Sec. 48-40-004 - NON BROKER-DEALER PORTAL OPERATORS

ยง 48-40-004. NON BROKER-DEALER PORTAL OPERATORS

A portal operator is not required to register as a broker-dealer provided that all of the following apply:

004.01 The portal operator shall not offer investment advice or recommendations:

004.02 The portal operator shall not solicit purchases, sales, or offers to buy the securities offered or displayed on its funding portal:

004.03 The portal operator shall not compensate employees, agents, or other persons for the solicitation, or based on the sale, of securities displayed or referenced on its funding portal:

004.04 The portal operator shall not be compensated based on the amount of securities sold, and shall not hold, manage, possess, or otherwise handle investor funds or securities:

004.05 The portal operator shall not identify, promote, or otherwise refer to any individual security offered on its funding portal in any advertising conducted by the portal operator:

004.06 The portal operator shall not operate or facilitate a secondary market in securities:

004.07 A portal operator shall not invest in any offering conducted pursuant to this Rule: and

004.08 Neither the portal operator, nor any director, executive officer, general partner, managing member, or other person with management authority over the portal operator, has been subject to any conviction, order, judgment, decree, or other action specified in Rule 506(d)(1) adopted under the Securities Act of 1933, 17 C.F.R. 230.506(d)(1), that would disqualify an issuer under Rule 506(d) adopted under the Securities Act of 1933. 17 C.F.R. 230.506(d), from claiming an exemption specified in Rule 506(a) to Rule 506(c) adopted under the Securities Act of 1933, 17 C.F.R. 230.506(a) to 17 C.F.R. 230.506(c). However, this subdivision does not apply if both of the following are met:

004.08A On a showing of good cause and without prejudice to any other action by the Director, the Director determines that it is not necessary under the circumstances that an exemption is denied: and

004.08B The portal operator establishes to the satisfaction of the Director, that it made a factual inquiry into whether any disqualification existed under this subdivision but did not know, and in the exercise of reasonable care, could not have known, that disqualification existed under this subdivision.

004.09 The portal operator may charge the issuer a fee for offering the issuer's securities on its funding portal. Such fee shall be either a fixed amount for each offering, a variable amount based upon the length of time that the securities are offered on the funding portal, or a combination of the fixed and variable amount.

(Adopted effective May 11, 2016.)

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