pursuant to Section 11a of this Act
have been paid, which fees shall not be returnable in any
event.
D. Effective Period and Sales Reports.
(1) A registration under subsection A or B of this
Section 6, unless sooner terminated by the voluntary
action of the issuer, or by suspension or revocation by
the Secretary of State, shall continue in force and
effect for a period of one year from the date of
registration or renewal of registration or such other
period of time as the Secretary of State may prescribe by
rule or regulation, and shall permit the offer and sale
of face amount certificate contracts so registered
without limitation as to number or aggregate amount
during such period of registration; provided, however,
that, in the case of face amount certificate contracts
registered under subsection B of this Section 6, the
issuer shall promptly file with the Secretary of State,
throughout such registration year, (i) one specimen copy
of each monthly, quarterly, semi-annual or other periodic
or special report and of each financial statement
distributed to contract holders; (ii) one certified copy
of all statements and reports filed with any regulatory
authority or agency of the Federal Government which
relate to the issuer or the issuance of the securities
registered pursuant to this Section 6 and (iii) one copy
of each independently certified audit report pertaining
to the financial affairs and position of the issuer
covering the issuer's fiscal year ending during the
registration year, to be supplied to the Secretary of
State as soon as available after the close of the
issuer's fiscal year.
(2) The Secretary of State may, at his or her
discretion, require each issuer, controlling person or
registered dealer on whose behalf a registration of face
amount certificate contracts is effective under this
Section 6 to file a report, in such form and of such
content and for such time period as the Secretary of
State may by rule or regulation prescribe, stating the
aggregate dollar amount of face amount certificate
contracts sold to Illinois residents. The civil remedies
provided for in subsection A of Section 13 of this Act
and the civil remedies of rescission and appointment of a
receiver, conservator, ancillary receiver or ancillary
conservator provided for in subsection I of Section 11
and in subsections F and G of Section 13 of this Act and
the civil remedies of restitution, damages and
disgorgement of profits provided for in subsection I of
Section 11 of this Act shall not be available against any
person by reason of the failure to file any such report
or on account of the contents of any such report.
E. Amendatory statements and required fees. The
Secretary of State may by rule or regulation require the
filing of an amendatory statement and prescribe its form and
content. The fee for filing the statement shall be
established pursuant to Section 11a of this Act. The fee
shall not be returnable in any event.
F. Renewal of Registration. A registration of face
amount certificate contracts in effect under subsection A or
B of this Section 6 may be renewed by the issuer by filing an
application for renewal with the Secretary of State no later
than 10 business days prior to the date upon which such
registration would otherwise expire, (or such lesser period
as the Secretary of State may prescribe by rule or
regulation) in such form and executed, verified, or
authenticated by such person as the Secretary of State shall
prescribe by rule or regulation. Such application shall be
accompanied by a prospectus in its most current form together
with a renewal fee established pursuant to Section 11a of
this Act, which shall not be returnable in any event. A
renewal of registration of face amount certificate contracts
shall take effect as of the date and time that the prior
registration under subsection A of this Section 6 or prior
renewal under this subsection F would otherwise have expired
and (or such alternative date as the Secretary of State may
prescribe by rule or regulation) thereafter shall be deemed
to be a new registration of the face amount certificate
contracts covered thereby. The Secretary of State may by
rule or regulation prescribe an additional fee for the
failure to file timely an application for renewal and limit
the number of times a registration may be renewed.
G. Deposit of Securities. No face amount certificate
contract shall be registered under subsection B of this
Section 6 unless the issuer shall establish and maintain with
the Secretary of State, for the benefit of the holders of
such contracts residing in this State, a deposit of
securities representing debt obligations of the kind in which
life insurance companies organized under the laws of this
State are permitted to invest their funds, in an amount
having a fair market value of not less than $100,000 and at
no time less than the current contract liability on all such
face amount certificate contracts held by persons residing in
this State, and provided further that deposited securities,
other than those secured by entire first mortgage or trust
deeds on improved unencumbered real estate, are issued by an
issuer required to file reports pursuant to Section 13 or
15(d) of the Federal 1934 Act or are covered by Section
12(g)(2)(B) or (G) of the Federal 1934 Act, or appear in
current quotations in transactions on exchanges recognized by
subsection G of Section 3 of this Act, and provided further,
that bonds or notes secured by mortgages or trust deeds be
limited to those (i) constituting the entire indebtedness
secured thereby, (ii) establishing a first lien on improved
real estate held in fee simple, and (iii) insured by the
Federal Housing Administrator under an Act of Congress of the
United States entitled "National Housing Act". Debentures
issued by the Federal Housing Administrator under an Act of
Congress of the United States entitled the "National Housing
Act" may be included in the deposit prescribed by this
subsection in amounts related to, and in substitution for,
specific insured mortgage loans then included in the subject
deposit which are in default, but at no time shall the
aggregate principal amount of such debentures included in the
subject deposit exceed 5% of the fair market value of
securities comprising the subject deposit. The current
contract liability in respect of contracts held by persons
residing in this State shall be that as determined in such
contracts as computed by the issuer and regularly certified
to the Secretary of State, on or before the last day of each
calendar month as of the close of the month last prior to the
date of reporting.
Securities deposited as hereinabove required may be
withdrawn by the depositor at any time, and from time to
time, whenever other securities eligible for deposit and of a
fair market value not less than that withdrawn are deposited
in substitution for securities withdrawn.
The Secretary of State may, upon receipt of appropriate
certification in writing, deemed by the Secretary of State to
be competent and adequate, evidencing the reduction of
contract liability on contracts held by persons residing in
this State to an aggregate amount representing not more than
90% of the fair market value of the securities then on
deposit, permit an equivalent reduction in the deposited
securities.
H. Minimum Deposit; Annual Fee; Transaction Charge. The
initial and continuing deposit required hereby shall, so long
as the face amount certificate contracts registered under
subsection B of this Section 6 are being offered and sold in
this State, and until all contract liability on all contracts
outstanding in this State has been discharged, include
obligations of the United States or the State of Illinois in
bearer form or fully registered, or registered as to
principal, in the title of Treasurer of the State of
Illinois, and his or her successors in office, in the minimum
principal amount of $50,000. An issuer of face amount
certificate contracts, in respect of which a deposit is
required to be established and maintained under this Section
6, and an issuer of face amount certificate contracts
heretofore qualified for issuance to persons residing in this
State under "An Act relating to the sale or other disposition
of securities and providing penalties for the violation
thereof and to repeal Acts in conflict therewith", approved
June 10, 1919, as amended, and in respect of which a deposit
of securities was established and has been maintained under
the Act approved June 10, 1919, as cited above, shall pay to
the Secretary of State an annual fee determined at the rate
of 1/30th of one percent on the average of quarterly
computations on the aggregate of principal amounts of
market-quoted or listed securities and the original loan
amounts of real estate loans insured by the Federal Housing
Administrator, and in addition each such issuer shall pay to
the Secretary of State, against quarterly billings therefor,
a transaction charge in the amount established pursuant to
Section 11a of this Act, which annual fee and transaction
charge shall not be returnable in any event, for each
separate issue or loan included in additions to and
withdrawals from such deposits, provided however that the
transaction charge established pursuant to Section 11a of
this Act for each separate issue of market-quoted or listed
securities shall apply to all the items of that issue
included in a single transaction, regardless of the aggregate
principal amount, and in respect of real estate loans such
transaction charge shall apply to the group of documents
pertaining to each separate loan, and not to the separate
items and documents included in such group.
Nothing herein contained in respect of prescribed custody
of deposited securities with the State Treasurer and of
permissible procedures of liquidation of deposited securities
by the Secretary of State in the event of insolvency of an
issuer of face amount certificate contracts, or the
appointment of a trustee in bankruptcy, shall preclude the
surrender of deposited securities to a duly qualified trustee
under appointment by a Court having jurisdiction under the
Federal Bankruptcy Code under an appropriate order of such
Court.
I. Liquidation of Securities. Upon the insolvency of
the issuer of face amount certificate contracts or
appointment of a receiver or trustee in bankruptcy, the
Secretary of State, if not required otherwise under Federal
law or under an order of a Federal Court of competent
jurisdiction, may apply to the Circuit Court of Sangamon
County, or any other court of competent jurisdiction, for
authority to proceed for the liquidation of such securities
held for the benefit of the holders of such contracts who
reside in this State. The Secretary of State is hereby
authorized to deal with such securities on deposit in this
State for the benefit of the holders of such face amount
certificate contracts, in his or her name or, if the Court
shall so order, in the name of the issuer. The Secretary of
State may, subject to the approval of the Court, sell or
otherwise dispose of the securities so deposited or any part
thereof. The Secretary of State shall as soon as may be
conveniently possible, give notice by publication as provided
by law, and as the Court may direct, to all contract holders
residing in this State who may have claims against the issuer
under such face amount certificate contracts and for whose
benefit such deposit is held, to file and prove their claims
in the manner and within the time the Court shall direct. In
order to preserve so far as possible the rights and interests
of the holders of outstanding contracts of such issuer who
reside in this State, the Secretary of State may liquidate
such securities on deposit in this State by entering into
contracts with any issuer or person able to buy such
securities in whole, or in part. Upon receiving an offer or
offers for the purchase of such securities in whole, or in
part, the Secretary of State shall submit such offer or
offers to the Court, and if, after a full hearing upon the
petition filed by the Secretary of State, the court shall
find that the Secretary of State endeavored to obtain the
best contract price for the benefit of the contract holders,
and if the court shall find that the best contract price in
the interests of the contract holders has been obtained, and
that it is for the best interests of the holders of such
contracts that such securities be sold, the court shall, by
written order approve the acts of the Secretary of State and
authorize him or her to dispose of such securities. Upon the
conversion of such securities to cash, the Secretary of State
may then proceed to dispose of the sum received for such
securities among the respective holders of such contracts as
their interests may appear. Upon the liquidation and
distribution of such funds, the Secretary of State may make
proper liquidation of such securities and the distribution or
disposition thereof or of the proceeds therefrom as herein
provided.
For the purpose of liquidation of such securities, the
Secretary of State shall have the power to appoint one or
more special deputies as his or her agent or agents and to
employ such clerks, assistants or attorneys as may by him or
her be deemed necessary and to give each of such persons such
power to assist him or her as he or she may consider wise.
The compensation of every such special deputy, agent, clerk,
assistant or attorney shall be fixed, and all expenses of
taking possession of such securities of the issuer and the
administration thereof shall be approved, by the Secretary of
State subject to the approval of the court and shall be paid
out of the funds or assets received from the liquidation of
such securities.
J. The applicant or registrant shall notify the
Secretary of State, by written notice (which may be by
electronic, telegraphic, or facsimile transmission), within 2
business days after its receipt of any stop order, denial,
order to show cause, suspension or revocation order,
injunction or restraining order, or similar order entered or
issued by any state, federal or other regulatory authority or
by any court, concerning the face amount certificate
contracts which are being or have been registered in this
State or any other securities of the issuer currently being
or proposed to be offered to the public, if the matter which
is the subject of, or the failure to disclose the existence
of, such order would in this State constitute a violation of
subsection E, F, G, H, I or J of Section 12 of this Act. The
obligation contained in this subsection J shall continue
until such time as offers and sales of the face amount
certificate contracts registered under this Section 6 are no
longer being made in this State by the applicant or
registrant.
K. Any document being filed pursuant to this Section 6
shall be deemed filed, and any fee being paid pursuant to
this Section 6 shall be deemed paid, upon the date of actual
receipt thereof by the Secretary of State.
L. The Secretary of State may require by rule or
regulation the payment of an additional fee for the filing of
information or documents required to be filed by this Section
6 which have not been filed in a timely manner. Such fees
shall be deposited into the Securities Investors Education
Fund and used to promote public awareness of the dangers of
securities fraud.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 5/7) (from Ch. 121 1/2, par. 137.7)
Sec. 7. Registration of Investment Fund Shares. All
investment fund shares except those set forth under Section
2a of this Act, or those exempt under Section 3 of this Act,
or those offered or sold in transactions exempt under Section
4 of this Act, or face amount certificate contracts required
to be registered under Section 6 of this Act, shall be
registered either by coordination or by qualification, as
hereinafter in this Section provided, prior to their offer or
sale in this State. Additional classes of shares that are of
the same rank, general description, and characteristics as
those currently registered may be added to a current
registration under this Section upon the filing of an
amendment and the payment of the additional fees as
prescribed by the Secretary of State by rule or regulation.
Any change in organization or plans of operation shall be
disclosed to the Secretary of State by filing an amendment to
a current registration and the payment of the additional fees
as prescribed by the Secretary of State by rule or
regulation.
A. Registration of Investment Fund Shares by
Coordination.
(1) Investment fund shares which are being or have
been registered under the Federal 1933 Act and the
Federal 1940 Investment Company Act may be registered by
coordination in the manner provided in this subsection A,
if the effective date of the registration under the
Federal 1933 Act is not more than 30 days before the
filing with the Secretary of State.
(2) Investment fund shares may be registered by
coordination by the filing with the Secretary of State by
the issuer, by a controlling person or by a registered
dealer of:
(a) One copy of the registration statement
(without exhibits) descriptive of the investment
fund shares on file with the Securities and Exchange
Commission in its most recent form as of the date of
the initial filing under this subsection A;
(b) An application, in such form and executed,
verified, or authenticated by such person as the
Secretary of State shall by rule or regulation
prescribe, setting forth the title of the investment
fund shares to be offered in this State under this
subsection A and, if the applicant is electing the
date of effectiveness of a post-effective amendment
as its effective date as provided in Section 2.13 of
this Act, specifying such date as the effective date
for purposes of registration under this subsection
A; and
(c) An undertaking to forward to the Secretary
of State, in writing (which may be by electronic
telegraphic or facsimile transmission), any and all
subsequent amendments of and supplements to the
registration statement not later than the 7th day
after the forwarding thereof to the Securities and
Exchange Commission, or such longer period as the
Secretary of State may permit by rule, regulation or
order; and
(d) if the applicant is not a registered
dealer, the name of at least one registered dealer
for the investment fund shares being registered
under this subsection A or a written statement
setting forth the method of offer and sale in this
State of the investment fund shares being registered
in compliance with Section 8 of this Act.
(3) Registration of investment fund shares by
coordination shall take effect automatically as of the
effective date of the registration statement (or
post-effective amendment) filed under the Federal 1933
Act, provided that on the effective date, the information
required by sub-paragraphs (a), (b), and (d) and the
undertaking required by sub-paragraph (c) of paragraph
(2) of this subsection A have been on file with the
Secretary of State for at least 10 business days, or such
shorter period as the Secretary of State may permit by
rule, regulation or order. If, however, the time period
referred to in the preceding sentence shall not have
expired on the effective date of the registration
statement (or post-effective amendment) filed under the
Federal 1933 Act, registration of such investment fund
shares by coordination shall, upon the expiration of such
time period, take effect automatically as of the
effective date of the registration statement (or
post-effective amendment) filed under the Federal 1933
Act.
(4) If the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this subsection A
are not filed with the Secretary of State prior to the
effective date of the registration statement (or
post-effective amendment) filed under the Federal 1933
Act, any registration of investment fund shares by
coordination under this subsection A shall take effect
automatically as soon as all of the following conditions
have been satisfied:
(a) the information required by sub-paragraphs
(a), (b), and (d) and the undertaking required by
sub-paragraph (c) of paragraph (2) of this
subsection A have been on file with the Secretary of
State for 10 business days, or for such shorter
period as the Secretary of State may permit by rule,
regulation or order;
(b) the registration statement or
post-effective amendment filed under the Federal
1933 Act is then in effect; and
(c) the prospectus then on file with the
Secretary of State satisfies the requirements of
Section 10(a)(3) of the Federal 1933 Act.
(5) The applicant shall furnish to the Secretary of
State written notice (which may be by electronic,
telegraphic, or facsimile transmission) confirming the
date of effectiveness and the title of the investment
fund shares registered under the Federal 1933 Act, no
later than the close of business on the second business
day following the date on which registration statement
becomes effective under the Federal 1933 Act.
(6) No action by the Secretary of State shall be
necessary to evidence the effectiveness of the
registration by coordination under this subsection A.
The Secretary of State may, at his or her discretion,
provide a statement attesting to such registration, which
statement shall be in such form as the Secretary of State
may deem appropriate.
(7) Notwithstanding the foregoing, the issuer,
controlling person or registered dealer who filed the
application set forth in subparagraph (b) of paragraph
(2) of this subsection A may request, in writing (which
may be by electronic, telegraphic, or facsimile
transmission) prior to or upon notice of effectiveness
under the Federal 1933 Act, a waiver of automatic
effectiveness of the registration of investment fund
shares and the Secretary of State may, at his or her
discretion, grant such waiver of automatic effectiveness.
Upon the grant by the Secretary of State of the request
of waiver of automatic effectiveness, such registration
of investment fund shares shall become effective
automatically on the date that the issuer, controlling
person or registered dealer who filed the application set
forth in subparagraph (b) of paragraph (2) of this
subsection A notifies the Secretary of State in writing.
B. Registration of Investment Fund Shares by
Qualification. Investment fund shares may be registered by
qualification in the manner provided in this subsection B.
(1) An application for registration by
qualification shall be made by the issuer, by a
controlling person or by a registered dealer together
with the examination fee established pursuant to Section
11a of the Act, which shall not be returnable in any
event. Such application shall be signed, verified, or
authenticated by the applicant and filed with the
Secretary of State. The application shall set forth:
(a) The name and address of the issuer;
(b) The title of the investment fund shares;
and
(c) The names and addresses of the persons
creating or sponsoring the investment fund shares.
(2) If the issuer, dealer, or controlling person
has not filed a registration statement or post-effective
amendment which is then in effect under the Federal 1933
Act, there shall be filed with the application:
(a) A specimen copy of the investment fund
shares, if any, or a copy of the form of the
instrument to evidence the investment fund shares,
if any;
(b) (Blank); If the issuer is a corporation, a
copy of its charter or articles of incorporation and
all amendments thereto, unless then on file in the
office of the Secretary of State; or, if other than
a corporation, a copy of all instruments, if any, by
which the investment trust or fund was created and
all amendments thereto;
(c) (Blank); A copy of the by-laws or other
code of regulations, if any, of the issuer;
(d) An opinion of counsel as to the legality
of the investment fund shares;
(e) An undertaking to file promptly (not later
than 2 business days after the occurrence of any
event which requires a material change in the
prospectus) with the Secretary of State any and all
amendments of and supplements to the prospectus as
theretofore filed under this subsection B, together
with any additional information, document or
undertaking which the Secretary of State, at his or
her discretion, deems material, accompanied by the
amendment filing fee established pursuant to Section
11a of this Act or, in lieu thereof, a notification
in writing that all offers and sales of the
investment fund shares have been suspended pending
the filing with the Secretary of State of the
amendment of or supplement to the prospectus;
(f) A written statement setting forth the name
of at least one registered dealer for the investment
fund shares being registered under this subsection B
or an application for registration of a salesperson
or a written statement setting forth the method of
offer and sale in this State of the investment fund
shares being registered in compliance with Section 8
of this Act.
(3) In addition, there shall be filed with the
application such additional information and material in
such form as the Secretary of State may by rule,
regulation or order prescribe and a prospectus which
contains, but is not limited to the following:
(a) The date and form of organization of the
fund or trust;
(b) The authorized and issued capitalization
of the fund or trust and a description of the
investment fund shares being registered and of all
authorized securities;
(c) A schedule of the types of deductions
which may be made from the trust or corporate or
fund assets and the income therefrom or the avails
thereof as charges prior to distribution to holders
of the investment fund shares;
(d) The names and addresses of all of the
fund's or trust's officers and directors, or persons
performing similar functions, their business
experience during the preceding 5 years and the
remuneration paid to each by the fund or trust or
any affiliate thereof during the fiscal year last
past and proposed to be paid for the then current
fiscal year;
(e) A brief description of any pending
material legal proceeding, and of any material legal
proceeding known to be contemplated by governmental
authorities involving the fund or trust;
(f) A statement of the plan of operation,
management policies and provisions and restrictions
in respect of investment and reinvestment of
principal funds and undistributed income therefrom;
(g) A statement of the plan and intention in
respect of distributions of ordinary income and
capital gains, which statement shall disclose the
taking of adequate measures for specific separation
and identification of distributions arising from
ordinary income and those arising from profits
realized from the disposition of securities;
(h) Specimen computations illustrating typical
applications of the formulae to be used in
determining asset value, offering price and
liquidating price of the investment fund shares; and
(i) The following financial statements in
respect of the issuer if the investment fund shares
represent shares of an issuing corporation, or in
respect of the trust fund, if the investment fund
shares represent beneficial interests in a trust
fund:
(i) a balance sheet as of a date within
135 days prior to the date of submitting the
application. If such balance sheet is not
certified by an independent certified public
accountant, the prospectus shall also contain a
balance sheet certified by an independent
certified public accountant as of the close of
the fund's last fiscal year, unless such fiscal
year ended within 135 days prior to the time of
filing the application, in which case the
certified balance sheet may be as of the end of
the preceding fiscal year;
(ii) a detailed statement of income and
expenses and of profits realized and losses
sustained from the sale of securities for each
of the three fiscal years (or for the period of
existence of the issuer if less than 3 years)
next preceding the date of the certified
balance sheet and for the period, if any,
between the date of the certified balance sheet
and the date of the most recent balance sheet.
Such statements shall be certified by an
independent certified public accountant for the
periods ending with the date of the certified
balance sheet;
(iii) an analysis of each surplus account
(or, in lieu thereof, a statement of changes in
net assets) for each period for which a
statement of income and expenses is filed,
certified by an independent certified public
accountant for the periods for which certified
statements of income and expenses are
submitted; and
(iv) such other financial statements and
supporting schedules as the Secretary of State
may by rule or regulation prescribe.
(4) The Secretary of State may make or cause to be
made an examination of matters pertaining to the
investment fund shares as to which registration is sought
under this subsection B and the persons creating,
sponsoring or having general charge of the distribution
of the investment fund shares, or any of them, and may
require the applicant to advance sufficient funds to
defray all actual expenses of such examination. An
itemized statement of such expenses shall be furnished to
the applicant.
