HB3429 Enrolled LRB099 04381 JLS 29575 b
1		AN ACT concerning business.
2		Be it enacted by the People of the State of Illinois,
3		represented in the General Assembly:
4		Section 5. The Illinois Securities Law of 1953 is amended
5		by changing Sections 4, 8, 11, 11a, 12, 13, and 18.1 and by
6		adding Sections 2.34, 2.35, 2.36, and 8d as follows:
7		(815 ILCS 5/2.34 new)
8		Sec. 2.34. Accredited investor. "Accredited investor" has
9		the meaning given to that term in 17 CFR 230.501(a), as amended
10		and in effect from time to time.
11		(815 ILCS 5/2.35 new)
12		Sec. 2.35. Qualified escrowee. "Qualified escrowee" means
13		a person, firm, partnership, association, corporation, or
14		other legal entity who: (a) falls under the definition of
15		"title insurance company" under, and pursuant to the terms and
16		requirements of, the Title Insurance Act; (b) is certified as
17		an independent escrowee under, and pursuant to the terms and
18		requirements of, the Title Insurance Act; or (c) is a bank,
19		regulated trust company, savings bank, savings and loan
20		association, or credit union which is authorized to do business
21		in the State and which maintains at least one physical business
22		location within the State.

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1		(815 ILCS 5/2.36 new)
2		Sec. 2.36. Registered Internet portal. "Registered
3		Internet portal" means an Internet portal maintained by a
4		corporation or other legal entity that is being used to offer
5		or sell securities and that meets the requirements of Section
6		8d of this Act.
7		(815 ILCS 5/4) (from Ch. 121 1/2, par. 137.4)
8		Sec. 4. Exempt transactions. The provisions of Sections 2a,
9		5, 6 and 7 of this Act shall not apply to any of the following
10		transactions, except where otherwise specified in this Section
11		4:
12		A. Any offer or sale, whether through a dealer or
13		otherwise, of securities by a person who is not an issuer,
14		underwriter, dealer or controlling person in respect of such
15		securities, and who, being the bona fide owner of such
16		securities, disposes thereof for his or her own account;
17		provided, that such offer or sale is not made directly or
18		indirectly for the benefit of the issuer or of an underwriter
19		or controlling person.
20		B. Any offer, sale, issuance or exchange of securities of
21		the issuer to or with security holders of the issuer except to
22		or with persons who are security holders solely by reason of
23		holding transferable warrants, transferable options, or
24		similar transferable rights of the issuer, if no commission or

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1		other remuneration is paid or given directly or indirectly for
2		or on account of the procuring or soliciting of such sale or
3		exchange (other than a fee paid to underwriters based on their
4		undertaking to purchase any securities not purchased by
5		security holders in connection with such sale or exchange).
6		C. Any offer, sale or issuance of securities to any
7		corporation, bank, savings bank, savings institution, savings
8		and loan association, trust company, insurance company,
9		building and loan association, or dealer; to a pension fund,
10		pension trust, or employees' profit sharing trust, other
11		financial institution or institutional investor, any
12		government or political subdivision or instrumentality
13		thereof, whether the purchaser is acting for itself or in some
14		fiduciary capacity; to any partnership or other association
15		engaged as a substantial part of its business or operations in
16		purchasing or holding securities; to any trust in respect of
17		which a bank or trust company is trustee or co-trustee; to any
18		entity in which at least 90% of the equity is owned by persons
19		described under subsection C, H, or S of this Section 4; to any
20		employee benefit plan within the meaning of Title I of the
21		Federal ERISA Act if (i) the investment decision is made by a
22		plan fiduciary as defined in Section 3(21) of the Federal ERISA
23		Act and such plan fiduciary is either a bank, savings and loan
24		association, insurance company, registered investment adviser
25		or an investment adviser registered under the Federal 1940
26		Investment Advisers Act, or (ii) the plan has total assets in

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1		excess of $5,000,000, or (iii) in the case of a self-directed
2		plan, investment decisions are made solely by persons that are
3		described under subsection C, D, H or S of this Section 4; to
4		any plan established and maintained by, and for the benefit of
5		the employees of, any state or political subdivision or agency
6		or instrumentality thereof if such plan has total assets in
7		excess of $5,000,000; or to any organization described in
8		Section 501(c)(3) of the Internal Revenue Code of 1986, any
9		Massachusetts or similar business trust, or any partnership, if
10		such organization, trust, or partnership has total assets in
11		excess of $5,000,000.
12		D. The Secretary of State is granted authority to create by
13		rule or regulation a limited offering transactional exemption
14		that furthers the objectives of compatibility with federal
15		exemptions and uniformity among the states. The Secretary of
16		State shall prescribe by rule or regulation the amount of the
17		fee for filing any report required under this subsection, but
18		the fee shall not be less than the minimum amount nor more than
19		the maximum amount established under Section 11a of this Act
20		and shall not be returnable in any event.
21		E. Any offer or sale of securities by an executor,
22		administrator, guardian, receiver or trustee in insolvency or
23		bankruptcy, or at any judicial sale, or at a public sale by
24		auction held at an advertised time and place, or the offer or
25		sale of securities in good faith and not for the purpose of
26		avoiding the provisions of this Act by a pledgee of securities

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1		pledged for a bona fide debt.
2		F. Any offer or sale by a registered dealer, either as
3		principal or agent, of any securities (except face amount
4		certificate contracts and investment fund shares) at a price
5		reasonably related to the current market price of such
6		securities, provided:
7		(1) (a) the securities are issued and outstanding;
8		(b) the issuer is required to file reports pursuant
9		to Section 13 or Section 15(d) of the Federal 1934 Act
10		and has been subject to such requirements during the 90
11		day period immediately preceding the date of the offer
12		or sale, or is an issuer of a security covered by
13		Section 12(g)(2)(B) or (G) of the Federal 1934 Act;
14		(c) the dealer has a reasonable basis for believing
15		that the issuer is current in filing the reports
16		required to be filed at regular intervals pursuant to
17		the provisions of Section 13 or Section 15(d), as the
18		case may be, of the Federal 1934 Act, or in the case of
19		insurance companies exempted from Section 12(g) of the
20		Federal 1934 Act by subparagraph 12(g)(2)(G) thereof,
21		the annual statement referred to in Section
22		12(g)(2)(G)(i) of the Federal 1934 Act; and
23		(d) the dealer has in its records, and makes
24		reasonably available upon request to any person
25		expressing an interest in a proposed transaction in the
26		securities, the issuer's most recent annual report

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1		filed pursuant to Section 13 or 15(d), as the case may
2		be, of the Federal 1934 Act or the annual statement in
3		the case of an insurance company exempted from Section
4		12(g) of the Federal 1934 Act by subparagraph
5		12(g)(2)(G) thereof, together with any other reports
6		required to be filed at regular intervals under the
7		Federal 1934 Act by the issuer after such annual report
8		or annual statement; provided that the making
9		available of such reports pursuant to this
10		subparagraph, unless otherwise represented, shall not
11		constitute a representation by the dealer that the
12		information is true and correct, but shall constitute a
13		representation by the dealer that the information is
14		reasonably current; or
15		(2) (a) prior to any offer or sale, an application for
16		the authorization thereof and a report as set forth
17		under sub-paragraph (d) of this paragraph (2) has been
18		filed by any registered dealer with and approved by the
19		Secretary of State pursuant to such rules and
20		regulations as the Secretary of State may prescribe;
21		(b) the Secretary of State shall have the power by
22		order to refuse to approve any application or report
23		filed pursuant to this paragraph (2) if
24		(i) the application or report does not comply
25		with the provisions of this paragraph (2), or
26		(ii) the offer or sale of such securities would

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1		work or tend to work a fraud or deceit, or
2		(iii) the issuer or the applicant has violated
3		any of the provisions of this Act;
4		(c) each application and report filed pursuant to
5		this paragraph (2) shall be accompanied by a filing fee
6		and an examination fee in the amount established
7		pursuant to Section 11a of this Act, which shall not be
8		returnable in any event;
9		(d) there shall be submitted to the Secretary of
10		State no later than 120 days following the end of the
11		issuer's fiscal year, each year during the period of
12		the authorization, one copy of a report which shall
13		contain a balance sheet and income statement prepared
14		as of the issuer's most recent fiscal year end
15		certified by an independent certified public
16		accountant, together with such current information
17		concerning the securities and the issuer thereof as the
18		Secretary of State may prescribe by rule or regulation
19		or order;
20		(e) prior to any offer or sale of securities under
21		the provisions of this paragraph (2), each registered
22		dealer participating in the offer or sale of such
23		securities shall provide upon request of prospective
24		purchasers of such securities a copy of the most recent
25		report required under the provisions of sub-paragraph
26		(d) of this paragraph (2);

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1		(f) approval of an application filed pursuant to
2		this paragraph (2) of subsection F shall expire 5 years
3		after the date of the granting of the approval, unless
4		said approval is sooner terminated by (1) suspension or
5		revocation by the Secretary of State in the same manner
6		as is provided for in subsections E, F and G of Section
7		11 of this Act, or (2) the applicant filing with the
8		Secretary of State an affidavit to the effect that (i)
9		the subject securities have become exempt under
10		Section 3 of this Act or (ii) the applicant no longer
11		is capable of acting as the applicant and stating the
12		reasons therefor or (iii) the applicant no longer
13		desires to act as the applicant. In the event of the
14		filing of an affidavit under either preceding
15		sub-division (ii) or (iii) the Secretary of State may
16		authorize a substitution of applicant upon the new
17		applicant executing the application as originally
18		filed. However, the aforementioned substituted
19		execution shall have no effect upon the previously
20		determined date of expiration of approval of the
21		application. Notwithstanding the provisions of this
22		subparagraph (f), approvals granted under this
23		paragraph (2) of subsection F prior to the effective
24		date of this Act shall be governed by the provisions of
25		this Act in effect on such date of approval; and
26		(g) no person shall be considered to have violated

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1		Section 5 of this Act by reason of any offer or sale
2		effected in reliance upon an approval granted under
3		this paragraph (2) after a termination thereof under
4		the foregoing subparagraph (f) if official notice of
5		such termination has not been circulated generally to
6		dealers by the Secretary of State and if such person
7		sustains the burden of proof that he or she did not
8		know, and in the exercise of reasonable care, could not
9		have known, of the termination; or
10		(3) the securities, or securities of the same class,
11		are the subject of an existing registration under Section 5
12		of this Act.
13		The exemption provided in this subsection F shall apply
14		only if the offer or sale is made in good faith and not for the
15		purpose of avoiding any of the provisions of this Act, and only
16		if the offer or sale is not made for the direct or indirect
17		benefit of the issuer of the securities, or the controlling
18		person in respect of such issuer.
19		G. (1) Any offer, sale or issuance of a security, whether
20		to residents or to non-residents of this State, where:
21		(a) all sales of such security to residents of this
22		State (including the most recent such sale) within the
23		immediately preceding 12-month period have been made
24		to not more than 35 persons or have involved an
25		aggregate sales price of not more than $1,000,000;
26		(b) such security is not offered or sold by means

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1		of any general advertising or general solicitation in
2		this State; and
3		(c) no commission, discount, or other remuneration
4		exceeding 20% of the sale price of such security, if
5		sold to a resident of this State, is paid or given
6		directly or indirectly for or on account of such sales.
7		(2) In computing the number of resident purchasers or
8		the aggregate sales price under paragraph (1) (a) above,
9		there shall be excluded any purchaser or dollar amount of
10		sales price, as the case may be, with respect to any
11		security which at the time of its sale was exempt under
12		Section 3 or was registered under Section 5, 6 or 7 or was
13		sold in a transaction exempt under other subsections of
14		this Section 4.
15		(3) A prospectus or preliminary prospectus with
16		respect to a security for which a registration statement is
17		pending or effective under the Federal 1933 Act shall not
18		be deemed to constitute general advertising or general
19		solicitation in this State as such terms are used in
20		paragraph (1) (b) above, provided that such prospectus or
21		preliminary prospectus has not been sent or otherwise
22		delivered to more than 150 residents of this State.
23		(4) The Secretary of State shall by rule or regulation
24		require the filing of a report or reports of sales made in
25		reliance upon the exemption provided by this subsection G
26		and prescribe the form of such report and the time within

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1		which such report shall be filed. Such report shall set
2		forth the name and address of the issuer and of the
3		controlling person, if the sale was for the direct or
4		indirect benefit of such person, and any other information
5		deemed necessary by the Secretary of State to enforce
6		compliance with this subsection G. The Secretary of State
7		shall prescribe by rule or regulation the amount of the fee
8		for filing any such report, established pursuant to Section
9		11a of this Act, which shall not be returnable in any
10		event. The Secretary of State may impose, in such cases as
11		he or she may deem appropriate, a penalty for failure to
12		file any such report in a timely manner, but no such
13		penalty shall exceed an amount equal to five times the
14		filing fee. The contents of any such report or portion
15		thereof may be deemed confidential by the Secretary of
16		State by rule or order and if so deemed shall not be
17		disclosed to the public except by order of court or in
18		court proceedings. The failure to file any such report
19		shall not affect the availability of such exemption, but
20		such failure to file any such report shall constitute a
21		violation of subsection D of Section 12 of this Act,
22		subject to the penalties enumerated in Section 14 of this
23		Act. The civil remedies provided for in subsection A of
24		Section 13 of this Act and the civil remedies of rescission
25		and appointment of a receiver, conservator, ancillary
26		receiver or ancillary conservator provided for in

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1		subsection F of Section 13 of this Act shall not be
2		available against any person by reason of the failure to
3		file any such report or on account of the contents of any
4		such report.
5		H. Any offer, sale or issuance of a security to an
6		accredited investor provided that such security is not offered
7		or sold by means of any general advertising or general
8		solicitation, except as otherwise permitted in this Act. (1)
9		any natural person who has, or is reasonably believed by the
10		person relying upon this subsection H to have, a net worth or
11		joint net worth with that person's spouse, at the time of the
12		offer, sale or issuance, in excess of $1,000,000 excluding the
13		value of a principal residence, or (2) any natural person who
14		had, or is reasonably believed by the person relying upon this
15		subsection H to have had, an income or joint income with that
16		person's spouse, in excess of $200,000 in each of the two most
17		recent years and who reasonably expects, or is reasonably
18		expected to have, an income in excess of $200,000 in the
19		current year, or (3) any person that is not a natural person
20		and in which at least 90% of the equity interest is owned by
21		persons who meet either of the tests set forth in clauses (1)
22		or (2) of this subsection H; provided that such security is not
23		offered or sold by means of any general advertising or general
24		solicitation in this State.
25		I. Any offer, sale or issuance of securities to or for the
26		benefit of security holders of any person incident to a vote by

