Text: HSB00148 Text: HSB00150 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 502.202, subsection 12, paragraph b, 1 2 unnumbered paragraph 1, Code 1999, is amended to read as 1 3 follows: 1 4 A mutual or cooperative organization, including a 1 5 cooperative association organized in good faith under and for 1 6 any of the purposes enumerated in chapters 497, 498,and499, 1 7 and 501 that deals in commodities or supplies goods or 1 8 services in transactions primarily with and for the benefit of 1 9 its members, if: 1 10 Sec. 2. Section 502.302, subsection 3, Code 1999, is 1 11 amended to read as follows: 1 12 3. Every applicant for initial or renewal registration as 1 13 a broker-dealer or investment adviser shall pay a filing fee 1 14 of two hundred dollars. Every applicant for initial or 1 15 renewal registration as an agent or investment adviser 1 16 representative shall pay a filing fee of thirty dollars. 1 17 However, an investment adviser representative is not required 1 18 to pay a filing fee, if the investment adviser is a sole 1 19 proprietorship or the substantial equivalent and the 1 20 investment adviser representative is the same individual as 1 21 the investment adviser. A filing fee is not refundable. 1 22 Every person acting as a federal covered adviser in this 1 23 state, except with respect to federal covered advisers whose 1 24 only clients are those described in section 502.301, 1 25 subsection 3, paragraph "b", shall pay an initial and renewal 1 26 notice filing fee of one hundred dollars. 1 27 Sec. 3. Section 502.304, subsection 5, Code 1999, is 1 28 amended to read as follows: 1 29 5. Withdrawal from registration as a broker-dealer, agent, 1 30 investment adviser, or investment adviser representative 1 31 becomes effective thirty days after receipt of an application 1 32 to withdraw or within such shorter period of time as the 1 33 administrator may by order determine, unless a proceeding to 1 34 deny, suspend, or revoke a registration is pending when the 1 35 application is filed or a proceeding to deny, suspend, or 2 1 revoke a registration, or to impose conditions upon the 2 2 withdrawal is instituted within thirty days after the 2 3 application is filed. If a proceeding is pending or 2 4 instituted, withdrawal becomes effective at such time and upon 2 5 such conditions as the administrator by order determines. If 2 6 no proceeding is pending or instituted and withdrawal 2 7 automatically becomes effective, the administrator may 2 8 nevertheless institute a revocation or suspension proceeding 2 9 under subsection 1, paragraph "b",within one year after 2 10 withdrawal became effective and enter a revocation or 2 11 suspension order as of the last date on which registration was 2 12 effective. 2 13 Sec. 4. Section 502.304, Code 1999, is amended by adding 2 14 the following new subsection: 2 15 NEW SUBSECTION. 5A. A person who directly or indirectly 2 16 controls a broker-dealer or agent is subject to the same 2 17 sanctions applicable to an applicant or registrant under this 2 18 section, unless the person proves that the person did not 2 19 know, and was not grossly negligent in failing to know, of the 2 20 existence of facts by reason of which the liability is alleged 2 21 to exist. 2 22 Sec. 5. Section 502.305, Code 1999, is amended to read as 2 23 follows: 2 24 502.305 EXAMINATION OF INVESTMENT ADVISER REPRESENTATIVE 2 25 AND EXEMPTION FROM EXAMINATION. 2 26 The administrator may adopt rules requiring the passage of 2 27 an examination by an individual who is required to be 2 28 registered under this chapter as an investment adviser 2 29 representative. However, a person who is registered as an 2 30 investment adviser representative between January 1, 1999, and 2 31 December 31,20001999, shall not be required to pass an 2 32 examination for as long as the person maintains a continuous 2 33 registration. 2 34 Sec. 6. Section 502.503, subsection 1, Code 1999, is 2 35 amended to read as follows: 3 1 1. Affiliates of a person liable under section 502.401, 3 2 502.501, 502.502,or502.502A, or 502.604, partners, principal 3 3 executive officers or directors of such person, persons 3 4 occupying a similar status or performing similar functions for 3 5 such person, persons (whether employees of such person or 3 6 otherwise) who materially aid and abet in the act or 3 7 transaction constituting the violation, and broker-dealers or 3 8 agents who materially aid and abet in the act or transaction 3 9 constituting the violation, are also liable jointly and 3 10 severally with and to the same extent as such person, unless 3 11 one of the following applies: 3 12 a. With respect to section 502.501, section 502.502, 3 13 subsections 1 and 5, or section 502.502A,anya person liable 3 14hereunderunder this subsection proves that the person did not 3 15 know, and in the exercise of reasonable care could not have 3 16 known, of the existence of the facts by reason of which the 3 17 liability is alleged to exist; and. 3 18 b. With respect to section 502.401, section 502.502, 3 19 subsections 2 and 3, and section 502.604anya person liable 3 20hereunderunder this subsection proves that the person did not 3 21 know, and was not grossly negligent in failing to know, of the 3 22 existence of the facts by reason of which the liability is 3 23 alleged to exist. 