(5) No investment fund shares shall be registered
under this subsection B unless the underlying securities
or cash are and are to be deposited and held under an
appropriate agreement for the benefit of the holders of
the investment fund shares with and by a trustee or
custodian which is a clearing corporation, bank, trust
company or member of a national securities exchange
registered under the Federal 1934 Act, provided that any
such bank or trust company shall have an aggregate
capital, surplus and undivided profits of at least
$2,000,000 and any such member of a national securities
exchange shall have capital stock, additional paid-in
capital and retained earnings of at least $2,000,000 if a
corporation or partnership capital of at least $2,000,000
if a partnership and further provided that any such
member of a national securities exchange shall comply
with the provisions of the Federal 1940 Investment
Company Act and the rules and regulations of the
Securities and Exchange Commission promulgated under that
Act relating to the custody of the underlying securities
of investment funds.
(6) The Secretary of State shall within a
reasonable time examine the application and documents
filed with him or her and may make such additional
examination pursuant to paragraph (4) of this subsection
B as he or she may deem appropriate, and unless the
Secretary of State makes a determination that the
application and documents so filed do not conform to the
requirements of this subsection B, or there is a
proceeding pending under Section 11 of this Act, the
Secretary of State shall register the investment fund
shares for offer and sale in this State under this
subsection B.
C. Pending Application and Filing Fee. No application
for registration of investment fund shares shall be deemed to
be filed or pending and no investment fund shares covered by
such application shall be deemed to be registered under
subsection A of this Section 7 unless a filing fee in the
amount established pursuant to Section 11a of this Act has
been paid, which fee shall not be returnable in any event. No
application shall be deemed to be filed or pending and no
investment fund shares covered by such application shall be
deemed to be registered under subsection B of this Section 7
unless the examination fee and filing fee established
pursuant to Section 11a of this Act have been paid, which
fees shall not be returnable in any event.
D. Amendatory statements and required fees. The
Secretary of State may by rule or regulation require the
filing of an amendatory statement and prescribe its form and
content. The fee for filing the statement shall be
established pursuant to Section 11a of this Act. The fee
shall not be returnable in any event.
E. Discontinuance of Registration. An amendatory
statement or statements may be submitted by the applicant at
any time, and from time to time, when it is desired to
discontinue registration in respect of one or more classes,
series, or portfolios and if the Secretary of State shall
find that such discontinuance is not against the public
interest, such amendatory statement or statements shall be
filed by the Secretary of State without charge, but such
discontinuance of registration shall not entitle the
applicant to any refund of any fees previously paid in
respect of such discontinued class or classes, series, or
portfolios.
F. Effective Period and Sales Reports.
(1) A registration of investment fund shares under
this Section 7, unless sooner terminated by the voluntary
action of the applicant or by action of the Secretary of
State under Section 11 hereof, shall continue in force
and effect for a period of one year from the date of
registration or renewal of registration (or such other
period of time as the Secretary of State may prescribe by
rule or regulation or order), without limitation as to
number of shares or aggregate amount; provided, however,
that in the case of investment fund shares registered
under subsection B of this Section 7, the issuer which
has no registration statement then in effect under the
Federal 1933 Act and the Federal 1940 Investment Company
Act shall promptly file with the Secretary of State
throughout such registration period, one copy of each
monthly, quarterly, semi-annual, annual or other periodic
report and financial statement sent to holders of its
outstanding investment fund shares, and one copy of each
statement and report relating to such investment fund
shares filed with any regulatory authority or agency of
the Federal Government.
(2) The Secretary of State may, at his or her
discretion, require each issuer, controlling person or
registered dealer on whose behalf a registration of
investment fund shares is effected under this Section 7
to file a report, in such form and of such content and
for such time period as the Secretary of State may by
rule or regulation prescribe, stating the aggregate
dollar amount of investment fund shares sold to Illinois
residents. The civil remedies provided for in subsection
A of Section 13 of this Act and the civil remedies of
rescission and appointment of a receiver, conservator,
ancillary receiver or ancillary conservator provided for
in subsection I of Section 11 and in subsections F and G
of Section 13 of this Act and the civil remedies of
restitution, damages and disgorgement of profits provided
for in subsection I of Section 11 of this Act shall not
be available against any person by reason of the failure
to file any such report or on account of the contents of
any such report.
G. Renewal of Registration. A registration of
investment fund shares in effect under subsection A or B of
this Section 7 may be renewed by the issuer by filing an
application for renewal of registration with the Secretary of
State no later than 10 business days prior to the date upon
which such registration would otherwise expire or such lesser
period as the Secretary of State may prescribe by rule or
regulation, in such form and executed, verified, or
authenticated by such person as the Secretary of State shall
prescribe by rule or regulation. Such application shall be
accompanied by a prospectus in its most current form together
with a renewal fee established pursuant to Section 11a of
this Act, which shall not be returnable in any event. A
renewal of registration of securities shall take effect as of
the date and time that the prior registration under
subsection A of this Section 7 or prior renewal under this
paragraph (1) would otherwise have expired (or such
alternative date as the Secretary of State may prescribe by
rule or regulation) and thereafter shall be deemed to be a
new registration of the investment fund shares covered
thereby. The Secretary of State may by rule or regulation
prescribe an additional fee for the failure to file timely an
application for renewal and limit the number of times a
registration may be renewed.
H. The applicant or registrant shall notify the
Secretary of State, by written notice (which may be by
electronic, telegraphic, or facsimile transmission), within 2
business days after its receipt of any stop order, denial,
order to show cause, suspension or revocation order,
injunction or restraining order, or similar order entered or
issued by any state, federal or other regulatory authority or
by any court, concerning the investment fund shares which are
being or have been registered in this State or any other
securities of the issuer currently being or proposed to be
offered to the public, if the matter which is the subject of,
or the failure to disclose the existence of, such order would
in this State constitute a violation of subsection E, F, G,
H, I or J of Section 12 of this Act. The obligation
contained in this subsection H shall continue until such time
as offers and sales of the investment fund shares registered
under this Section 7 are no longer being made in this State
by the applicant or registrant.
I. Any document being filed pursuant to this Section 7
shall be deemed filed, and any fee being paid pursuant to
this Section 7 shall be deemed paid, upon the date of actual
receipt thereof by the Secretary of State.
J. The Secretary of State may require by rule or
regulation the payment of an additional fee for the filing of
information or documents required to be filed by this Section
7 which have not been filed in a timely manner. Such fees
shall be deposited into the Securities Investors Education
Fund and use to promote public awareness of the dangers of
securities fraud.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
(815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
Sec. 8. Registration of dealers, limited Canadian
dealers, salespersons, and investment advisers, and
investment adviser representatives.
A. Except as otherwise provided in this subsection A,
every dealer, limited Canadian dealer, salesperson, and
investment adviser, and investment adviser representative
shall be registered as such with the Secretary of State. No
dealer or salesperson need be registered as such when
offering or selling securities in transactions believed in
good faith to be exempted by subsection A, B, C, D, E, G, H,
I, J, K, M, O, P, Q, R or S of Section 4 of this Act,
provided that such dealer or salesperson is not regularly
engaged in the business of offering or selling securities in
reliance upon the exemption set forth in subsection G or M of
Section 4 of this Act. No dealer, issuer or controlling
person shall employ a salesperson unless such salesperson is
registered as such with the Secretary of State or is employed
for the purpose of offering or selling securities solely in
transactions believed in good faith to be exempted by
subsection A, B, C, D, E, G, H, I, J, K, L, M, O, P, Q, R or
S of Section 4 of this Act; provided that such salesperson
need not be registered when effecting transactions in this
State limited to those transactions described in Section
15(h)(2) of the Federal 1934 Act or engaging engaged in the
offer or sale of securities in respect of which he or she has
beneficial ownership and is a controlling person. The
Secretary of State may, by rule, regulation or order and
subject to such terms, conditions as fees as may be
prescribed in such rule, regulation or order, exempt from the
registration requirements of this Section 8 any investment
adviser, if the Secretary of State shall find that such
registration is not necessary in the public interest by
reason of the small number of clients or otherwise limited
character of operation of such investment adviser.
B. An application for registration as a dealer or
limited Canadian dealer, executed, verified, or authenticated
by or on behalf of the applicant, shall be filed with the
Secretary of State, in such form as the Secretary of State
may by rule, regulation or order prescribe, setting forth or
accompanied by:
(1) The name and address of the applicant, the
location of its principal business office and all branch
offices, if any, and the date of its organization;
(2) A statement of any other Federal or state
licenses or registrations which have been granted the
applicant and whether any such licenses or registrations
have ever been refused, cancelled, suspended, revoked or
withdrawn;
(3) The assets and all liabilities, including
contingent liabilities of the applicant, as of a date not
more than 60 days prior to the filing of the application;
(4) (a) A brief description of any civil or
criminal proceeding of which fraud is an essential
element pending against the applicant and whether the
applicant has ever been convicted of a felony, or of any
misdemeanor of which fraud is an essential element;
(b) A list setting forth the name, residence and
business address and a 10 year occupational statement of
each principal of the applicant and a statement
describing briefly any civil or criminal proceedings of
which fraud is an essential element pending against any
such principal and the facts concerning any conviction of
any such principal of a felony, or of any misdemeanor of
which fraud is an essential element;
(5) If the applicant is a corporation: a copy of
its articles of incorporation in their most current form,
unless they are already on file in the office of the
Secretary of State; a list of its officers and directors
setting forth the residence and business address of each;
a 10-year occupational statement of each such officer or
director; and a statement describing briefly any civil or
criminal proceedings of which fraud is an essential
element pending against each such officer or director and
the facts concerning any conviction of any officer or
director of a felony, or of any misdemeanor of which
fraud is an essential element;
(6) If the applicant is a sole proprietorship, a
partnership, limited liability company, an unincorporated
association or any similar form of business organization:
the name, residence and business address of the
proprietor or of each partner, member, officer, director,
trustee or manager; the limitations, if any, of the
liability of each such individual; a 10-year occupational
statement of each such individual; a statement describing
briefly any civil or criminal proceedings of which fraud
is an essential element pending against each such
individual and the facts concerning any conviction of any
such individual of a felony, or of any misdemeanor of
which fraud is an essential element;
(7) Such additional information as the Secretary of
State may by rule or regulation prescribe as necessary to
determine the applicant's financial responsibility,
business repute and qualification to act as a dealer.
(8) (a) No applicant shall be registered or
re-registered as a dealer or limited Canadian dealer
under this Section unless and until each principal of the
dealer has passed an examination conducted by the
Secretary of State or a self-regulatory organization of
securities dealers or similar person, which examination
has been designated by the Secretary of State by rule,
regulation or order to be satisfactory for purposes of
determining whether the applicant has sufficient
knowledge of the securities business and laws relating
thereto to act as a registered dealer. Any dealer who was
registered on September 30, 1963, and has continued to be
so registered; and any principal of any registered
dealer, who was acting in such capacity on and
continuously since September 30, 1963; and any individual
who has previously passed a securities dealer examination
administered by the Secretary of State or any examination
designated by the Secretary of State to be satisfactory
for purposes of determining whether the applicant has
sufficient knowledge of the securities business and laws
relating thereto to act as a registered dealer by rule,
regulation or order, shall not be required to pass an
examination in order to continue to act in such capacity.
The Secretary of State may by order waive the examination
requirement for any principal of an applicant for
registration under this subsection B who has had such
experience or education relating to the securities
business as may be determined by the Secretary of State
to be the equivalent of such examination. Any request
for such a waiver shall be filed with the Secretary of
State in such form as may be prescribed by rule or
regulation.
(b) Unless an applicant is a member of the body
corporate known as the Securities Investor Protection
Corporation established pursuant to the Act of Congress
of the United States known as the Securities Investor
Protection Act of 1970, as amended, or a member of an
association of dealers registered as a national
securities association pursuant to Section 15A of the
Federal 1934 Act, or a member of a self-regulatory
organization or stock exchange in Canada which the
Secretary of State has designated by rule or order, an
applicant shall not be registered or re-registered unless
and until there is filed with the Secretary of State
evidence that such applicant has in effect insurance or
other equivalent protection for each client's cash or
securities held by such applicant, and an undertaking
that such applicant will continually maintain such
insurance or other protection during the period of
registration or re-registration. Such insurance or other
protection shall be in a form and amount reasonably
prescribed by the Secretary of State by rule or
regulation.
(9) The application for the registration of a
dealer or limited Canadian dealer shall be accompanied
by a filing fee and a fee for each branch office in this
State, in each case in the amount established pursuant to
Section 11a of this Act, which fees shall not be
returnable in any event.
(10) The Secretary of State shall notify the dealer
or limited Canadian dealer by written notice (which may
be by electronic, telegraphic, or facsimile transmission)
of the effectiveness of the registration as a dealer in
this State.
(11) Any change which renders no longer accurate
any information contained in any application for
registration or re-registration of a dealer or limited
Canadian dealer shall be reported to the Secretary of
State within 10 business days after the occurrence of
such change; but in respect to assets and liabilities
only materially adverse changes need be reported.
C. Any registered dealer, limited Canadian dealer,
issuer, or controlling person desiring to register a
salesperson shall file an application with the Secretary of
State, in such form as the Secretary of State may by rule or
regulation prescribe, which the salesperson is required by
this Section to provide to the dealer, issuer, or controlling
person, executed, verified, or authenticated by the
salesperson setting forth or accompanied by:
(1) The name, residence and business address of the
salesperson;
(2) Whether any federal or State license or
registration as dealer, limited Canadian dealer, or
salesperson has ever been refused the salesperson or
cancelled, suspended, revoked, or withdrawn;
(3) The nature of employment with, and names and
addresses of, employers of the salesperson for the 10
years immediately preceding the date of application;
(4) A brief description of any civil or criminal
proceedings of which fraud is an essential element
pending against the salesperson, and whether the
salesperson has ever been convicted of a felony, or of
any misdemeanor of which fraud is an essential element;
(5) Such additional information as the Secretary of
State may by rule, regulation or order prescribe as
necessary to determine the salesperson's business repute
and qualification to act as a salesperson; and
(6) No individual shall be registered or
re-registered as a salesperson under this Section unless
and until such individual has passed an examination
conducted by the Secretary of State or a self-regulatory
organization of securities dealers or similar person,
which examination has been designated by the Secretary of
State by rule, regulation or order to be satisfactory for
purposes of determining whether the applicant has
sufficient knowledge of the securities business and laws
relating thereto to act as a registered salesperson.
Any salesperson who was registered prior to
September 30, 1963, and has continued to be so
registered, and any individual who has passed a
securities salesperson examination administered by the
Secretary of State or an examination designated by the
Secretary of State by rule, regulation or order to be
satisfactory for purposes of determining whether the
applicant has sufficient knowledge of the securities
business and laws relating thereto to act as a registered
salesperson, shall not be required to pass an examination
in order to continue to act as a salesperson. The
Secretary of State may by order waive the examination
requirement for any applicant for registration under this
subsection C who has had such experience or education
relating to the securities business as may be determined
by the Secretary of State to be the equivalent of such
examination. Any request for such a waiver shall be
filed with the Secretary of State in such form as may be
prescribed by rule, regulation or order.
(7) The application for registration of a
salesperson shall be accompanied by a filing fee and a
Securities Audit and Enforcement Fund fee, each in the
amount established pursuant to Section 11a of this Act,
which shall not be returnable in any event.
(8) Any change which renders no longer accurate any
information contained in any application for registration
or re-registration as a salesperson shall be reported to
the Secretary of State within 10 business days after the
occurrence of such change. If the activities are
terminated which rendered an individual a salesperson for
the dealer, issuer or controlling person, the dealer,
issuer or controlling person, as the case may be, shall
notify the Secretary of State, in writing, within 30 days
of the salesperson's cessation of activities, using the
appropriate termination notice form.
(9) A registered salesperson may transfer his or
her registration under this Section 8 for the unexpired
term thereof from one registered dealer or limited
Canadian dealer to another by the giving of notice of the
transfer by the new registered dealer or limited Canadian
dealer to the Secretary of State in such form and subject
to such conditions as the Secretary of State shall by
rule or regulation prescribe. The new registered dealer
or limited Canadian dealer shall promptly file an
application for registration of such salesperson as
provided in this subsection C, accompanied by the filing
fee prescribed by paragraph (7) of this subsection C.
C-5. Except with respect to federal covered investment
advisers whose only clients are investment companies as
defined in the Federal 1940 Act, other investment advisers,
federal covered investment advisers, or any similar person
which the Secretary of State may prescribe by rule or order,
a federal covered investment adviser shall file with the
Secretary of State, prior to acting as a federal covered
investment adviser in this State, such documents as have been
filed with the Securities and Exchange Commission as the
Secretary of State by rule or order may prescribe. The
notification of a federal covered investment adviser shall be
accompanied by a notification filing fee established pursuant
to Section 11a of this Act, which shall not be returnable in
any event. Every person acting as a federal covered
investment adviser in this State shall file a notification
filing and pay an annual notification filing fee established
pursuant to Section 11a of this Act, which is not returnable
in any event. The failure to file any such notification
shall constitute a violation of subsection D of Section 12 of
this Act, subject to the penalties enumerated in Section 14
of this Act. Until October 10, 1999 or other date as may be
legally permissible, a federal covered investment adviser who
fails to file the notification or refuses to pay the fees as
required by this subsection shall register as an investment
adviser with the Secretary of State under Section 8 of this
Act. The civil remedies provided for in subsection A of
Section 13 of this Act and the civil remedies of rescission
and appointment of receiver, conservator, ancillary receiver,
or ancillary conservator provided for in subsection F of
Section 13 of this Act shall not be available against any
person by reason of the failure to file any such notification
or to pay the notification fee or on account of the contents
of any such notification.
D. An application for registration as an investment
adviser, executed, verified, or authenticated by or on behalf
of the applicant, shall be filed with the Secretary of State,
in such form as the Secretary of State may by rule or
regulation prescribe, setting forth or accompanied by:
(1) The name and form of organization under which
the investment adviser engages or intends to engage in
business; the state or country and date of its
organization; the location of the adviser's principal
business office and branch offices, if any; the names and
addresses of the adviser's principal, partners, officers,
directors, and persons performing similar functions or,
if the investment adviser is an individual, of the
individual; and the number of the adviser's employees who
perform investment advisory functions;
(2) The education, the business affiliations for
the past 10 years, and the present business affiliations
of the investment adviser and of the adviser's principal,
partners, officers, directors, and persons performing
similar functions and of any person controlling the
investment adviser;
(3) The nature of the business of the investment
adviser, including the manner of giving advice and
rendering analyses or reports;
(4) The nature and scope of the authority of the
investment adviser with respect to clients' funds and
accounts;
(5) The basis or bases upon which the investment
adviser is compensated;
(6) Whether the investment adviser or any
principal, partner, officer, director, person performing
similar functions or person controlling the investment
adviser (i) within 10 years of the filing of the
application has been convicted of a felony, or of any
misdemeanor of which fraud is an essential element, or
(ii) is permanently or temporarily enjoined by order or
judgment from acting as an investment adviser,
underwriter, dealer, principal or salesperson, or from
engaging in or continuing any conduct or practice in
connection with any such activity or in connection with
the purchase or sale of any security, and in each case
the facts relating to the conviction, order or judgment;
(7) (a) A statement as to whether the investment
adviser is engaged or is to engage primarily in the
business of rendering investment supervisory services;
and
(b) A statement that the investment adviser will
furnish his, her, or its clients with such information as
the Secretary of State deems necessary in the form
prescribed by the Secretary of State by rule or
regulation;
(8) Such additional information as the Secretary of
State may, by rule, regulation or order prescribe as
necessary to determine the applicant's financial
responsibility, business repute and qualification to act
as an investment adviser.
(9) No applicant shall be registered or
re-registered as an investment adviser under this Section
unless and until each principal of the applicant who is
actively engaged in the conduct and management of the
applicant's advisory business in this State has passed an
examination or completed an educational program conducted
by the Secretary of State or an association of investment
advisers or similar person, which examination or
educational program has been designated by the Secretary
of State by rule, regulation or order to be satisfactory
for purposes of determining whether the applicant has
sufficient knowledge of the securities business and laws
relating thereto to conduct the business of a registered
investment adviser.
Any person who was a registered investment adviser
prior to September 30, 1963, and has continued to be so
registered, and any individual who has passed an
investment adviser examination administered by the
Secretary of State, or passed an examination or completed
an educational program designated by the Secretary of
State by rule, regulation or order to be satisfactory for
purposes of determining whether the applicant has
sufficient knowledge of the securities business and laws
relating thereto to conduct the business of a registered
investment adviser, shall not be required to pass an
examination or complete an educational program in order
to continue to act as an investment adviser. The
Secretary of State may by order waive the examination or
educational program requirement for any applicant for
registration under this subsection D if the principal of
the applicant who is actively engaged in the conduct and
management of the applicant's advisory business in this
State has had such experience or education relating to
the securities business as may be determined by the
Secretary of State to be the equivalent of the
examination or educational program. Any request for a
waiver shall be filed with the Secretary of State in such
form as may be prescribed by rule or regulation.
(10) No applicant shall be registered or
re-registered as an investment adviser under this Section
8 unless (i) the application for registration or
re-registration is accompanied by an application for
registration or re-registration for each person a list of
all persons acting as an investment adviser
representative representatives on behalf of the adviser
and (ii) a Securities Audit and Enforcement Fund fee that
shall not be returnable in any event is paid with respect
to each investment adviser representative. No fee,
however, shall be required under this paragraph if the
investment adviser representative is also registered as a
salesperson and the Securities Audit and Enforcement Fund
fee required under subsection C or subsection H of this
Section has been paid to the Secretary of State.
(11) The application for registration of an
investment adviser shall be accompanied by a filing fee
and a fee for each branch office in this State, in each
case in the amount established pursuant to Section 11a of
this Act, which fees shall not be returnable in any
event.