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1		such security holders pursuant to such person's organizational
2		document or any applicable statute of the jurisdiction of such
3		person's organization, on a merger, consolidation,
4		reclassification of securities, or sale or transfer of assets
5		in consideration of or exchange for securities of the same or
6		another person.
7		J. Any offer, sale or issuance of securities in exchange
8		for one or more outstanding securities, claims or property
9		interests, or partly in such exchange and partly for cash,
10		where such offer, sale or issuance is incident to a
11		reorganization, recapitalization, readjustment, composition or
12		settlement of a claim, as approved by a court of competent
13		jurisdiction of the United States, or any state.
14		K. Any offer, sale or issuance of securities for patronage,
15		or as patronage refunds, or in connection with marketing
16		agreements by cooperative associations organized exclusively
17		for agricultural, producer, marketing, purchasing, or consumer
18		purposes; and the sale of subscriptions for or shares of stock
19		of cooperative associations organized exclusively for
20		agricultural, producer, marketing, purchasing, or consumer
21		purposes, if no commission or other remuneration is paid or
22		given directly or indirectly for or on account of such
23		subscription, sale or resale, and if any person does not own
24		beneficially more than 5% of the aggregate amount of issued and
25		outstanding capital stock of such cooperative association.
26		L. Offers for sale or solicitations of offers to buy (but

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1		not the acceptance thereof), of securities which are the
2		subject of a pending registration statement filed under the
3		Federal 1933 Act and which are the subject of a pending
4		application for registration under this Act.
5		M. Any offer or sale of preorganization subscriptions for
6		any securities prior to the incorporation, organization or
7		formation of any issuer under the laws of the United States, or
8		any state, or the issuance by such issuer, after its
9		incorporation, organization or formation, of securities
10		pursuant to such preorganization subscriptions, provided the
11		number of subscribers does not exceed 25 and either (1) no
12		commission or other remuneration is paid or given directly or
13		indirectly for or on account of such sale or sales or issuance,
14		or (2) if any commission or other remuneration is paid or given
15		directly or indirectly for or on account of such sale or sales
16		or issuance, the securities are not offered or sold by any
17		means of general advertising or general solicitation in this
18		State.
19		N. The execution of orders for purchase of securities by a
20		registered salesperson and dealer, provided such persons act as
21		agent for the purchaser, have made no solicitation of the order
22		to purchase the securities, have no direct interest in the sale
23		or distribution of the securities ordered, receive no
24		commission, profit, or other compensation other than the
25		commissions involved in the purchase and sale of the securities
26		and deliver to the purchaser written confirmation of the order

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1		which clearly identifies the commissions paid to the registered
2		dealer.
3		O. Any offer, sale or issuance of securities, other than
4		fractional undivided interests in an oil, gas or other mineral
5		lease, right or royalty, for the direct or indirect benefit of
6		the issuer thereof, or of a controlling person, whether through
7		a dealer (acting either as principal or agent) or otherwise, if
8		the securities sold, immediately following the sale or sales,
9		together with securities already owned by the purchaser, would
10		constitute 50% or more of the equity interest of any one
11		issuer, provided that the number of purchasers is not more than
12		5 and provided further that no commission, discount or other
13		remuneration exceeding 15% of the aggregate sale price of the
14		securities is paid or given directly or indirectly for or on
15		account of the sale or sales.
16		P. Any offer, sale or issuance of securities (except face
17		amount certificate contracts and investment fund shares)
18		issued by and representing an interest in an issuer which is a
19		business corporation incorporated under the laws of this State,
20		the purposes of which are to provide capital and supervision
21		solely for the redevelopment of blighted urban areas located in
22		a municipality in this State and whose assets are located
23		entirely within that municipality, provided: (1) no
24		commission, discount or other remuneration is paid or given
25		directly or indirectly for or on account of the sale or sales
26		of such securities; (2) the aggregate amount of any securities

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1		of the issuer owned of record or beneficially by any one person
2		will not exceed the lesser of $5,000 or 4% of the equity
3		capitalization of the issuer; (3) the officers and directors of
4		the corporation have been bona fide residents of the
5		municipality not less than 3 years immediately preceding the
6		effectiveness of the offering sheet for the securities under
7		this subsection P; and (4) the issuer files with the Secretary
8		of State an offering sheet descriptive of the securities
9		setting forth:
10		(a) the name and address of the issuer;
11		(b) the title and total amount of securities to be
12		offered;
13		(c) the price at which the securities are to be
14		offered; and
15		(d) such additional information as the Secretary of
16		State may prescribe by rule and regulation.
17		The Secretary of State shall within a reasonable time
18		examine the offering sheet so filed and, unless the Secretary
19		of State shall make a determination that the offering sheet so
20		filed does not conform to the requirements of this subsection
21		P, shall declare the offering sheet to be effective, which
22		offering sheet shall continue effective for a period of 12
23		months from the date it becomes effective. The fee for
24		examining the offering sheet shall be as established pursuant
25		to Section 11a of this Act, and shall not be returnable in any
26		event. The Secretary of State shall by rule or regulation

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1		require the filing of a report or reports of sales made to
2		residents of this State in reliance upon the exemption provided
3		by this subsection P and prescribe the form of such report and
4		the time within which such report shall be filed. The Secretary
5		of State shall prescribe by rule or regulation the amount of
6		the fee for filing any such report, but such fee shall not be
7		less than the minimum amount nor more than the maximum amount
8		established pursuant to Section 11a of this Act, and shall not
9		be returnable in any event. The Secretary of State may impose,
10		in such cases as he or she may deem appropriate, a penalty for
11		failure to file any such report in a timely manner, but no such
12		penalty shall exceed an amount equal to five times the filing
13		fee. The contents of any such report shall be deemed
14		confidential and shall not be disclosed to the public except by
15		order of court or in court proceedings. The failure to file any
16		such report shall not affect the availability of such
17		exemption, but such failure to file any such report shall
18		constitute a violation of subsection D of Section 12 of this
19		Act, subject to the penalties enumerated in Section 14 of this
20		Act. The civil remedies provided for in subsection A of Section
21		13 of this Act and the civil remedies of rescission and
22		appointment of a receiver, conservator, ancillary receiver or
23		ancillary conservator provided for in subsection F of Section
24		13 of this Act shall not be available against any person by
25		reason of the failure to file any such report or on account of
26		the contents of any such report.

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1		Q. Any isolated transaction, whether effected by a dealer
2		or not.
3		R. Any offer, sale or issuance of a security to any person
4		who purchases at least $150,000 of the securities being
5		offered, where the purchaser's total purchase price does not,
6		or it is reasonably believed by the person relying upon this
7		subsection R that said purchase price does not, exceed 20
8		percent of the purchaser's net worth at the time of sale, or if
9		a natural person a joint net worth with that person's spouse,
10		for one or any combination of the following: (i) cash, (ii)
11		securities for which market quotations are readily available,
12		(iii) an unconditional obligation to pay cash or securities for
13		which quotations are readily available, which obligation is to
14		be discharged within five years of the sale of the securities
15		to the purchaser, or (iv) the cancellation of any indebtedness
16		owed by the issuer to the purchaser; provided that such
17		security is not offered or sold by means of any general
18		advertising or general solicitation in this State.
19		S. Any offer, sale or issuance of a security to any person
20		who is, or who is reasonably believed by the person relying
21		upon this subsection S to be, a director, executive officer, or
22		general partner of the issuer of the securities being offered
23		or sold, or any director, executive officer, or general partner
24		of a general partner of that issuer. For purposes of this
25		subsection S, "executive officer" shall mean the president, any
26		vice president in charge of a principal business unit, division

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1		or function (such as sales, administration or finance), any
2		other officer who performs a policy making function, or any
3		other person who performs similar policy making functions for
4		the issuer. Executive officers of subsidiaries may be deemed
5		executive officers of the issuer if they perform such policy
6		making functions for the issuer.
7		A document being filed pursuant to this Section 4 shall be
8		deemed filed, and any fee paid pursuant to this Section 4 shall
9		be deemed paid, upon the date of actual receipt thereof by the
10		Secretary of State.
11		T. An offer or sale of a security by an issuer that is
12		organized and, as of the time of the offer and the time of
13		sale, in good standing under the laws of the State of Illinois,
14		made solely to persons or entities that are, as of the time of
15		the offer and time of sale, residents of the State of Illinois,
16		provided:
17		(1) The offering meets all of the requirements of the
18		federal exemption for intrastate offerings provided in
19		Section 3(a)(11) of the Securities Act of 1933 (15 U.S.C.
20		77c(a)(11)) and Rule 147 adopted under the Securities Act
21		of 1933 (17 CFR 230.147).
22		(2) The aggregate purchase price of all securities sold
23		by an issuer in reliance on the exemption under this
24		subsection, within any 12-month period, does not exceed:
25		(i) $1,000,000; or (ii) $4,000,000 if the issuer has
26		undergone and made available (directly, or through a

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1		registered Internet portal), to each prospective purchaser
2		and the Secretary of State, copies of its most recent
3		financial statements which have been audited by an
4		independent auditor and certified by a senior officer of
5		the issuer as fairly, completely, and accurately
6		presenting the financial condition of the issuer, in all
7		material respects, as of the dates indicated therein.
8		Amounts received in connection with any offer or sale to
9		any accredited investor or any of the following shall not
10		count toward the calculation of the foregoing monetary
11		limitations:
12		(a) any entity (including, without limitation, any
13		trust) in which all of the equity interests are owned
14		by (or with respect to any trust, the primary
15		beneficiaries are) persons who are accredited
16		investors or who meet one or more of the criteria in
17		subparagraphs (b) through (d) of this paragraph (2);
18		(b) with respect to participating in an offering of
19		a particular issuer, a natural person serving as an
20		officer, director, partner, or trustee of, or
21		otherwise occupying similar status or performing
22		similar functions with respect to, such issuer;
23		(c) with respect to participating in an offering of
24		a particular issuer, a natural person or entity who
25		owns 10% or more of the then aggregate outstanding
26		voting capital securities of such issuer; or

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1		(d) such other person or entity as the Secretary of
2		State may hereafter exempt by rule.
3		The Secretary of State may hereafter cumulatively
4		increase the dollar limitations provided in this
5		paragraph.
6		(3) The aggregate amount sold by an issuer to any
7		purchaser (other than an accredited investor or a person or
8		entity which meets one or more of the criteria in
9		subparagraphs (a) through (d) of paragraph (2) of this
10		subsection T) in an offering of securities made in reliance
11		on the exemption provided in this subsection T, within any
12		consecutive 12-month period, does not exceed $5,000.
13		(4) The Secretary of State shall establish by rule the
14		duties of the issuer including disclosure and filing
15		requirements, treatment of escrow funds and agreements,
16		production of financial statements, and other requirements
17		as deemed necessary.
18		(5) The issuer has made available, to each prospective
19		purchaser and the Secretary of State, copies of its most
20		recent financial statements personally certified by one or
21		more senior officers of the issuer as fairly, completely,
22		and accurately presenting the financial condition of the
23		issuer, in all material respects, as of the dates indicated
24		therein.
25		(6) No commission or other remuneration is paid or
26		given directly or indirectly to any person or entity

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1		(including, without limitation, any registered Internet
2		portal) for soliciting any person in this State, except to
3		registered dealers and registered salespersons licensed in
4		this State.
5		(7) Not less than 15 days before the earlier of the
6		first sale of securities made in reliance on the exemption
7		provided in this subsection T, or the use of any general
8		solicitation with respect thereto (other than a general
9		announcement made by or on behalf of), an issuer shall file
10		forms, materials, and fees as required by the Secretary of
11		State by rule.
12		The Secretary of State shall prescribe by rule the
13		amount of the fee for filing the notice required in
14		subparagraph (a), established pursuant to Section 11a of
15		this Act. The Secretary of State may impose, in such cases
16		as he or she may deem appropriate, a penalty for failure to
17		file any such notice in a timely manner, but no such
18		penalty shall exceed an amount equal to 5 times the filing
19		fee. The contents of any such notice or portion thereof may
20		be deemed confidential by the Secretary of State by rule or
21		order and if so deemed shall not be disclosed to the public
22		except by order of court or in court proceedings. The
23		failure to file any such notice does not affect the
24		availability of such exemption, but such failure to file
25		any such report constitutes a violation of subsection D of
26		Section 12 of this Act and is subject to the penalties and

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1		remedies available in this Act and under the law.
2		(8) All payments for purchase of securities offered
3		pursuant to the exemption provided under this subsection T
4		are made directly to, and held by, the qualified escrowee
5		identified in the escrow agreement required pursuant to
6		subparagraph (c) of paragraph (4).
7		(9) The issuer includes each of the following in one or
8		more of the offering materials delivered to a prospective
9		purchaser, or to which a prospective purchaser has been
10		granted electronic access, in connection with the
11		offering:
12		(a) a description of the issuer, its type of
13		entity, the address, and telephone number of its
14		principal office;
15		(b) a reasonably detailed description of the
16		intended use of the offering proceeds, including any
17		amounts to be paid, as compensation or otherwise, to
18		any owner, executive officer, director, managing
19		member, or other person occupying a similar status or
20		performing similar functions on behalf of the issuer;
21		(c) the identity of all persons owning more than
22		10% of the voting capital securities of the issuer;
23		(d) the identity of the executive officers,
24		directors, managing members, and other persons
25		occupying a similar status or performing similar
26		functions in the name of and on behalf of the issuer,

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1		including their titles and a reasonably detailed
2		description of their prior experience;
3		(e) the identity of any person or entity who has
4		been or will be retained by the issuer to assist the
5		issuer in conducting the offering and sale of the
6		securities (including all registered Internet portals
7		but excluding persons acting solely as accountants or
8		attorneys and employees whose primary job
9		responsibilities involve the operating business of the
10		issuer rather than assisting the issuer in raising
11		capital) and a description of the consideration being
12		paid to each such person or entity for such assistance;
13		(f) any additional information material to the
14		offering, including a description of significant
15		factors that make the offering speculative or risky for
16		the purchaser;
17		(g) the information required pursuant to
18		subparagraphs (a) and (b) of paragraph (4) of this
19		subsection T;
20		(h) such other information as the Secretary of
21		State may hereafter require by rule.
22		(10) The issuer (directly or through a registered
23		Internet portal) requires each purchaser to certify, in
24		writing or electronically, that the purchaser:
25		(a) is a resident of the State of Illinois;
26		(b) understands that he or she is investing in a

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1		high-risk, highly speculative, business venture, that
2		he or she may lose all of his or her investment, and
3		that he or she can afford such a loss of his or her
4		investment;
5		(c) understands that the securities being offered
6		are highly illiquid, that there is no ready market for
7		the sale of such securities, that it may be difficult
8		or impossible for purchaser to sell or otherwise
9		dispose of such securities, and (where applicable)
10		that purchaser may be required to hold the securities
11		for an indefinite period of time; and
12		(d) understands that purchaser may be subject to
13		the payment of certain taxes with respect to the
14		securities being purchased whether or not purchaser
15		has sold, or otherwise disposed of, such securities or
16		whether purchaser has received any distributions or
17		other amounts from the issuer.
18		(11) The issuer (directly or through a registered
19		Internet portal) obtains from each purchaser of a security
20		offered under this subsection T evidence that the purchaser
21		is a resident of this State and, if applicable, is an
22		accredited investor. Without limiting the generality of
23		the foregoing, and not to the exclusion of other reasonable
24		methods which may be used by the issuer in connection with
25		the foregoing, an issuer may rely.
26		(12) The issuer (and to the extent a registered

