710 IAC 4-1-1 - Definitions

Authority: IC 23-19-6-5

Affected: IC 23-19

Sec. 1.

The following definitions apply throughout this article unless the context otherwise requires:

(1) "Affiliate of or person affiliated with a specified person" 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.
(2) "Aggregate offering price" means the sum of all:
(A) cash;
(B) services;
(C) property;
(D) notes;
(E) cancellation of debt; or
(F) other consideration;

received by an issuer for issuance of its securities. Where securities are being offered for both cash and noncash 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.

(3) "Applicant" means the issuer, broker-dealer, agent, or other person executing the application.
(4) "Associated person" means:
(A) a partner;
(B) an officer;
(C) a director;
(D) a salesperson;
(E) a trader;
(F) a manager; or
(G) any employee;

handling funds or securities or soliciting transactions or accounts for a broker-dealer.

(5) "Branch office" means any location where one (1) or more associated persons of a member regularly conducts the business of effecting any transactions in, 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 back office type, or both, functions 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:
(i) 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.
(ii) The location is not held out to the public as an office, and the associated person does not meet with customers at that location.
(iii) Neither customer funds nor securities are handled at that location.
(iv) 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 the associated person.
(v) The associated person's correspondence and communications with the public are subject to the firm's supervision in accordance with Rule 3010.
(vi) Electronic communications are made through the broker-dealer's electronic system.
(vii) All orders are entered through the designated branch office or an electronic system.
(viii) Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the broker-dealer.
(ix) A list of residence locations is maintained by the broker-dealer.
(C) Any location, other than a primary residence, that is used for securities business for less than thirty (30) days in one (1) calendar year, provided that the broker-dealer complies with the provisions of clause (B).
(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.
(E) Any location that is not used primarily to engage in nonsecurities activities and in which the associated person or persons effects not more than twenty-five (25) securities transactions in any one (1) calendar year; provided that any advertisement or sales literature identifying the location also sets forth the address and telephone number of the location from which the associated person or persons conducting business at the nonbranch location 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 a business continuity plan.
(6) "Commissioner" means the Indiana securities commissioner appointed under IC 23-19-6-1(a).
(7) "Division" means the Indiana securities division.
(8) "Initiation of proceedings" or "order for proceedings" means any:
(A) summary order issued under IC 23-19-2-4(a), IC 23-19-3-6, or IC 23-19-4-12;
(B) ex parte order issued under IC 23-19-6-4; or
(C) notice of hearing issued at the instance of the commissioner.
(9) "National securities association" means an association registered with the U.S. Securities and Exchange Commission under Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).
(10) "National securities exchange" means an exchange registered with the U.S. Securities and Exchange Commission under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f).
(11) "Net liquid capital" means net capital as defined in Rule 15c3-1(c) (2) (17 CFR 240.15c3 - 1(c)(2)) under the Securities Exchange Act of 1934, promulgated by the U.S. Securities and Exchange Commission.
(12) "Offering" means all offers and sales of securities by an issuer that are integrated and considered as part of a single offering of securities by the issuer. Offers and sales that are made more than six (6) months before the start of a putative offering under IC 23-19-2-2(14) or are made more than six (6) months after completion of a 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 of those offered or sold under IC 23-19-2-2(14), other than those offers or sales of securities under an employee benefit plan as defined in Rule 405 (17 CFR 230.405) under the Securities Act of 1933. If the issuer offers or sells securities within 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.
(E) Whether the sales are made for the same general purpose.
(13) "Office of supervisory jurisdiction" means any office of a broker-dealer at which 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 under clause (D).
(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.
(14) "Officer" means and shall be limited to the:
(A) president;
(B) first vice president;
(C) secretary; and
(D) treasurer;

of a corporation or the equivalent positions in another type of business organization.

(15) "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:
(i) relative of the purchaser representative by blood, marriage, or adoption and not more remote than a first cousin;
(ii) trust or estate in which the purchaser representative and any person related to the purchaser as specified in item (i), 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
(iii) corporation or other organization of which the purchaser representative and any persons related to the purchaser as specified in item (i) or (ii), 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 that the person is capable of evaluating:
(i) alone;
(ii) together with other purchaser representatives of the purchaser; or
(iii) 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:
(i) then exist;
(ii) is mutually understood to be contemplated; or
(iii) 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.

(16) "Secretary of state" means the secretary of state of Indiana.
(17) "Underwriter" includes any individual or organization that offers securities for the direct or indirect benefit of the issuer of the securities whether on a firm or best-efforts basis.


710 IAC 4-1-1
Securities Division; 710 IAC 4-1-1; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA Readopted filed 5/12/2016, 1:47 p.m.: 20160608-IR-710160136RFA

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