(12) The Secretary of State shall notify the
investment adviser by written notice (which may be by
electronic, telegraphic, or facsimile transmission) of
the effectiveness of the registration as an investment
adviser in this State.
(13) Any change which renders no longer accurate
any information contained in any application for
registration or re-registration of an investment adviser
shall be reported to the Secretary of State within 10
business days after the occurrence of the change. In
respect to assets and liabilities of an investment
adviser that retains custody of clients' cash or
securities or accepts pre-payment of fees in excess of
$500 per client and 6 or more months in advance only
materially adverse changes need be reported by written
notice (which may be by electronic telegraphic or
facsimile transmission) no later than the close of
business on the second business day following the
discovery thereof.
(14) Each application for registration as an
investment adviser shall become effective automatically
on the 45th day following the filing of the application,
required documents or information, and payment of the
required fee unless (i) the Secretary of State has
registered the investment adviser prior to that date or
(ii) an action with respect to the applicant is pending
under Section 11 of this Act.
D-5. A registered investment adviser or federal covered
investment adviser desiring to register an investment
adviser representative shall file an application with the
Secretary of State, in the form as the Secretary of State may
by rule or order prescribe, which the investment adviser
representative is required by this Section to provide to the
investment adviser, executed, verified, or authenticated by
the investment adviser representative and setting forth or
accompanied by:
(1) The name, residence, and business address of
the investment adviser representative;
(2) A statement whether any federal or state
license or registration as a dealer, salesperson,
investment adviser, or investment adviser representative
has ever been refused, canceled, suspended, revoked or
withdrawn;
(3) The nature of employment with, and names and
addresses of, employers of the investment adviser
representative for the 10 years immediately preceding the
date of application;
(4) A brief description of any civil or criminal
proceedings, of which fraud is an essential element,
pending against the investment adviser representative and
whether the investment adviser representative has ever
been convicted of a felony or of any misdemeanor of which
fraud is an essential element;
(5) Such additional information as the Secretary of
State may by rule or order prescribe as necessary to
determine the investment adviser representative's
business repute or qualification to act as an investment
adviser representative;
(6) Documentation that the individual has passed an
examination conducted by the Secretary of State, an
organization of investment advisers, or similar person,
which examination has been designated by the Secretary of
State by rule or order to be satisfactory for purposes of
determining whether the applicant has sufficient
knowledge of the investment advisory or securities
business and laws relating to that business to act as a
registered investment adviser representative; and
(7) A Securities Audit and Enforcement Fund fee
established under Section 11a of this Act, which shall
not be returnable in any event.
The Secretary of State may by order waive the examination
requirement for an applicant for registration under this
subsection D-5 who has had the experience or education
relating to the investment advisory or securities business as
may be determined by the Secretary of State to be the
equivalent of the examination. A request for a waiver shall
be filed with the Secretary of State in the form as may be
prescribed by rule or order.
A change that renders no longer accurate any information
contained in any application for registration or
re-registration as an investment adviser representative must
be reported to the Secretary of State within 10 business days
after the occurrence of the change. If the activities that
rendered an individual an investment adviser representative
for the investment adviser are terminated, the investment
adviser shall notify the Secretary of State in writing (which
may be by electronic or facsimile transmission), within 30
days of the investment adviser representative's termination,
using the appropriate termination notice form as the
Secretary of State may prescribe by rule or order.
A registered investment adviser representative may
transfer his or her registration under this Section 8 for the
unexpired term of the registration from one registered
investment adviser to another by the giving of notice of the
transfer by the new investment adviser to the Secretary of
State in the form and subject to the conditions as the
Secretary of State shall prescribe. The new registered
investment adviser shall promptly file an application for
registration of the investment adviser representative as
provided in this subsection, accompanied by the Securities
Audit and Enforcement Fund fee prescribed by paragraph (7) of
this subsection D-5.
E. (1) Subject to the provisions of subsection F of
Section 11 of this Act, the registration of a dealer, limited
Canadian dealer, salesperson, or investment adviser, or
investment adviser representative may be denied, suspended or
revoked if the Secretary of State finds that the dealer,
limited Canadian dealer, salesperson, or investment adviser,
or investment adviser representative or any principal
officer, director, partner, member, trustee, manager or any
person who performs a similar function of the dealer, limited
Canadian dealer, or investment adviser:
(a) Has been convicted of any felony during the 10
year period preceding the date of filing of any
application for registration or at any time thereafter,
or of any misdemeanor of which fraud is an essential
element;
(b) Has engaged in any inequitable practice in the
offer or sale of securities or in any fraudulent business
practice;
(c) Has failed to account for any money or
property, or has failed to deliver any security, to any
person entitled thereto when due or within a reasonable
time thereafter;
(d) In the case of a dealer, limited Canadian
dealer, or investment adviser, is insolvent;
(e) In the case of a dealer or limited Canadian
dealer, (i) has failed reasonably to supervise the
securities activities of any of its salespersons and the
failure has permitted or facilitated a violation of
Section 12 of this Act or (ii) is offering or selling or
has offered or sold securities in this State through a
salesperson other than a registered salesperson, or, in
the case of a salesperson, is selling or has sold
securities in this State for a dealer, limited Canadian
dealer, issuer or controlling person with knowledge that
the dealer, limited Canadian dealer, issuer or
controlling person has not complied with the provisions
of this Act;
(f) In the case of an investment adviser, has
failed reasonably to supervise the advisory activities of
any of its investment adviser representatives or
employees and the failure has permitted or facilitated a
violation of Section 12 of this Act;
(g) Has violated any of the provisions of this Act;
(h) Has made any material misrepresentation to the
Secretary of State in connection with any information
deemed necessary by the Secretary of State to determine a
dealer's, limited Canadian dealer's, or investment
adviser's financial responsibility or a dealer's, limited
Canadian dealer's, investment adviser's, or
salesperson's, or investment adviser representative's
business repute or qualifications, or has refused to
furnish any such information requested by the Secretary
of State;
(i) Has had a license or registration under any
Federal or State law regulating the offer or sale of
securities or commodity futures contracts, refused,
cancelled, suspended or withdrawn;
(j) Has been suspended or expelled from or refused
membership in or association with or limited in any
capacity by any self-regulatory organization registered
under the Federal 1934 Act or the Federal 1974 Act
arising from any fraudulent or deceptive act or a
practice in violation of any rule, regulation or standard
duly promulgated by the self-regulatory organization;
(k) Has had any order entered against it after
notice and opportunity for hearing by a securities agency
of any state, any foreign government or agency thereof,
the Securities and Exchange Commission, or the Federal
Commodities Futures Trading Commission arising from any
fraudulent or deceptive act or a practice in violation of
any statute, rule or regulation administered or
promulgated by the agency or commission;
(l) In the case of a dealer or limited Canadian
dealer, fails to maintain a minimum net capital in an
amount which the Secretary of State may by rule or
regulation require;
(m) Has conducted a continuing course of dealing of
such nature as to demonstrate an inability to properly
conduct the business of the dealer, limited Canadian
dealer, salesperson, or investment adviser, or investment
adviser representative;
(n) Has had, after notice and opportunity for
hearing, any injunction or order entered against it or
license or registration refused, cancelled, suspended,
revoked, withdrawn or limited by any state or federal
body, agency or commission regulating banking, insurance,
finance or small loan companies, real estate or mortgage
brokers or companies, if the action resulted from any act
found by the body, agency or commission to be a
fraudulent or deceptive act or practice in violation of
any statute, rule or regulation registration administered
or promulgated by the body, agency or commission;
(o) Has failed to file a return, or to pay the tax,
penalty or interest shown in a filed return, or to pay
any final assessment of tax, penalty or interest, as
required by any tax Act administered by the Illinois
Department of Revenue, until such time as the
requirements of that tax Act are satisfied;
(p) In the case of a natural person who is a
dealer, limited Canadian dealer, salesperson, or
investment adviser, or investment adviser representative,
has defaulted on an educational loan guaranteed by the
Illinois Student Assistance Commission, until the natural
person has established a satisfactory repayment record as
determined by the Illinois Student Assistance Commission;
(q) Has failed to maintain the books and records
required under this Act or rules or regulations
promulgated under this Act within a reasonable time after
receiving notice of any deficiency;
(r) Has refused to allow or otherwise impeded
designees of the Secretary of State from conducting an
audit, examination, inspection, or investigation provided
for under Section 8 or 11 of this Act;
(s) Has failed to maintain any minimum net capital
or bond requirement set forth in this Act or any rule or
regulation promulgated under this Act;
(t) Has refused the Secretary of State or his or
her designee access to any office or location within an
office to conduct an investigation, audit, examination,
or inspection.
(2) If the Secretary of State finds that any registrant
or applicant for registration is no longer in existence or
has ceased to do business as a dealer, limited Canadian
dealer, salesperson, or investment adviser, or investment
adviser representative, or is subject to an adjudication as a
person under legal disability or to the control of a
guardian, or cannot be located after reasonable search, or
has failed after written notice to pay to the Secretary of
State any additional fee prescribed by this Section or
specified by rule or regulation, or if a natural person, has
defaulted on an educational loan guaranteed by the Illinois
Student Assistance Commission, the Secretary of State may by
order cancel the registration or application.
(3) Withdrawal of an application for registration or
withdrawal from registration as a dealer, limited Canadian
dealer, salesperson, or investment adviser, or investment
adviser representative becomes effective 30 days after
receipt of an application to withdraw or within such shorter
period of time as the Secretary of State may determine,
unless any proceeding is pending under Section 11 of this Act
when the application is filed or a proceeding is instituted
within 30 days after the application is filed. If a
proceeding is pending or instituted, withdrawal becomes
effective at such time and upon such conditions as the
Secretary of State by order determines. If no proceeding is
pending or instituted and withdrawal automatically becomes
effective, the Secretary of State may nevertheless institute
a revocation or suspension proceeding within one year after
withdrawal became effective and enter a revocation or
suspension order as of the last date on which registration
was effective.
F. The Secretary of State shall make available upon
request the date that each dealer, investment adviser, or
salesperson, or investment adviser representative was granted
registration, together with the name and address of the
dealer, limited Canadian dealer, or issuer on whose behalf
the salesperson is registered, and all orders of the
Secretary of State denying or abandoning an application, or
suspending or revoking registration, or censuring the
persons. The Secretary of State may designate by rule,
regulation or order the statements, information or reports
submitted to or filed with him or her pursuant to this
Section 8 which the Secretary of State determines are of a
sensitive nature and therefore should be exempt from public
disclosure. Any such statement, information or report shall
be deemed confidential and shall not be disclosed to the
public except upon the consent of the person filing or
submitting the statement, information or report or by order
of court or in court proceedings.
G. The registration or re-registration of a dealer or
limited Canadian dealer and of all salespersons registered
upon application of the dealer or limited Canadian dealer
shall expire on the next succeeding anniversary date of the
registration or re-registration of the dealer; and the
registration or re-registration of an investment adviser and
of all investment adviser representatives registered upon
application of the investment adviser shall expire on the
next succeeding anniversary date of the registration of the
investment adviser; provided, that the Secretary of State may
by rule or regulation prescribe an alternate date which any
dealer registered under the Federal 1934 Act or a member of
any self-regulatory association approved pursuant thereto, a
member of a self-regulatory organization or stock exchange in
Canada, or any investment adviser registered under the
Federal 1940 Investment Advisers Act may elect as the
expiration date of its dealer or limited Canadian dealer and
salesperson registrations, or the expiration date of its
investment adviser registration, as the case may be. A
registration of a salesperson registered upon application of
an issuer or controlling person shall expire on the next
succeeding anniversary date of the registration, or upon
termination or expiration of the registration of the
securities, if any, designated in the application for his or
her registration or the alternative date as the Secretary may
prescribe by rule or regulation. Subject to paragraph (9) of
subsection C of this Section 8, a salesperson's registration
also shall terminate upon cessation of his or her employment,
or termination of his or her appointment or authorization, in
each case by the person who applied for the salesperson's
registration, provided that the Secretary of State may by
rule or regulation prescribe an alternate date for the
expiration of the registration.
H. Applications for re-registration of dealers, limited
Canadian dealers, salespersons, and investment advisers, and
investment adviser representatives shall be filed with the
Secretary of State prior to not less than 7 days preceding
the expiration of the then current registration and shall
contain such information as may be required by the Secretary
of State upon initial application with such omission
therefrom or addition thereto as the Secretary of State may
authorize or prescribe. Each application for re-registration
of a dealer, limited Canadian dealer, or investment adviser
shall be accompanied by a filing fee, and each application
for re-registration as a salesperson shall be accompanied by
a filing fee and a Securities Audit and Enforcement Fund fee
established pursuant to Section 11a of this Act, and each
application for re-registration as an investment adviser
representative shall be accompanied by a Securities Audit and
Enforcement Fund fee established under Section 11a of this
Act, which shall not be returnable in any event.
Notwithstanding the foregoing, (1) applications for
re-registration of dealers and investment advisers may be
filed within the 6 days next preceding the expiration of the
then current registration provided that the applicant pays
the annual registration fee for the year with respect to
which the re-registration is applicable together with an
additional amount equal to the annual registration fee; and
(2) applications for re-registration of dealers, limited
Canadian dealers, and investment advisers may be filed within
30 days following the expiration of the registration provided
that the applicant pays the annual registration fee together
with an additional amount equal to 2 times the annual
registration fee and files any other information or documents
that the Secretary of State may prescribe by rule or
regulation or order. Any application filed within 30 days
following the expiration of the registration shall be
automatically effective as of the time of the earlier
expiration provided that the proper fee has been paid to the
Secretary of State.
Each registered dealer, limited Canadian dealer, or
investment adviser shall continue to be registered if the
registrant changes his, her, or its form of organization
provided that the dealer or investment adviser files an
amendment to his, her, or its application not later than 30
days following the occurrence of the change and pays the
Secretary of State a fee in the amount established under
Section 11a of this Act.
I. (1) Every registered dealer, limited Canadian dealer,
and investment adviser shall make and keep for such periods,
such accounts, correspondence, memoranda, papers, books and
records as the Secretary of State may by rule or regulation
prescribe. All records so required shall be preserved for 3
years unless the Secretary of State by rule, regulation or
order prescribes otherwise for particular types of records.
(2) Every registered dealer, limited Canadian dealer,
and investment adviser shall file such financial reports as
the Secretary of State may by rule or regulation prescribe.
(3) All the books and records referred to in paragraph
(1) of this subsection I are subject at any time or from time
to time to such reasonable periodic, special or other audits,
examinations, or inspections by representatives of the
Secretary of State, within or without this State, as the
Secretary of State deems necessary or appropriate in the
public interest or for the protection of investors.
(4) At the time of an audit, examination, or inspection,
the Secretary of State, by his or her designees, may conduct
an interview of any person employed or appointed by or
affiliated with a registered dealer, limited Canadian dealer,
or investment advisor, provided that the dealer, limited
Canadian dealer, or investment advisor shall be given
reasonable notice of the time and place for the interview.
At the option of the dealer, limited Canadian dealer, or
investment advisor, a representative of the dealer or
investment advisor with supervisory responsibility over the
individual being interviewed may be present at the interview.
J. The Secretary of State may require by rule or
regulation the payment of an additional fee for the filing of
information or documents required to be filed by this Section
which have not been filed in a timely manner. The Secretary
of State may also require by rule or regulation the payment
of an examination fee for administering any examination which
it may conduct pursuant to subsection B, C, or D, or D-5 of
this Section 8.
K. The Secretary of State may declare any application
for registration or limited registration under this Section 8
abandoned by order if the applicant fails to pay any fee or
file any information or document required under this Section
8 or by rule or regulation for more than 30 days after the
required payment or filing date. The applicant may petition
the Secretary of State for a hearing within 15 days after the
applicant's receipt of the order of abandonment, provided
that the petition sets forth the grounds upon which the
applicant seeks a hearing.
L. Any document being filed pursuant to this Section 8
shall be deemed filed, and any fee being paid pursuant to
this Section 8 shall be deemed paid, upon the date of actual
receipt thereof by the Secretary of State or his or her
designee.
M. The Secretary of State shall provide to the Illinois
Student Assistance Commission annually or at mutually agreed
periodic intervals the names and social security numbers of
natural persons registered under subsections B, C, D, and D-5
E of this Section. The Illinois Student Assistance
Commission shall determine if any student loan defaulter is
registered as a dealer, limited Canadian dealer, salesperson,
or investment adviser under this Act and report its
determination to the Secretary of State or his or her
designee.
(Source: P.A. 88-494; 89-209, eff. 1-1-96; 89-626, eff.
8-9-96.)
(815 ILCS 5/9) (from Ch. 121 1/2, par. 137.9)
Sec. 9. Advertising. The Secretary of State may by rule
or regulation require the filing with him or her of any
prospectus, pamphlet, circular, form letter, advertisement or
other sales literature or advertising communication addressed
or intended for distribution or dissemination in this State
to prospective investors, including clients or prospective
clients of an investment adviser; provided, that no such
filing may be required with respect to:
(1) securities exempt from registration pursuant to the
provisions of Section 3 of this Act or sold solely in
transactions of the nature set forth in Section 4 of this
Act;
(2) securities registered under both the Federal 1933
Act and subsection A or B of Section 5, 6 or 7 of this Act;
or
(2.5) federal covered securities; or
(3) advertisements appearing in newspapers, magazines or
periodicals of regular publication and established paid
circulation, other than an advertisement which constitutes an
offer of securities which is not covered by any of the
exemptions set forth in Section 4 of this Act, and which
securities are not exempt from registration pursuant to the
provisions of Section 3 of this Act.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
(815 ILCS 5/10) (from Ch. 121 1/2, par. 137.10)
Sec. 10. Service of process.
A. A consent to service of process shall be in the form
prescribed by the Secretary of State, shall be irrevocable,
and shall provide that actions arising out of or founded upon
the offer or sale of any securities in alleged violation of
this Act may be commenced against the person executing the
consent in any circuit court within this State, by the
service of process upon the Secretary of State.
Service of any process or pleading in any action against
a person who has filed under this Act a consent to service of
process upon the Secretary of State shall, if made on the
Secretary of State, be by duplicate copies, one of which
shall be filed in the office of the Secretary of State and
the other immediately forwarded by the Secretary of State by
registered mail or certified mail, return receipt requested,
to the person at his or her latest address on file in the
office of the Secretary of State. The filing fee for service
of process under this subsection A shall be as established
pursuant to Section 11a of this Act, and shall not be
returnable in any event.
B. (1) The filing of a notice filing under Section 2a of
this Act or of an application for registration under Section
5, 6, 7, or 8 of this Act, or the offer, sale or delivery of
securities in this State, whether effected by mail or
otherwise, by any person (unless the securities are exempt
from registration under subsection A or B of Section 3 of
this Act) shall be equivalent to and shall constitute an
appointment of the Secretary of State, or his or her
successors in office, by the person and the issuer of the
securities to be the true and lawful attorney for the person
upon whom may be served all lawful process in any action or
proceeding against the person, arising out of the offer or
sale of the securities.
(2) Service of process under this subsection B shall be
made by serving a copy upon the Secretary of State or any
employee in his or her office designated by the Secretary of
State to accept such service for him or her, provided notice
of such and a copy of the process are, within 10 days
thereafter, sent by registered mail or certified mail, return
receipt requested, by the plaintiff to the defendant, at the
last known address of the defendant. The filing fee for
service of process under this subsection B shall be as
established pursuant to Section 11a of this Act, and shall
not be returnable in any event. The Secretary of State shall
keep a record of all such processes which shall show the day
of the service.
C. Notwithstanding the foregoing, the filing of an
application by an issuer, controlling person, or registered
dealer, or limited Canadian dealer for the registration of a
salesperson shall also constitute the appointment by the
salesperson of the issuer, controlling person, or registered
dealer, or limited Canadian dealer to be the true and lawful
attorney for the person upon whom may be served all lawful
process against the person, arising under subsection J of
Section 8 or Section 11 of this Act. Following any service
in the foregoing manner, the Secretary of State shall, as
soon thereafter as reasonably practical, serve a copy of the
lawful process to the person by registered mail or certified
mail, return receipt requested, at his, or her, or its last
known address.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
(815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
Sec. 11. Duties and powers of the Secretary of State.
A. (1) The administration of this Act is vested in the
Secretary of State, who may from time to time make, amend and
rescind such rules and regulations as may be necessary to
carry out this Act, including rules and regulations governing
procedures of registration, statements, applications and
reports for various classes of securities, persons and
matters within his or her jurisdiction and defining any
terms, whether or not used in this Act, insofar as the
definitions are not inconsistent with this Act. The rules
and regulations adopted by the Secretary of State under this
Act shall be effective in the manner provided for in the
Illinois Administrative Procedure Act.
(2) Among other things, the Secretary of State shall
have authority, for the purposes of this Act, to prescribe
the form or forms in which required information shall be set
forth, accounting practices, the items or details to be shown
in balance sheets and earning statements, and the methods to
be followed in the preparation of accounts, in the appraisal
or valuation of assets and liabilities, in the determination
of depreciation and depletion, in the differentiation of
recurring and non-recurring income, in the differentiation of
investment and operating income, and in the preparation of
consolidated balance sheets or income accounts of any person,
directly or indirectly, controlling or controlled by the
issuer, or any person under direct or indirect common control
with the issuer.
(3) No provision of this Act imposing any liability
shall apply to any act done or omitted in good faith in
conformity with any rule or regulation of the Secretary of
State under this Act, notwithstanding that the rule or
regulation may, after the act or omission, be amended or
rescinded or be determined by judicial or other authority to
be invalid for any reason.
(4) The Securities Department of the Office of the
Secretary of State shall be deemed a criminal justice agency
for purposes of all federal and state laws and regulations
and, in that capacity, shall be entitled to access to any
information available to criminal justice agencies.
(5) The Secretary of State, by rule, may conditionally
or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities,
or transactions from any provision of Section 5, 6, 7, 8, 8a,
or 9 of this Act or of any rule promulgated under these
Sections, to the extent that such exemption is necessary or
appropriate in the public interest, and is consistent with
the protection of investors.