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1		Internet portal is used, such registered Internet portal)
2		maintains records of all offers and sales of securities
3		made pursuant to the exemption granted by this subsection T
4		and provides ready access to such records to the Secretary
5		of State, upon notice from the Secretary of State.
6		(13) The issuer is not, either before or as a result of
7		the offering:
8		(a) an investment company, as defined in Section 3
9		of the Investment Company Act of 1940 (15 U.S.C.
10		80a-3), as amended and in effect (unless the issuer
11		qualifies for exclusion from such definition pursuant
12		to one or more of the exceptions provided in Section
13		3(c) of the Investment Company Act of 1940, any other
14		provision of the Investment Company Act of 1940, or any
15		administrative rule or regulation promulgated with
16		respect to the Investment Company Act of 1940 or in
17		connection therewith); or
18		(b) subject to the reporting requirements of
19		Section 13 or 15(d) of the Securities Exchange Act of
20		1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d).
21		(14) Neither the issuer, nor any person affiliated with
22		the issuer (either before or as a result of the offering),
23		nor the offering itself, nor the registered Internet portal
24		(to the extent used) is subject to disqualification
25		established by the Secretary of State by rule or contained
26		in the Securities Act of 1933 (15 U.S.C. 77c(a)(11)) and

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1		Rule 147 adopted under the Securities Act of 1933 (17 CFR
2		230.147), unless both of the following are met:
3		(a) on a showing of good cause and without
4		prejudice to any other action by the Secretary of
5		State, the Secretary of State determines that it is not
6		necessary under the circumstances that an exemption is
7		denied; and
8		(b) the issuer establishes that it made a factual
9		inquiry into whether any disqualification existed
10		under this paragraph (14), but did not know, and in the
11		exercise of reasonable care could not have known, that
12		a disqualification existed under this paragraph (14);
13		the nature and scope of the requisite inquiry will vary
14		based on the circumstances of the issuer and the other
15		offering participants.
16		(Source: P.A. 90-70, eff. 7-8-97; 91-809, eff. 1-1-01.)
17		(815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
18		Sec. 8. Registration of dealers, limited Canadian dealers,
19		internet portals, salespersons, investment advisers, and
20		investment adviser representatives.
21		A. Except as otherwise provided in this subsection A, every
22		dealer, limited Canadian dealer, salesperson, investment
23		adviser, and investment adviser representative shall be
24		registered as such with the Secretary of State. No dealer or

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1		salesperson need be registered as such when offering or selling
2		securities in transactions exempted by subsection A, B, C, D,
3		E, G, H, I, J, K, M, O, P, Q, R or S of Section 4 of this Act,
4		provided that such dealer or salesperson is not regularly
5		engaged in the business of offering or selling securities in
6		reliance upon the exemption set forth in subsection G or M of
7		Section 4 of this Act. No dealer, issuer or controlling person
8		shall employ a salesperson unless such salesperson is
9		registered as such with the Secretary of State or is employed
10		for the purpose of offering or selling securities solely in
11		transactions exempted by subsection A, B, C, D, E, G, H, I, J,
12		K, L, M, O, P, Q, R or S of Section 4 of this Act; provided that
13		such salesperson need not be registered when effecting
14		transactions in this State limited to those transactions
15		described in Section 15(h)(2) of the Federal 1934 Act or
16		engaging in the offer or sale of securities in respect of which
17		he or she has beneficial ownership and is a controlling person.
18		The Secretary of State may, by rule, regulation or order and
19		subject to such terms, conditions, and fees as may be
20		prescribed in such rule, regulation or order, exempt from the
21		registration requirements of this Section 8 any investment
22		adviser, if the Secretary of State shall find that such
23		registration is not necessary in the public interest by reason
24		of the small number of clients or otherwise limited character
25		of operation of such investment adviser.

HB3429 Enrolled - 29 - LRB099 04381 JLS 29575 b
1		B. An application for registration as a dealer or limited
2		Canadian dealer, executed, verified, or authenticated by or on
3		behalf of the applicant, shall be filed with the Secretary of
4		State, in such form as the Secretary of State may by rule,
5		regulation or order prescribe, setting forth or accompanied by:
6		(1) The name and address of the applicant, the location
7		of its principal business office and all branch offices, if
8		any, and the date of its organization;
9		(2) A statement of any other Federal or state licenses
10		or registrations which have been granted the applicant and
11		whether any such licenses or registrations have ever been
12		refused, cancelled, suspended, revoked or withdrawn;
13		(3) The assets and all liabilities, including
14		contingent liabilities of the applicant, as of a date not
15		more than 60 days prior to the filing of the application;
16		(4) (a) A brief description of any civil or criminal
17		proceeding of which fraud is an essential element pending
18		against the applicant and whether the applicant has ever
19		been convicted of a felony, or of any misdemeanor of which
20		fraud is an essential element;
21		(b) A list setting forth the name, residence and
22		business address and a 10 year occupational statement of
23		each principal of the applicant and a statement describing
24		briefly any civil or criminal proceedings of which fraud is
25		an essential element pending against any such principal and
26		the facts concerning any conviction of any such principal

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1		of a felony, or of any misdemeanor of which fraud is an
2		essential element;
3		(5) If the applicant is a corporation: a list of its
4		officers and directors setting forth the residence and
5		business address of each; a 10-year occupational statement
6		of each such officer or director; and a statement
7		describing briefly any civil or criminal proceedings of
8		which fraud is an essential element pending against each
9		such officer or director and the facts concerning any
10		conviction of any officer or director of a felony, or of
11		any misdemeanor of which fraud is an essential element;
12		(6) If the applicant is a sole proprietorship, a
13		partnership, limited liability company, an unincorporated
14		association or any similar form of business organization:
15		the name, residence and business address of the proprietor
16		or of each partner, member, officer, director, trustee or
17		manager; the limitations, if any, of the liability of each
18		such individual; a 10-year occupational statement of each
19		such individual; a statement describing briefly any civil
20		or criminal proceedings of which fraud is an essential
21		element pending against each such individual and the facts
22		concerning any conviction of any such individual of a
23		felony, or of any misdemeanor of which fraud is an
24		essential element;
25		(7) Such additional information as the Secretary of
26		State may by rule or regulation prescribe as necessary to

HB3429 Enrolled - 31 - LRB099 04381 JLS 29575 b
1		determine the applicant's financial responsibility,
2		business repute and qualification to act as a dealer.
3		(8) (a) No applicant shall be registered or
4		re-registered as a dealer or limited Canadian dealer under
5		this Section unless and until each principal of the dealer
6		has passed an examination conducted by the Secretary of
7		State or a self-regulatory organization of securities
8		dealers or similar person, which examination has been
9		designated by the Secretary of State by rule, regulation or
10		order to be satisfactory for purposes of determining
11		whether the applicant has sufficient knowledge of the
12		securities business and laws relating thereto to act as a
13		registered dealer. Any dealer who was registered on
14		September 30, 1963, and has continued to be so registered;
15		and any principal of any registered dealer, who was acting
16		in such capacity on and continuously since September 30,
17		1963; and any individual who has previously passed a
18		securities dealer examination administered by the
19		Secretary of State or any examination designated by the
20		Secretary of State to be satisfactory for purposes of
21		determining whether the applicant has sufficient knowledge
22		of the securities business and laws relating thereto to act
23		as a registered dealer by rule, regulation or order, shall
24		not be required to pass an examination in order to continue
25		to act in such capacity. The Secretary of State may by
26		order waive the examination requirement for any principal

HB3429 Enrolled - 32 - LRB099 04381 JLS 29575 b
1		of an applicant for registration under this subsection B
2		who has had such experience or education relating to the
3		securities business as may be determined by the Secretary
4		of State to be the equivalent of such examination. Any
5		request for such a waiver shall be filed with the Secretary
6		of State in such form as may be prescribed by rule or
7		regulation.
8		(b) Unless an applicant is a member of the body
9		corporate known as the Securities Investor Protection
10		Corporation established pursuant to the Act of Congress of
11		the United States known as the Securities Investor
12		Protection Act of 1970, as amended, a member of an
13		association of dealers registered as a national securities
14		association pursuant to Section 15A of the Federal 1934
15		Act, or a member of a self-regulatory organization or stock
16		exchange in Canada which the Secretary of State has
17		designated by rule or order, an applicant shall not be
18		registered or re-registered unless and until there is filed
19		with the Secretary of State evidence that such applicant
20		has in effect insurance or other equivalent protection for
21		each client's cash or securities held by such applicant,
22		and an undertaking that such applicant will continually
23		maintain such insurance or other protection during the
24		period of registration or re-registration. Such insurance
25		or other protection shall be in a form and amount
26		reasonably prescribed by the Secretary of State by rule or

HB3429 Enrolled - 33 - LRB099 04381 JLS 29575 b
1		regulation.
2		(9) The application for the registration of a dealer or
3		limited Canadian dealer shall be accompanied by a filing
4		fee and a fee for each branch office in this State, in each
5		case in the amount established pursuant to Section 11a of
6		this Act, which fees shall not be returnable in any event.
7		(10) The Secretary of State shall notify the dealer or
8		limited Canadian dealer by written notice (which may be by
9		electronic or facsimile transmission) of the effectiveness
10		of the registration as a dealer in this State.
11		(11) Any change which renders no longer accurate any
12		information contained in any application for registration
13		or re-registration of a dealer or limited Canadian dealer
14		shall be reported to the Secretary of State within 10
15		business days after the occurrence of such change; but in
16		respect to assets and liabilities only materially adverse
17		changes need be reported.
18		C. Any registered dealer, limited Canadian dealer, issuer,
19		or controlling person desiring to register a salesperson shall
20		file an application with the Secretary of State, in such form
21		as the Secretary of State may by rule or regulation prescribe,
22		which the salesperson is required by this Section to provide to
23		the dealer, issuer, or controlling person, executed, verified,
24		or authenticated by the salesperson setting forth or
25		accompanied by:

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1		(1) the name, residence and business address of the
2		salesperson;
3		(2) whether any federal or State license or
4		registration as dealer, limited Canadian dealer, or
5		salesperson has ever been refused the salesperson or
6		cancelled, suspended, revoked, withdrawn, barred, limited,
7		or otherwise adversely affected in a similar manner or
8		whether the salesperson has ever been censured or expelled;
9		(3) the nature of employment with, and names and
10		addresses of, employers of the salesperson for the 10 years
11		immediately preceding the date of application;
12		(4) a brief description of any civil or criminal
13		proceedings of which fraud is an essential element pending
14		against the salesperson, and whether the salesperson has
15		ever been convicted of a felony, or of any misdemeanor of
16		which fraud is an essential element;
17		(5) such additional information as the Secretary of
18		State may by rule, regulation or order prescribe as
19		necessary to determine the salesperson's business repute
20		and qualification to act as a salesperson; and
21		(6) no individual shall be registered or re-registered
22		as a salesperson under this Section unless and until such
23		individual has passed an examination conducted by the
24		Secretary of State or a self-regulatory organization of
25		securities dealers or similar person, which examination
26		has been designated by the Secretary of State by rule,

HB3429 Enrolled - 35 - LRB099 04381 JLS 29575 b
1		regulation or order to be satisfactory for purposes of
2		determining whether the applicant has sufficient knowledge
3		of the securities business and laws relating thereto to act
4		as a registered salesperson.
5		Any salesperson who was registered prior to September
6		30, 1963, and has continued to be so registered, and any
7		individual who has passed a securities salesperson
8		examination administered by the Secretary of State or an
9		examination designated by the Secretary of State by rule,
10		regulation or order to be satisfactory for purposes of
11		determining whether the applicant has sufficient knowledge
12		of the securities business and laws relating thereto to act
13		as a registered salesperson, shall not be required to pass
14		an examination in order to continue to act as a
15		salesperson. The Secretary of State may by order waive the
16		examination requirement for any applicant for registration
17		under this subsection C who has had such experience or
18		education relating to the securities business as may be
19		determined by the Secretary of State to be the equivalent
20		of such examination. Any request for such a waiver shall be
21		filed with the Secretary of State in such form as may be
22		prescribed by rule, regulation or order.
23		(7) The application for registration of a salesperson
24		shall be accompanied by a filing fee and a Securities Audit
25		and Enforcement Fund fee, each in the amount established
26		pursuant to Section 11a of this Act, which shall not be

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1		returnable in any event.
2		(8) Any change which renders no longer accurate any
3		information contained in any application for registration
4		or re-registration as a salesperson shall be reported to
5		the Secretary of State within 10 business days after the
6		occurrence of such change. If the activities are terminated
7		which rendered an individual a salesperson for the dealer,
8		issuer or controlling person, the dealer, issuer or
9		controlling person, as the case may be, shall notify the
10		Secretary of State, in writing, within 30 days of the
11		salesperson's cessation of activities, using the
12		appropriate termination notice form.
13		(9) A registered salesperson may transfer his or her
14		registration under this Section 8 for the unexpired term
15		thereof from one registered dealer or limited Canadian
16		dealer to another by the giving of notice of the transfer
17		by the new registered dealer or limited Canadian dealer to
18		the Secretary of State in such form and subject to such
19		conditions as the Secretary of State shall by rule or
20		regulation prescribe. The new registered dealer or limited
21		Canadian dealer shall promptly file an application for
22		registration of such salesperson as provided in this
23		subsection C, accompanied by the filing fee prescribed by
24		paragraph (7) of this subsection C.
25		C-5. Except with respect to federal covered investment

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1		advisers whose only clients are investment companies as defined
2		in the Federal 1940 Act, other investment advisers, federal
3		covered investment advisers, or any similar person which the
4		Secretary of State may prescribe by rule or order, a federal
5		covered investment adviser shall file with the Secretary of
6		State, prior to acting as a federal covered investment adviser
7		in this State, such documents as have been filed with the
8		Securities and Exchange Commission as the Secretary of State by
9		rule or order may prescribe. The notification of a federal
10		covered investment adviser shall be accompanied by a
11		notification filing fee established pursuant to Section 11a of
12		this Act, which shall not be returnable in any event. Every
13		person acting as a federal covered investment adviser in this
14		State shall file a notification filing and pay an annual
15		notification filing fee established pursuant to Section 11a of
16		this Act, which is not returnable in any event. The failure to
17		file any such notification shall constitute a violation of
18		subsection D of Section 12 of this Act, subject to the
19		penalties enumerated in Section 14 of this Act. Until October
20		10, 1999 or other date as may be legally permissible, a federal
21		covered investment adviser who fails to file the notification
22		or refuses to pay the fees as required by this subsection shall
23		register as an investment adviser with the Secretary of State
24		under Section 8 of this Act. The civil remedies provided for in
25		subsection A of Section 13 of this Act and the civil remedies
26		of rescission and appointment of receiver, conservator,

