RULE 590-4-1-.01 - Definitions

RULE 590-4-1-.01. Definitions

All definitions contained in Section 10-5-2 of the Official Code of Georgia Annotated ("Code" or "O.C.G.A.") are incorporated by reference herein. When used in the Act and in these Rules, the following terms shall have the following meanings:

(1) "Accredited Investor" shall have the same meaning as set forth in Rule 501 of Regulation D under the SEC's general rules and regulations adopted pursuant to the Securities Act of 1933, 17 C.F.R. § 230.501.

(2) "Act" or "The Act" means the Georgia Uniform Securities Act of 2008, as amended, as set forth in Chapter 5 of Title 10 of the Official Code of Georgia Annotated.

(3) "Affiliate of" or "Person affiliated with" means a person who directly, or indirectly through one (1) or more intermediaries, controls or is controlled by, or is under common control with, the person specified.

(4) "Aggregate Offering Price" means the sum of all cash, services, property, notes, cancellation of debt, and other consideration received by an issuer for issuance of its securities. Where securities are being offered for both cash and non-cash consideration, the aggregate offering price shall be based on the price at which the securities are offered for cash. If securities are not offered for cash, the aggregate offering price shall be based on the value of the consideration as established by bona fide sales of that consideration made within a reasonable time or, in the absence of sales, on the fair value as determined by an accepted standard.

(5) "APA" means the Georgia Administrative Procedure Act, as set forth in Chapter 13 of Title 50 of the Official Code of Georgia Annotated.

(6) "Applicant" means the issuer, broker-dealer, investment adviser, investment adviser representative, agent, or other person executing the application.

(7) "Assistant Commissioner" means the Assistant Commissioner of Securities of the State of Georgia.

(8) "Associated person" means any partner, officer, director, branch manager (or any person occupying a similar status or performing similar functions) of a broker-dealer or investment adviser, any person directly or indirectly controlling, controlled by, or under common control with such broker-dealer or investment adviser, or any employee of such broker-dealer or investment adviser, except that any person associated with a broker-dealer or investment adviser whose functions are solely clerical or ministerial shall not be included in the meaning of such term.

(9) "Branch office" means any location where one (1) or more associated persons of a broker-dealer or investment adviser regularly conducts the business of effecting any transactions in any security, advising with respect to any security, or inducing or attempting to induce the purchase or sale of any security, or is held out as such, excluding the following:

(a) Any location that is established solely for customer service or administrative/clerical functions, or both, where no sales activities are conducted and that is not held out to the public as a branch office.

(b) Any location that is the associated person's primary residence, provided the following:

1. Only one (1) associated person, or multiple associated persons who reside at that location and are members of the same immediate family, conduct business at that location;

2. The location is not held out to the public as an office, and the associated person does not meet with customers at that location;

3. Neither customer funds nor securities are handled at that location;

4. The associated person is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements, and other communications to the public by such associated person;

5. The associated person's correspondence and communications with the public are subject to the firm's supervision in accordance with NASD Rule 3010 as found in the FINRA Manual;

6. Electronic communications (e.g., emails) are made through the broker-dealer's or investment adviser's electronic system;

7. All orders are entered through the designated branch office or an electronic system established by the broker-dealer that is reviewable at the branch office;

8. Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the broker-dealer or investment adviser; and

9. A list of residence locations is maintained by the broker-dealer or investment adviser.

(c) Any location, other than a primary residence, that is used for securities business for less than thirty (30) business days in any one (1) calendar year, provided that the broker-dealer or investment adviser complies with the provisions set forth in clauses (b)(1)-(9) above.

(d) Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, that is not held out to the public as an office. Where such office of convenience is located on bank premises, signage necessary to comply with applicable federal and state laws, rules, and regulations and applicable rules and regulations of the New York Stock Exchange, other self-regulatory organizations, and securities and banking regulators may be displayed and shall not be deemed "holding out" for purposes of this Rule.

(e) Any location that is used primarily to engage in non-securities activities and from which the associated person or persons effects no more than twenty-five (25) securities transactions in any one (1) calendar year; provided that any advertisement or sales literature identifying such location also sets forth the address and telephone number of the location from which the associated person or persons conducting business at the non-branch locations are directly supervised.