B. The Secretary of State may, anything in this Act to
the contrary notwithstanding, require financial statements
and reports of the issuer, dealer, salesperson, or investment
adviser as often as circumstances may warrant. In addition,
the Secretary of State may secure information or books and
records from or through others and may make or cause to be
made investigations respecting the business, affairs, and
property of the issuer of securities, any person involved in
the sale or offer for sale, purchase or offer to purchase of
any mineral investment contract, mineral deferred delivery
contract, or security and of dealers, salespersons, and
investment advisers that are registered or are the subject of
an application for registration under this Act. The costs of
an investigation shall be borne by the registrant or the
applicant, provided that the registrant or applicant shall
not be obligated to pay the costs without his, her or its
consent in advance.
C. Whenever it shall appear to the Secretary of State,
either upon complaint or otherwise, that this Act, or any
rule or regulation prescribed under authority thereof, has
been or is about to be violated, he or she may, in his or her
discretion, do one or both of the following:
(1) require or permit the person to file with the
Secretary of State a statement in writing under oath, or
otherwise, as to all the facts and circumstances
concerning the subject matter which the Secretary of
State believes to be in the public interest to
investigate, audit, examine, or inspect; and
(2) conduct an investigation, audit, examination,
or inspection as necessary or advisable for the
protection of the interests of the public.
D. (1) For the purpose of all investigations, audits,
examinations, or inspections which in the opinion of the
Secretary of State are necessary and proper for the
enforcement of this Act, the Secretary of State or a person
designated by him or her is empowered to administer oaths and
affirmations, subpoena witnesses, take evidence, and require
the production of any books and records, papers, or other
documents which the Secretary of State or a person designated
by him or her deems relevant or material to the inquiry.
(2) The Secretary of State or a person designated by him
or her is further empowered to administer oaths and
affirmations, subpoena witnesses, take evidence, and require
the production of any books and records, papers, or other
documents in this State at the request of a securities agency
of another state, if the activities constituting the alleged
violation for which the information is sought would be in
violation of Section 12 of this Act if the activities had
occurred in this State.
(3) The Circuit Court of any County of this State, upon
application of the Secretary of State or a person designated
by him or her may order the attendance of witnesses, the
production of books and records, papers, accounts and
documents and the giving of testimony before the Secretary of
State or a person designated by him or her; and any failure
to obey the order may be punished by the Circuit Court as a
contempt thereof.
(4) The fees of subpoenaed witnesses under this Act for
attendance and travel shall be the same as fees of witnesses
before the Circuit Courts of this State, to be paid when the
witness is excused from further attendance, provided, the
witness is subpoenaed at the instance of the Secretary of
State; and payment of the fees shall be made and audited in
the same manner as other expenses of the Secretary of State.
(5) Whenever a subpoena is issued at the request of a
complainant or respondent as the case may be, the Secretary
of State may require that the cost of service and the fee of
the witness shall be borne by the party at whose instance the
witness is summoned.
(6) The Secretary of State shall have power at his or
her discretion, to require a deposit to cover the cost of the
service and witness fees and the payment of the legal witness
fee and mileage to the witness served with subpoena.
(7) A subpoena issued under this Act shall be served in
the same manner as a subpoena issued out of a circuit court.
(8) The Secretary of State may in any investigation,
audits, examinations, or inspections cause the taking of
depositions of persons residing within or without this State
in the manner provided in civil actions under the laws of
this State.
E. Anything in this Act to the contrary notwithstanding:
(1) If the Secretary of State shall find that the
offer or sale or proposed offer or sale or method of
offer or sale of any securities by any person, whether
exempt or not, except the offer or sale of securities as
defined in subsection A of Section 3, in this State, is
fraudulent, or would work or tend to work a fraud or
deceit, or is being offered or sold in violation of
Section 12, or there has been a failure or refusal to
submit any notification filing or fee required under this
Act, the Secretary of State may by written order prohibit
or suspend the offer or sale of securities by that person
or deny or revoke the registration of the securities or
the exemption from registration for the securities.
(2) If the Secretary of State shall find that any
person has violated subsection C, D, E, F, G, H, I, J, or
K of Section 12 of this Act, the Secretary of State may
by written order temporarily or permanently prohibit or
suspend the person from offering or selling any
securities, any mineral investment contract, or any
mineral deferred delivery contract in this State,
provided that any person who is the subject of an order
of permanent prohibition may petition the Secretary of
State for a hearing to present evidence of rehabilitation
or change in circumstances justifying the amendment or
termination of the order of permanent prohibition.
(3) If the Secretary of State shall find that any
person is engaging or has engaged in the business of
selling or offering for sale securities as a dealer or
salesperson or is acting or has acted as an investment
adviser or federal covered investment adviser, without
prior thereto and at the time thereof having complied
with the registration or notice filing requirements of
this Act, the Secretary of State may by written order
prohibit or suspend the person from engaging in the
business of selling or offering for sale securities, or
acting as an investment adviser or federal covered
investment adviser, in this State.
(4) In addition to any other sanction or remedy
contained in this subsection E, the Secretary of State,
after finding that any provision of this Act has been
violated, may impose a fine as provided by rule,
regulation or order against the violator not to exceed
$10,000 for each violation of this Act, and may issue an
order of public censure against the violator.
F. (1) The Secretary of State shall not deny, suspend or
revoke the registration of securities, suspend or revoke the
registration of a dealer, salesperson or investment adviser,
prohibit or suspend the offer or sale of any securities,
prohibit or suspend any person from offering or selling any
securities in this State, prohibit or suspend a dealer or
salesperson from engaging in the business of selling or
offering for sale securities, prohibit or suspend a person
from acting as an investment adviser or federal covered
investment adviser, impose any fine for violation of this
Act, issue an order of public censure, or enter into an
agreed settlement except after an opportunity for hearing
upon not less than 10 days notice given by personal service
or registered mail or certified mail, return receipt
requested, to the person or persons concerned. Such notice
shall state the date and time and place of the hearing and
shall contain a brief statement of the proposed action of the
Secretary of State and the grounds for the proposed action.
A failure to appear at the hearing or otherwise respond to
the allegations set forth in the notice of hearing shall
constitute an admission of any facts alleged therein and
shall constitute sufficient basis to enter an order.
(2) Anything herein contained to the contrary
notwithstanding, the Secretary of State may temporarily
prohibit or suspend, for a maximum period of 60 days, by an
order effective immediately, the offer or sale or
registration of securities, the registration of a dealer,
salesperson or investment adviser, or the offer or sale of
securities by any person, or the business of rendering
investment advice, without the notice and prior hearing in
this subsection prescribed, if the Secretary of State shall
in his or her opinion, based on credible evidence, deem it
necessary to prevent an imminent violation of this Act or to
prevent losses to investors which the Secretary of State
reasonably believes will occur as a result of a prior
violation of this Act. Immediately after taking action
without such notice and hearing, the Secretary of State shall
deliver a copy of the temporary order to the respondent named
therein by personal service or registered mail or certified
mail, return receipt requested. The temporary order shall
set forth the grounds for the action and shall advise that
the respondent may request a hearing as soon as reasonably
practicable, that the request for a hearing will not stop the
effectiveness of the temporary order and that respondent's
failure to request a hearing within 30 days after the date of
the entry of the temporary order shall constitute an
admission of any facts alleged therein and shall constitute
sufficient basis to make the temporary order final. Any
provision of this paragraph (2) to the contrary
notwithstanding, the Secretary of State may not pursuant to
the provisions of this paragraph (2) suspend the registration
of a dealer, limited Canadian dealer, salesperson, or
investment adviser, or investment adviser representative
based upon sub-paragraph (n) of paragraph (l) of subsection E
of Section 8 of this Act or revoke the registration of
securities or revoke the registration of any a dealer,
salesperson, investment adviser representative, or investment
adviser.
(3) The Secretary of State may issue a temporary order
suspending or delaying the effectiveness of any registration
of securities under subsection A or B of Section 5, 6 or 7 of
this Act subsequent to and upon the basis of the issuance of
any stop, suspension or similar order by the Securities and
Exchange Commission with respect to the securities which are
the subject of the registration under subsection A or B of
Section 5, 6 or 7 of this Act, and the order shall become
effective as of the date and time of effectiveness of the
Securities and Exchange Commission order and shall be vacated
automatically at such time as the order of the Securities and
Exchange Commission is no longer in effect.
(4) When the Secretary of State finds that an
application for registration as a dealer, salesperson or
investment adviser should be denied, the Secretary of State
may enter an order denying the registration. Immediately
after taking such action, the Secretary of State shall
deliver a copy of the order to the respondent named therein
by personal service or registered mail or certified mail,
return receipt requested. The order shall state the grounds
for the action and that the matter will be set for hearing
upon written request filed with the Secretary of State within
30 days after the receipt of the request by the respondent.
The respondent's failure to request a hearing within 30 days
after receipt of the order shall constitute an admission of
any facts alleged therein and shall make the order final. If
a hearing is held, the Secretary of State shall affirm,
vacate, or modify the order.
(5) The findings and decision of the Secretary of State
upon the conclusion of each final hearing held pursuant to
this subsection shall be set forth in a written order signed
on behalf of the Secretary of State by his or her designee
and shall be filed as a public record. All hearings shall be
held before a person designated by the Secretary of State,
and appropriate records thereof shall be kept.
(6) Notwithstanding the foregoing, the Secretary of
State, after notice and opportunity for hearing, may at his
or her discretion enter into an agreed settlement,
stipulation or consent order with a respondent in accordance
with the provisions of the Illinois Administrative Procedure
Act. The provisions of the agreed settlement, stipulation or
consent order shall have the full force and effect of an
order issued by the Secretary of State.
(7) Anything in this Act to the contrary
notwithstanding, whenever the Secretary of State finds that a
person is currently expelled from, refused membership in or
association with, or limited in any material capacity by a
self-regulatory organization registered under the Federal
1934 Act or the Federal 1974 Act because of a fraudulent or
deceptive act or a practice in violation of a rule,
regulation, or standard duly promulgated by the
self-regulatory organization, the Secretary of State may, at
his or her discretion, enter a Summary Order of Prohibition,
which shall prohibit the offer or sale of any securities,
mineral investment contract, or mineral deferred delivery
contract by the person in this State. The order shall take
effect immediately upon its entry. Immediately after taking
the action the Secretary of State shall deliver a copy of the
order to the named Respondent by personal service or
registered mail or certified mail, return receipt requested.
A person who is the subject of an Order of Prohibition may
petition the Secretary of State for a hearing to present
evidence of rehabilitation or change in circumstances
justifying the amendment or termination of the Order of
Prohibition.
G. No administrative action shall be brought by the
Secretary of State for relief under this Act or upon or
because of any of the matters for which relief is granted by
this Act after the earlier to occur of (i) 3 years from the
date upon which the Secretary of State had notice of facts
which in the exercise of reasonable diligence would lead to
actual knowledge of the alleged violation of the Act, or (ii)
5 years from the date on which the alleged violation
occurred.
H. The action of the Secretary of State in denying,
suspending, or revoking the registration of a dealer, limited
Canadian dealer, salesperson, or investment adviser, or
investment adviser representative, in prohibiting any person
from engaging in the business of offering or selling
securities as a dealer, limited Canadian dealer, or
salesperson, in prohibiting or suspending the offer or sale
of securities by any person, in prohibiting a person from
acting as an investment adviser, federal covered investment
adviser, or investment adviser representative, in denying,
suspending, or revoking the registration of securities, in
prohibiting or suspending the offer or sale or proposed offer
or sale of securities, in imposing any fine for violation of
this Act, or in issuing any order shall be subject to
judicial review in the Circuit Court of any county in this
State. The Administrative Review Law shall apply to and
govern every action for the judicial review of final actions
or decisions of the Secretary of State under this Act.
I. Notwithstanding any other provisions of this Act to
the contrary, whenever it shall appear to the Secretary of
State that any person is engaged or about to engage in any
acts or practices which constitute or will constitute a
violation of this Act or of any rule or regulation prescribed
under authority of this Act, the Secretary of State may at
his or her discretion, through the Attorney General:
(1) file a complaint and apply for a temporary
restraining order without notice, and upon a proper
showing the court may enter a temporary restraining order
without bond, to enforce this Act; and
(2) file a complaint and apply for a preliminary or
permanent injunction, and, after notice and a hearing and
upon a proper showing, the court may grant a preliminary
or permanent injunction and may order the defendant to
make an offer of rescission with respect to any sales or
purchases of securities, mineral investment contracts, or
mineral deferred delivery contracts determined by the
court to be unlawful under this Act.
The court shall further have jurisdiction and authority,
in addition to the penalties and other remedies in this Act
provided, to enter an order for the appointment of the court
or a person as a receiver, conservator, ancillary receiver or
ancillary conservator for the defendant or the defendant's
assets located in this State, or to require restitution,
damages or disgorgement of profits on behalf of the person or
persons injured by the act or practice constituting the
subject matter of the action, and may assess costs against
the defendant for the use of the State; provided, however,
that the civil remedies of rescission and appointment of a
receiver, conservator, ancillary receiver or ancillary
conservator shall not be available against any person by
reason of the failure to file with the Secretary of State, or
on account of the contents of, any report of sale provided
for in subsection G or P of Section 4, paragraph (2) of
subsection D of Sections 5 and 6, or paragraph (2) of
subsection F of Section 7 of this Act. Appeals may be taken
as in other civil cases.
J. In no case shall the Secretary of State, or any of
his or her employees or agents, in the administration of this
Act, incur any official or personal liability by instituting
an injunction or other proceeding or by denying, suspending
or revoking the registration of a dealer or salesperson, or
by denying, suspending or revoking the registration of
securities or prohibiting the offer or sale of securities, or
by suspending or prohibiting any person from acting as a
dealer, limited Canadian dealer, salesperson, or investment
adviser, or investment adviser representative or from
offering or selling securities.
K. No provision of this Act shall be construed to
require or to authorize the Secretary of State to require any
investment adviser or federal covered investment adviser
engaged in rendering investment supervisory services to
disclose the identity, investments, or affairs of any client
of the investment adviser or federal covered investment
adviser, except insofar as the disclosure may be necessary or
appropriate in a particular proceeding or investigation
having as its object the enforcement of this Act.
L. Whenever, after an examination, investigation or
hearing, the Secretary of State deems it of public interest
or advantage, he or she may certify a record to the State's
Attorney of the county in which the act complained of,
examined or investigated occurred. The State's Attorney of
that county within 90 days after receipt of the record shall
file a written statement at the Office of the Secretary of
State, which statement shall set forth the action taken upon
the record, or if no action has been taken upon the record
that fact, together with the reasons therefor, shall be
stated.
M. The Secretary of State may initiate, take, pursue, or
prosecute any action authorized or permitted under Section 6d
of the Federal 1974 1936 Act.
N. (1) Notwithstanding any provision of this Act to the
contrary, to encourage uniform interpretation,
administration, and enforcement of the provisions of this
Act, the Secretary of State may cooperate with the securities
agencies or administrators of one or more states, Canadian
provinces or territories, or another country, the Securities
and Exchange Commission, the Commodity Futures Trading
Commission, the Securities Investor Protection Corporation,
any self-regulatory organization, and any governmental law
enforcement or regulatory agency.
(2) The cooperation authorized by paragraph (1) of this
subsection includes, but is not limited to, the following:
(a) establishing or participating in a central
depository or depositories for registration under this
Act and for documents or records required under this Act;
(b) making a joint audit, inspection, examination,
or investigation;
(c) holding a joint administrative hearing;
(d) filing and prosecuting a joint civil or
criminal proceeding;
(e) sharing and exchanging personnel;
(f) sharing and exchanging information and
documents; or
(g) issuing any joint statement or policy.
(Source: P.A. 88-279; 89-209, eff. 1-1-96; 89-626, eff.
8-9-96.)
(815 ILCS 5/11a) (from Ch. 121 1/2, par. 137.11a)
Sec. 11a. Fees.
(1) The Secretary of State shall by rule or regulation
impose and shall collect reasonable fees necessary for the
administration of this Act including, but not limited to,
fees for the following purposes:
(a) Filing an application pursuant to paragraph (2)
of subsection F of Section 4 of this Act;
(b) Examining an application and report pursuant to
paragraph (2) of subsection F of Section 4 of this Act;
(c) Filing a report pursuant to subsection G of
Section 4 of this Act, determined in accordance with
paragraph (4) of subsection G of Section 4 of this Act;
(d) Examining an offering sheet pursuant to
subsection P of Section 4 of this Act;
(e) Filing a report pursuant to subsection P of
Section 4, determined in accordance with subsection P of
Section 4 of this Act;
(f) Examining an application to register securities
under subsection B of Section 5 of this Act;
(g) Examining an amended or supplemental prospectus
filed pursuant to the undertaking required by
sub-paragraph (i) of paragraph (2) of subsection B of
Section 5 of this Act;
(h) Registering or renewing registration of
securities under Section 5, determined in accordance with
subsection C of Section 5 of this Act;
(i) Registering securities in excess of the amount
initially registered, determined in accordance with
paragraph (2) of subsection C of Section 5 of this Act;
(j) Failure to file timely an application for
renewal under subsection E of Section 5 of this Act;
(k) Failure to file timely any document or
information required under Section 5 of this Act;
(l) Examining an application to register face
amount certificate contracts under subsection B of
Section 6 of this Act;
(m) Examining an amended or supplemental prospectus
filed pursuant to the undertaking required by
sub-paragraph (f) of paragraph (2) of subsection B of
Section 6 of this Act;
(n) Registering or renewing registration of face
amount certificate contracts under Section 6 of this Act;
(o) Amending a registration of face amount
certificate contracts pursuant to subsection E of Section
6 of this Act to add any additional series, type or class
of contract;
(p) Failure to file timely an application for
renewal under subsection F of Section 6 of this Act;
(q) Adding to or withdrawing from deposits with
respect to face amount certificate contracts pursuant to
subsection H of Section 6, a transaction charge payable
at the times and in the manner specified in subsection H
of Section 6 (which transaction charge shall be in
addition to the annual fee called for by subsection H of
Section 6 of this Act);
(r) Failure to file timely any document or
information required under Section 6 of this Act;
(s) Examining an application to register investment
fund shares under subsection B of Section 7 of this Act;
(t) Examining an amended or supplemental prospectus
filed pursuant to the undertaking required by
sub-paragraph (f) of paragraph (2) of subsection B of
Section 7 of this Act;
(u) Registering or renewing registration of
investment fund shares under Section 7 of this Act;
(v) Amending a registration of investment fund
shares pursuant to subsection D of Section 7 of this Act
to register an additional class or classes of investment
fund shares;
(w) Failure to file timely an application for
renewal under paragraph (l) of subsection G of Section 7
of this Act;
(x) Examining an application for renewal of
registration of investment fund shares under paragraph
(2) of subsection G of Section 7 of this Act;
(y) Failure to file timely any document or
information required under Section 7 of this Act;
(z) Filing an application for registration or
re-registration of a dealer or limited Canadian dealer
under Section 8 of this Act for each office in this
State;
(aa) In connection with an application for the
registration or re-registration of a salesperson under
Section 8 or this Act, for the following purposes:
(i) filing an application; and
(ii) a Securities Audit and Enforcement Fund
fee; and
(iii) a notification filing of federal covered
investment advisers.
(bb) In connection with an application for the
registration or re-registration of an investment adviser
under Section 8 of this Act;, for the following purposes:
(i) filing an application;
(ii) for reporting investment adviser
representatives; and
(iii) a fee for each office in this State;
(cc) Failure to file timely any document or
information required under Section 8 of this Act;
(dd) Filing a consent to service of process under
Section 10 of this Act;
(ee) Issuing a certificate pursuant to subsection B
of Section 15 of this Act;
(ff) Issuing a certified copy pursuant to
subsection C of Section 15 of this Act;
(gg) Issuing a non-binding statement pursuant to
Section 15a of this Act.
(hh) Filings by Notification under Section 2a;
(ii) Notification filing of federal Regulation D,
Section 506 offering under the Federal 1933 Act;
(jj) Notification filing of securities and
closed-end investment company securities;
(kk) Notification filing of face amount certificate
contracts;
(ll) Notification filing of open-end investment
company securities;
(mm) Filing a report pursuant to subsection D of
Section 4 of this Act;
(nn) In connection with the filing of an
application for registration or re-registration of an
investment adviser representative under subsection D of
Section 8 of this Act;
(2) The Secretary of State may, by rule or regulation,
raise or lower any fee imposed by, and which he or she is
authorized by law to collect under, this Act.
(Source: P.A. 87-463.)
(815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)
Sec. 12. Violation. It shall be a violation of the
provisions of this Act for any person:
A. To offer or sell any security except in accordance
with the provisions of this Act.
B. To deliver to a purchaser any security required to be
registered under Section 5, Section 6 or Section 7 hereof
unless accompanied or preceded by a prospectus that meets the
requirements of the pertinent subsection of Section 5 or of
Section 6 or of Section 7.
C. To act as a dealer, salesperson or investment adviser
unless registered as such, where such registration is
required, under the provisions of this Act.
D. To fail to file with the Secretary of State any
application, report or document required to be filed under
the provisions of this Act or any rule or regulation made by
the Secretary of State pursuant to this Act or to fail to
comply with the terms of any order of the Secretary of State
issued pursuant to Section 11 hereof.
E. To make, or cause to be made, (1) in any application,
report or document filed under this Act or any rule or
regulation made by the Secretary of State pursuant to this
Act, any statement which was false or misleading with respect
to any material fact or (2) any statement to the effect that
a security (other than a security issued by the State of
Illinois) has been in any way endorsed or approved by the
Secretary of State or the State of Illinois.
F. To engage in any transaction, practice or course of
business in connection with the sale or purchase of
securities which works or tends to work a fraud or deceit
upon the purchaser or seller thereof.