HB3429 Enrolled - 38 - LRB099 04381 JLS 29575 b
1		ancillary receiver, or ancillary conservator provided for in
2		subsection F of Section 13 of this Act shall not be available
3		against any person by reason of the failure to file any such
4		notification or to pay the notification fee or on account of
5		the contents of any such notification.
6		D. An application for registration as an investment
7		adviser, executed, verified, or authenticated by or on behalf
8		of the applicant, shall be filed with the Secretary of State,
9		in such form as the Secretary of State may by rule or
10		regulation prescribe, setting forth or accompanied by:
11		(1) The name and form of organization under which the
12		investment adviser engages or intends to engage in
13		business; the state or country and date of its
14		organization; the location of the adviser's principal
15		business office and branch offices, if any; the names and
16		addresses of the adviser's principal, partners, officers,
17		directors, and persons performing similar functions or, if
18		the investment adviser is an individual, of the individual;
19		and the number of the adviser's employees who perform
20		investment advisory functions;
21		(2) The education, the business affiliations for the
22		past 10 years, and the present business affiliations of the
23		investment adviser and of the adviser's principal,
24		partners, officers, directors, and persons performing
25		similar functions and of any person controlling the

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1		investment adviser;
2		(3) The nature of the business of the investment
3		adviser, including the manner of giving advice and
4		rendering analyses or reports;
5		(4) The nature and scope of the authority of the
6		investment adviser with respect to clients' funds and
7		accounts;
8		(5) The basis or bases upon which the investment
9		adviser is compensated;
10		(6) Whether the investment adviser or any principal,
11		partner, officer, director, person performing similar
12		functions or person controlling the investment adviser (i)
13		within 10 years of the filing of the application has been
14		convicted of a felony, or of any misdemeanor of which fraud
15		is an essential element, or (ii) is permanently or
16		temporarily enjoined by order or judgment from acting as an
17		investment adviser, underwriter, dealer, principal or
18		salesperson, or from engaging in or continuing any conduct
19		or practice in connection with any such activity or in
20		connection with the purchase or sale of any security, and
21		in each case the facts relating to the conviction, order or
22		judgment;
23		(7) (a) A statement as to whether the investment
24		adviser is engaged or is to engage primarily in the
25		business of rendering investment supervisory services; and
26		(b) A statement that the investment adviser will

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1		furnish his, her, or its clients with such information as
2		the Secretary of State deems necessary in the form
3		prescribed by the Secretary of State by rule or regulation;
4		(8) Such additional information as the Secretary of
5		State may, by rule, regulation or order prescribe as
6		necessary to determine the applicant's financial
7		responsibility, business repute and qualification to act
8		as an investment adviser.
9		(9) No applicant shall be registered or re-registered
10		as an investment adviser under this Section unless and
11		until each principal of the applicant who is actively
12		engaged in the conduct and management of the applicant's
13		advisory business in this State has passed an examination
14		or completed an educational program conducted by the
15		Secretary of State or an association of investment advisers
16		or similar person, which examination or educational
17		program has been designated by the Secretary of State by
18		rule, regulation or order to be satisfactory for purposes
19		of determining whether the applicant has sufficient
20		knowledge of the securities business and laws relating
21		thereto to conduct the business of a registered investment
22		adviser.
23		Any person who was a registered investment adviser
24		prior to September 30, 1963, and has continued to be so
25		registered, and any individual who has passed an investment
26		adviser examination administered by the Secretary of

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1		State, or passed an examination or completed an educational
2		program designated by the Secretary of State by rule,
3		regulation or order to be satisfactory for purposes of
4		determining whether the applicant has sufficient knowledge
5		of the securities business and laws relating thereto to
6		conduct the business of a registered investment adviser,
7		shall not be required to pass an examination or complete an
8		educational program in order to continue to act as an
9		investment adviser. The Secretary of State may by order
10		waive the examination or educational program requirement
11		for any applicant for registration under this subsection D
12		if the principal of the applicant who is actively engaged
13		in the conduct and management of the applicant's advisory
14		business in this State has had such experience or education
15		relating to the securities business as may be determined by
16		the Secretary of State to be the equivalent of the
17		examination or educational program. Any request for a
18		waiver shall be filed with the Secretary of State in such
19		form as may be prescribed by rule or regulation.
20		(10) No applicant shall be registered or re-registered
21		as an investment adviser under this Section 8 unless the
22		application for registration or re-registration is
23		accompanied by an application for registration or
24		re-registration for each person acting as an investment
25		adviser representative on behalf of the adviser and a
26		Securities Audit and Enforcement Fund fee that shall not be

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1		returnable in any event is paid with respect to each
2		investment adviser representative.
3		(11) The application for registration of an investment
4		adviser shall be accompanied by a filing fee and a fee for
5		each branch office in this State, in each case in the
6		amount established pursuant to Section 11a of this Act,
7		which fees shall not be returnable in any event.
8		(12) The Secretary of State shall notify the investment
9		adviser by written notice (which may be by electronic or
10		facsimile transmission) of the effectiveness of the
11		registration as an investment adviser in this State.
12		(13) Any change which renders no longer accurate any
13		information contained in any application for registration
14		or re-registration of an investment adviser shall be
15		reported to the Secretary of State within 10 business days
16		after the occurrence of the change. In respect to assets
17		and liabilities of an investment adviser that retains
18		custody of clients' cash or securities or accepts
19		pre-payment of fees in excess of $500 per client and 6 or
20		more months in advance only materially adverse changes need
21		be reported by written notice (which may be by electronic
22		or facsimile transmission) no later than the close of
23		business on the second business day following the discovery
24		thereof.
25		(14) Each application for registration as an
26		investment adviser shall become effective automatically on

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1		the 45th day following the filing of the application,
2		required documents or information, and payment of the
3		required fee unless (i) the Secretary of State has
4		registered the investment adviser prior to that date or
5		(ii) an action with respect to the applicant is pending
6		under Section 11 of this Act.
7		D-5. A registered investment adviser or federal covered
8		investment adviser desiring to register an investment adviser
9		representative shall file an application with the Secretary of
10		State, in the form as the Secretary of State may by rule or
11		order prescribe, which the investment adviser representative
12		is required by this Section to provide to the investment
13		adviser, executed, verified, or authenticated by the
14		investment adviser representative and setting forth or
15		accompanied by:
16		(1) The name, residence, and business address of the
17		investment adviser representative;
18		(2) A statement whether any federal or state license or
19		registration as a dealer, salesperson, investment adviser,
20		or investment adviser representative has ever been
21		refused, canceled, suspended, revoked or withdrawn;
22		(3) The nature of employment with, and names and
23		addresses of, employers of the investment adviser
24		representative for the 10 years immediately preceding the
25		date of application;

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1		(4) A brief description of any civil or criminal
2		proceedings, of which fraud is an essential element,
3		pending against the investment adviser representative and
4		whether the investment adviser representative has ever
5		been convicted of a felony or of any misdemeanor of which
6		fraud is an essential element;
7		(5) Such additional information as the Secretary of
8		State may by rule or order prescribe as necessary to
9		determine the investment adviser representative's business
10		repute or qualification to act as an investment adviser
11		representative;
12		(6) Documentation that the individual has passed an
13		examination conducted by the Secretary of State, an
14		organization of investment advisers, or similar person,
15		which examination has been designated by the Secretary of
16		State by rule or order to be satisfactory for purposes of
17		determining whether the applicant has sufficient knowledge
18		of the investment advisory or securities business and laws
19		relating to that business to act as a registered investment
20		adviser representative; and
21		(7) A Securities Audit and Enforcement Fund fee
22		established under Section 11a of this Act, which shall not
23		be returnable in any event.
24		The Secretary of State may by order waive the examination
25		requirement for an applicant for registration under this
26		subsection D-5 who has had the experience or education relating

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1		to the investment advisory or securities business as may be
2		determined by the Secretary of State to be the equivalent of
3		the examination. A request for a waiver shall be filed with the
4		Secretary of State in the form as may be prescribed by rule or
5		order.
6		A change that renders no longer accurate any information
7		contained in any application for registration or
8		re-registration as an investment adviser representative must
9		be reported to the Secretary of State within 10 business days
10		after the occurrence of the change. If the activities that
11		rendered an individual an investment adviser representative
12		for the investment adviser are terminated, the investment
13		adviser shall notify the Secretary of State in writing (which
14		may be by electronic or facsimile transmission), within 30 days
15		of the investment adviser representative's termination, using
16		the appropriate termination notice form as the Secretary of
17		State may prescribe by rule or order.
18		A registered investment adviser representative may
19		transfer his or her registration under this Section 8 for the
20		unexpired term of the registration from one registered
21		investment adviser to another by the giving of notice of the
22		transfer by the new investment adviser to the Secretary of
23		State in the form and subject to the conditions as the
24		Secretary of State shall prescribe. The new registered
25		investment adviser shall promptly file an application for
26		registration of the investment adviser representative as

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1		provided in this subsection, accompanied by the Securities
2		Audit and Enforcement Fund fee prescribed by paragraph (7) of
3		this subsection D-5.
4		E. (1) Subject to the provisions of subsection F of Section
5		11 of this Act, the registration of a dealer, limited Canadian
6		dealer, salesperson, investment adviser, or investment adviser
7		representative may be denied, suspended or revoked if the
8		Secretary of State finds that the dealer, limited Canadian
9		dealer, internet portal, salesperson, investment adviser, or
10		investment adviser representative or any principal officer,
11		director, partner, member, trustee, manager or any person who
12		performs a similar function of the dealer, limited Canadian
13		dealer, internet portal, or investment adviser:
14		(a) has been convicted of any felony during the 10 year
15		period preceding the date of filing of any application for
16		registration or at any time thereafter, or of any
17		misdemeanor of which fraud is an essential element;
18		(b) has engaged in any unethical practice in connection
19		with any security, or in any fraudulent business practice;
20		(c) has failed to account for any money or property, or
21		has failed to deliver any security, to any person entitled
22		thereto when due or within a reasonable time thereafter;
23		(d) in the case of a dealer, limited Canadian dealer,
24		or investment adviser, is insolvent;
25		(e) in the case of a dealer, limited Canadian dealer,

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

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

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

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1		penalty or interest shown in a filed return, or to pay any
2		final assessment of tax, penalty or interest, as required
3		by any tax Act administered by the Illinois Department of
4		Revenue, until such time as the requirements of that tax
5		Act are satisfied;
6		(p) in the case of a natural person who is a dealer,
7		limited Canadian dealer, salesperson, investment adviser,
8		or investment adviser representative, has defaulted on an
9		educational loan guaranteed by the Illinois Student
10		Assistance Commission, until the natural person has
11		established a satisfactory repayment record as determined
12		by the Illinois Student Assistance Commission;
13		(q) has failed to maintain the books and records
14		required under this Act or rules or regulations promulgated
15		under this Act or under any requirements established by the
16		Securities and Exchange Commission or a self-regulatory
17		organization;
18		(r) has refused to allow or otherwise impeded designees
19		of the Secretary of State from conducting an audit,
20		examination, inspection, or investigation provided for
21		under Section 8 or 11 of this Act;
22		(s) has failed to maintain any minimum net capital or
23		bond requirement set forth in this Act or any rule or
24		regulation promulgated under this Act;
25		(t) has refused the Secretary of State or his or her
26		designee access to any office or location within an office

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1		to conduct an investigation, audit, examination, or
2		inspection;
3		(u) has advised or caused a public pension fund or
4		retirement system established under the Illinois Pension
5		Code to make an investment or engage in a transaction not
6		authorized by that Code;
7		(v) if a corporation, limited liability company, or
8		limited liability partnership has been suspended,
9		canceled, revoked, or has failed to register as a foreign
10		corporation, limited liability company, or limited
11		liability partnership with the Secretary of State;
12		(w) is permanently or temporarily enjoined by any court
13		of competent jurisdiction, including any state, federal,
14		or foreign government, from engaging in or continuing any
15		conduct or practice involving any aspect of the securities
16		or commodities business or in any other business where the
17		conduct or practice enjoined involved investments,
18		franchises, insurance, banking, or finance;
19		(2) If the Secretary of State finds that any registrant or
20		applicant for registration is no longer in existence or has
21		ceased to do business as a dealer, limited Canadian dealer,
22		internet portal, salesperson, investment adviser, or
23		investment adviser representative, or is subject to an
24		adjudication as a person under legal disability or to the
25		control of a guardian, or cannot be located after reasonable
26		search, or has failed after written notice to pay to the

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1		Secretary of State any additional fee prescribed by this
2		Section or specified by rule or regulation, or if a natural
3		person, has defaulted on an educational loan guaranteed by the
4		Illinois Student Assistance Commission, the Secretary of State
5		may by order cancel the registration or application.
6		(3) Withdrawal of an application for registration or
7		withdrawal from registration as a dealer, limited Canadian
8		dealer, salesperson, investment adviser, or investment adviser
9		representative becomes effective 30 days after receipt of an
10		application to withdraw or within such shorter period of time
11		as the Secretary of State may determine, unless any proceeding
12		is pending under Section 11 of this Act when the application is
13		filed or a proceeding is instituted within 30 days after the
14		application is filed. If a proceeding is pending or instituted,
15		withdrawal becomes effective at such time and upon such
16		conditions as the Secretary of State by order determines. If no
17		proceeding is pending or instituted and withdrawal
18		automatically becomes effective, the Secretary of State may
19		nevertheless institute a revocation or suspension proceeding
20		within 2 years after withdrawal became effective and enter a
21		revocation or suspension order as of the last date on which
22		registration was effective.
23		F. The Secretary of State shall make available upon request
24		the date that each dealer, investment adviser, salesperson, or
25		investment adviser representative was granted registration,

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1		together with the name and address of the dealer, limited
2		Canadian dealer, or issuer on whose behalf the salesperson is
3		registered, and all orders of the Secretary of State denying or
4		abandoning an application, or suspending or revoking
5		registration, or censuring the persons. The Secretary of State
6		may designate by rule, regulation or order the statements,
7		information or reports submitted to or filed with him or her
8		pursuant to this Section 8 which the Secretary of State
9		determines are of a sensitive nature and therefore should be
10		exempt from public disclosure. Any such statement, information
11		or report shall be deemed confidential and shall not be
12		disclosed to the public except upon the consent of the person
13		filing or submitting the statement, information or report or by
14		order of court or in court proceedings.
15		G. The registration or re-registration of a dealer or
16		limited Canadian dealer and of all salespersons registered upon
17		application of the dealer or limited Canadian dealer shall
18		expire on the next succeeding anniversary date of the
19		registration or re-registration of the dealer; and the
20		registration or re-registration of an investment adviser and of
21		all investment adviser representatives registered upon
22		application of the investment adviser shall expire on the next
23		succeeding anniversary date of the registration of the
24		investment adviser; provided, that the Secretary of State may
25		by rule or regulation prescribe an alternate date which any