3 24 Sec. 7. Section 502.504, Code 1999, is amended by adding 3 25 the following new subsection: 3 26 NEW SUBSECTION. 7. This section shall not apply to 3 27 actions filed by the administrator pursuant to section 3 28 502.604. 3 29 Sec. 8. Section 502.604, subsection 2, Code 1999, is 3 30 amended to read as follows: 3 31 2. Bring an action in the district court to enjoin the act 3 32 or practice and to enforce compliance with this chapter or a 3 33 rule or order adopted or issued pursuant to this chapter. 3 34 Upon a proper showing, the court may do all of the following: 3 35 a. Grant a permanent or temporary injunction, restraining 4 1 order,orasset freeze, accounting, writ of attachment, writ 4 2 of general or special execution, writ of mandamusshall be4 3granted and a, or other equitable or ancillary relief. 4 4 b. Appoint a receiver or conservatormay be appointedfor 4 5 the defendant or the defendant's assets.In addition, upon a4 6proper showing by the administrator, the court may enter an4 7order of4 8 c. Order the administrator to take charge and control of a 4 9 party's property, including but not limited to managing rents 4 10 and profits, collecting debts, and acquiring and disposing of 4 11 property. 4 12 d. Order the rescission, restitution, or disgorgement 4 13 directed at any person who has engaged in an act constituting 4 14 a violation of this chapter, or a rule or order adopted or 4 15 issued pursuant to this chapter, and may order. 4 16 e. Order the payment of prejudgment and postjudgment 4 17 interest. 4 18 PARAGRAPH DIVIDED. The administrator shall not be required 4 19 to post a bond. 4 20 Sec. 9. Section 523B.2, subsection 10, paragraph a, 4 21 subparagraph 9, Code 1999, is amended to read as follows: 4 22 (9) The seller does not have a minimum net worth of 4 23twenty-fivefifty thousand dollars, as determined in 4 24 accordance with generally accepted accounting principles. A 4 25 seller may submit a surety bond in lieu of the net worth 4 26 requirement. The administrator may by rule or order increase 4 27 the amount of the net worth or bond for the protection of 4 28 purchasers and may require the seller to file reports of all 4 29 sales in this state to determine the appropriate amount of the 4 30 net worth requirement. The surety bond shall be for the 4 31 period of the registration, issued by a surety company 4 32 authorized to do business in this state and for the benefit of 4 33 any purchaser. 4 34 Sec. 10. Section 523C.6, Code 1999, is amended to read as 4 35 follows: 5 1 523C.6 NET WORTH REQUIREMENT. 5 2 A service company that has issued or renewed in the 5 3 aggregate one thousand or less residential service contracts 5 4 during the preceding calendar year shall maintain a minimum 5 5 net worth of forty thousand dollars, and the minimum net worth 5 6 to be maintained shall be increased by an additional twenty 5 7 thousand dollars for each additional five hundred contracts or 5 8 fraction thereof issued or renewed, up to a maximum required 5 9 net worth of four hundred thousand dollars. At least twenty 5 10 thousand dollars of net worth shall consist of paid-in 5 11 capital. 5 12For purposes of this chapter, "net worth" means the excess5 13of all assets over all liabilities including required reserves5 14computed in accordance with generally accepted accounting5 15principles. At least twenty thousand dollars of net worth5 16shall consist of paid-in capital.5 17 Sec. 11. Section 523C.8, Code 1999, is amended to read as 5 18 follows: 5 19 523C.8 REBATES AND COMMISSIONS. 5 20 1.AExcept as provided in subsection 2, a service company 5 21 shall not pay a commission or any other consideration to any 5 22 person as an inducement or compensation for the issuance, 5 23 purchase, or acquisition of a residential service contract. 5 24However, this5 25 2. This section does not prohibit any of the following: 5 26 a. The payment of an override commission or marketing fee 5 27 to an employee or commission sales agent who is a marketing or 5 28 sales representative of the service company or its parent 5 29 company, subsidiary, or affiliate on the sale or marketing of 5 30 a residential service contract, provided the employee or 5 31 commission sales agent is not a real estate licensee sharing 5 32 in or entitled to share in, or affiliated with, a company or 5 33 organization which is entitled to share in any real estate 5 34 commission generated by the underlying real property 5 35 transaction.This section also does not prohibit fees,6 1 b. Fees, payments, or reimbursements for a bona fide 6 2inspectionsinspection, if an inspection of the property to be 6 3 the subject of a residential service contract is required by a 6 4 service company and if the inspection fee is reasonably 6 5 related to the services performed. 6 6 3. The division may adopt rules identifying types of fees, 6 7 payments, or reimbursements that do not constitute an 6 8 inducement or compensation for the issuance, purchase, or 6 9 acquisition of a residential service contract. 