G. To obtain money or property through the sale of
securities by means of any untrue statement of a material
fact or any omission to state a material fact necessary in
order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
H. To sign or circulate any statement, prospectus, or
other paper or document required by any provision of this Act
knowing or having reasonable grounds to know any material
representation therein contained to be false or untrue.
I. To employ any device, scheme or artifice to defraud
in connection with the sale or purchase of any security,
directly or indirectly.
J. When acting as an investment adviser, investment
adviser representative, or federal covered investment
adviser, by any means or instrumentality, directly or
indirectly:
(1) To employ any device, scheme or artifice to
defraud any client or prospective client;
(2) To engage in any transaction, practice, or
course of business which operates as a fraud or deceit
upon any client or prospective client; or
(3) To engage in any act, practice, or course of
business which is fraudulent, deceptive or manipulative.
The Secretary of State shall for the purposes of this
paragraph (3), by rules and regulations, define and
prescribe means reasonably designed to prevent such acts,
practices, and courses of business as are fraudulent,
deceptive, or manipulative.
K. When offering or selling any mineral investment
contract or mineral deferred delivery contract:
(1) To employ any device, scheme, or artifice to
defraud any customer, prospective customer, or offeree;
(2) To engage in any transaction, practice, or
course of business that operates as a fraud or deceit
upon any customer, prospective customer, or offeree; or
(3) To engage in any act, practice, or course of
business that is fraudulent, deceptive, or manipulative.
The Secretary of State shall for the purposes of this
paragraph (3), by rules and regulations, define and
prescribe means reasonably designed to prevent acts,
practices, and courses of business as are fraudulent,
deceptive, or manipulative.
(Source: P.A. 87-463.)
(815 ILCS 5/13) (from Ch. 121 1/2, par. 137.13)
Sec. 13. Private and other civil remedies; securities.
A. Every sale of a security made in violation of the
provisions of this Act shall be voidable at the election of
the purchaser exercised as provided in subsection B of this
Section; and the issuer, controlling person, underwriter,
dealer or other person by or on behalf of whom said sale was
made, and each underwriter, dealer or salesperson who shall
have participated or aided in any way in making the sale, and
in case the issuer, controlling person, underwriter or dealer
is a corporation or unincorporated association or
organization, each of its officers and directors (or persons
performing similar functions) who shall have participated or
aided in making the sale, shall be jointly and severally
liable to the purchaser as follows:
(1) for the full amount paid, together with
interest from the date of payment for the securities sold
at the rate of the interest or dividend stipulated in the
securities sold (or if no rate is stipulated, then at the
rate of 10% per annum) less any income or other amounts
received by the purchaser on the securities, upon offer
to tender to the seller or tender into court of the
securities sold or, where the securities were not
received, of any contract made in respect of the sale; or
(2) if the purchaser no longer owns the securities,
for the amounts set forth in clause (1) of this
subsection A less any amounts received by the purchaser
for or on account of the disposition of the securities.
If the purchaser shall prevail in any action brought to
enforce any of the remedies provided in this subsection, the
court shall assess costs together with the reasonable fees
and expenses of the purchaser's attorney against the
defendant. Any provision of this subsection A to the contrary
notwithstanding, the civil remedies provided in this
subsection A shall not be available against any person by
reason of the failure to file with the Secretary of State, or
on account of the content of, any report of sale provided for
in subsection G or P of Section 4, paragraph (2) of
subsection D of Sections 5 and 6, or paragraph (2) of
subsection F of Section 7 of this Act.
B. Notice of any election provided for in subsection A
of this Section shall be given by the purchaser within 6
months after the purchaser shall have knowledge that the sale
of the securities to him or her is voidable, to each person
from whom recovery will be sought, by registered mail or
certified mail, return receipt requested, addressed to the
person to be notified at his or her last known address with
proper postage affixed, or by personal service.
C. No purchaser shall have any right or remedy under
this Section who shall fail, within 15 days from the date of
receipt thereof, to accept an offer to repurchase the
securities purchased by him or her for a price equal to the
full amount paid therefor plus interest thereon and less any
income thereon as set forth in subsection A of this Section.
Every offer of repurchase provided for in this subsection
shall be in writing, shall be delivered to the purchaser or
sent by registered mail or certified mail, return receipt
requested, addressed to the purchaser at his or her last
known address, and shall offer to repurchase the securities
sold for a price equal to the full amount paid therefor plus
interest thereon and less any income thereon as set forth in
subsection A of this Section. Such offer shall continue in
force for 15 days from the date on which it was received by
the purchaser, shall advise the purchaser of his or her
rights and the period of time limited for acceptance thereof,
and shall contain such further information, if any, as the
Secretary of State may prescribe. Any agreement not to
accept or refusing or waiving any such offer made during or
prior to said 15 days shall be void.
D. No action shall be brought for relief under this
Section or upon or because of any of the matters for which
relief is granted by this Section after 3 years from the date
of sale; provided, that if the party bringing the action
neither knew nor in the exercise of reasonable diligence
should have known of any alleged violation of subsection E,
F, G, H, I or J of Section 12 of this Act which is the basis
for the action, the 3 year period provided herein shall begin
to run upon the earlier of:
(1) the date upon which the party bringing the
action has actual knowledge of the alleged violation of
this Act; or
(2) the date upon which the party bringing the
action has notice of facts which in the exercise of
reasonable diligence would lead to actual knowledge of
the alleged violation of this Act; but in no event shall
the period of limitation so extended be more than 2
years beyond the expiration of the 3 year period
otherwise applicable.
E. The term purchaser as used in this Section shall
include the personal representative or representatives of the
purchaser.
F. Anything in this Act to the contrary notwithstanding
and in addition to all other remedies, the Secretary of State
through the Office of the Attorney General may bring an
action in any circuit court of the State of Illinois in the
name and on behalf of the State of Illinois against any
person or persons participating in or about to participate in
a violation of this Act to enjoin those persons who are
continuing or doing any act in violation of this Act or to
enforce compliance with this Act. Upon a proper showing the
court may grant a permanent or preliminary injunction or
temporary restraining order without bond, and may order the
defendant to make an offer of rescission of any sales or
purchases of securities determined by the court to be
unlawful under this Act. The court shall further have
jurisdiction and authority, in addition to the other
penalties and remedies in this Act provided, to act or
appoint another person as a receiver, conservator, ancillary
receiver or ancillary conservator for the defendant or the
defendant's assets located in this State and may assess costs
against the defendant for the use of the State.
G. (1) Whenever any person has engaged or is about to
engage in any act or practice constituting a violation of
this Act, any party in interest may bring an action in the
circuit court of the county in which the party in interest
resides, or where the person has his, her or its principal
office or registered office or where any part of the
transaction has or will take place, to enjoin that person
from continuing or doing any act in violation of or to
enforce compliance with this Act. Upon a proper showing, the
court shall grant a permanent or preliminary injunction or
temporary restraining order or rescission of any sales or
purchases of securities determined to be unlawful under this
Act, and may assess costs of the proceedings against the
defendant.
(2) A copy of the complaint shall be served upon the
Secretary of State within one business day of filing in the
form and manner prescribed by the Secretary of State by rule
or regulation; provided, that the failure to comply with this
provision shall not invalidate the action which is the
subject of the complaint.
H. Any provision of this Section 13 to the contrary
notwithstanding, neither the civil remedies provided in
subsection A of this Section 13 nor the remedies of
rescission and appointment of a receiver, conservator,
ancillary receiver or ancillary conservator provided in
subsection I of Section 11 of this Act and in subsections F
and G of this Section 13 of this Act nor the remedies of
restitution, damages or disgorgement of profits provided in
subsection I of Section 11 of this Act shall be available
against any person by reason of the failure to file with the
Secretary of State, or on account of the contents of, any
notice filing under Section 2a of this Act or subsection C-5
of Section 8 of this Act or any report of sale provided for
in subsection G or P of Section 4, paragraph (2) of
subsection D of Sections 5 and 6, or paragraph (2) of
subsection F of Section 7 of this Act.
(Source: P.A. 89-209, eff. 1-1-96; 89-626, eff. 8-9-96.)
Section 10. The Illinois Loan Brokers Act of 1995 is
amended by changing Sections 15-15, 15-30, 15-35, 15-40,
15-45, 15-55, 15-60, and 15-80, and by adding Sections
15-5.03, 15-30.5, and 15-100 as follows:
(815 ILCS 175/15-5.03 new)
Sec. 15-5.03. Borrower. "Borrower" means any person who
has signed an agreement with a loan broker that provides for
the services described in Section 15-5.15, for compensation.
(815 ILCS 175/15-15)
Sec. 15-15. Application for registration, contents,
bond, issuance, effective date, and consent to Secretary of
State as process agent.
(a) In order to be registered under this Act a loan
broker shall file an application for registration with the
Secretary of State. The application for registration shall
contain:
(1) The disclosure document required under
subsection (b) of Section 15-30 of this Act and the form
of disclosure statement proposed to be used under item
(1) of subsection (b) of Section 15-30 of this Act.
(2) Consent to service of process under subsection
(e) of this Section;
(3) Evidence of the bond required in subsection (b)
of this Section;
(4) A fee in the amount as specified in subsection
(a) of Section 15-25 of this Act, and shall not be
returnable in any event.
(b) A loan broker who engages in any loan brokerage
transactions where the loan is subject to the
Truth-in-Lending Act must maintain a bond satisfactory to the
Secretary of State in the amount of $25,000, which shall be
in favor of the State.
(c) Whenever the provisions of this Law have been
complied with, the Secretary of State shall issue a
certificate of registration to the applicant, authorizing the
applicant to engage in the business of loan brokering.
(d) An application for registration becomes effective 30
days after it is filed, unless a certificate an order of the
Secretary of State establishes an earlier effective date.
Every registration is effective until January 1 of the year
after it goes into effect.
(e) Every applicant for registration shall file with the
Secretary of State, in such form as the Secretary of State
may prescribe by rule or regulation, an irrevocable consent
appointing the Secretary of State to be the applicant's agent
to receive service of any lawful process in any noncriminal
suit, action or proceeding against the applicant arising from
the violation of any provision of this Act.
(f) An application shall be considered filed when all
required documentation and fees are received by the Office of
the Secretary of State.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-30)
Sec. 15-30. Disclosure document to be provided by loan
broker.
(a) At least 7 days before the time any person signs a
contract for the services of a loan broker, or at the time 7
days before the loan broker receives any consideration upon
the contract, whichever occurs first, the loan broker must
provide to the contracting person a written disclosure
document that meets the requirements set forth in subsection
(b) of this Section.
(b) A written disclosure statement shall contain the
following information:
(1) A disclosure statement which shall be the cover
sheet and shall be entitled in at least 10-point boldface
capital letters "DISCLOSURES REQUIRED BY LAW". Under
this title shall appear the statement in at least
10-point type that "THE SECRETARY OF STATE HAS NOT
REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE OR
SPONSOR ANY LOAN BROKERAGE CONTRACT. THE INFORMATION
CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE
SECRETARY OF STATE. IF YOU HAVE ANY QUESTIONS SEE AN
ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT."
Nothing except the title and the required statement shall
appear on the cover sheet.
(2) The name and form of organization of the
broker, the names under which the broker has done, is
doing, or intends to do business, and the name of any
parent organization or affiliate of the broker.
(3) The names, addresses and titles of the broker's
officers, directors, trustees, general partners, general
managers, principal executives and any other person
performing similar duties.
(4) The length of time the broker has conducted
business as a loan broker.
(5) A full and detailed description of the actual
services that the loan broker undertakes to perform for
the prospective borrower.
(6) A specific statement of the circumstances under
which the broker will be entitled to obtain or retain
consideration from the party with whom the broker
contracts.
(7) Any other information the Secretary of State
may require by rule or regulation.
(b-5) The information in subdivisions b(5) and b(6) of
this Section need not be set out on the disclosure document
if the loan broker's contract is provided with the disclosure
document.
(c) A loan broker shall amend the disclosure document
required by subsection (b) of this Section whenever necessary
to prevent it from containing any false or misleading
statement of a material fact and shall deliver a copy of the
amended disclosure document to the Secretary of State on or
before the date of the amendment.
(d) A loan broker shall deliver to any person who
proposes to become obligated for a loan an estimated
disclosure document if the creditor is would be required to
deliver to the person a disclosure document under the
Truth-in-Lending Law, 15 U.S.C. 1601-1667e, for the
transaction. The estimated disclosure document shall:
(1) Be delivered to the person before the person
becomes contractually obligated on the loan; or
(2) Be delivered or placed in the mail to the
person not later than 3 business days after the person
enters into an agreement with the loan broker whichever
occurs first. The estimated disclosure document must
contain all the information and be in the form required
by the Truth-in-Lending Law, 15 U.S.C. 1601-1667e, and
regulations under that Law. However, the annual
percentage rate, finance charge, total of payments and
other matters required under the Truth-in-Lending Law, 15
U.S.C. 1601-1667e, shall be adjusted to reflect the
amount of all fees and charges of the loan broker that
the creditor could exclude from an estimated disclosure
document. The estimated disclosure document must state
at the top in at least 10 point type: "THE FOLLOWING IS
AN ESTIMATED DISCLOSURE DOCUMENT SHOWING YOUR LOAN
TRANSACTION AS IF THE FEES AND CHARGES YOU ARE SCHEDULED
TO PAY US WERE CHARGED TO YOU DIRECTLY BY THE CREDITOR."
After the estimated disclosure document is delivered to
any person, the loan broker shall deliver to the person
an additional statement redisclosing all items if the
actual annual percentage rate will vary from the annual
percentage rate contained in the original estimated
disclosure document by more than 0.125%. Any required
additional disclosure document shall be delivered or
placed in the mail before consummation of the loan or no
later than 3 days from when the information that requires
redisclosure becomes available, whichever occurs first.
(e) If none of the exemptions in Section 10-30.5 apply,
then for a period of 7 days after the time the borrower signs
a contract for the services, the borrower shall have the
right to rescind the contract for services with the loan
broker and receive all fees actually paid thereon; provided,
however, that the client who has rescinded the contract may
not use or disclose any confidential or non-public
information provided to the client by the loan broker.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-30.5 new)
Sec. 15-30.5. Exemption from disclosure requirement.
The disclosure requirement of Section 15-30 shall not apply
where the borrower to be represented by the loan broker:
(a) Is a natural person who has, or is reasonably
believed by the loan broker relying upon this Section to
have, a net worth or joint net worth with that person's
spouse in excess of $1,000,000 at the time of the execution
of the loan broker agreement;
(b) Is a natural person who has, or is reasonably
believed by the loan broker relying upon this Section to
have, an income or joint income with that person's spouse in
excess of $200,000 in the most recent applicable fiscal year;
(c) Is a person who is not a natural person who has, or
is reasonably believed by the loan broker relying upon this
Section to have, total assets having a value of $1,000,000
and has been in existence for at least nine months and was
not formed for the purposes of the transaction;
(d) Is a person who is not a natural person who has, or
is reasonably believed by the loan broker relying upon this
Section to have, gross revenue in excess of $200,000 in the
most recent applicable fiscal year and has been in existence
for at least nine months and was not formed for the purposes
of this transaction;
(e) Is a person who is not a natural person in which at
least 90% of the equity interest is owned, or is reasonably
believed by the loan broker relying upon this Section to be
owned, by persons who meet any of the tests set forth in this
subsection; or
(f) Has had an attorney review the loan broker's
contract.
A loan broker may rely upon a statement signed by the
borrower that such borrower is any of the categories
enumerated above.
(815 ILCS 175/15-35)
Sec. 15-35. Contracts required to be in writing;
retention of copy by borrowing party. To be enforceable,
every contract for the services of a loan broker shall be in
writing and signed by all contracting parties. The borrowing
party and loan broker shall retain a copy of the signed
contract at the time it is signed. The loan broker shall
retain a copy of the contract for a period of 6 years.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-40)
Sec. 15-40. Denial, suspension or revocation of
registration; orders and hearing.
(a) The Secretary of State may deny, suspend or revoke
the registration of a loan broker if the loan broker:
(1) Fails to maintain the bond required under
subsection (b) of Section 15-15 of this Act.
(2) Is insolvent.
(3) Has violated any provision of this Act.
(4) Has filed with the Secretary of State any
document or statement containing any false representation
of a material fact or omitting to state a material fact.
(5) Has been convicted, within 10 years before the
date of the application, renewal or review, of any crime
involving fraud or deceit.
(b) The Secretary of State may not enter a final order
denying, suspending or revoking the registration of a loan
broker without prior notice to all interested parties,
opportunity for a hearing and written findings of fact and
conclusions of law. The Secretary of State may by summary
order deny, suspend or revoke a registration pending final
determination of any proceeding under this Section. Upon the
entry of a summary order, the Secretary of State shall
promptly notify all interested parties that it has been
entered, of the reasons for the summary order and, that upon
receipt by the Secretary of State of a written request from a
party, the matter will be set for hearing which shall be
conducted in accordance with the provisions of the Illinois
Administrative Procedure Act. If no hearing is requested
within 30 days of the entry of the order and none is ordered
by the Secretary of State, the order remains in effect until
it is modified vacated, or superseded by a final order. A
final order may be entered by the Secretary of State against
any party who fails to request a hearing within 30 days of
the entry of the summary order or vacated by the Secretary of
State. If a hearing is requested or ordered, the Secretary
of State, after notice of the hearing has been given to all
interested persons and the hearing has been held, may modify
or vacate the order, or extend it until final determination,
or issue a final order.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-45)
Sec. 15-45. Powers of Secretary of State; privilege
against self-incrimination; admissibility into evidence.
(a) The Secretary of State may do the following:
(1) Adopt rules and regulations to implement this
Act.
(2) Make investigations and examinations:
(A) In connection with any application for
registration of any loan broker or any registration
already granted; or
(B) Whenever it appears to the Secretary of
State, upon the basis of a complaint or information,
that reasonable grounds exist for the belief that an
investigation or examination is necessary or
advisable for the more complete protection of the
interests of the public.
(3) Charge as costs of investigation or examination
all reasonable expenses, including a per diem prorated
upon the salary of any employee and actual traveling and
hotel expenses. All reasonable expenses are to be paid
by the party or parties under investigation or
examination.
(4) Issue notices and orders, including cease and
desist notices and orders, after making an investigation
or examination under item (2) of subsection (a) of this
Section. The Secretary of State may also bring an action
to prohibit a person from violating this Act. The
Secretary of State shall notify the person that an order
or notice has been issued, the reasons for it and that a
hearing will be set in accordance with the provisions of
the Illinois Administrative Procedure Act after the
Secretary of State receives a written request from the
person requesting a hearing.
(5) Sign all orders, official certifications,
documents or papers issued under this Law or delegate the
authority to sign any of those items to his or her
designee.
(6) Hold and conduct hearings.
(7) Hear evidence.
(8) Conduct inquiries with or without hearings.
Inquiries shall include oral and written requests for
information. A failure to respond to a written request
for information may be deemed a violation of this Act
and the Secretary of State may issue notices and orders,
including cease and desist notices and orders, against
the violators.
(9) Receive reports of investigators or other
officers or employees of the State of Illinois or any
municipal corporation or governmental subdivision within
the State.
(10) Administer oaths or cause them to be
administered.
(11) Subpoena witnesses and compel them to attend
and testify.
(12) Compel the production of books, records and
other documents.
(13) Order depositions to be taken of any witness
residing within or without the State. The depositions
shall be taken in the manner prescribed by law for
depositions in civil actions and made returnable to the
Secretary of State.
(b) If any person refuses to obey a subpoena issued
under this Act, the Secretary of State may make application
to any court of competent jurisdiction to order the person to
appear before the Secretary of State and produce documentary
evidence or give evidence as directed in the subpoena. The
failure to obey the order of the court shall be subject to
punishment by the court as contempt of court.
(c) No person shall be excused from complying with a
subpoena on the ground that the testimony or evidence
required may tend to incriminate the person or subject the
person to a penalty or forfeiture. No individual may be
prosecuted or subject to any penalty or forfeiture for or on
account of any transaction, matter or thing which the
individual is compelled to testify or produce evidence, after
claiming the privilege against self-incrimination. However,
the individual so testifying shall not be exempt from
prosecution and punishment for perjury committed in so
testifying.
(d) In any prosecution, action, suit or proceeding based
upon or arising out of this Act, the Secretary of State may
sign a certificate showing compliance or non-compliance with
this Act by any loan broker. This shall constitute prima
facie evidence of compliance or non-compliance with this Act
and shall be admissible in evidence in any court.
(e) Whenever it shall appear to the Secretary of State
that any person is engaged or about to engage in any acts or
practices which constitute or will constitute a violation of
this Act, or of any rule or regulation prescribed under
authority of this Act, the Secretary of State may at his or
her discretion, through the Attorney General:
(1) File a complaint and apply for a temporary
restraining order without notice, and upon a proper
showing the court may enter a temporary restraining order
without a bond, to enforce this Act.
(2) File a complaint and apply for a preliminary or
permanent injunction, and, after notice and hearing and
upon a proper showing, the court may grant a preliminary
or permanent injunction and may order the defendant to
make an offer of rescission with respect to any contract
for loan brokerage services determined by the court to be
unlawful under this Act.
(f) The court shall further have jurisdiction and
authority, in addition to the penalties and other remedies in
this Act provided, to enter an order for the appointment of
the court or a person as a receiver, conservator, ancillary
receiver or ancillary conservator for the defendant or the
defendant's assets located in this State, or to require
restitution, damages or disgorgement of profits on behalf of
the person or persons injured by the act or practice
constituting the subject matter of the action, and may assess
costs and attorneys fees against the defendant for the use of
the State.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-55)
Sec. 15-55. Violations; administrative fines;
enforcement.
(a) If the Secretary of State determines, after notice
and opportunity for a hearing, that a person has violated
this Act, the Secretary of State may in addition to all other
remedies, impose an administrative fine upon the person in an
amount not to exceed $10,000 for each violation.
(b) The Secretary of State may bring an action in the
circuit court of Sangamon or Cook county to enforce payment
of fines imposed under this Section.
