Utah Admin. Code R164-1-3 - Definitions

These definitions supplement the definitions set forth in Section 61-1-13:

(1) "Customer" means potential, current, or past clients.

(2) "Designated security" means any equity security other than a security:

(a) listed, or approved for listing upon notice of issuance, on a national securities exchange and makes transaction reports available as required under SEC Rule 11Aa3-1;

(b) listed, or approved for listing upon notice of issuance, on the NASDAQ system;

(c) issued by an investment company registered under the Investment Company Act of 1940;

(d) that is a put option or call option issued by The Options Clearing Corporation; or

(e) whose issuer has net tangible assets in excess of $4,000,000 as demonstrated by financial statements, dated less than 15 months previous to the date of the transaction with the person, that the licensee has reviewed and has a reasonable basis to believe are true and complete, and

(i) if the issuer is other than a foreign private issuer, are the most recent financial statements for the issuer that have been audited and reported on by an independent public accountant in accordance with SEC Rule 2-02; or

(ii) if the issuer is a foreign private issuer, are the most recent financial statements for the issuer that have been filed with the Commission; furnished to the Commission pursuant to SEC Rule 12g3-2(b); or prepared in accordance with generally accepted accounting principles in the country of incorporation, audited in compliance with the requirements of that jurisdiction, and reported on by an accountant registered and in good standing in accordance with the regulations of that jurisdiction.

(3) "Exempt transaction" under Subsection R164-1-4(8) means:

(a) a transaction in which the price of the designated security is five dollars or more, exclusive of costs or charges; except that if the designated security is a unit composed of one or more securities, the unit price divided by the number of components of the unit other than warrants, options, rights, or similar securities must be five dollars or more, and any component of the unit that is a warrant, option, right, or similar securities, or a convertible security must have an exercise price or conversion price of five dollars or more;

(b) a transaction that is not recommended by the licensee or the licensee's agent;

(c) a transaction by the licensee:

(i) where commissions, commission equivalents, and mark-ups from transactions in designated securities during each of the immediately preceding three months, and during 11 or more of the preceding 12 months, did not exceed 5% of the licensee's total commissions, commission equivalents, and mark-ups from transactions in securities during those months; and

(ii) the licensee has not executed principal transactions in connection with the solicitation to purchase the designated security that is the subject of the transaction in the immediately preceding 12 months; or

(d) a transaction that, upon prior written request or upon its own motion, the division conditionally or unconditionally exempts as not encompassed within this definition.

(4) "Licensee" means a licensed broker-dealer, broker-dealer agent, or issuer-agent.

(5) "Market-maker" means a broker-dealer who, with respect to a particular security:

(a) regularly publishes bona fide, competitive bid and ask quotations in a recognized inter-dealer quotation system; or

(b) regularly furnishes bona fide competitive bid and offer quotations to other broker-dealers upon request; and

(c) is ready, willing and able to effect transactions in reasonable quantities at the broker-dealer's quoted price with other broker-dealers on a regular basis.

(6) "NASDAQ" means National Association of Securities Dealers Automatic Quotation System.

Notes

Utah Admin. Code R164-1-3

Amended by Utah State Bulletin Number 2022-07, effective 3/11/2022