HB3429 Enrolled - 54 - LRB099 04381 JLS 29575 b
1		dealer registered under the Federal 1934 Act or a member of any
2		self-regulatory association approved pursuant thereto, a
3		member of a self-regulatory organization or stock exchange in
4		Canada, or any investment adviser may elect as the expiration
5		date of its dealer or limited Canadian dealer and salesperson
6		registrations, or the expiration date of its investment adviser
7		registration, as the case may be. A registration of a
8		salesperson registered upon application of an issuer or
9		controlling person shall expire on the next succeeding
10		anniversary date of the registration, or upon termination or
11		expiration of the registration of the securities, if any,
12		designated in the application for his or her registration or
13		the alternative date as the Secretary may prescribe by rule or
14		regulation. Subject to paragraph (9) of subsection C of this
15		Section 8, a salesperson's registration also shall terminate
16		upon cessation of his or her employment, or termination of his
17		or her appointment or authorization, in each case by the person
18		who applied for the salesperson's registration, provided that
19		the Secretary of State may by rule or regulation prescribe an
20		alternate date for the expiration of the registration.
21		H. Applications for re-registration of dealers, limited
22		Canadian dealers, internet portals, salespersons, investment
23		advisers, and investment adviser representatives shall be
24		filed with the Secretary of State prior to the expiration of
25		the then current registration and shall contain such

HB3429 Enrolled - 55 - LRB099 04381 JLS 29575 b
1		information as may be required by the Secretary of State upon
2		initial application with such omission therefrom or addition
3		thereto as the Secretary of State may authorize or prescribe.
4		Each application for re-registration of a dealer, limited
5		Canadian dealer, internet portal, or investment adviser shall
6		be accompanied by a filing fee, each application for
7		re-registration as a salesperson shall be accompanied by a
8		filing fee and a Securities Audit and Enforcement Fund fee
9		established pursuant to Section 11a of this Act, and each
10		application for re-registration as an investment adviser
11		representative shall be accompanied by a Securities Audit and
12		Enforcement Fund fee established under Section 11a of this Act,
13		which shall not be returnable in any event. Notwithstanding the
14		foregoing, applications for re-registration of dealers,
15		limited Canadian dealers, internet portals, and investment
16		advisers may be filed within 30 days following the expiration
17		of the registration provided that the applicant pays the annual
18		registration fee together with an additional amount equal to
19		the annual registration fee and files any other information or
20		documents that the Secretary of State may prescribe by rule or
21		regulation or order. Any application filed within 30 days
22		following the expiration of the registration shall be
23		automatically effective as of the time of the earlier
24		expiration provided that the proper fee has been paid to the
25		Secretary of State.
26		Each registered dealer, limited Canadian dealer, internet

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1		portal, or investment adviser shall continue to be registered
2		if the registrant changes his, her, or its form of organization
3		provided that the dealer or investment adviser files an
4		amendment to his, her, or its application not later than 30
5		days following the occurrence of the change and pays the
6		Secretary of State a fee in the amount established under
7		Section 11a of this Act.
8		I. (1) Every registered dealer, limited Canadian dealer,
9		internet portal, and investment adviser shall make and keep for
10		such periods, such accounts, correspondence, memoranda,
11		papers, books and records as the Secretary of State may by rule
12		or regulation prescribe. All records so required shall be
13		preserved for 3 years unless the Secretary of State by rule,
14		regulation or order prescribes otherwise for particular types
15		of records.
16		(2) Every registered dealer, limited Canadian dealer,
17		internet portal, and investment adviser shall file such
18		financial reports as the Secretary of State may by rule or
19		regulation prescribe.
20		(3) All the books and records referred to in paragraph (1)
21		of this subsection I are subject at any time or from time to
22		time to such reasonable periodic, special or other audits,
23		examinations, or inspections by representatives of the
24		Secretary of State, within or without this State, as the
25		Secretary of State deems necessary or appropriate in the public

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1		interest or for the protection of investors.
2		(4) At the time of an audit, examination, or inspection,
3		the Secretary of State, by his or her designees, may conduct an
4		interview of any person employed or appointed by or affiliated
5		with a registered dealer, limited Canadian dealer, internet
6		portal, or investment advisor, provided that the dealer,
7		limited Canadian dealer, internet portal, or investment
8		advisor shall be given reasonable notice of the time and place
9		for the interview. At the option of the dealer, limited
10		Canadian dealer, internet portal, or investment advisor, a
11		representative of the dealer or investment advisor with
12		supervisory responsibility over the individual being
13		interviewed may be present at the interview.
14		J. The Secretary of State may require by rule or regulation
15		the payment of an additional fee for the filing of information
16		or documents required to be filed by this Section which have
17		not been filed in a timely manner. The Secretary of State may
18		also require by rule or regulation the payment of an
19		examination fee for administering any examination which it may
20		conduct pursuant to subsection B, C, D, or D-5 of this Section
21		8.
22		K. The Secretary of State may declare any application for
23		registration or limited registration under this Section 8
24		abandoned by order if the applicant fails to pay any fee or

HB3429 Enrolled - 58 - LRB099 04381 JLS 29575 b
1		file any information or document required under this Section 8
2		or by rule or regulation for more than 30 days after the
3		required payment or filing date. The applicant may petition the
4		Secretary of State for a hearing within 15 days after the
5		applicant's receipt of the order of abandonment, provided that
6		the petition sets forth the grounds upon which the applicant
7		seeks a hearing.
8		L. Any document being filed pursuant to this Section 8
9		shall be deemed filed, and any fee being paid pursuant to this
10		Section 8 shall be deemed paid, upon the date of actual receipt
11		thereof by the Secretary of State or his or her designee.
12		M. The Secretary of State shall provide to the Illinois
13		Student Assistance Commission annually or at mutually agreed
14		periodic intervals the names and social security numbers of
15		natural persons registered under subsections B, C, D, and D-5
16		of this Section. The Illinois Student Assistance Commission
17		shall determine if any student loan defaulter is registered as
18		a dealer, limited Canadian dealer, internet portal
19		salesperson, or investment adviser under this Act and report
20		its determination to the Secretary of State or his or her
21		designee.
22		(Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
23		(815 ILCS 5/8d new)

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1		Sec. 8d. Offerings made through registered Internet
2		portals.
3		(a) An issuer shall make an offering or sale of securities
4		pursuant to subsection T of Section 4 of this Act through the
5		use of one or more registered Internet portals.
6		(b) The Internet portal:
7		(1) shall be a registered broker-dealer under the
8		Securities Exchange Act of 1934 (15 U.S.C. 78o);
9		(2) shall be a funding portal registered under the
10		Securities Act of 1933 (15 U.S.C. 77d-1) and the Securities
11		and Exchange Commission has adopted rules under authority
12		of Section 3(h) of the Securities Exchange Act of 1934 (15
13		U.S.C. 78c) and Section 304 of the Jumpstart Our Business
14		Startups Act (P.L. 112-106) governing funding portals;
15		(3) shall be a dealer registered under this Act as of
16		the date of any offer or sale of securities made through
17		the Internet portal; or
18		(4) shall, to the extent it meets the qualifications
19		for exemption from registration pursuant to subsection (d)
20		of this Section:
21		(A) file, not later than 30 days before the date of
22		the first offer or sale of securities made within this
23		State, an application for registration (or renewal of
24		registration, as applicable) as a registered Internet
25		portal with the Secretary of State, in writing or in
26		electronic form as prescribed by the Secretary of

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1		State, which the Secretary of State shall make
2		available as an electronic document on the Secretary of
3		State's Internet website, containing such information
4		and required deliveries as specified therein; and
5		(B) pay the application filing fee established
6		under Section 11a of this Act; the Secretary of State
7		shall, within a reasonable time, examine the filed
8		application and other materials filed and, approve or
9		deny the application.
10		(c) If any change occurs in the information submitted by,
11		or on behalf of, an Internet portal to the Secretary of State,
12		the Internet portal shall notify the Secretary of State within
13		10 days after such change occurs and shall provide the
14		Secretary of State with such additional information (if any)
15		requested by the Secretary of State in connection therewith.
16		(d) Notwithstanding anything contained in this Act to the
17		contrary, neither an Internet portal nor its owning or
18		operating entity is required to register as a dealer or an
19		investment advisor under this Act if each of the following
20		applies with respect to the Internet portal and its owning or
21		operating entity:
22		(1) It does not solicit purchases, sales, or offers to
23		buy the securities offered or displayed on the Internet
24		portal.
25		(2) It does not collect or hold funds in connection
26		with any purchase, sale, or offer to buy any securities

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1		offered or displayed on the Internet portal.
2		(3) It does not compensate employees, agents, or other
3		persons for the solicitation or based on the sale of
4		securities displayed or referenced on the Internet portal.
5		(4) It is not compensated based on the amount of
6		securities sold.
7		(5) The fee it charges an issuer for an offering of
8		securities on the Internet portal is a fixed amount for
9		each offering, a variable amount based on the length of
10		time that the securities are offered on the Internet
11		portal, a variable amount based on the total proposed
12		offering amount, or any combination of such fixed and
13		variable amounts.
14		(6) It does not offer investment advice or
15		recommendations; however, an Internet portal is not deemed
16		to be offering investment advice or recommendations simply
17		by virtue of:
18		(A) selecting transactions in which the Internet
19		portal shall serve as an intermediary;
20		(B) establishing reasonable selection criteria for
21		an issuer to meet in order to establish an offer or
22		sale of securities through the Internet portal;
23		(C) establishing reasonable selection criteria for
24		a potential purchaser to meet in order to participate
25		in an offer or sale of securities made through the
26		Internet portal; or

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1		(D) terminating an issuer transaction at any time
2		before the first sale of the securities of such issuer
3		if the Internet portal determines such action is
4		appropriate, after reasonable due diligence, to
5		protect potential purchasers, and the Internet portal
6		is able to direct the qualified escrowee to return all
7		funds then provided by potential purchasers, if any.
8		(7) It does not engage in such other activities as the
9		Secretary of State, by rule, determines are prohibited.
10		(e) Upon completion of an offering made pursuant to
11		subsection T of Section 4, each registered Internet portal
12		involved with the transactions (and the issuer, to the extent
13		applicable) shall store any and all electronic materials
14		related to the completed offering (including copies of all
15		offering documents, all offering materials, and all purchaser
16		information) on a secure, non-public, server or in such other
17		manner as the Secretary of State may hereafter deem acceptable
18		by rule.
19		(815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
20		Sec. 11. Duties and powers of the Secretary of State.
21		A. (1) The administration of this Act is vested in the
22		Secretary of State, who may from time to time make, amend and
23		rescind such rules and regulations as may be necessary to carry
24		out this Act, including rules and regulations governing
25		procedures of registration, statements, applications and

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1		reports for various classes of securities, persons and matters
2		within his or her jurisdiction and defining any terms, whether
3		or not used in this Act, insofar as the definitions are not
4		inconsistent with this Act. The rules and regulations adopted
5		by the Secretary of State under this Act shall be effective in
6		the manner provided for in the Illinois Administrative
7		Procedure Act.
8		(2) Among other things, the Secretary of State shall have
9		authority, for the purposes of this Act, to prescribe the form
10		or forms in which required information shall be set forth,
11		accounting practices, the items or details to be shown in
12		balance sheets and earning statements, and the methods to be
13		followed in the preparation of accounts, in the appraisal or
14		valuation of assets and liabilities, in the determination of
15		depreciation and depletion, in the differentiation of
16		recurring and non-recurring income, in the differentiation of
17		investment and operating income, and in the preparation of
18		consolidated balance sheets or income accounts of any person,
19		directly or indirectly, controlling or controlled by the
20		issuer, or any person under direct or indirect common control
21		with the issuer.
22		(3) No provision of this Act imposing any liability shall
23		apply to any act done or omitted in good faith in conformity
24		with any rule or regulation of the Secretary of State under
25		this Act, notwithstanding that the rule or regulation may,
26		after the act or omission, be amended or rescinded or be

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1		determined by judicial or other authority to be invalid for any
2		reason.
3		(4) The Securities Department of the Office of the
4		Secretary of State shall be deemed a criminal justice agency
5		for purposes of all federal and state laws and regulations and,
6		in that capacity, shall be entitled to access to any
7		information available to criminal justice agencies and has the
8		power to appoint special agents to conduct all investigations,
9		searches, seizures, arrests, and other duties imposed under the
10		provisions of any law administered by the Department. The
11		special agents have and may exercise all the powers of peace
12		officers solely for the purpose of enforcing provisions of this
13		Act.
14		The Director must authorize to each special agent employed
15		under this Section a distinct badge that, on its face, (i)
16		clearly states that the badge is authorized by the Department
17		and (ii) contains a unique and identifying number.
18		Special agents shall comply with all training requirements
19		established for law enforcement officers by provisions of the
20		Illinois Police Training Act.
21		(5) The Secretary of State, by rule, may conditionally or
22		unconditionally exempt any person, security, or transaction,
23		or any class or classes of persons, securities, or transactions
24		from any provision of Section 5, 6, 7, 8, 8a, or 9 of this Act
25		or of any rule promulgated under these Sections, to the extent
26		that such exemption is necessary or appropriate in the public

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1		interest, and is consistent with the protection of investors.
2		B. The Secretary of State may, anything in this Act to the
3		contrary notwithstanding, require financial statements and
4		reports of the issuer, dealer, internet portal, salesperson,
5		investment adviser, or investment adviser representative as
6		often as circumstances may warrant. In addition, the Secretary
7		of State may secure information or books and records from or
8		through others and may make or cause to be made investigations
9		respecting the business, affairs, and property of the issuer of
10		securities, any person involved in the sale or offer for sale,
11		purchase or offer to purchase of any mineral investment
12		contract, mineral deferred delivery contract, or security and
13		of dealers, internet portals, salespersons, investment
14		advisers, and investment adviser representatives that are
15		registered or are the subject of an application for
16		registration under this Act. The costs of an investigation
17		shall be borne by the registrant or the applicant, provided
18		that the registrant or applicant shall not be obligated to pay
19		the costs without his, her or its consent in advance.
20		C. Whenever it shall appear to the Secretary of State,
21		either upon complaint or otherwise, that this Act, or any rule
22		or regulation prescribed under authority thereof, has been or
23		is about to be violated, he or she may, in his or her
24		discretion, do one or more of the following:
25		(1) require or permit the person to file with the
26		Secretary of State a statement in writing under oath, or

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1		otherwise, as to all the facts and circumstances concerning
2		the subject matter which the Secretary of State believes to
3		be in the public interest to investigate, audit, examine,
4		or inspect;
5		(2) conduct an investigation, audit, examination, or
6		inspection as necessary or advisable for the protection of
7		the interests of the public; and
8		(3) appoint investigators to conduct all
9		investigations, searches, seizures, arrests, and other
10		duties imposed under the provisions of any law administered
11		by the Department. The Director must authorize to each
12		investigator employed under this Section a distinct badge
13		that, on its face, (i) clearly states that the badge is
14		authorized by the Department and (ii) contains a unique and
15		identifying number.
16		D. (1) For the purpose of all investigations, audits,
17		examinations, or inspections which in the opinion of the
18		Secretary of State are necessary and proper for the enforcement
19		of this Act, the Secretary of State or a person designated by
20		him or her is empowered to administer oaths and affirmations,
21		subpoena witnesses, take evidence, and require, by subpoena or
22		other lawful means provided by this Act or the rules adopted by
23		the Secretary of State, the production of any books and
24		records, papers, or other documents which the Secretary of
25		State or a person designated by him or her deems relevant or
26		material to the inquiry.