(c) If the Secretary of State shall find that any person
has violated any provision of this Act, the Secretary of
State may, by written order temporarily or permanently
prohibit or suspend such person from acting as a loan broker.
(d) If the Secretary of State shall find that any person
is acting or has acted as a loan broker as defined in Section
15-5.15 15-5.10 of this Act, without prior thereto or at the
time thereof having complied with the registration
requirements of this Act, the Secretary of State may by
written order prohibit such person from acting as a loan
broker in this State.
(e) Anything herein contained to the contrary
notwithstanding, the Secretary of State may temporarily
prohibit or suspend, for a maximum period of 90 days, by an
order effective immediately, any individual or entity acting
as a loan broker or engaging in the registration of a loan
broker or the business of providing loan brokerage services,
without notice and prior hearing, if the Secretary of State
shall in his or her opinion, based upon credible evidence,
deems it necessary to prevent an imminent violation of this
Act or to prevent losses to clients which the Secretary of
State reasonably believes will occur as a result of a prior
violation of this Act. Immediately after taking action
without such notice and hearing, the Secretary of State shall
deliver a copy of the temporary order to the respondent named
therein by personal service or registered mail or certified
mail, return receipt requested. The temporary order shall
set forth the grounds for the action and shall advise that
the respondent may request a hearing to be held as soon as
reasonably practicable, that the request for a hearing will
not stop the effectiveness of the temporary order and that
respondent's failure to request a hearing within 30 days
after the date of the entry of the temporary order, shall
constitute an admission of any facts alleged therein and
shall constitute sufficient basis to make the temporary order
final.
(f) The Secretary of State may issue a temporary order
suspending or delaying the effectiveness of any registration
of a loan broker under this Act subsequent to and upon the
basis of the issuance of any stop, suspension or similar
order by any agency of the United States regulating loan
brokers or any state or federal courts with respect to the
person who is the subject of the registration under this Act,
and such order shall become effective as of the date and time
of effectiveness of the agency or court order and shall be
vacated automatically at such time as the order of the agency
or court order is no longer in effect.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-60)
Sec. 15-60. Violations; liability of loan broker to
damaged parties; rights of prospective borrower. A person
who violates this Act, in connection with a contract for the
services of a loan broker, is liable to any person damaged by
the violation, for the amount of the actual damages suffered,
interest at the legal rate, and attorney fees. If a loan
broker violates any provision of this Act, in connection
with a contract for loan brokering services, the contract is
void, and the prospective borrower is entitled to receive
from the loan broker all sums paid to the loan broker, with
interest and any attorney's fee required to enforce this
Section. Any provision of this Section to the contrary
notwithstanding, the civil remedies of this Section shall not
be available against any person by reason of failure to
comply with the requirements of Section 15-75 of this Act.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 175/15-80)
Sec. 15-80. Persons exempt from registration and other
duties; burden of proof thereof.
(a) The following persons are exempt from the
registration and bonding requirements of this Act:
(1) Any attorney while engaging in the practice of
law.
(2) Any certified public accountant licensed to
practice in Illinois, while engaged in practice as a
certified public accountant and whose service in relation
to procurement of a loan is incidental to his or her
practice.
(3) Any person licensed to engage in business as a
real estate broker or salesperson in Illinois while
rendering services in the ordinary course of a
transaction in which a license as a real estate broker or
salesperson is required.
(4) Any dealer, salesperson or investment adviser
registered under the Illinois Securities Law of 1953, or
an investment advisor, representative, or any person who
is regularly engaged in the business of offering or
selling securities in a transaction exempted under
subsection C, H, M, R, Q, or S of Section 4 of the
Illinois Securities Law of 1953 or subsection G of
Section 4 of the Illinois Securities Law of 1953 provided
that such person is registered under the federal
securities law.
(4.1) An associated person described in subdivision
(h)(2) of Section 15 of the Federal 1934 Act.
(4.2) An investment adviser registered pursuant to
Section 203 of the Federal 1940 Investment Advisors Act.
(4.3) A person described in subdivision (a)(11) of
Section 202 of the Federal 1940 Investment Advisors Act.
(5) Any person whose fee is wholly contingent on
the successful procurement of a loan from a third party
and to whom no fee, other than a bona fide third party
fee, is paid before the procurement.
(6) Any person who is a creditor, or proposed to be
a creditor, for any loan.
(7) (Blank). Any person authorized to conduct
business under the Residential Mortgage License Act of
1987.
(8) Any person regulated by the Department of
Financial Institutions or the Office of Banks and Real
Estate, or any insurance producer or company authorized
to do business in this State, any dealer, salesperson or
investment adviser registered under the Illinois
Securities Law of 1953, or any investment adviser
representative, or any person who is regularly engaged in
the business of offering or selling securities in a
transaction exempted under subsection C, H, M, R, Q, or S
of Section 4 of the Illinois Securities Law of 1953 or
subsection G of Section 4 of the Illinois Securities Law
of 1953 provided that such person is registered under the
federal securities law.
(b) As used in this Section, "bona fide third party fee"
includes fees for:
(1) Credit reports, appraisals and investigations.
(2) If the loan is to be secured by real property,
title examinations, an abstract of title, title
insurance, a property survey and similar purposes.
(c) As used in this Section, "successful procurement of
a loan" means that a binding commitment from a creditor to
advance money has been received and accepted by the borrower.
(d) The burden of proof of any exemption provided in
this Act shall be on the party claiming the exemption.
(Source: P.A. 89-209, eff. 1-1-96; 89-508, eff. 7-3-96.)
(815 ILCS 175/15-100 new)
Sec. 15-100. Immunity for official acts. In no case
shall the Secretary of State or any of his or her employees
or agents, in the administration of this Act, incur any
official or personal liability while acting in accordance
with their official duties or authority.
Section 15. The Illinois Business Brokers Act of 1995 is
amended by changing Sections 10-5.10, 10-10, 10-25, 10-30,
10-35, 10-40, 10-45, 10-55, 10-60, 10-75, 10-80, and 10-85,
and by adding Sections 10-5.16, 10-5.17, 10-5.18, 10-5.25,
10-5.30, 10-30.5, 10-95, 10-100, 10-105, 10-110, and 10-115
as follows:
(815 ILCS 307/10-5.10)
Sec. 10-5.10. Business Broker. "Business Broker" means
any person who is required to register under Section 10-10 of
this Act and, in return for a fee, commission, or other
compensation:
(1) promises to procure a business for any person
or assists any person in procuring a business from any
third person;
(2) negotiates, offers, attempts or agrees to
negotiate the sale, exchange, or purchase of a business;
(3) buys, sells, offers to buy or sell or otherwise
deals in options on businesses;
(4) advertises or represents himself as a business
broker;
(5) assists or directs in the procuring of
prospects intended to result in the purchase, sale, or
exchange of a business;
(6) offers, promotes, lists or agrees to offer,
promote, or list a business for sale, lease, or exchange.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-5.16 new)
Sec. 10-5.16. Client. "Client" means any person who has
signed an agreement with a business broker that provides for
the services described in Section 10-5.10 for compensation.
(815 ILCS 307/10-5.17 new)
Sec. 10-5.17. Insolvency. "Insolvency" means the
rendering of a business broker financially unable to perform
any contractual obligations of its business brokering duties.
(815 ILCS 307/10-5.18 new)
Sec. 10-5.18. Material. "Material", when used to qualify
a requirement for the furnishing of information as to any
subject, limits the information required to those matters as
to which there is a substantial likelihood that a reasonable
person would consider important.
(815 ILCS 307/10-5.25 new)
Sec. 10-5.25. Purchaser. "Purchaser" means a person who
enters into a contract or agreement for the acquisition of a
business or a person to whom an offer to sell a business is
directed.
(815 ILCS 307/10-5.30 new)
Sec. 10-5.30. Seller. "Seller" means a person who sells
or offers to sell a business or any agent who directly or
indirectly acts on behalf of such person, except that a
person acting as a business broker is neither a seller nor
purchaser.
(815 ILCS 307/10-10)
Sec. 10-10. Registration of business brokers. Every
person engaging in the business of business brokering shall
be registered with the Office of the Secretary of State
pursuant to the provisions of this Act. Persons employed,
contracted by, or working on behalf of other persons who are
registered under this Act need not register separately;
provided that such non-registered employed or contracted
persons working for a business broker have been identified in
the registration submitted and proper fees, if any, are paid.
(a) In order to be registered under this Act, a business
broker shall file an application for registration with the
Secretary of State. The application for registration shall
contain, to the extent reasonably available to the applicant:
(1) The disclosure document required under
subsection (b) of Section 10-30 of this Act and the form
of disclosure statement proposed to be used under
subsection (b)(1) of Section 10-30 of this Act.
(2) Consent to service of process under subsection
(d) of this Section;
(3) A fee in the amount as provided for specified
in subsection (a) of Section 10-25 of this Act, and shall
not be returnable in any event; and
(4) Any other information deemed necessary by the
Secretary of State as prescribed by rule or regulation.
(b) Whenever the provisions of this Act have been
complied with, the Secretary of State shall issue a
certificate of registration to the applicant, authorizing the
applicant to engage in the business of business brokering.
(c) An application for registration becomes effective 30
days after it is filed, unless an order of the Secretary of
State establishes an earlier effective date. Every
registration is effective until January 1 of the year after
it goes into effect.
(d) Every applicant for registration shall file with the
Secretary of State, in such form as the Secretary of State
may prescribe by rule or regulation, an irrevocable consent
appointing the Secretary of State to be the applicant's agent
to receive service of any process in any noncriminal suit,
action, or proceeding against the applicant arising from the
violation of any provision of this Act.
(e) The Secretary of State shall maintain a record,
which shall be open for public inspection, upon which shall
be entered the name and address of each business broker and
all orders of the Secretary of State denying, suspending, or
revoking registration. The Secretary of State may designate
by rule or order any statements, information, or reports
submitted to or filed with him or her pursuant to this Act
which the Secretary of State determines are of a sensitive
nature and therefore should be exempt from public disclosure.
Any statement, information, or reports determined by the
Secretary of State to be of a sensitive nature shall not be
disclosed to the public except upon consent of the person
filing or submitting the statement, information, or reports
or by order of a court or in court proceedings.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-25)
Sec. 10-25. Fees and funds. All fees and funds accruing
for the administration of this Act shall be accounted for by
the Secretary of State and shall be deposited with the State
Treasurer who shall deposit them in the Securities Audit and
Enforcement Fund.
(a) The Secretary of State shall, by rule or regulation,
impose and collect fees necessary for the administration of
this Act, including but not limited to, fees for the
following purposes:
(1) Filing an application pursuant to Section 10-10
of this Act;
(2) Examining an application pursuant to Sections
10-10 and 10-20 of this Act;
(3) Registering a business broker under Section
10-10 of this Act;
(4) Renewing registration of a business broker
pursuant to Section 10-20 of this Act;
(5) Failure to file or file timely any document or
information required under this Act;
(6) Filing a notice of lien pursuant to Section
10-115 of this Act.
(b) The Secretary of State may, by rule or regulation,
raise or lower any fee imposed by, and which he or she is
authorized by law to collect under, this Act.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-30)
Sec. 10-30. Disclosure document to be provided by
business broker.
(a) A business broker must provide a written disclosure
document that meets the requirements set forth in subsection
(b) of this Section to a client at the time or before the
client signs a contract for the services of a business broker
or at the time or before the business broker receives any
consideration upon the contract. Any person who signs a
contract for the services of a business broker shall have 7
days from the date of signing of the contract to rescind the
contract and receive a refund of all payments, if any, made
by that person. At least 7 days before the time any person
signs a contract for the services of a business broker, or 7
days before the business broker receives any consideration
upon the contract, whichever occurs first, the business
broker must provide to the contracting person a written
disclosure document that meets the requirements set forth in
subsection (b) of this Section.
(b) A written disclosure document statement shall
contain the following information:
(1) A disclosure statement which shall be the cover
sheet and shall be entitled, in at least 10-point
boldface capital letters "DISCLOSURES REQUIRED BY LAW".
Under this title shall appear the statement, in at least
10 point type that "THE SECRETARY OF STATE HAS NOT
REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE, OR
SPONSOR ANY BUSINESS BROKERAGE CONTRACT. THE INFORMATION
CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE
SECRETARY OF STATE. IF YOU HAVE ANY QUESTIONS, SEE AN
ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT."
Nothing except the title and the required statement shall
appear on the cover sheet, except that the name of the
business broker, address, telephone number, facsimile
number, and any other information as authorized by the
Secretary of State by rule may appear on the cover sheet.
(2) The name and form of organization of the
business broker, the names under which the business
broker has done or, is doing, or intends to do business,
and the name of any parent organization or affiliate of
the business broker.
(3) The names, addresses, and titles of the
business broker's officers, directors, trustees, general
partners, general managers, principal executives, and any
other person performing similar duties.
(4) A full and detailed description of the actual
services that the business broker undertakes to perform
for the prospective client.
(5) A specific statement of the circumstances under
which the business broker will be entitled to obtain or
retain consideration from the party with whom the
business broker contracts.
(6) Any other information the Secretary of State
may require by rule or regulation.
(c) A business broker shall amend the disclosure
document required by subsection (b) of this Section whenever
necessary to prevent it from containing any false or
misleading statement of a material fact and shall deliver a
copy of the amended disclosure document to the Secretary of
State on or before the date of the amendment.
(d) The information in subdivisions (b)(4) and (b)(5) of
this Section need not be set out on the disclosure document
if the business broker's contract contains the information
required in subdivisions (b)(4) and (b)(5) of this Section
and is provided with the disclosure document.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-30.5 new)
Sec. 10-30.5. Exemptions from disclosure requirements.
Section 10-30 shall not apply if:
(a) the client to be represented by the business broker
is:
(1) a natural person who has, or is reasonably
believed by the business broker relying upon this
Section to have, a net worth or joint net worth with that
person's spouse in excess of $1,000,000 at the time of
the execution of the business broker agreement or
contract;
(2) a natural person who has, or is reasonably
believed by the business broker relying upon this
Section to have, an income or joint income with that
person's spouse in excess of $200,000 in the most recent
fiscal year;
(3) a company, business, or other non-natural
person that has, or is reasonably believed by the
business broker relying upon this Section to have, a
total asset value in excess of $1,000,000 and has been in
existence for at least nine months and was not formed for
the purpose of the subject transaction;
(4) a company, business, or other non-natural
person that has, or is reasonably believed by the
business broker relying upon this Section to have, gross
revenues or gross sales in excess of $200,000 in the most
recent fiscal year and has been in existence for at least
nine months and was not formed for the purposes of the
subject transaction; or
(5) a company, business, or other non-natural
person in which at least 90% of the equity interest is
owned, or is reasonably believed by the business broker
relying upon this Section to be owned, by persons who
meet any of the tests set forth in subdivisions (a)(1),
(a)(2), (a)(3), (a)(4), or (a)(5) of this Section; or
(b) the client to be represented by the business broker
has had an attorney review the business broker's contract for
the client.
(815 ILCS 307/10-35)
Sec. 10-35. Contracts required to be in writing;
retention of copy by client. To be enforceable, every
contract for the services of a business broker shall be in
writing and signed by all contracting parties. The client
shall have the right to retain a copy of the signed contract
for the services of a business broker. The client's copy of
the contract shall be provided to the client when the
contract is signed, if that is reasonably feasible and the
client so requests. Otherwise, the contract shall be mailed
or otherwise sent to the client within one week of execution.
No account number, as referred to in Section 10-75 of this
Act, is required on the client's copy of the contract at the
time it is signed.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-40)
Sec. 10-40. Denial, suspension or revocation of
registration; orders and hearing.
(a) The Secretary of State may deny, suspend or revoke
the registration of a business broker if the business broker:
(1) Is insolvent.
(2) Has violated any provision of this Act.
(3) Has filed with the Secretary of State any
document or statement containing any false representation
of a material fact or omitting to state a material fact.
(4) Has been convicted, within 10 years before the
date of the application, renewal or review, of any crime
involving fraud or deceit.
(5) Has been found by any court or agency, within
10 years before the date of the application, renewal, or
review, to have engaged in any activity involving fraud
or deceit.
(b) The Secretary of State may not enter a final order
denying, suspending, or revoking the registration of a
business broker without prior notice to all interested
parties, opportunity for a hearing and written findings of
fact and conclusions of law. The Secretary of State may by
summary order deny, suspend, or revoke a registration pending
final determination of any proceeding under this Section.
Upon the entry of a summary order, the Secretary of State
shall promptly notify all interested parties that it has been
entered, of the reasons for the summary order and, that upon
receipt by the Secretary of State of a written request from a
party, the matter will be set for hearing which shall be
conducted in accordance with the provisions of the Illinois
Administrative Procedure Act. If no hearing is requested and
none is ordered by the Secretary of State, the order remains
in effect until it is modified or vacated by the Secretary of
State. If a hearing is requested or ordered, the Secretary
of State, after notice of the hearing has been given to all
interested persons and the hearing has been held, may modify
or vacate the order or extend it until final determination.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-45)
Sec. 10-45. Powers of Secretary of State; privilege
against self-incrimination; admissibility into evidence.
(a) The Secretary of State may do the following:
(1) Adopt rules and regulations to implement this
Act.
(2) Conduct investigations and examinations:
(A) In connection with any application for
registration of any business broker or any
registration already granted; or
(B) Whenever it appears to the Secretary of
State, upon the basis of a complaint or information,
that reasonable grounds exist for the belief that an
investigation or examination is necessary or
advisable for the more complete protection of the
interests of the public.
(3) Charge as costs of investigation or examination
all reasonable expenses, including a per diem prorated
upon the salary of any employee and actual traveling and
hotel expenses. All reasonable expenses are to be paid
by the party or parties under investigation or
examination.
(4) Issue notices and orders, including cease and
desist notices and orders, after making an investigation
or examination under paragraph (2) of subsection (a) of
this Section. The Secretary of State may also bring an
action to prohibit a person from violating this Act. The
Secretary of State shall notify the person that an order
or notice has been issued, the reasons for it and that a
hearing will be set in accordance with the provisions of
the Illinois Administrative Procedure Act after the
Secretary of State receives a written request from the
person requesting a hearing.
(5) Sign all orders, official certifications,
documents or papers issued under this Act or delegate the
authority to sign any of those items to his or her
designee.
(6) Hold and conduct hearings.
(7) Hear evidence.
(8) Conduct inquiries with or without hearings.
(9) Receive reports of investigators or other
officers or employees of the State of Illinois or any
municipal corporation or governmental subdivision within
the State.
(10) Administer oaths or cause them to be
administered.
(11) Subpoena witnesses and compel them to attend
and testify.
(12) Compel the production of books, records and
other documents.
(13) Order depositions to be taken of any witness
residing within or without the State. The depositions
shall be taken in the manner prescribed by law for
depositions in civil actions and made returnable to the
Secretary of State.
(b) If any person refuses to obey a subpoena issued
under this Act, the Secretary of State may make application
to any court of competent jurisdiction to order the person to
appear before the Secretary of State and produce documentary
evidence or give evidence as directed in the subpoena. The
failure to obey the order of the court shall be subject to
punishment by the court as contempt of court.
(c) No person shall be excused from complying with a
subpoena on the ground that the testimony or evidence
required may tend to incriminate the person or subject the
person to a penalty or forfeiture. No individual may be
prosecuted or subject to any penalty or forfeiture for or on
account of any transaction, matter or thing which the
individual is compelled to testify or produce evidence, after
claiming the privilege against self-incrimination. However,
the individual so testifying shall not be exempt from
prosecution and punishment for perjury committed in so
testifying.
(d) In any prosecution, action, suit or proceeding based
upon or arising out of this Act, the Secretary of State may
sign a certificate showing compliance or non-compliance with
this Act by any business broker. This shall constitute prima
facie evidence of compliance or non-compliance with this Act
and shall be admissible in evidence in any court to enforce
this Act.
(e) Whenever it shall appear to the Secretary of State
that any person is engaged or about to engage in any acts or
practices which constitute or will constitute a violation of
this Act, or of any rule or regulation prescribed under
authority of this Act, the Secretary of State may at his or
her discretion, through the Attorney General:
(1) File a complaint and apply for a temporary
restraining order without notice, and upon a proper
showing the court may enter a temporary restraining order
without a bond, to enforce this Act.
(2) File a complaint and apply for a preliminary or
permanent injunction, and, after notice and hearing and
upon a proper showing, the court may grant a preliminary
or permanent injunction and may order the defendant to
make an offer of rescission with respect to any contract
for business brokerage services determined by the court
to be unlawful under this Act.
(f) The court shall further have jurisdiction and
authority, in addition to the penalties and other remedies in
this Act provided, to enter an order for the appointment of
the court or a person as a receiver, conservator, ancillary
receiver or ancillary conservator for the defendant or the
defendant's assets located in this State, or to require
restitution or damages on behalf of the person or persons
injured by the act or practice constituting the subject
matter of the action, and may assess costs against the
defendant for the use of the State.
(g) No provision of this Act imposing liability shall
apply to any act done or omitted in good faith in conformity
with any rule of the Secretary of State under this Act,
notwithstanding that such rule may, after such act or
omission, be amended or rescinded or be determined by
judicial or other authority to be invalid for any reason.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-55)
Sec. 10-55. Violations; administrative fines;
enforcement.
(a) If the Secretary of State determines, after notice
and opportunity for a hearing, that a person has violated
this Act, the Secretary of State may in addition to all other
remedies, impose an administrative fine upon the person in an
amount not to exceed $10,000 for each violation.
(b) The Secretary of State may bring an action in the
circuit court of Sangamon or Cook county to enforce payment
of fines imposed under this Section.
(c) If the Secretary of State shall find that any person
has violated any provision of this Act, the Secretary of
State may, by written order temporarily or permanently
prohibit or suspend such person from acting as a business
broker.
(d) If the Secretary of State shall find, after notice
and opportunity for hearing, that any person is acting or has
acted as a business broker as defined in Section 10-5.10 of
this Act, without prior thereto or at the time thereof having
complied with the registration requirements of this Act, the
Secretary of State may by written order prohibit or suspend
such person from acting as a business broker in this State.