(f) The floor of a registered national securities exchange where a broker-dealer conducts a direct access business with public customers.

(g) A temporary location established in response to the implementation of a business continuity plan.

Notwithstanding the exclusions in this Rule, any location that is responsible for supervising the activities of persons associated with the broker-dealer or investment adviser at one (1) or more non-branch locations of the broker-dealer or investment adviser is considered to be a branch office.

(10) "Business Day" shall mean any day other than Saturday, Sunday or other day on which the office of the Secretary of State is authorized or required by law, regulation or order to close. The term "business day" as used in this Rule shall not include any partial business day provided that the associated person spends at least four (4) hours on such business day at his or her designated branch office during the hours that such office is normally open for business.

(11) "The Commissioner" or "Commissioner" means the Commissioner of Securities of the State of Georgia. For the purpose of the Rules, the term Commissioner includes the Assistant Commissioner and any other individuals delegated to act on behalf of the Commissioner or Assistant Commissioner.

(12) "CRD" means the Central Registration Depository as maintained by FINRA.

(13) "Division" means the Securities Division of the office of the Secretary of State.

(14) "FINRA" means the Financial Industry Regulatory Authority, Inc.

(15) "IARD" means the Investment Adviser Registration Depository as maintained by FINRA.

(16) "Initiation of Proceedings" or "Order for Proceedings" shall mean any:

(a) Summary order issued under Code Sections 10-5-13(a), 10-5-25, or 10-5-41;

(b) Ex parte order issued under Code Section 10-5-73; or

(c) Notice of hearing issued at the instance of the Commissioner.

(17) "NASAA" means the North American Securities Administrators Association, Inc.

(18) "National Securities Association" means an association registered with the SEC under Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. § 78o-3).

(19) "National Securities Exchange" means an exchange registered with the SEC under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f).

(20) "Net Liquid Capital" means net capital as defined in SEC Rule 15c3-1(c)(2) (17 C.F.R. § 240.15c3 - 1(c)(2)) under the Securities Exchange Act of 1934.

(21) "Offering" means any or all offers and sales of securities by an issuer that are integrated and considered as part of a single offering of securities by such issuer. Offers and sales that are made more than six (6) months before the start of a putative offering under Code Section 10-5-11(14) or are made more than six (6) months after completion of such putative offering will not be considered part of that offering, so long as during those six (6) month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold under Code Section 10-5-11(14), other than those offers or sales of securities under an employee benefit plan as defined in SEC Rule 405 (17 C.F.R. 230.405) under the Securities Act of 1933. If the issuer offers or sells securities within either of the six (6) month periods, the determination as to whether separate sales of securities are part of the same offering depends on the particular facts and circumstances of the sales, including the following:

(a) Whether the sales are part of a single plan of financing,

(b) Whether the sales involve issuance of the same class of securities,

(c) Whether the sales have been made at or about the same time,

(d) Whether the same type of consideration is received, and

(e) Whether the sales are made for the same general purpose.

(22) "Office of Supervisory Jurisdiction" means any office of a broker-dealer at which any one (1) or more of the following functions takes place:

(a) Order execution or market making, or both.

(b) Structuring of public offerings or private placements.

(c) Maintaining custody of customers' funds or securities, or both.

(d) Final acceptance (approval) of new accounts on behalf of the broker-dealer.

(e) Review and endorsement of customer orders.

(f) Final approval of advertising or sales literature for use by persons associated with the broker-dealer, except for an office that solely conducts final approval of research reports.

(g) Responsibility for supervising the activities of persons associated with the broker-dealer at one (1) or more other branch offices of the broker-dealer.

(23) "Officer" means, without limitation, the chief executive officer, president, vice president, secretary, and treasurer of a corporation, managing member of a limited liability company, managing partners of a partnership, or the equivalent positions in another type of business organization.

(24) "Order" or "Consent Order" includes, but is not limited to, an administrative order issued under these Rules or a similar order issued by a court of competent jurisdiction, any federal, foreign, or state agency, or a self-regulatory organization that makes a finding that state or federal securities laws have been violated and sanctions administered.