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1		(2) The Secretary of State or a person designated by him or
2		her is further empowered to administer oaths and affirmations,
3		subpoena witnesses, take evidence, and require the production
4		of any books and records, papers, or other documents in this
5		State at the request of a securities agency of another state,
6		if the activities constituting the alleged violation for which
7		the information is sought would be in violation of Section 12
8		of this Act if the activities had occurred in this State.
9		(3) The Circuit Court of any County of this State, upon
10		application of the Secretary of State or a person designated by
11		him or her may order the attendance of witnesses, the
12		production of books and records, papers, accounts and documents
13		and the giving of testimony before the Secretary of State or a
14		person designated by him or her; and any failure to obey the
15		order may be punished by the Circuit Court as a contempt
16		thereof.
17		(4) The fees of subpoenaed witnesses under this Act for
18		attendance and travel shall be the same as fees of witnesses
19		before the Circuit Courts of this State, to be paid when the
20		witness is excused from further attendance, provided, the
21		witness is subpoenaed at the instance of the Secretary of
22		State; and payment of the fees shall be made and audited in the
23		same manner as other expenses of the Secretary of State.
24		(5) Whenever a subpoena is issued at the request of a
25		complainant or respondent as the case may be, the Secretary of
26		State may require that the cost of service and the fee of the

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1		witness shall be borne by the party at whose instance the
2		witness is summoned.
3		(6) The Secretary of State shall have power at his or her
4		discretion, to require a deposit to cover the cost of the
5		service and witness fees and the payment of the legal witness
6		fee and mileage to the witness served with subpoena.
7		(7) A subpoena issued under this Act shall be served in the
8		same manner as a subpoena issued out of a circuit court.
9		(8) The Secretary of State may in any investigation,
10		audits, examinations, or inspections cause the taking of
11		depositions of persons residing within or without this State in
12		the manner provided in civil actions under the laws of this
13		State.
14		E. Anything in this Act to the contrary notwithstanding:
15		(1) If the Secretary of State shall find that the offer
16		or sale or proposed offer or sale or method of offer or
17		sale of any securities by any person, whether exempt or
18		not, in this State, is fraudulent, or would work or tend to
19		work a fraud or deceit, or is being offered or sold in
20		violation of Section 12, or there has been a failure or
21		refusal to submit any notification filing or fee required
22		under this Act, the Secretary of State may by written order
23		prohibit or suspend the offer or sale of securities by that
24		person or deny or revoke the registration of the securities
25		or the exemption from registration for the securities.
26		(2) If the Secretary of State shall find that any

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1		person has violated subsection C, D, E, F, G, H, I, J, or K
2		of Section 12 of this Act, the Secretary of State may by
3		written order temporarily or permanently prohibit or
4		suspend the person from offering or selling any securities,
5		any mineral investment contract, or any mineral deferred
6		delivery contract in this State, provided that any person
7		who is the subject of an order of permanent prohibition may
8		petition the Secretary of State for a hearing to present
9		evidence of rehabilitation or change in circumstances
10		justifying the amendment or termination of the order of
11		permanent prohibition.
12		(3) If the Secretary of State shall find that any
13		person is engaging or has engaged in the business of
14		selling or offering for sale securities as a dealer,
15		internet portal, or salesperson or is acting or has acted
16		as an investment adviser, investment adviser
17		representative, or federal covered investment adviser,
18		without prior thereto and at the time thereof having
19		complied with the registration or notice filing
20		requirements of this Act, the Secretary of State may by
21		written order prohibit or suspend the person from engaging
22		in the business of selling or offering for sale securities,
23		or acting as an investment adviser, investment adviser
24		representative, or federal covered investment adviser, in
25		this State.
26		(4) In addition to any other sanction or remedy

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1		contained in this subsection E, the Secretary of State,
2		after finding that any provision of this Act has been
3		violated, may impose a fine as provided by rule, regulation
4		or order not to exceed $10,000 for each violation of this
5		Act, may issue an order of public censure against the
6		violator, and may charge as costs of investigation all
7		reasonable expenses, including attorney's fees and witness
8		fees.
9		F. (1) The Secretary of State shall not deny, suspend or
10		revoke the registration of securities, suspend or revoke the
11		registration of a dealer, internet portal, salesperson,
12		investment adviser, or investment adviser representative,
13		prohibit or suspend the offer or sale of any securities,
14		prohibit or suspend any person from offering or selling any
15		securities in this State, prohibit or suspend a dealer or
16		salesperson from engaging in the business of selling or
17		offering for sale securities, prohibit or suspend a person from
18		acting as an investment adviser or federal covered investment
19		adviser, or investment adviser representative, impose any fine
20		for violation of this Act, issue an order of public censure, or
21		enter into an agreed settlement except after an opportunity for
22		hearing upon not less than 10 days notice given by personal
23		service or registered mail or certified mail, return receipt
24		requested, to the person or persons concerned. Such notice
25		shall state the date and time and place of the hearing and
26		shall contain a brief statement of the proposed action of the

HB3429 Enrolled - 71 - LRB099 04381 JLS 29575 b
1		Secretary of State and the grounds for the proposed action. A
2		failure to appear at the hearing or otherwise respond to the
3		allegations set forth in the notice of hearing shall constitute
4		an admission of any facts alleged therein and shall constitute
5		sufficient basis to enter an order.
6		(2) Anything herein contained to the contrary
7		notwithstanding, the Secretary of State may temporarily
8		prohibit or suspend, for a maximum period of 90 days, by an
9		order effective immediately, the offer or sale or registration
10		of securities, the registration of a dealer, internet portal,
11		salesperson, investment adviser, or investment adviser
12		representative, or the offer or sale of securities by any
13		person, or the business of rendering investment advice, without
14		the notice and prior hearing in this subsection prescribed, if
15		the Secretary of State shall in his or her opinion, based on
16		credible evidence, deem it necessary to prevent an imminent
17		violation of this Act or to prevent losses to investors which
18		the Secretary of State reasonably believes will occur as a
19		result of a prior violation of this Act. Immediately after
20		taking action without such notice and hearing, the Secretary of
21		State shall deliver a copy of the temporary order to the
22		respondent named therein by personal service or registered mail
23		or certified mail, return receipt requested. The temporary
24		order shall set forth the grounds for the action and shall
25		advise that the respondent may request a hearing, that the
26		request for a hearing will not stop the effectiveness of the

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1		temporary order and that respondent's failure to request a
2		hearing within 30 days after the date of the entry of the
3		temporary order shall constitute an admission of any facts
4		alleged therein and shall constitute sufficient basis to make
5		the temporary order final. Any provision of this paragraph (2)
6		to the contrary notwithstanding, the Secretary of State may not
7		pursuant to the provisions of this paragraph (2) suspend the
8		registration of a dealer, limited Canadian dealer,
9		salesperson, investment adviser, or investment adviser
10		representative based upon sub-paragraph (n) of paragraph (l) of
11		subsection E of Section 8 of this Act or revoke the
12		registration of securities or revoke the registration of any
13		dealer, salesperson, investment adviser representative, or
14		investment adviser.
15		(3) The Secretary of State may issue a temporary order
16		suspending or delaying the effectiveness of any registration of
17		securities under subsection A or B of Section 5, 6 or 7 of this
18		Act subsequent to and upon the basis of the issuance of any
19		stop, suspension or similar order by the Securities and
20		Exchange Commission with respect to the securities which are
21		the subject of the registration under subsection A or B of
22		Section 5, 6 or 7 of this Act, and the order shall become
23		effective as of the date and time of effectiveness of the
24		Securities and Exchange Commission order and shall be vacated
25		automatically at such time as the order of the Securities and
26		Exchange Commission is no longer in effect.

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1		(4) When the Secretary of State finds that an application
2		for registration as a dealer, internet portal, salesperson,
3		investment adviser, or investment adviser representative
4		should be denied, the Secretary of State may enter an order
5		denying the registration. Immediately after taking such
6		action, the Secretary of State shall deliver a copy of the
7		order to the respondent named therein by personal service or
8		registered mail or certified mail, return receipt requested.
9		The order shall state the grounds for the action and that the
10		matter will be set for hearing upon written request filed with
11		the Secretary of State within 30 days after the receipt of the
12		request by the respondent. The respondent's failure to request
13		a hearing within 30 days after receipt of the order shall
14		constitute an admission of any facts alleged therein and shall
15		make the order final. If a hearing is held, the Secretary of
16		State shall affirm, vacate, or modify the order.
17		(5) The findings and decision of the Secretary of State
18		upon the conclusion of each final hearing held pursuant to this
19		subsection shall be set forth in a written order signed on
20		behalf of the Secretary of State by his or her designee and
21		shall be filed as a public record. All hearings shall be held
22		before a person designated by the Secretary of State, and
23		appropriate records thereof shall be kept.
24		(6) Notwithstanding the foregoing, the Secretary of State,
25		after notice and opportunity for hearing, may at his or her
26		discretion enter into an agreed settlement, stipulation or

HB3429 Enrolled - 74 - LRB099 04381 JLS 29575 b
1		consent order with a respondent in accordance with the
2		provisions of the Illinois Administrative Procedure Act. The
3		provisions of the agreed settlement, stipulation or consent
4		order shall have the full force and effect of an order issued
5		by the Secretary of State.
6		(7) Anything in this Act to the contrary notwithstanding,
7		whenever the Secretary of State finds that a person is
8		currently expelled from, refused membership in or association
9		with, or limited in any material capacity by a self-regulatory
10		organization registered under the Federal 1934 Act or the
11		Federal 1974 Act because of a fraudulent or deceptive act or a
12		practice in violation of a rule, regulation, or standard duly
13		promulgated by the self-regulatory organization, the Secretary
14		of State may, at his or her discretion, enter a Summary Order
15		of Prohibition, which shall prohibit the offer or sale of any
16		securities, mineral investment contract, or mineral deferred
17		delivery contract by the person in this State. The order shall
18		take effect immediately upon its entry. Immediately after
19		taking the action the Secretary of State shall deliver a copy
20		of the order to the named Respondent by personal service or
21		registered mail or certified mail, return receipt requested. A
22		person who is the subject of an Order of Prohibition may
23		petition the Secretary of State for a hearing to present
24		evidence of rehabilitation or change in circumstances
25		justifying the amendment or termination of the Order of
26		Prohibition.

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1		G. No administrative action shall be brought by the
2		Secretary of State for relief under this Act or upon or because
3		of any of the matters for which relief is granted by this Act
4		after the earlier to occur of (i) 3 years from the date upon
5		which the Secretary of State had notice of facts which in the
6		exercise of reasonable diligence would lead to actual knowledge
7		of the alleged violation of the Act, or (ii) 5 years from the
8		date on which the alleged violation occurred.
9		H. The action of the Secretary of State in denying,
10		suspending, or revoking the registration of a dealer, internet
11		portal, limited Canadian dealer, salesperson, investment
12		adviser, or investment adviser representative, in prohibiting
13		any person from engaging in the business of offering or selling
14		securities as a dealer, limited Canadian dealer, or
15		salesperson, in prohibiting or suspending the offer or sale of
16		securities by any person, in prohibiting a person from acting
17		as an investment adviser, federal covered investment adviser,
18		or investment adviser representative, in denying, suspending,
19		or revoking the registration of securities, in prohibiting or
20		suspending the offer or sale or proposed offer or sale of
21		securities, in imposing any fine for violation of this Act, or
22		in issuing any order shall be subject to judicial review in the
23		Circuit Courts of Cook or Sangamon Counties in this State. The
24		Administrative Review Law shall apply to and govern every
25		action for the judicial review of final actions or decisions of
26		the Secretary of State under this Act.

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1		I. Notwithstanding any other provisions of this Act to the
2		contrary, whenever it shall appear to the Secretary of State
3		that any person is engaged or about to engage in any acts or
4		practices which constitute or will constitute a violation of
5		this Act or of any rule or regulation prescribed under
6		authority of this Act, the Secretary of State may at his or her
7		discretion, through the Attorney General take any of the
8		following actions:
9		(1) File a complaint and apply for a temporary
10		restraining order without notice, and upon a proper showing
11		the court may enter a temporary restraining order without
12		bond, to enforce this Act.
13		(2) File a complaint and apply for a preliminary or
14		permanent injunction, and, after notice and a hearing and
15		upon a proper showing, the court may grant a preliminary or
16		permanent injunction and may order the defendant to make an
17		offer of rescission with respect to any sales or purchases
18		of securities, mineral investment contracts, or mineral
19		deferred delivery contracts determined by the court to be
20		unlawful under this Act.
21		(3) Seek the seizure of assets when probable cause
22		exists that the assets were obtained by a defendant through
23		conduct in violation of Section 12, paragraph F, G, I, J,
24		K, or L of this Act, and thereby subject to a judicial
25		forfeiture hearing as required under this Act.
26		(a) In the event that such probable cause exists

HB3429 Enrolled - 77 - LRB099 04381 JLS 29575 b
1		that the subject of an investigation who is alleged to
2		have committed one of the relevant violations of this
3		Act has in his possession assets obtained as a result
4		of the conduct giving rise to the violation, the
5		Secretary of State may seek a seizure warrant in any
6		circuit court in Illinois.
7		(b) In seeking a seizure warrant, the Secretary of
8		State, or his or her designee, shall submit to the
9		court a sworn affidavit detailing the probable cause
10		evidence for the seizure, the location of the assets to
11		be seized, the relevant violation under Section 12 of
12		this Act, and a statement detailing any known owners or
13		interest holders in the assets.
14		(c) Seizure of the assets shall be made by any
15		peace officer upon process of the seizure warrant
16		issued by the court. Following the seizure of assets
17		under this Act and pursuant to a seizure warrant,
18		notice of seizure, including a description of the
19		seized assets, shall immediately be returned to the
20		issuing court. Seized assets shall be maintained
21		pending a judicial forfeiture hearing in accordance
22		with the instructions of the court.
23		(d) In the event that management of seized assets
24		becomes necessary to prevent the devaluation,
25		dissipation, or otherwise to preserve the property,
26		the court shall have jurisdiction to appoint a