(e) Anything herein contained to the contrary
notwithstanding, the Secretary of State may temporarily
prohibit or suspend, for a maximum period of 90 days, by an
order effective immediately, the registration of a business
broker or the business of providing business brokerage
services, without notice and prior hearing, if the Secretary
of State shall in his or her opinion, based upon credible
evidence, deem it necessary to prevent an imminent violation
of this Act Law or to prevent losses to clients which the
Secretary of State reasonably believes will occur as a result
of a prior violation of this Act. Immediately after taking
action without such notice and hearing, the Secretary of
State shall deliver a copy of the temporary order to the
respondent named therein by personal service or registered
mail or certified mail, return receipt requested. The
temporary order shall set forth the grounds for the action
and shall advise that the respondent may request a hearing as
soon as reasonably practicable, that the request for a
hearing will not stop the effectiveness of the temporary
order and that respondent's failure to request a hearing
within 30 days after the date of the entry of the temporary
order, shall constitute an admission of any facts alleged
therein and shall make the temporary order final. A business
broker whose registration has been suspended pursuant to this
Section may request the Secretary of State permission to
continue to receive payment for any executory contracts at
the time of any suspension and to continue to perform its
obligation thereunder. The decision to grant or deny
permission to receive payment for any executory contracts or
perform any obligation thereunder shall be at the sole
discretion of the Secretary of State and shall not be subject
to review under the Administrative Review Law.
(f) The Secretary of State may issue a temporary order
suspending or delaying the effectiveness of any registration
of a business broker under this Act subsequent to and upon
the basis of the issuance of any stop, suspension or similar
order by any agency of the United States regulating business
brokers or any state or federal courts with respect to the
person who is the subject of the registration under this Act,
and such order shall become effective as of the date and time
of effectiveness of the agency or court order and shall be
vacated automatically at such time as the order of the agency
or court order is no longer in effect.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-60)
Sec. 10-60. Violations; liability of business broker to
damaged parties; rights of prospective client. A person who
commits a material violation of violates this Act, in
connection with a contract for the services of a business
broker, is liable to any client person damaged by the
violation, for the amount of the actual damages suffered, but
not more than the fees actually paid by the client seeking
relief, together with interest at the legal rate, and
attorney fees. If a business broker commits a material
violation of Sections 10-10, 10-20, and 10-30 of this Act
violates any provision of this Act, in connection with a
contract for business brokering services, the contract is
void, and the prospective client is entitled to receive from
the business broker all sums paid to the business broker,
with interest and any attorney's fee required to enforce this
Section.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-75)
Sec. 10-75. Account numbers; retention and maintenance of
records.
(a) Each business broker agreement shall be given an
account number and all instruments executed taken in
connection with that agreement must bear this number, except
as provided in Section 10-35 of this Act. Each business
broker shall keep and maintain the following records or their
equivalent:
(1) A business agreement register that consists of
a chronological listing of all business broker agreements
that have been entered into. For each business broker
agreement the register shall contain the following:
(A) The account number.
(B) The date of the agreement.
(C) The name of the client or any proposed
client.
(D) The amount of any fees charged.
(E) The cost and type of any insurance
required.
(2) A record file for each client or proposed
client shall contain the following:
(A) The name and address of the client or any
proposed client.
(B) A copy of the signed business broker
agreement.
(C) A copy of any other papers or instruments
used in connection with the business broker
agreement and signed by the client or any proposed
client, including a copy of the disclosure document
required by Section 10-30 of this Act, that contains
an acknowledged receipt by the client or any
proposed client.
(D) The amount of the business broker's fee
that the client has paid. If there is an unpaid
balance, the status of any collection efforts.
(3) All receipts from or for the account of clients
or any proposed clients and all disbursements to or for
the account of clients or any proposed clients, recorded
so that the transactions are readily identifiable.
(4) (Blank). A general ledger that shall be posted
at least monthly, and a trial balance sheet and profit
and loss statement prepared within 30 days of the
Secretary of State's request for the information.
(5) A copy of:
(A) All advertisements, pamphlets, circulars,
letters, articles or communications published in any
newspaper, magazine or periodical.
(B) Scripts of any recording, radio or
television announcement.
(C) Any sales kits or literature to be used in
solicitation of clients.
(b) The records listed in subsection (a) of this Section
shall be kept for a period of 6 years in the business
broker's principal office and must be separate or readily
identifiable from the records of any other business that is
conducted in the office of the business broker. After a
period of 2 years, a copy of this information may be retained
on magnetic, digital, or other electronic medium in a form
that may be readily retrieved.
(c) The records listed in subsection (a) of this Section
need not be kept for a client where no fee, expense
reimbursement, retainer, or other charge was incurred and no
transaction was consummated.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-80)
Sec. 10-80. Persons exempt from registration and other
duties under law; burden of proof thereof.
(a) The following persons are exempt from the
requirements of this Act:
(1) Any attorney who is licensed to practice in
this State, while engaged engaging in the practice of law
and whose service in relation to the business broker
transaction is incidental to the attorney's practice.
(2) Any person licensed as a real estate broker or
salesperson under the Illinois Real Estate License Act of
1983 who is primarily engaged in business activities for
which a license is required under that Act and who, on an
incidental basis, acts as a business broker.
(3) Any dealer, salesperson, or investment adviser
registered pursuant to under the Illinois Securities Law
of 1953 or any investment adviser representative, or any
person who is regularly engaged in the business of
offering or selling securities in a transaction exempted
under subsection C, H, M, R, Q, or S of Section 4 of the
Illinois Securities Law of 1953 or subsection G of
Section 4 of the Illinois Securities Law of 1953 provided
that such person is registered pursuant to under the
federal securities law.
(4) An associated person described in subdivision
(h)(2) of Section 15 of the Federal 1934 Act.
(5) An investment adviser registered pursuant to
Section 203 of the Federal 1940 Investment Advisors Act.
(6) A person described in subdivision (a)(11) of
Section 202 of the Federal 1940 Investment Advisors Act.
(7) Any person who is selling a business owned or
operated (in whole or in part) by that person in a one
time transaction.
(b) This Act shall not be deemed to apply in any manner,
directly or indirectly, to: (i) a State bank or national
bank, as those terms are defined in the Illinois Banking Act,
or any subsidiary of a State bank or national bank; (ii) a
bank holding company, as that term is defined in the Illinois
Bank Holding Company Act of 1957, or any subsidiary of a bank
holding company; (iii) a foreign banking corporation, as that
term is defined in the Foreign Banking Office Act, or any
subsidiary of a foreign banking corporation; (iv) a
representative office, as that term is defined in the
Foreign Bank Representative Office Act; (v) a corporate
fiduciary, as that term is defined in the Corporate Fiduciary
Act, or any subsidiary of a corporate fiduciary; (vi) a
savings bank organized under the Savings Bank Act, or a
federal savings bank organized under federal law, or any
subsidiary of a savings bank or federal savings bank; (vii) a
savings bank holding company organized under the Savings Bank
Act, or any subsidiary of a savings bank holding company;
(viii) an association or federal association, as those terms
are defined in the Illinois Savings and Loan Act of 1985, or
any subsidiary of an association or federal association; (ix)
a foreign savings and loan association or foreign savings
bank subject to the Illinois Savings and Loan Act of 1985, or
any subsidiary of a foreign savings and loan association or
foreign savings bank; or (x) a savings and loan association
holding company, as that term is defined in the Illinois
Savings and Loan Act of 1985, or any subsidiary of a savings
and loan association holding company.
(b-1) Persons registered under the Illinois Franchise
Disclosure Act of 1987 (and their employees) are exempt from
the requirements of this Act as to: offers and sales in
connection with franchising activities; or assisting any of
their franchisees in the offer or sale of a franchise by any
such franchisee for the franchisee's own account regardless
of whether the sale is effected by or through the registered
persons.
(b-2) Any certified public accountant licensed to
practice in Illinois, while engaged in the practice as a
certified public accountant and whose service in relation to
the business broker transaction is incidental to his or her
practice, is exempt from the requirements of this Act.
(b-3) Any publisher, or regular employee of such
publisher, of a bona fide newspaper or news magazine of
regular and established paid circulation who, in the routine
course of selling advertising, advertises businesses for sale
and in which no other related services are provided is exempt
from the requirements of this Act.
(c) The burden of proof of any exemption or
classification provided in this Act shall be on the party
claiming the exemption or classification.
(Source: P.A. 89-209, eff. 1-1-96; 89-665, eff. 8-14-96.)
(815 ILCS 307/10-85)
Sec. 10-85. Prohibited acts.
(a) A business broker shall not, in connection with a
contract for the services of a business broker, either
directly or indirectly, do any of the following:
(1) (a) Employ any device, scheme or article to
defraud.
(2) (b) Make any untrue statements of a material
fact or omit to state a material fact necessary in order
to make the statements made, in the light of
circumstances under which they are made, not misleading,
unless the statement is made in reasonable reliance on
information provided by the client.
(3) (c) Engage in any act, practice or course of
business that operates or would operate as a fraud or
deceit upon any person.
(b) A business broker shall not either directly or
indirectly do the following:
(1) Engage in the business of acting as a business
broker without registration under this Act unless exempt
under the Act.
(2) Fail to file with the Secretary of State any
application, report, document, or answer required to be
filed under the provisions of this Act or any rule made
by the Secretary of State pursuant to this Act or fail to
comply with the terms of any order issued pursuant to
this Act or rule or made by the Secretary of State.
(3) Fail to maintain any records as required under
the provisions of this Act or any rule made by Secretary
of State pursuant to this Act.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 307/10-95 new)
Sec. 10-95. Miscellaneous provisions.
(a) The rights and remedies under this Act are in
addition to any other rights or remedies that may exist at
law or equity.
(b) Any condition, stipulation, or provision binding any
client of a business broker to waive compliance with or
relieve a person from any duty or liability imposed by or any
right provided by this Act or any rule or order pursuant to
this Act is void.
(c) If any provision of this Act or its application to
any person or circumstance is held invalid, the invalidity of
that provision or application does not effect other
provisions or applications of this Act that can be given
effect without the invalid provision or application.
(815 ILCS 307/10-100 new)
Sec. 10-100. Immunity for official acts. In no case
shall the Secretary of State, or any of his or her employees
or agents, in the administration of this Act, incur any
official or personal liability while acting in accordance
with their official duties or authority or both.
(815 ILCS 307/10-105 new)
Sec. 10-105. Scope of the Act. This Act shall apply
only when the person engaged or sought to be engaged by the
business broker is domiciled in this State or when the
company or business sought to be sold has its principal place
of business in this State.
(815 ILCS 307/10-110 new)
Sec. 10-110. Previous and ongoing agreements or
contracts and transactions not affected. All business broker
agreements or contracts and transactions between a business
broker and its clients or proposed clients which do not
comply with the Act, if entered into prior to January 1,
1996, shall be deemed to be valid and enforceable,
notwithstanding this Act.
(815 ILCS 307/10-115 new)
Sec. 10-115. Business broker lien.
(a) Any business broker shall have a lien upon the
assets of a business that is the subject of a business
broker's contract and the proceeds from the sale of such
business in the amount that the broker is due.
(b) The lien shall be available to the business broker
named in the instrument signed by the seller or purchaser.
The lien arising under this Act shall be in addition to any
other rights that a business broker may have.
(c) The lien under this Act shall attach upon the
business broker being otherwise entitled to a fee or
commission under a written instrument signed by the seller or
purchaser or the seller or purchaser's duly authorized agent,
as applicable.
(d) When payment to a business broker is due in
installments, a portion of which is due only after the
conveyance or transfer of the business, any claim for lien
for those payments due after the transfer or conveyance may
be filed at any time subsequent to the transfer or conveyance
of the business and prior to the date on which the payment is
due but shall only be effective as a lien against the
business or proceeds to the extent moneys are still owed to
the transferor by the transferee. The lien shall attach as of
the filing of the notice of lien and not relate back to the
date of the written agreement.
(e) If a business broker has a written agreement with a
prospective purchaser or seller, then the lien shall attach
upon the prospective purchaser or seller that is purchasing,
selling, or otherwise accepting a conveyance or transfer of
the business and the filing of a notice of lien by the
business broker in the Office of the Secretary of State
within 90 days after the purchase, sale, or other conveyance
or transfer of the business that is the subject of the
written agreement with the business broker. The lien shall
attach as of the date of the receipt of any consideration by
the seller of the business that is the subject of the written
agreement with the business broker.
(f) The business broker shall, within 10 days after
filing its notice of lien, mail a copy of the notice of lien
to the owner of the business by registered or certified mail,
with return receipt requested, or personally served on the
owner of record or his agent. If the lien is filed within 10
days prior to closing, the business broker is not required to
mail or personally serve a copy of the notice of lien.
Mailing of the copy of the notice of lien is effective if
mailed to the address of the business that is the subject of
the notice of lien, or to such other address as the seller or
purchaser has provided to the business broker in writing and
signed by the seller or purchaser. Mailing of the copy of
the notice of claim for lien is effective when deposited in a
United States mailbox with postage prepaid. The broker's
lien shall be unenforceable if mailing of the copy of the
notice of lien does not occur at the time and in the manner
required by this Act.
(g) A business broker may bring suit to enforce a lien
in the circuit court in the county where the headquarters of
the business being sold is located, where the purchaser
resides (or maintains its headquarters) if the lien is being
filed against the purchaser, or where the seller resides (or
maintains its headquarters) if the lien is filed against the
seller, by filing a complaint and sworn affidavit that the
lien has been filed.
(h) The person claiming a lien shall, within 2 years
after filing the lien, commence proceedings by filing a
complaint. Failure to commence proceedings within 2 years
after filing the lien shall extinguish the lien. No
subsequent notice of lien may be given for the same claim nor
may that claim be asserted in any proceedings under this Act.
(i) A complaint under this Section shall contain a brief
statement of the contract or agreements on which the lien is
founded, the date when the contract or agreement was made, a
description of the services performed, the amount due and
unpaid, a description of the business that is, or the
proceeds from sale of which are, subject to the lien, and
other facts necessary for a full understanding of the rights
of the parties. The plaintiff shall make all interested
parties, of whose interest the plaintiff is notified or has
knowledge, defendants to the action and shall issue summons
and provide service as in other civil actions. When any
defendant resides or has gone out of the State, or on inquiry
cannot be found, or is concealed within this State so that
process cannot be served on that defendant, the plaintiff
shall cause a notice to be given to that defendant, or cause
a copy of the complaint to be served upon that defendant, in
the manner and upon the same conditions as in other civil
actions. Failure of the plaintiff to provide proper summons
or notice shall be grounds for judgment against the plaintiff
with prejudice.
(j) The lien notice shall state the name of the
claimant, the name of the purchaser or seller whose property
or assets are subject to the lien, a description of the
business upon which or upon the proceeds from the sale of
which the lien is being claimed, the amount for which the
lien is claimed, and the registration number of the business
broker. The notice of lien shall recite that the information
contained in the notice is true and accurate to the knowledge
of the signatory. The notice of lien shall be signed by the
business broker or by a person authorized to sign on behalf
of the business broker and shall be verified.
(k) Whenever a claim for lien has been filed with the
Office of the Secretary of State and a condition occurs that
would preclude the business broker from receiving
compensation under the terms of the business broker's written
agreement, the business broker shall provide to the purchaser
of the business, if the lien is filed against the purchaser,
or the seller of the business, if the lien is filed against
the seller, within 10 days following demand by the owner of
record, a written release or satisfaction of the lien.
(l) Upon written demand of the owner, lienee, or other
authorized agent, served on the person claiming the lien
requiring suit to be commenced to enforce the lien or answer
to be filed in a pending suit, a suit shall be commenced or
answer filed within 30 days thereafter, or the lien shall be
extinguished. Service may be by registered or certified
mail, return receipt requested, or by personal service.
(m) If a claim for lien has been filed with the
Secretary of State and is paid, or if there is failure to
institute a suit to enforce the lien within the time provided
by this Act, the business broker shall acknowledge
satisfaction or release of the lien, in writing, on written
demand of the purchaser of the business, if the lien is filed
against the purchaser, or the seller of the business, if the
lien is filed against the seller, within 5 days after payment
or expiration of the time in which to file the lien.
(n) The cost of proceedings asserting or defending a
business broker's claim of lien, including reasonable
attorneys' fees, costs, and prejudgment interests due to the
prevailing party, shall be borne by the nonprevailing party
or parties. When more than one party is responsible for
costs, fees, and prejudgment interest, the costs, fees, and
prejudgment interest shall be equitably apportioned by the
court among those responsible parties.
(o) Prior recorded liens and mortgages shall have
priority over a broker's lien. A prior recorded lien shall
include, without limitation, (i) a valid mechanic's lien
claim that is recorded subsequent to the broker's notice of
lien but which relates back to a date prior to the recording
date of the broker's notice of lien and (ii) prior recorded
liens securing revolving credit and future advances of
construction loans as described in Section 15-1302 of the
Code of Civil Procedure.
Section 20. The Business Opportunity Sales Law of 1995
is amended by changing Sections 5-5.10, 5-15, 5-35, 5-45,
5-55, 5-60, 5-65, 5-70, 5-75, 5-95, 5-115, and 5-130 as
follows:
(815 ILCS 602/5-5.10)
Sec. 5-5.10. Business opportunity.
(a) "Business opportunity" means a contract or
agreement, between a seller and purchaser, express or
implied, orally or in writing, wherein it is agreed that the
seller or a person recommended by the seller shall provide to
the purchaser any product, equipment, supplies or services
enabling the purchaser to start a business when the purchaser
is required to make a payment to the seller or a person
recommended by the seller of more than $500 and the seller
represents directly or indirectly, orally or in writing,
that:
(1) The seller or a person recommended by the
seller will provide or assist the purchaser in finding
locations for the use or operation of vending machines,
racks, display cases or other similar devices, on
premises neither owned nor leased by the purchaser or
seller;
(2) The seller or a person recommended by the
seller will provide or assist the purchaser in finding
outlets or accounts for the purchaser's products or
services;
(3) The seller or a person specified by the seller
will purchase any or all products made, produced,
fabricated, grown, bred or modified by the purchaser;
(4) The seller guarantees that the purchaser will
derive income from the business which exceeds the price
paid to the seller;
(5) The seller will refund all or part of the price
paid to the seller, or repurchase any of the products,
equipment or supplies provided by the seller or a person
recommended by the seller, if the purchaser is
dissatisfied with the business; or
(6) The seller will provide a marketing plan,
provided that this Law shall not apply to the sale of a
marketing plan made in conjunction with the licensing of
a federally registered trademark or federally registered
service mark.
(b) "Business opportunity" does not include:
(1) Any offer or sale of an ongoing business
operated by the seller and to be sold in its entirety;
(2) Any offer or sale of a business opportunity to
an ongoing business where the seller will provide
products, equipment, supplies or services which are
substantially similar to the products, equipment,
supplies or services sold by the purchaser in connection
with the purchaser's ongoing business;
(3) Any offer or sale of a business opportunity
which is a franchise as defined by the Franchise
Disclosure Act of 1987;
(4) Any offer or sale of a business opportunity
which is registered pursuant to the Illinois Securities
Law of 1953;
(5) Any offer or sale of a business opportunity
which involves a marketing plan made in conjunction with
the licensing of a federally registered trademark or
federally registered service mark provided that the
seller had a minimum net worth of $1,000,000 as
determined on the basis of the seller's most recent
audited financial statement prepared within 13 months of
the first offer in this State. Net worth may be
determined on a consolidated basis where the seller is at
least 80% owned by one person and that person expressly
guarantees the obligations of the seller with regard to
the offer or sale of any business opportunity claimed to
be excluded under this item; or
(6) Any offer or sale of a business opportunity by
an executor, administrator, sheriff, marshal, receiver,
trustee in bankruptcy, guardian or conservator or a
judicial offer or sale, of a business opportunity.
(7) Cash payments made by a purchaser not exceeding
$500 and the payment is made for the not-for-profit sale
of sales demonstration equipment, material or samples, or
the payment is made for product inventory sold to the
purchaser at a bona fide wholesale price.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-15)
Sec. 5-15. Denial or revocation of exemptions.
(a) The Secretary of State may by order deny or revoke
any exemption specified in Section 5-10 of this Law with
respect to a particular offering of one or more business
opportunities. No such order may be entered without
appropriate prior notice to all interested parties,
opportunity for hearing, and written findings of fact and
conclusions of law.
(b) If the public interest or the protection of
purchasers so requires, the Secretary of State may by summary
order deny or revoke any of the specified exemptions pending
final determination of any proceedings under this Section.
Upon the entry of the order, the Secretary of State shall
promptly notify all interested parties that it has been
entered and of the reasons therefor and that the matter will
be set for hearing upon written request filed with the
Secretary of State within 30 days after the receipt of the
request by the respondent within 15 days of the receipt of a
written request the matter will be set down for hearing. If
no hearing is requested and none is ordered by the Secretary
of State, the order will remain in effect until it is
modified or vacated by the Secretary of State. If a hearing
is requested and none is ordered by the Secretary of State,
the order will remain in effect until it is modified or
vacated by the Secretary of State. If a hearing is requested
or ordered, the Secretary of State, after notice of an
opportunity for hearing to all interested persons, may modify
or vacate the order or extend it until final determination.
(c) No order under this Section may operate
retroactively.
(d) No person may be considered to have violated Section
5-25 by reason of any offer or sale effected after the entry
of an order under paragraph (1) of Section 5-65 of this Law
if he or she sustains the burden of proof that he or she did
not know, and in the exercise of reasonable care could not
have known, of the order.
(e) Notwithstanding any provision to the contrary, this
Law shall not apply to (i) any dealer, salesperson, or
investment adviser registered under the Illinois Securities
Law of 1953 or any investment adviser representative, or any
person who is regularly engaged in the business of offering
or selling securities in a transaction exempted under
subsection C, H, M, R, Q, or S of Section 4 of the Illinois
Securities Law of 1953 or subsection G of Section 4 of the
Illinois Securities Law of 1953 provided that such person is
registered under the federal securities law, (ii) an
associated person described in subdivision (h)(2) of Section
15 of the Federal 1934 Act, (iii) an investment adviser
registered under Section 203 of the Federal 1940 Investment
Advisors Act, or (iv) a person described in subdivision
(a)(11) of Section 202 of the Federal 1940 Investment
Advisors Act.
