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Selected Sections of the
Nevada Securities Act
Sections included on this page:
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DEFINITIONSAs used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 90.215 to 90.305, inclusive, have the meanings ascribed to them in those sections.
INVESTMENT ADVISER DEFINED“Investment adviser” means any person who, for compensation, engages in the business of advising others as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. The term does not include:
1. An employee of an adviser; 2. A depository institution;
3. A lawyer, accountant, engineer or teacher whose performance of investment advisory services is solely incidental to the practice of his profession;
4. A broker-dealer whose performance of investment advisory services is solely incidental to the conduct of business as a broker-dealer and who receives no special compensation for
the investment advisory services;
5. A publisher, employee or columnist of a newspaper, news magazine or business or financial publication, or an owner, operator, producer or employee of a cable, radio or television network, station or production facility if, in either case, the financial or business news published or disseminated is made available to the general public and the content does not consist of rendering advice on the basis of the specific investment situation of each client;
6. A person whose advice, analyses or reports relate only to securities exempt under paragraph (a) of subsection 2 of NRS 90.520; or
7. Any other person the Administrator by regulation or order designates.
PROMOTER DEFINED1. A person who, acting alone or in concert with one or more other persons, takes the entrepreneurial initiative in founding or organizing the business or enterprise of an issuer;
2. An officer or director who owns any securities of an issuer or any person who owns, beneficially or of record, 10 percent or more of any class of securities of the issuer if the officer, director or other person acquires any of those securities within 3 years before the issuer files a registration under this chapter in a transaction which does not possess the indicia of bargaining at arm’s length; and
3. A member of the immediate family of a person within subsection 1 or 2 if the member received the securities in a transaction which does not possess the indicia of bargaining at arm’s length.
REPRESENTATIVE OF AN INVESTMENT ADVISER DEFINED1. “Representative of an investment adviser” means any person employed by or associated with an investment adviser who:
(a) Provides advice concerning securities;
(b) Manages accounts or portfolios of clients;
(c) Determines the advice concerning securities that is offered to clients;
(d) Solicits for the sale of investment advice, unless the person is a sales representative licensed pursuant to this chapter;
(e) Sells, offers to sell or negotiates for the sale of investment advice; or
(f) Supervises employees who engage in the activities described in paragraphs (a) to (e), inclusive.
2. The term does not include:
(a) A broker-dealer;
(b) An investment adviser; and
(c) A person employed by or associated with an investment adviser who provides clerical or administrative services.
SALE AND SELL DEFINED“Sale” includes every contract of sale, contract to sell, or other disposition, of a security or interest in a security for value. “Sell” has a corresponding meaning. In this context:
1. “Offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value.
2. “Offer to purchase” includes every attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value, but the term does not include a transaction that is subject to section 14(d) of the Securities Exchange Act of 1934.
3. A security given or delivered with, or as a bonus on account of, a purchase of securities or other item is considered to constitute a part of the subject of the purchase and to have been offered for sale and sold for value.
4. A gift of assessable stock is deemed to involve an offer and sale.
5. A sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, or a sale or offer of a security that gives the holder a present or future right or privilege to convert into another security of the same of another issuer, is deemed to include an offer of the other security.
6. The terms defined in this section do not include:
(a) The creation of a security interest or a loan;
(b) A stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if:
(1) The distribution of the dividend is not for the purpose of evading the provisions of this chapter governing the registration of securities; and
(2) Nothing of value is given by the stockholders for the dividend other than the surrender of a right to a cash or property dividend and each stockholder may elect to take the dividend in cash, property or stock; or
(c) An act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims or property interests, or partly in exchange and partly for cash.
SALES REPRESENTATIVE DEFINED“Sales representative” means a natural person other than a broker-dealer, authorized to act and acting for a broker-dealer or issuer effecting or attempting to effect purchases or sales of securities. A partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is a sales representative only if he otherwise comes within the definition.
SELF-REGULATORY ORGANIZATION DEFINED“Self-regulatory organization” means a national securities exchange registered under section 6 of the Securities Exchange Act of 1934, a national association of brokers and dealers registered under section 15A of the Securities Exchange Act of 1934, a clearing agency registered under section 17A of the Securities Exchange Act of 1934, the Municipal Securities Rulemaking Board established under section 15B(b)(1) of the Securities Exchange Act of 1934 or section 21 of the Commodity Exchange Act.
STATE DEFINED
“State” means a state, commonwealth, territory or possession of the United States, the District of Columbia or the commonwealth of Puerto Rico.
AUTHORITY OF ATTORNEY GENERAL AND DISTRICT ATTORNEY
1. The Attorney General may investigate and prosecute any violation of a provision of this chapter, a regulation adopted pursuant to this chapter, an order denying, suspending or revoking the effectiveness of registration or an order to cease and desist issued by the Administrator.
2. The district attorney of the appropriate county may prosecute any such violation:
(a) At the request of the Attorney General; or
(b) If the Attorney General does not prosecute such a violation.
CRIMINAL PENALTIES1. A person who willfully violates:
(a) A provision of this chapter, except NRS 90.600, or who violates NRS 90.600 knowing that the statement made is false or misleading in any material respect;
(b) A regulation adopted pursuant to this chapter; or
(c) An order denying, suspending or revoking the effectiveness of registration or an order to cease and desist issued by the Administrator pursuant to this chapter,
Ê is guilty of a category B felony and shall be punished by imprisonment in the state prison for a minimum term of not less than 1 year and a maximum term of not more than 20 years, or by a fine of not more than $500,000, or by both fine and imprisonment, for each violation. In addition to any other penalty, the court shall order the person to pay restitution.