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1		receiver, conservator, ancillary receiver, or
2		ancillary conservator for that purpose, as provided in
3		item (2) of this subsection.
4		(4) Seek the forfeiture of assets obtained through
5		conduct in violation of Section 12, paragraph F, G, H, I,
6		J, K, or L when authorized by law. A forfeiture must be
7		ordered by a circuit court or an action brought by the
8		Secretary of State as provided for in this Act, under a
9		verified complaint for forfeiture.
10		(a) In the event assets have been seized pursuant
11		to this Act, forfeiture proceedings shall be
12		instituted by the Attorney General within 45 days of
13		seizure.
14		(b) Service of the complaint filed under the
15		provisions of this Act shall be made in the manner as
16		provided in civil actions in this State.
17		(c) Only an owner of or interest holder in the
18		property may file an answer asserting a claim against
19		the property. For purposes of this Section, the owner
20		or interest holder shall be referred to as claimant.
21		(d) The answer must be signed by the owner or
22		interest holder under penalty of perjury and must set
23		forth:
24		(i) the caption of the proceedings as set forth
25		on the notice of pending forfeiture and the name of
26		the claimant;

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1		(ii) the address at which the claimant will
2		accept mail;
3		(iii) the nature and extent of the claimant's
4		interest in the property;
5		(iv) the date, identity of the transferor, and
6		circumstances of the claimant's acquisition of the
7		interest in the property;
8		(v) the name and address of all other persons
9		known to have an interest in the property;
10		(vi) the specific provisions of this Act
11		relied on in asserting that the property is not
12		subject to forfeiture;
13		(vii) all essential facts supporting each
14		assertion; and
15		(viii) the precise relief sought.
16		(e) The answer must be filed with the court within
17		45 days after service of the complaint.
18		(f) A property interest is exempt from forfeiture
19		under this Act if its owner or interest holder
20		establishes by a preponderance of evidence that the
21		owner or interest holder:
22		(i) is not legally accountable for the conduct
23		giving rise to the forfeiture, did not acquiesce in
24		it, and did not know and could not reasonably have
25		known of the conduct or that the conduct was likely
26		to occur;

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1		(ii) with respect to conveyances, did not hold
2		the property jointly or in common with a person
3		whose conduct gave rise to the forfeiture;
4		(iii) does not hold the property for the
5		benefit of or as a nominee for any person whose
6		conduct gave rise to its forfeiture and the owner
7		or interest holder acquires it as a bona fide
8		purchaser for value without knowingly taking part
9		in the conduct giving rise to the forfeiture; or
10		(iv) acquired the interest after the
11		commencement of the conduct giving rise to its
12		forfeiture and the owner or interest holder
13		acquired the interest as a mortgagee, secured
14		creditor, lienholder, or bona fide purchaser for
15		value without knowledge of the conduct that gave
16		rise to the forfeiture.
17		(g) The hearing must be held within 60 days after
18		the answer is filed unless continued for good cause.
19		(h) During the probable cause portion of the
20		judicial in rem proceeding wherein the Secretary of
21		State presents its case-in-chief, the court must
22		receive and consider, among other things, any relevant
23		hearsay evidence and information. The laws of evidence
24		relating to civil actions shall apply to all other
25		portions of the judicial in rem proceeding.
26		(i) The Secretary of State shall show the existence

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1		of probable cause for forfeiture of the property. If
2		the Secretary of State shows probable cause, the
3		claimant has the burden of showing by a preponderance
4		of the evidence that the claimant's interest in the
5		property is not subject to forfeiture.
6		(j) If the Secretary of State does not show the
7		existence of probable cause or a claimant has an
8		interest that is exempt under subdivision I (4)(d) of
9		this Section, the court shall order the interest in the
10		property returned or conveyed to the claimant and shall
11		order all other property forfeited to the Secretary of
12		State pursuant to all provisions of this Act. If the
13		Secretary of State does show the existence of probable
14		cause and the claimant does not establish by a
15		preponderance of the evidence that the claimant has an
16		interest that is exempt under subsection D herein, the
17		court shall order all the property forfeited to the
18		Secretary of State pursuant to the provisions of the
19		Section.
20		(k) A defendant convicted in any criminal
21		proceeding is precluded from later denying the
22		essential allegations of the criminal offense of which
23		the defendant was convicted in any proceeding for
24		violations of the Act giving rise to forfeiture of
25		property herein regardless of the pendency of an appeal
26		from that conviction. However, evidence of the

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1		pendency of an appeal is admissible.
2		(l) An acquittal or dismissal in a criminal
3		proceeding for violations of the Act giving rise to the
4		forfeiture of property herein shall not preclude civil
5		proceedings under this provision; however, for good
6		cause shown, on a motion by the Secretary of State, the
7		court may stay civil forfeiture proceedings during the
8		criminal trial for a related criminal indictment or
9		information alleging violation of the provisions of
10		Section 12 of the Illinois Securities Law of 1953.
11		Property subject to forfeiture under this Section
12		shall not be subject to return or release by a court
13		exercising jurisdiction over a criminal case involving
14		the seizure of the property unless the return or
15		release is consented to by the Secretary of State.
16		(m) All property declared forfeited under this Act
17		vests in the State on the commission of the conduct
18		giving rise to forfeiture together with the proceeds of
19		the property after that time. Any such property or
20		proceeds subsequently transferred to any person remain
21		subject to forfeiture and thereafter shall be ordered
22		forfeited unless the transferee claims and establishes
23		in a hearing under the provisions of this Act that the
24		transferee's interest is exempt under the Act. Any
25		assets forfeited to the State shall be disposed of in
26		following manner:

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1		(i) all forfeited property and assets shall be
2		liquidated by the Secretary of State in accordance
3		with all laws and rules governing the disposition
4		of such property;
5		(ii) the Secretary of State shall provide the
6		court at the time the property and assets are
7		declared forfeited a verified statement of
8		investors subject to the conduct giving rise to the
9		forfeiture;
10		(iii) after payment of any costs of sale,
11		receivership, storage, or expenses for
12		preservation of the property seized, other costs
13		to the State, and payment to claimants for any
14		amount deemed exempt from forfeiture, the proceeds
15		from liquidation shall be distributed pro rata to
16		investors subject to the conduct giving rise to the
17		forfeiture; and
18		(iv) any proceeds remaining after all verified
19		investors have been made whole shall be
20		distributed 25% to the Securities Investors
21		Education Fund, 25% to the Securities Audit and
22		Enforcement Fund, 25% to the Attorney General or
23		any State's Attorney bringing criminal charges for
24		the conduct giving rise to the forfeiture, and 25%
25		to other law enforcement agencies participating in
26		the investigation of the criminal charges for the

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1		conduct giving rise to the forfeiture. In the event
2		that no other law enforcement agencies are
3		involved in the investigation of the conduct
4		giving rise to the forfeiture, then the portion to
5		other law enforcement agencies shall be
6		distributed to the Securities Investors Education
7		Fund.
8		(n) The Secretary of State shall notify by
9		certified mail, return receipt requested, all known
10		investors in the matter giving rise to the forfeiture
11		of the forfeiture proceeding and sale of assets
12		forfeited arising from the violations of this Act, and
13		shall further publish notice in a paper of general
14		circulation in the district in which the violations
15		were prosecuted. The notice to investors shall
16		identify the name, address, and other identifying
17		information about any defendant prosecuted for
18		violations of this Act that resulted in forfeiture and
19		sale of property, the offense for which the defendant
20		was convicted, and that the court has ordered
21		forfeiture and sale of property for claims of investors
22		who incurred losses or damages as a result of the
23		violations. Investors may then file a claim in a form
24		prescribed by the Secretary of State in order to share
25		in disbursement of the proceeds from sale of the
26		forfeited property. Investor claims must be filed with

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1		the Secretary of State within 30 days after receipt of
2		the certified mail return receipt, or within 30 days
3		after the last date of publication of the general
4		notice in a paper of general circulation in the
5		district in which the violations were prosecuted,
6		whichever occurs last.
7		(o) A civil action under this subsection must be
8		commenced within 5 years after the last conduct giving
9		rise to the forfeiture became known or should have
10		become known or 5 years after the forfeitable property
11		is discovered, whichever is later, excluding time
12		during which either the property or claimant is out of
13		this State or in confinement or during which criminal
14		proceedings relating to the same conduct are in
15		progress.
16		(p) If property is seized for evidence and for
17		forfeiture, the time periods for instituting judicial
18		forfeiture proceedings shall not begin until the
19		property is no longer necessary for evidence.
20		(q) Notwithstanding other provisions of this Act,
21		the Secretary of State and a claimant of forfeitable
22		property may enter into an agreed-upon settlement
23		concerning the forfeitable property in such an amount
24		and upon such terms as are set out in writing in a
25		settlement agreement.
26		(r) Nothing in this Act shall apply to property

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1		that constitutes reasonable bona fide attorney's fees
2		paid to an attorney for services rendered or to be
3		rendered in the forfeiture proceeding or criminal
4		proceeding relating directly thereto when the property
5		was paid before its seizure and before the issuance of
6		any seizure warrant or court order prohibiting
7		transfer of the property and when the attorney, at the
8		time he or she received the property, did not know that
9		it was property subject to forfeiture under this Act.
10		The court shall further have jurisdiction and authority, in
11		addition to the penalties and other remedies in this Act
12		provided, to enter an order for the appointment of the court or
13		a person as a receiver, conservator, ancillary receiver or
14		ancillary conservator for the defendant or the defendant's
15		assets located in this State, or to require restitution,
16		damages or disgorgement of profits on behalf of the person or
17		persons injured by the act or practice constituting the subject
18		matter of the action, and may assess costs against the
19		defendant for the use of the State; provided, however, that the
20		civil remedies of rescission and appointment of a receiver,
21		conservator, ancillary receiver or ancillary conservator shall
22		not be available against any person by reason of the failure to
23		file with the Secretary of State, or on account of the contents
24		of, any report of sale provided for in subsection G or P of
25		Section 4, paragraph (2) of subsection D of Sections 5 and 6,
26		or paragraph (2) of subsection F of Section 7 of this Act.

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1		Appeals may be taken as in other civil cases.
2		J. In no case shall the Secretary of State, or any of his
3		or her employees or agents, in the administration of this Act,
4		incur any official or personal liability by instituting an
5		injunction or other proceeding or by denying, suspending or
6		revoking the registration of a dealer or salesperson, or by
7		denying, suspending or revoking the registration of securities
8		or prohibiting the offer or sale of securities, or by
9		suspending or prohibiting any person from acting as a dealer,
10		limited Canadian dealer, salesperson, investment adviser, or
11		investment adviser representative or from offering or selling
12		securities.
13		K. No provision of this Act shall be construed to require
14		or to authorize the Secretary of State to require any
15		investment adviser or federal covered investment adviser
16		engaged in rendering investment supervisory services to
17		disclose the identity, investments, or affairs of any client of
18		the investment adviser or federal covered investment adviser,
19		except insofar as the disclosure may be necessary or
20		appropriate in a particular proceeding or investigation having
21		as its object the enforcement of this Act.
22		L. Whenever, after an examination, investigation or
23		hearing, the Secretary of State deems it of public interest or
24		advantage, he or she may certify a record to the State's
25		Attorney of the county in which the act complained of, examined
26		or investigated occurred. The State's Attorney of that county

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1		within 90 days after receipt of the record shall file a written
2		statement at the Office of the Secretary of State, which
3		statement shall set forth the action taken upon the record, or
4		if no action has been taken upon the record that fact, together
5		with the reasons therefor, shall be stated.
6		M. The Secretary of State may initiate, take, pursue, or
7		prosecute any action authorized or permitted under Section 6d
8		of the Federal 1974 Act.
9		N. (1) Notwithstanding any provision of this Act to the
10		contrary, to encourage uniform interpretation, administration,
11		and enforcement of the provisions of this Act, the Secretary of
12		State may cooperate with the securities agencies or
13		administrators of one or more states, Canadian provinces or
14		territories, or another country, the Securities and Exchange
15		Commission, the Commodity Futures Trading Commission, the
16		Securities Investor Protection Corporation, any
17		self-regulatory organization, and any governmental law
18		enforcement or regulatory agency.
19		(2) The cooperation authorized by paragraph (1) of this
20		subsection includes, but is not limited to, the following:
21		(a) establishing or participating in a central
22		depository or depositories for registration under this Act
23		and for documents or records required under this Act;
24		(b) making a joint audit, inspection, examination, or
25		investigation;
26		(c) holding a joint administrative hearing;

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1		(d) filing and prosecuting a joint civil or criminal
2		proceeding;
3		(e) sharing and exchanging personnel;
4		(f) sharing and exchanging information and documents;
5		or
6		(g) issuing any joint statement or policy.
7		(Source: P.A. 92-308, eff. 1-1-02; 93-580, eff. 8-21-03.)
8		(815 ILCS 5/11a) (from Ch. 121 1/2, par. 137.11a)
9		Sec. 11a. Fees.
10		(1) The Secretary of State shall by rule or regulation
11		impose and shall collect reasonable fees necessary for the
12		administration of this Act including, but not limited to, fees
13		for the following purposes:
14		(a) filing an application pursuant to paragraph (2) of
15		subsection F of Section 4 of this Act;
16		(b) examining an application and report pursuant to
17		paragraph (2) of subsection F of Section 4 of this Act;
18		(c) filing a report pursuant to subsection G of Section
19		4 of this Act, determined in accordance with paragraph (4)
20		of subsection G of Section 4 of this Act;
21		(d) examining an offering sheet pursuant to subsection
22		P of Section 4 of this Act;
23		(e) filing a report pursuant to subsection P of Section
24		4, determined in accordance with subsection P of Section 4
25		of this Act;

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1		(f) examining an application to register securities
2		under subsection B of Section 5 of this Act;
3		(g) examining an amended or supplemental prospectus
4		filed pursuant to the undertaking required by
5		sub-paragraph (i) of paragraph (2) of subsection B of
6		Section 5 of this Act;
7		(h) registering or renewing registration of securities
8		under Section 5, determined in accordance with subsection C
9		of Section 5 of this Act;
10		(i) registering securities in excess of the amount
11		initially registered, determined in accordance with
12		paragraph (2) of subsection C of Section 5 of this Act;
13		(j) failure to file timely an application for renewal
14		under subsection E of Section 5 of this Act;
15		(k) failure to file timely any document or information
16		required under Section 5 of this Act;
17		(l) examining an application to register face amount
18		certificate contracts under subsection B of Section 6 of
19		this Act;
20		(m) examining an amended or supplemental prospectus
21		filed pursuant to the undertaking required by
22		sub-paragraph (f) of paragraph (2) of subsection B of
23		Section 6 of this Act;
24		(n) registering or renewing registration of face
25		amount certificate contracts under Section 6 of this Act;
26		(o) amending a registration of face amount certificate