(25) "Purchaser Representative" means any person who satisfies all of the following conditions or who the issuer reasonably believes satisfies all of the following conditions:

(a) Is not an affiliate, director, officer, or other employee of the issuer, or beneficial owner of ten percent (10%) or more of any class of the equity securities or ten percent (10%) or more of the equity interest in the issuer, except where the purchaser is a:

1. Relative of the purchaser representative by blood, marriage, or adoption and not more remote than a first cousin;

2. Trust or estate in which the purchaser representative and any person related to the purchaser as specified in item 1, collectively, have more than fifty percent (50%) of the beneficial interest (excluding contingent interest) or of which the purchaser representative serves as trustee, executor, or in any similar capacity; or

3. Corporation or other organization of which the purchaser representative and any persons related to the purchaser as specified in item 1 or 2, collectively, are the beneficial owners of more than fifty percent (50%) of the equity securities (excluding directors' qualifying shares) or equity interests.

(b) Has the knowledge and experience in financial and business matters such that the person is capable of evaluating, either alone, together with other purchaser representatives of the purchaser, or together with the purchaser, the merits and risks of the prospective investment.

(c) Is acknowledged by the purchaser, in writing, during the course of the specific transaction, to be the purchaser's purchaser representative in connection with evaluating the merits and risks of the specific prospective investment.

(d) Discloses to the purchaser, in writing, prior to the acknowledgment specified in clause (c), any material relationship between himself or herself or his or her affiliates and the issuer or its affiliates that then exist, is mutually understood to be contemplated, or has existed at any time during the previous two (2) years, and any compensation received or to be received as a result of the relationship.

(26) "Rule" or "the Rules" means the rules as they appear in the "Official Compilation Rules and Regulations of the State of Georgia" as compiled and printed by the Secretary of State pursuant to the Georgia Administrative Procedure Act, Code Section 50-13-1et seq.

(27) "Sales and Advertising Literature" means any advertisement; pamphlet; circular; letter; article; communication published in any newspaper, magazine or periodical; script of any recording, radio or television announcement or broadcast; sales-kit; pitch-book; film clip; or other communication through facsimile or other electronic means used or proposed to be used in connection with any offering of securities.

(28) "SEC" means the United States Securities and Exchange Commission.

(29) "Secretary of State" means the Secretary of State of the State of Georgia.

(30) "Securities Act of 1933" means the Securities Act of 1933, 15 U.S.C. § 77 a et seq., as amended.

(31) "Securities Exchange Act of 1934" means the Securities Exchange Act of 1934, 15 U.S.C. § 78 fet seq., as amended.

(32) "Underwriter" means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of such an undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission.

(33) "Willfully" or "Willful" means intentionally committing the act that constitutes the violation. There is no requirement that the actor also be aware that he, she, or it is violating the Act or Rules.

(Original Rule entitled "Registration in Home State" adopted. F. and eff. July 19, 1965. Amended: ER. 590-4-1-0.4-.01 entitled "Untrue Statements Prohibited" adopted. F. and eff. Apr. 1, 1974, the date of adoption. Amended: Permanent Rule entitled "Delegation to Assistant Commissioner" adopted. F. July 5, 1974; eff. July 25, 1974. Repealed: New Rule entitled "Definitions" adopted. F. Dec. 9, 1980; eff. Dec. 29, 1980. Repealed: New Rule of same title adopted. F. Apr. 13, 1983; eff. May 3, 1983. Amended: ER. 590-4-1-0.31-.01 adopted. F. July 2, 1990; eff. July 1, 1990, the date of adoption. Amended: Permanent Rule adopted. F. Aug. 8, 1990; eff. Aug. 28, 1990. Amended: F. Dec. 13, 1990; eff. Jan. 2, 1991. Repealed: New Rule of same title adopted. F. Dec. 21, 2004; eff. Jan. 10, 2005. Repealed: New Rule of the same title adopted. F. Nov. 18, 2011; eff. Dec. 8, 2011.)

O.C.G.A. Secs. 10-5-2, 10-5-10, 10-5-70, 10-5-74.

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