2. A person convicted of violating a regulation or order under this chapter may be fined, but must not be imprisoned, if the person proves lack of knowledge of the regulation or order.
3. This chapter does not limit the power of the State to punish a person for conduct which constitutes a crime under other law.
CIVIL LIABILITY1. A person who offers or sells a security in violation of any of the following provisions:
(a) Subsection 1 of NRS 90.310;
(b) NRS 90.460;
(c) Subsection 10 of NRS 90.500;
(d) Subsection 2 of NRS 90.570;
(e) Subsection 2 of NRS 90.610; or
(f) A condition imposed in subsection 8 or 9 of NRS 90.500,
is liable to the person purchasing the security. Upon tender of the security, the purchaser may recover the consideration paid for the security and interest at the legal rate of this State from the date of payment, costs and reasonable attorney’s fees, less the amount of income received on the security. A purchaser who no longer owns the security may recover damages. Damages are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, plus interest at the legal rate of this State from the date of disposition of the security, costs and reasonable attorney’s fees determined by the court. Tender requires only notice of willingness to exchange the security for the amount specified.
2. A person who offers or sells a security in violation of subsection 2 of NRS 90.570 is not liable under subsection 1 of this section if:
(a) The purchaser knew that a statement of a material fact was untrue or that there was an omission of a statement of a material fact; or
(b) The seller did not know and in the exercise of reasonable care could not have known of the untrue statement or misleading omission.
3. A person who willfully participates in any act or transaction in violation of NRS 90.580 is liable to a person who purchases or sells a security, other than a security traded on a national securities exchange or quoted on a national automated quotation system administered by a self-regulatory organization, at a price that was affected by the act or transaction for the damages sustained as a result of the act or transaction. Damages are the difference between the price at which the securities were purchased or sold and the market value the securities would have had at the time of the person’s purchases or sale in the absence of the act or transaction, plus interest at the legal rate of this State from the date of the act or transaction and reasonable attorney’s fees.
4. A person who directly or indirectly controls another person who is liable under subsection 1 or 3, a partner, officer or director of the person liable, a person occupying a similar status or performing similar functions, any agent of the person liable, an employee of the person liable if the employee materially aids in the act, omission or transaction constituting the violation, and a broker-dealer or sales representative who materially aids in the act, omission or transaction constituting the violation, are also liable jointly and severally with and to the same extent as the other person, but it is a defense that the person did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by which the liability is alleged to exist. With respect to a person who directly or indirectly, controls another person who is liable under subsection 3, it is also a defense that the controlling person acted in good faith and did not, directly or indirectly, induce the act, omission or transaction constituting the violation. Contribution among the several persons liable is the same as in cases arising out of breach of contract. STATUTE OF LIMITATIONS
A person may not sue under NRS 90.660 unless suit is brought within the earliest of 2 years after the discovery of the violation, 2 years after discovery should have been made by the exercise of reasonable care, or 5 years after the act, omission or transaction constituting the violation.
OFFER OF RESCISSION AND SETTLEMENT1. Relief may not be obtained under subsection 1 of NRS 90.660 if, before suit is commenced, the purchaser:
(a) Receives a written offer:
(1) Stating the respect in which liability under NRS 90.660 may have arisen and fairly advising the purchaser of his rights of rescission;
(2) If the basis for relief under subsection 1 of NRS 90.660 is a violation of subsection 2 of NRS 90.570, including financial and other information necessary to correct all material misstatements or omissions in the information which was required by this chapter to be furnished to the purchaser as of the time of the sale of the security to the purchaser;
(3) Offering to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, plus interest at the legal rate of this State from the date of payment, less income received thereon, or, if the purchaser no longer owns the security, offering to pay the purchaser upon acceptance of the offer an amount in cash equal to the damages computed under subsection 1 of NRS 90.660 plus attorney’s fees; and
(4) Stating that the offer may be accepted by the purchaser at any time within a specified period of not less than 30 days after the date of its receipt by the purchaser or such shorter or longer time as the Administrator by order prescribes; and
(b) Fails to accept the offer in writing within the period specified under subparagraph (4) of paragraph (a).
2. The Administrator by regulation may prescribe the form in which the information specified in subsection 1 must be contained in an offer made under subsection 1.
3. An offer under subsection 1 must be delivered to the offeree or sent in a manner which assures actual receipt by the offeree.
4. If, after acceptance, a rescission offer is not performed in accordance with either its terms or this section, the offeree may obtain relief under NRS 90.660 without regard to this section. BURDEN OF PROOF
1. In a civil action or administrative proceeding under this chapter, a person claiming an exemption or an exception from a definition has the burden of proving the exemption or exception.
2. In a criminal proceeding, the burden of going forward with evidence of a claim of exemption or exception from a definition is on the person claiming it.
LIABILITY: GENERAL PROVISIONS1. Except as provided in NRS 90.680, a tender required under this chapter may be made before entry of judgment.
2. The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist at law or in equity but this chapter does not create any claim for relief not specified in NRS 90.620 to 90.690, inclusive.
3. A claim for relief under this chapter survives the death of a person who might have obtained relief as a plaintiff or defendant.
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