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1		contracts pursuant to subsection E of Section 6 of this Act
2		to add any additional series, type or class of contract;
3		(p) failure to file timely an application for renewal
4		under subsection F of Section 6 of this Act;
5		(q) adding to or withdrawing from deposits with respect
6		to face amount certificate contracts pursuant to
7		subsection H of Section 6, a transaction charge payable at
8		the times and in the manner specified in subsection H of
9		Section 6 (which transaction charge shall be in addition to
10		the annual fee called for by subsection H of Section 6 of
11		this Act);
12		(r) failure to file timely any document or information
13		required under Section 6 of this Act;
14		(s) examining an application to register investment
15		fund shares under subsection B of Section 7 of this Act;
16		(t) examining an amended or supplemental prospectus
17		filed pursuant to the undertaking required by
18		sub-paragraph (f) of paragraph (2) of subsection B of
19		Section 7 of this Act;
20		(u) registering or renewing registration of investment
21		fund shares under Section 7 of this Act;
22		(v) amending a registration of investment fund shares
23		pursuant to subsection D of Section 7 of this Act to
24		register an additional class or classes of investment fund
25		shares;
26		(w) failure to file timely an application for renewal

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1		under paragraph (l) of subsection G of Section 7 of this
2		Act;
3		(x) examining an application for renewal of
4		registration of investment fund shares under paragraph (2)
5		of subsection G of Section 7 of this Act;
6		(y) failure to file timely any document or information
7		required under Section 7 of this Act;
8		(z) filing an application for registration or
9		re-registration of a dealer or limited Canadian dealer
10		under Section 8 of this Act for each office in this State;
11		(aa) in connection with an application for the
12		registration or re-registration of a salesperson under
13		Section 8 of or this Act, for the following purposes:
14		(i) filing an application;
15		(ii) a Securities Audit and Enforcement Fund fee;
16		and
17		(iii) a notification filing of federal covered
18		investment advisers;
19		(bb) in connection with an application for the
20		registration or re-registration of an investment adviser
21		under Section 8 of this Act;
22		(cc) failure to file timely any document or information
23		required under Section 8 of this Act;
24		(dd) filing a consent to service of process under
25		Section 10 of this Act;
26		(ee) issuing a certificate pursuant to subsection B of

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1		Section 15 of this Act;
2		(ff) issuing a certified copy pursuant to subsection C
3		of Section 15 of this Act;
4		(gg) issuing a non-binding statement pursuant to
5		Section 15a of this Act;
6		(hh) filings by Notification under Section 2a;
7		(ii) notification filing of federal Regulation D,
8		Section 506 offering under the Federal 1933 Act;
9		(jj) notification filing of securities and closed-end
10		investment company securities;
11		(kk) notification filing of face amount certificate
12		contracts;
13		(ll) notification filing of open-end investment
14		company securities;
15		(mm) filing a report pursuant to subsection D of
16		Section 4 of this Act;
17		(nn) in connection with the filing of an application
18		for registration or re-registration of an investment
19		adviser representative under subsection D of Section 8 of
20		this Act; .
21		(oo) filing a notice pursuant to paragraph (6) of
22		subsection T of Section 4 of this Act; and
23		(pp) applying for registration, or renewing
24		registration, as a registered Internet portal pursuant to
25		Section 8d of this Act.
26		(2) The Secretary of State may, by rule or regulation,

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1		raise or lower any fee imposed by, and which he or she is
2		authorized by law to collect under, this Act.
3		(Source: P.A. 90-70, eff. 7-8-97; 91-357, eff. 7-29-99; revised
4		12-11-14.)
5		(815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)
6		Sec. 12. Violation. It shall be a violation of the
7		provisions of this Act for any person:
8		A. To offer or sell any security except in accordance with
9		the provisions of this Act.
10		B. To deliver to a purchaser any security required to be
11		registered under Section 5, Section 6 or Section 7 hereof
12		unless accompanied or preceded by a prospectus that meets the
13		requirements of the pertinent subsection of Section 5 or of
14		Section 6 or of Section 7.
15		C. To act as a dealer, internet portal, salesperson,
16		investment adviser, or investment adviser representative,
17		unless registered as such, where such registration is required,
18		under the provisions of this Act.
19		D. To fail to file with the Secretary of State any
20		application, report or document required to be filed under the
21		provisions of this Act or any rule or regulation made by the
22		Secretary of State pursuant to this Act or to fail to comply
23		with the terms of any order of the Secretary of State issued
24		pursuant to Section 11 hereof.
25		E. To make, or cause to be made, (1) in any application,

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1		report or document filed under this Act or any rule or
2		regulation made by the Secretary of State pursuant to this Act,
3		any statement which was false or misleading with respect to any
4		material fact or (2) any statement to the effect that a
5		security (other than a security issued by the State of
6		Illinois) has been in any way endorsed or approved by the
7		Secretary of State or the State of Illinois.
8		F. To engage in any transaction, practice or course of
9		business in connection with the sale or purchase of securities
10		which works or tends to work a fraud or deceit upon the
11		purchaser or seller thereof.
12		G. To obtain money or property through the sale of
13		securities by means of any untrue statement of a material fact
14		or any omission to state a material fact necessary in order to
15		make the statements made, in the light of the circumstances
16		under which they were made, not misleading.
17		H. To sign or circulate any statement, prospectus, or other
18		paper or document required by any provision of this Act or
19		pertaining to any security knowing or having reasonable grounds
20		to know any material representation therein contained to be
21		false or untrue.
22		I. To employ any device, scheme or artifice to defraud in
23		connection with the sale or purchase of any security, directly
24		or indirectly.
25		J. When acting as an investment adviser, investment adviser
26		representative, or federal covered investment adviser, by any

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1		means or instrumentality, directly or indirectly:
2		(1) To employ any device, scheme or artifice to defraud
3		any client or prospective client;
4		(2) To engage in any transaction, practice, or course
5		of business which operates as a fraud or deceit upon any
6		client or prospective client; or
7		(3) To engage in any act, practice, or course of
8		business which is fraudulent, deceptive or manipulative.
9		The Secretary of State shall for the purposes of this
10		paragraph (3), by rules and regulations, define and
11		prescribe means reasonably designed to prevent such acts,
12		practices, and courses of business as are fraudulent,
13		deceptive, or manipulative.
14		K. When offering or selling any mineral investment contract
15		or mineral deferred delivery contract:
16		(1) To employ any device, scheme, or artifice to
17		defraud any customer, prospective customer, or offeree;
18		(2) To engage in any transaction, practice, or course
19		of business that operates as a fraud or deceit upon any
20		customer, prospective customer, or offeree; or
21		(3) To engage in any act, practice, or course of
22		business that is fraudulent, deceptive, or manipulative.
23		The Secretary of State shall for the purposes of this
24		paragraph (3), by rules and regulations, define and
25		prescribe means reasonably designed to prevent acts,
26		practices, and courses of business as are fraudulent,

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1		deceptive, or manipulative.
2		L. To knowingly influence, coerce, manipulate, or mislead
3		any person engaged in the preparation or audit of financial
4		statements or appraisals to be used in the offer or sale of
5		securities for the purpose of rendering such financial
6		statements or appraisals materially misleading.
7		(Source: P.A. 93-580, eff. 8-21-03.)
8		(815 ILCS 5/13) (from Ch. 121 1/2, par. 137.13)
9		Sec. 13. Private and other civil remedies; securities.
10		A. Every sale of a security made in violation of the
11		provisions of this Act shall be voidable at the election of the
12		purchaser exercised as provided in subsection B of this
13		Section; and the issuer, controlling person, underwriter,
14		dealer or other person by or on behalf of whom said sale was
15		made, and each underwriter, dealer, internet portal, or
16		salesperson who shall have participated or aided in any way in
17		making the sale, and in case the issuer, controlling person,
18		underwriter, or dealer, or internet portal is a corporation or
19		unincorporated association or organization, each of its
20		officers and directors (or persons performing similar
21		functions) who shall have participated or aided in making the
22		sale, shall be jointly and severally liable to the purchaser as
23		follows:
24		(1) for the full amount paid, together with interest
25		from the date of payment for the securities sold at the

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1		rate of the interest or dividend stipulated in the
2		securities sold (or if no rate is stipulated, then at the
3		rate of 10% per annum) less any income or other amounts
4		received by the purchaser on the securities, upon offer to
5		tender to the seller or tender into court of the securities
6		sold or, where the securities were not received, of any
7		contract made in respect of the sale; or
8		(2) if the purchaser no longer owns the securities, for
9		the amounts set forth in clause (1) of this subsection A
10		less any amounts received by the purchaser for or on
11		account of the disposition of the securities.
12		If the purchaser shall prevail in any action brought to
13		enforce any of the remedies provided in this subsection, the
14		court shall assess costs together with the reasonable fees and
15		expenses of the purchaser's attorney against the defendant. Any
16		provision of this subsection A to the contrary notwithstanding,
17		the civil remedies provided in this subsection A shall not be
18		available against any person by reason of the failure to file
19		with the Secretary of State, or on account of the content of,
20		any report of sale provided for in subsection G or P of Section
21		4, paragraph (2) of subsection D of Sections 5 and 6, or
22		paragraph (2) of subsection F of Section 7 of this Act.
23		B. Notice of any election provided for in subsection A of
24		this Section shall be given by the purchaser within 6 months
25		after the purchaser shall have knowledge that the sale of the
26		securities to him or her is voidable, to each person from whom

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1		recovery will be sought, by registered mail or certified mail,
2		return receipt requested, addressed to the person to be
3		notified at his or her last known address with proper postage
4		affixed, or by personal service.
5		C. No purchaser shall have any right or remedy under this
6		Section who shall fail, within 15 days from the date of receipt
7		thereof, to accept an offer to repurchase the securities
8		purchased by him or her for a price equal to the full amount
9		paid therefor plus interest thereon and less any income thereon
10		as set forth in subsection A of this Section. Every offer of
11		repurchase provided for in this subsection shall be in writing,
12		shall be delivered to the purchaser or sent by registered mail
13		or certified mail, return receipt requested, addressed to the
14		purchaser at his or her last known address, and shall offer to
15		repurchase the securities sold for a price equal to the full
16		amount paid therefor plus interest thereon and less any income
17		thereon as set forth in subsection A of this Section. Such
18		offer shall continue in force for 15 days from the date on
19		which it was received by the purchaser, shall advise the
20		purchaser of his or her rights and the period of time limited
21		for acceptance thereof, and shall contain such further
22		information, if any, as the Secretary of State may prescribe.
23		Any agreement not to accept or refusing or waiving any such
24		offer made during or prior to said 15 days shall be void.
25		D. No action shall be brought for relief under this Section
26		or upon or because of any of the matters for which relief is

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1		granted by this Section after 3 years from the date of sale;
2		provided, that if the party bringing the action neither knew
3		nor in the exercise of reasonable diligence should have known
4		of any alleged violation of subsection E, F, G, H, I or J of
5		Section 12 of this Act which is the basis for the action, the 3
6		year period provided herein shall begin to run upon the earlier
7		of:
8		(1) the date upon which the party bringing the action
9		has actual knowledge of the alleged violation of this Act;
10		or
11		(2) the date upon which the party bringing the action
12		has notice of facts which in the exercise of reasonable
13		diligence would lead to actual knowledge of the alleged
14		violation of this Act.
15		E. The term purchaser as used in this Section shall include
16		the personal representative or representatives of the
17		purchaser.
18		F. Anything in this Act to the contrary notwithstanding and
19		in addition to all other remedies, the Secretary of State
20		through the Office of the Attorney General may bring an action
21		in any circuit court of the State of Illinois in the name and
22		on behalf of the State of Illinois against any person or
23		persons participating in or about to participate in a violation
24		of this Act to enjoin those persons who are continuing or doing
25		any act in violation of this Act or to enforce compliance with
26		this Act. Upon a proper showing the court may grant a permanent

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1		or preliminary injunction or temporary restraining order
2		without bond, and may order the defendant to make an offer of
3		rescission of any sales or purchases of securities determined
4		by the court to be unlawful under this Act. The court shall
5		further have jurisdiction and authority, in addition to the
6		other penalties and remedies in this Act provided, to act or
7		appoint another person as a receiver, conservator, ancillary
8		receiver or ancillary conservator for the defendant or the
9		defendant's assets located in this State and may assess costs
10		against the defendant for the use of the State.
11		G. (1) Whenever any person has engaged or is about to
12		engage in any act or practice constituting a violation of this
13		Act, any party in interest may bring an action in the circuit
14		court of the county in which the party in interest resides, or
15		where the person has his, her or its principal office or
16		registered office or where any part of the transaction has or
17		will take place, to enjoin that person from continuing or doing
18		any act in violation of or to enforce compliance with this Act.
19		Upon a proper showing, the court shall grant a permanent or
20		preliminary injunction or temporary restraining order or
21		rescission of any sales or purchases of securities determined
22		to be unlawful under this Act, and may assess costs of the
23		proceedings against the defendant.
24		(2) A copy of the complaint shall be served upon the
25		Secretary of State within one business day of filing in the
26		form and manner prescribed by the Secretary of State by rule or

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1		regulation; provided, that the failure to comply with this
2		provision shall not invalidate the action which is the subject
3		of the complaint.
4		H. Any provision of this Section 13 to the contrary
5		notwithstanding, neither the civil remedies provided in
6		subsection A of this Section 13 nor the remedies of rescission
7		and appointment of a receiver, conservator, ancillary receiver
8		or ancillary conservator provided in subsection I of Section 11
9		of this Act and in subsections F and G of this Section 13 of
10		this Act nor the remedies of restitution, damages or
11		disgorgement of profits provided in subsection I of Section 11
12		of this Act shall be available against any person by reason of
13		the failure to file with the Secretary of State, or on account
14		of the contents of, any notice filing under Section 2a of this
15		Act or subsection C-5 of Section 8 of this Act or any report of
16		sale provided for in subsection G or P of Section 4, paragraph
17		(2) of subsection D of Sections 5 and 6, or paragraph (2) of
18		subsection F of Section 7 of this Act.
19		(Source: P.A. 98-174, eff. 8-5-13.)
20		(815 ILCS 5/18.1)
21		Sec. 18.1. Additional fees. In addition to any other fee
22		that the Secretary of State may impose and collect pursuant to
23		the authority contained in Sections 4, 8, and 11a of this Act,
24		beginning on July 1, 2003 the Secretary of State shall also
25		collect the following additional fees:

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1 Securities offered or sold under the Uniform 2 Limited Offering Exemption Pursuant to 3 Section 4.D of the Act............................ $100 4 Securities offered or sold under the Uniform 5 Limited Offering Exemption pursuant to subsection 6 T of Section 4 of this Act. $100 7 Registration and renewal of a dealer.............. $300 8 Registration and renewal of a registered Internet 9 portal. $300 10 Registration and renewal of an investment adviser. $200 11 Federal covered investment adviser notification 12 filing and annual notification filing............. $200 13 Registration and renewal of a salesperson......... $75 14 Registration and renewal of an investment adviser 15 representative and a federal covered 16 investment adviser representative................. $75
17		Investment fund shares notification filing and annual
18		notification filing: $800 plus $80 for each series, class, or
19		portfolio.
20		All fees collected by the Secretary of State pursuant to
21		this amendatory Act of the 93rd General Assembly shall be
22		deposited into the General Revenue Fund in the State treasury.
23		(Source: P.A. 93-32, eff. 7-1-03.)