6 10 Sec. 12. Section 523E.1, subsection 6, Code 1999, is 6 11 amended to read as follows: 6 12 6. This section does not apply to payments for merchandise 6 13 delivered to the purchaser. Delivery includes storage in a 6 14 warehouseunder the control of the seller or any other6 15warehouseor storage facility approved by the commissioner 6 16when a receipt of ownership in the name of the purchaser is6 17delivered to the purchaser, the merchandise is insured against6 18loss, the merchandise is protected against damage, title has6 19been transferred to the purchaser, the merchandise is6 20appropriately identified and described in a manner that it can6 21be distinguished from other similar items of merchandise6 22unless this identification requirement with respect to bronze6 23merchandise is waived by the commissioner by rule, the method6 24of storage allows for visual audits of the merchandise, and6 25the annual reporting requirements of section 523E.2,6 26subsection 1, are satisfied. 6 27 EXPLANATION 6 28 This bill amends a number of provisions regulating entities 6 29 under the authority of the insurance division, including 6 30 securities, business opportunities, cemetery merchandise, and 6 31 residential service contracts. 6 32 Code section 502.202 exempts certain entities from 6 33 registration and filing requirements of the securities law. 6 34 The bill exempts cooperatives organized under Code chapter 6 35 501. 7 1 Code section 502.302 imposes a registration fee upon 7 2 investment advisers and investment adviser representatives. 7 3 The bill provides that in the case of a sole proprietorship an 7 4 investment adviser representative is not required to pay a fee 7 5 if the person is also the investment adviser. 7 6 Code section 502.304 provides for the denial, revocation, 7 7 or suspension of registration as a broker-dealer or agent. 7 8 The section provides that the division may institute a 7 9 revocation or suspension proceeding following withdrawal from 7 10 registration within one year after withdrawal. The bill 7 11 provides that the disciplinary action may be based on any 7 12 action that could have supported disciplinary action prior to 7 13 the withdrawal. 7 14 Code section 502.304 provides that a person directly or 7 15 indirectly controlling a broker-dealer or agent is subject to 7 16 the same penalties as the broker-dealer or agent guilty of 7 17 committing a violation, unless the person proves that the 7 18 person did not know the facts creating the violation and was 7 19 not grossly negligent in failing to know the facts. 7 20 Code section 502.305 requires that a person registered as 7 21 an investment advisor representative between January 1, 1999, 7 22 and December 31, 2000, is not required to pass an examination 7 23 in order to be registered. The bill reduces that period to 7 24 December 31, 1999. 7 25 Code section 502.503 provides that a person who aids and 7 26 abets in an effort to commit fraud is liable to the same 7 27 extent as the person who commits the fraud. 7 28 Code section 502.504 provides time limits for rights of 7 29 action brought under the chapter. The bill provides that the 7 30 section does not apply to actions filed by the division 7 31 necessary in order to enjoin the act or practice and to 7 32 enforce compliance with Code chapter 502 or a rule or order 7 33 adopted or issued pursuant to the chapter. 7 34 Code section 502.604 provides that the district court may 7 35 enjoin an act or practice and enforce compliance with Code 8 1 chapter 502 or rules adopted under that chapter. The bill 8 2 provides that the court may grant an asset freeze, accounting, 8 3 writ of attachment, writ of general or special execution, or 8 4 other equitable or ancillary relief. The bill also provides 8 5 that the court may order the division to take charge and 8 6 control of a party's property, including but not limited to 8 7 managing rents and profits, collecting debts, and acquiring 8 8 and disposing of property. 8 9 Code section 523B.2 provides that it is unlawful to offer 8 10 or sell a business opportunity in this state unless the 8 11 business opportunity is registered or exempt from registration 8 12 under Code chapter 523B. The section provides that the 8 13 division may issue an order suspending or revoking the 8 14 registration if the administrator finds that the seller does 8 15 not have a minimum net worth of $25,000. This bill increases 8 16 the net worth requirement to $50,000. 8 17 Code section 523C.6 requires a service company to maintain 8 18 a minimum net worth. The section defines "net worth" as the 8 19 excess of all assets over all liabilities including required 8 20 reserves computed in accordance with generally accepted 8 21 accounting principles. The bill eliminates this definition. 8 22 Code section 523C.8 prohibits a service company from paying 8 23 a commission or other consideration as an inducement or 8 24 compensation for the issuance, purchase, or acquisition of a 8 25 residential service contract. The bill provides that the 8 26 division may adopt rules identifying types of fees, payments, 8 27 or reimbursements that would not be determined to constitute 8 28 an inducement or compensation. 8 29 Code section 523E.6 provides that the seller of cemetery 8 30 merchandise must comply with Code chapter 555A regulating 8 31 door-to-door sales. Code section 523E.1 provides that certain 8 32 requirements relating to placing funds in trust from the sale 8 33 of cemetery merchandise do not apply to payments for 8 34 merchandise delivered to the purchaser. The bill eliminates a 8 35 number of conditions required for delivery. 9 1 LSB 1307DP 78 9 2 da/jw/5.1
Text: HSB00148 Text: HSB00150 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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