(f) This Law shall not be deemed to apply in any manner,
directly or indirectly, to: (i) a State bank or national
bank, as those terms are defined in the Illinois Banking Act,
or any subsidiary of a State bank or national bank; (ii) a
bank holding company, as that term is defined in the Illinois
Bank Holding Company Act of 1957, or any subsidiary of a bank
holding company; (iii) a foreign banking corporation, as that
term is defined in the Foreign Banking Office Act, or any
subsidiary of a foreign banking corporation; (iv) a
representative office, as that term is defined in the
Foreign Bank Representative Office Act, (v) a corporate
fiduciary, as that term is defined in the Corporate Fiduciary
Act, or any subsidiary of a corporate fiduciary; (vi) a
savings bank organized under the Savings Bank Act, or a
federal savings bank organized under federal law, or any
subsidiary of a savings bank or federal savings bank; (vii) a
savings bank holding company organized under the Savings Bank
Act, or any subsidiary of a savings bank holding company;
(viii) an association or federal association, as those terms
are defined in the Illinois Savings and Loan Act of 1985, or
any subsidiary of an association or federal association; (ix)
a foreign savings and loan association or foreign savings
bank subject to the Illinois Savings and Loan Act of 1985, or
any subsidiary of a foreign savings and loan association or
foreign savings bank; or (x) a savings and loan association
holding company, as that term is defined in the Illinois
Savings and Loan Act of 1985, or any subsidiary of a savings
and loan association holding company.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-35)
Sec. 5-35. Disclosure requirements.
(a) It shall be unlawful for any person to offer or,
sell any business opportunity required to be registered under
this Law unless a written disclosure document as filed under
subsection (a) of Section 5-30 of this Law is delivered to
each purchaser at least 10 business days prior to the
execution by a purchaser of any contract or agreement
imposing a binding legal obligation on the purchaser or the
payment by a purchaser of any consideration in connection
with the offer or sale of the business opportunity.
(b) The disclosure document shall have a cover sheet
which is entitled, in at least 10-point bold type,
"DISCLOSURE REQUIRED BY THE STATE OF ILLINOIS." Under the
title shall appear the statement in at least 10-point bold
type that "THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES
NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT
ENFORCEMENT BY THE STATE OF ILLINOIS. THE INFORMATION
CONTAINED IN THIS DISCLOSURE DOCUMENT HAS NOT BEEN VERIFIED
BY THIS STATE. IF YOU HAVE ANY QUESTIONS OR CONCERNS ABOUT
THIS INVESTMENT, SEEK PROFESSIONAL ADVICE BEFORE YOU SIGN A
CONTRACT OR MAKE ANY PAYMENT. YOU ARE TO BE PROVIDED 10
BUSINESS DAYS TO REVIEW THIS DOCUMENT BEFORE SIGNING ANY
CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT TO THE SELLER OR
THE SELLER'S REPRESENTATIVE". The seller's name and principal
business address, along with the date of the disclosure
document shall also be provided on the cover sheet. No other
information shall appear on the cover sheet. The disclosure
document shall contain the following information unless the
seller uses a disclosure document as provided in paragraph
(1) or (2) of subsection (a) of Section 5-30 of this Law:
(1) The names and residential addresses of those
salespersons who will engage in the offer or sale of the
business opportunity in this State.
(2) The name of the seller, whether the seller is
doing business as an individual, partnership or
corporation; the names under which the seller has
conducted, is conducting or intends to conduct business;
and the name of any parent or affiliated company that
will engage in business transactions with purchasers or
which will take responsibility for statements made by the
seller.
(3) The names, addresses and titles of the seller's
officers, directors, trustees, general managers,
principal executives, agents, and any other persons
charged with responsibility for the seller's business
activities relating to the sale of the business
opportunity.
(4) Prior business experience of the seller
relating to business opportunities including:
(A) The name, address, and a description of
any business opportunity previously offered by the
seller;
(B) The length of time the seller has offered
each such business opportunity; and
(C) The length of time the seller has
conducted the business opportunity currently being
offered to the purchaser.
(5) With respect to persons identified in item (3)
of this subsection:
(A) A description of the persons' business
experience for the 10 year period preceding the
filing date of this disclosure document. The
description of business experience shall list
principal occupations and employers; and
(B) A listing of the persons' educational and
professional backgrounds including, the names of
schools attended and degrees received, and any other
information that will demonstrate sufficient
knowledge and experience to perform the services
proposed.
(6) Whether the seller or any person identified in
item (3) of this subsection:
(A) Has been convicted of any felony, or
pleaded nolo contendere to a felony charge, or has
been the subject of any criminal, civil or
administrative proceedings alleging the violation of
any business opportunity law, securities law,
commodities law, franchise law, fraud or deceit,
embezzlement, fraudulent conversion, restraint of
trade, unfair or deceptive practices,
misappropriation of property or comparable
allegations;
(B) Has filed in bankruptcy, been adjudged
bankrupt, been reorganized due to insolvency, or was
an owner, principal officer or general partner or
any other person that has so filed or was so
adjudged or reorganized during or within the last 7
years.
(7) The name of the person identified in item (6)
of this subsection, nature of and parties to the action
or proceeding, court or other forum, date of the
institution of the action, docket references to the
action, current status of the action or proceeding, terms
and conditions or any order or decree, the penalties or
damages assessed and terms of settlement.
(8) The initial payment required, or when the exact
amount cannot be determined, a detailed estimate of the
amount of the initial payment to be made to the seller.
(9) A detailed description of the actual services
the seller agrees to perform for the purchaser.
(10) A detailed description of any training the
seller agrees to provide for the purchaser.
(11) A detailed description of services the seller
agrees to perform preform in connection with the
placement of equipment, products or supplies at a
location, as well as any agreement necessary in order to
locate or operate equipment, products or supplies on a
premises neither owned nor leased by the purchaser or
seller.
(12) A detailed description of any license or
permit that will be necessary in order for the purchaser
to engage in or operate the business opportunity.
(13) The business opportunity seller that is
required to secure a bond under Section 5-50 of this Law,
shall state in the disclosure document "As required by
the State of Illinois, the seller has secured a bond
issued by (insert name and address of surety company), a
surety company, authorized to do business in this State.
Before signing a contract or agreement to purchase this
business opportunity, you should check with the surety
company to determine the bond's current status.".
(14) Any representations made by the seller to the
purchaser concerning sales or earnings that may be made
from this business opportunity, including, but not
limited to:
(A) The bases or assumptions for any actual,
average, projected or forecasted sales, profits,
income or earnings;
(B) The total number of purchasers who, within
a period of 3 years of the date of the disclosure
document, purchased a business opportunity involving
the product, equipment, supplies or services being
offered to the purchaser; and
(C) The total number of purchasers who, within
3 years of the date of the disclosure document,
purchased a business opportunity involving the
product, equipment, supplies or services being
offered to the purchaser who, to the seller's
knowledge, have actually received earnings in the
amount or range specified.
(15) Any seller who makes a guarantee to a
purchaser shall give a detailed description of the
elements of the guarantee. Such description shall
include, but shall not be limited to, the duration,
terms, scope, conditions and limitations of the
guarantee.
(16) A statement of:
(A) The total number of business opportunities
that are the same or similar in nature to those that
have been sold or organized by the seller;
(B) The names and addresses of purchasers who
have requested a refund or rescission from the
seller within the last 12 months and the number of
those who have received the refund or rescission;
and
(C) The total number of business opportunities
the seller intends to sell in this State within the
next 12 months.
(17) A statement describing any contractual
restrictions, prohibitions or limitations on the
purchaser's conduct. Attach a copy of all business
opportunity and other contracts or agreements proposed
for use or in use in this State including, without
limitation, all lease agreements, option agreements, and
purchase agreements.
(18) The rights and obligations of the seller and
the purchaser regarding termination of the business
opportunity contract or agreement.
(19) A statement accurately describing the grounds
upon which the purchaser may initiate legal action to
terminate the business opportunity contract or agreement.
(20) A copy of the most recent audited financial
statement of the seller, prepared within 13 months of the
first offer in this State, together with a statement of
any material changes in the financial condition of the
seller from that date. The Secretary of State may allow
the seller to submit a limited review in order to satisfy
the requirements of this subsection.
(21) A list of the states in which this business
opportunity is registered.
(22) A list of the states in which this disclosure
document is on file.
(23) A list of the states which have denied,
suspended or revoked the registration of this business
opportunity.
(24) A section entitled "Risk Factors" containing a
series of short concise statements summarizing the
principal factors which make this business opportunity a
high risk or one of a speculative nature. Each statement
shall include a cross-reference to the page on which
further information regarding that risk factor can be
found in the disclosure document.
(25) Any additional information as the Secretary of
State may require by rule, regulation, or order.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-45)
Sec. 5-45. Denial, suspension, or revocation of
registration.
(a) The Secretary of State may issue an order denying
effectiveness to, or suspending or revoking the effectiveness
of, a registration if the Secretary of State finds that the
order is in the public interest and that any of the following
exist:
(1) The registration as of its effective date or as
of any earlier date in the case of an order denying
effectiveness, or any amendment as of its effective date,
or any report is incomplete in any material respect or
contains any statement which was, in the light of the
circumstances under which it was made, false or
misleading with respect to any material fact.
(2) Any provision of this Law or any rule,
regulation, order, or condition lawfully imposed under
this Law has been willfully violated, in connection with
the business opportunity:
(A) by the person filing the registration; or
(B) by the seller, any partner, officer, or
director of the seller, any person occupying a
similar status or performing similar functions, or
any person directly or indirectly controlling or
controlled by the seller, but only if the person
filing the registration is directly or indirectly
controlled by or acting for the seller.
(3) The business opportunity registered or sought
to be registered is the subject of an administrative
order denying, suspending or revoking a registration or a
permanent or temporary injunction or final order of any
court of competent jurisdiction; but the Secretary of
State:
(A) may not institute a proceeding against an
effective registration under this paragraph more
than one year from the date of the order or
injunction relied on; and
(B) may not enter an order under this
paragraph on the basis of an order or injunction
entered under any other state act unless that order
or injunction was based on facts which would
currently constitute a ground for an order under
this Section.
(4) The seller's enterprise or method of business,
or that of the business opportunity, includes or would
include activities which are illegal where performed.
(5) The business opportunity or the offering of a
business opportunity has worked or tended to work a fraud
upon purchasers or would so operate.
(6) There has been a failure to file any documents
or information required by Section 5-30 of this Law;
(7) The seller has failed to pay the proper filing
fee but the Secretary of State may enter only a denial
order under this paragraph and the Secretary of State
shall vacate any such order when the deficiency has been
corrected.
(8) The seller's literature or advertising is
misleading, incorrect, incomplete or deceptive.
(b) The Secretary of State may not institute a
proceeding under this Section against an effective
registration on the basis of a fact or transaction known to
the Secretary of State when the registration became effective
unless the proceeding is instituted within the next 30 days.
(c) The Secretary of State may by summary order postpone
or suspend the effectiveness of the registration pending
final determination of any proceeding under this Section.
Upon the entry of the order, the Secretary of State shall
promptly notify the seller that the order has been entered
and of the reasons therefor and that within 15 days after the
receipt of a written request the matter will be set down for
hearing. The written request must be made within 30 days of
the entry of the order. If no hearing is requested and none
is ordered by the Secretary of State, the order will remain
in effect until it is modified or vacated by the Secretary of
State. If a hearing is requested or ordered, the Secretary of
State, after notice of an opportunity for hearing to the
seller, may modify or vacate the order or extend it until
final determination.
(d) No summary stop order may be entered under any part
of this Section, except the first sentence of subsection (c)
of this Section, without appropriate prior notice to the
seller, opportunity for hearing, and written findings of fact
and conclusions of law.
(e) The Secretary of State may vacate or modify an order
issued under this Section if the Secretary of State finds
that the conditions which prompted its entry have changed or
that it is otherwise in the public interest to do so.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-55)
Sec. 5-55. Administration of this Law.
(a) This Law shall be administered by the Secretary of
State.
(b) It is unlawful for the Secretary of State or any of
his or her officers or employees to use for personal benefit
any information which is filed with or obtained by the
Secretary of State and which is not made public. No provision
of this Law authorizes the Secretary of State or any of the
Secretary of State's officers or employees to disclose any
such information except among themselves or when necessary or
appropriate in a proceeding or investigation under this Law.
No provision of this Law either creates or derogates from any
privilege which exists at common law or otherwise when
documentary or other evidence is sought under a subpoena
directed to the Secretary of State or any of the Secretary of
State's officers or employees.
(c) In no case shall the Secretary of State or any of
his or her employees or agents, in the administration of
this Law, incur any official or personal liability by
instituting an injunction or other proceeding, by denying,
suspending, or revoking the registration of any business
opportunity, by prohibiting the offer or sale of any
business opportunity, or by prohibiting any person from
offering or selling business opportunities.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-60)
Sec. 5-60. Investigations and subpoenas.
(a) The Secretary of State:
(1) may make such public or private investigations
within or outside of this State as the Secretary of State
deems necessary to determine whether any person has
violated or is about to violate any provision of this Law
or any rule, regulation, or order under this Law, or to
aid in the enforcement of this Law or in the prescribing
of rules and forms under this Law;
(2) may require or permit any person to file a
statement, under oath or otherwise as the Secretary of
State determines, as to all the facts and circumstances
concerning the matter to be investigated; and
(3) may publish information concerning any
violation of this Law or any rule, regulation, or order
under this Law.
(b) For the purpose of any investigation or proceeding
under this Law, the Secretary of State or his or her designee
may administer oaths and affirmations, subpoena witnesses,
compel their attendance, take evidence and require the
production of any books, papers, correspondence, memoranda,
agreements, or other documents or records which the Secretary
of State deems relevant or material to the inquiry.
(c) In case of contumacy by, or refusal to obey a
subpoena issued to any person, through the Office of the
Attorney General may bring an appropriate action in any
circuit court of the State of Illinois for the purpose of
enforcing the subpoena.
(d) It shall be a violation of the provisions of this
Law for any person to fail to file with the Secretary of
State any report, document, or statement required to be filed
under the provisions of this Section or to fail to comply
with the terms of any order of the Secretary of State issued
pursuant to this Law.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-65)
Sec. 5-65. Remedies. Whenever it appears to the Secretary
of State that any person has engaged in or is about to engage
in any act or practice constituting a violation of any
provision of this Law or any rule, regulation, or order under
this Law, the Secretary of State may:
(1) Issue an order, anything contained in this Law
to the contrary notwithstanding, directing the person to
cease and desist from continuing the act or practice. Any
person named in a cease and desist order issued by the
Secretary of State may, within 30 15 days after the date
receipt of the entry of the order, file a written request
for a hearing with the Secretary of State. If the
Secretary of State does not receive a written request for
a hearing within the time specified, the cease and desist
order will be permanent and the person named in the order
will be deemed to have waived all rights to a hearing.
If a hearing is requested, the order will remain in force
until it is modified, vacated, rescinded or expunged by
the Secretary of State.
(1.5) Prohibit or suspend the offer or sale of any
business opportunity, prohibit or suspend any person
from offering or selling any business opportunities,
impose any fine for violation of this Law, issue an order
of public censure, or enter into an agreed settlement or
stipulation. No such order may be entered without
appropriate prior notice to all interested parties,
opportunity for hearing, and written findings of fact and
conclusions of law.
(2) Bring an action in the circuit court of any
county to enjoin the acts or practices and to enforce
compliance with this Law or any rule, regulation, or
order under this Law. Upon a proper showing a permanent
or temporary injunction, restraining order, or writ of
mandamus shall be granted and a receiver or conservator
may be appointed for the defendant or the defendant's
assets or the court may order rescission, which shall
include restitution plus the legal interest rate, for any
sales of business opportunities determined to be unlawful
under this Law or any rule, regulation, or order under
this Law. The court shall not require the Secretary of
State to post a bond.
(3) The Secretary of State may refer such evidence
as may be available concerning violations of this Law or
any rule, regulation, or order under this Law to the
Attorney General or the appropriate State's Attorney, who
may, with or without such a reference, institute the
appropriate proceedings under this Section.
(4) In addition to any other sanction or remedy
contained in this Section, the Secretary of State, after
finding that any provision of this Law has been violated,
may impose a fine as provided by rule or order against
the violator not to exceed $10,000 per violation, and
may issue an order of public censure against the
violator.
(5) Notwithstanding the foregoing, the Secretary of
State, after notice and opportunity for hearing, may at
his or her discretion enter into an agreed settlement,
stipulation, or consent order with a respondent in
accordance with the provisions of the Illinois
Administrative Procedure Act. The provisions of the
agreed settlement, stipulation, or consent order shall
have the full force and effect of an order issued by the
Secretary of State.
(6) The action of the Secretary of State in
denying, suspending, or revoking the registration of a
business opportunity, in prohibiting or suspending a
person from offering or selling business opportunities,
in prohibiting or suspending the offer or sale of
business opportunities, in imposing any fine for
violation of this Law, or in issuing any order shall be
subject to judicial review under the Administrative
Review Law which shall apply to and govern every action
for the judicial review of final actions or decisions of
the Secretary of State under this Law.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-70)
Sec. 5-70. Rules, forms, orders and hearings.
(a) The Secretary of State may amend, modify, vacate,
and expunge orders and may make, amend and rescind rules and,
forms, and orders as are necessary to carry out the
provisions of this Law including rules and forms governing
disclosure documents, applications and reports, and defining
any terms, whether or not used in this Law insofar as the
definitions are not inconsistent with the provisions of this
Law. For the purpose of rules and forms, the Secretary of
State may classify business opportunities, persons, and
matters within his or her jurisdiction, and prescribe
different requirements for different classes.
(b) No rule, form, or order may be made, amended, or
rescinded unless the Secretary of State finds that the action
is necessary or appropriate in the public interest or for the
protection of the purchaser. In prescribing rules and forms
the Secretary of State may cooperate with the administrators
of other jurisdictions with a view to effectuating the policy
of this Law to achieve maximum uniformity in the form and
content of disclosure statements, applications, and reports
whenever practicable.
(c) No provision of this Law imposing any liability
applies to any act done or omitted in good faith in
conformity with any rule, form, or order of the Secretary of
State, notwithstanding that the rule, form, or order may
later be amended or rescinded or be determined by judicial or
other authority to be invalid for any reason.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-75)
Sec. 5-75. Administrative files and opinions.
(a) A document is filed with the Secretary of State
when all requirements of this Law with respect to filing have
been complied with and the required fee has been paid when it
is received by the Secretary of State.
(b) The Secretary of State shall keep records of all
applications for registration and disclosure documents which
are or have been effective under this Law and all orders
which have been entered under this Law. The register shall be
open for public inspection.
(c) Unless otherwise provided by law, any registration
statement, filing, application, or report filed with the
Secretary of State shall be open for public inspection.
(d) The Secretary of State may honor written requests
from interested persons for non-binding opinions upon the
payment of a fee established pursuant to subsection (c) of
Section 5-30 of this Law, which shall not be returnable in
any event.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-95)
Sec. 5-95. Fraudulent practices. It is unlawful for any
person, in connection with the offer or sale of any business
opportunity in this State or any offer or sale pursuant to
the exemptions granted under subdivisions 5-10(a), (c), (d),
or (h), directly or indirectly:
(1) To employ any device, scheme or artifice to
defraud;
(2) To make any untrue statement of a material fact
or to omit to state a material fact necessary in order to
make the statements made, in the light of the
circumstances under which they are made, not misleading;
or
(3) To engage in any act, practice or course of
business which operates or would operate as a fraud or
deceit upon any person.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-115)
Sec. 5-115. Criminal penalties.
(a) Any person who willfully violates Sections 5-25,
5-50, 5-95, 5-105, 5-110, subsection (a) of Section 5-35, or
subsection (a) of Section 5-40, or subsection (d) of Section
5-60 of this Law or who willfully violates any order of which
the person has notice, or who violates Section 5-100 of this
Law knowing that the statement made was false or misleading
in any material respect is guilty of a Class 3 felony for
each offense. Each of the acts specified shall constitute a
separate offense and a prosecution or conviction for any one
of such offenses shall not bar prosecution or conviction for
any other offense.
(b) No prosecution for any crime under this Law may be
commenced more than 5 years after the alleged violation.
(c) Nothing in this Law limits the power of the State to
punish any person for any conduct which constitutes a crime
under any other statute.
(d) The Secretary of State may refer such evidence as
may be available concerning violations of this Law or any
rule, regulation, or order under this Law to the Attorney
General or appropriate State's attorney, who may, with or
without such a reference, institute the appropriate criminal
proceedings under this Law.
(Source: P.A. 89-209, eff. 1-1-96.)
(815 ILCS 602/5-130)
Sec. 5-130. Miscellaneous provisions.
(a) No action shall be maintained under Section 5-120 of
this Law unless commenced before 3 years after the act or
transaction constituting the violation.
(a-5) No administrative action shall be brought by the
Secretary of State for relief under this Law after the
earlier to occur of (i) 3 years from the date upon which the
Secretary of State had notice of facts which in the exercise
of reasonable diligence would lead to actual knowledge of
the alleged violation of the Act, or (ii) 5 years from the
date on which the alleged violation occurred.
(b) The rights and and remedies under this Law are in
addition to any other rights or remedies that may exist at
law or in equity.
(c) Any condition, stipulation or provision binding any
purchaser of a business opportunity to waive compliance with
or relieving a person from any duty or liability imposed by
or any right provided by this Law or any rule, regulation or
order issued pursuant to this Law is void.
(Source: P.A. 89-209, eff. 1-1-96.)
Section 99. Effective date. This Act takes effect July
1, 1997.