S03166'03 (S-2)

SB-0391, As Passed Senate, June 18, 2003

SUBSTITUTE FOR

SENATE BILL NO. 391

A bill to amend 1964 PA 265, entitled

"Uniform securities act,"

by amending section 202 (MCL 451.602), as amended by 2000 PA

494.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 202. (a) A broker-dealer, agent, or investment adviser

2 may obtain an initial registration by filing with the

3 administrator an application together with a consent to service

4 of process pursuant to section 414(g). The application shall

5 contain the information that the administrator by rule requires

6 concerning any of the following:

7 (1) The applicant's form and place of organization.

8 (2) The applicant's proposed method of doing business.

9 (3) The qualifications and business history of the applicant;

10 in the case of a broker-dealer or investment adviser, the

1 qualifications and business history of any partner, officer, or

2 director, any person occupying a similar status or performing

3 similar functions, or any person directly or indirectly

4 controlling the broker-dealer or investment adviser; and, in the

5 case of an investment adviser, the qualifications and business

6 history of any employee.

7 (4) Any injunction or administrative order or conviction of a

8 misdemeanor or of a felony.

9 (5) The applicant's financial condition and history.

10 (b) The administrator may by rule or order require an

11 applicant for initial registration to publish an announcement of

12 the application in 1 or more specified newspapers published in

13 this state. Registration becomes effective upon order of the

14 administrator. The administrator may by rule or order establish

15 classes of or otherwise condition the registration of

16 broker-dealers, agents, or investment advisers.

17 (c) ~~Every~~ Before September 30, 2003 or after September 30,

18 2007, an applicant for registration shall pay a filing fee and

19 every registrant shall pay an annual fee of $250.00 in the case

20 of a broker-dealer, $30.00 in the case of an agent, and $150.00

21 in the case of an investment adviser. ~~Every~~ Before September

22 30, 2003 or after September 30, 2007, an applicant filing an

23 application for registration of a successor pursuant to

24 subsection (d) shall pay a filing fee of $100.00 for the

25 unexpired portion of the year. A Before September 30, 2003 or

26 after September 30, 2007, a registered agent who has terminated

27 his or her connection with a broker-dealer shall pay a transfer

1 fee of $10.00 when transferring his or her connection to another

2 broker-dealer. After September 30, 2003 and before October 1,

3 2007, an applicant for registration shall pay a filing fee and

4 every registrant shall pay an annual fee of $300.00 in the case

5 of a broker-dealer, $65.00 in the case of an agent, and $200.00

6 in the case of an investment adviser. After September 30, 2003

7 and before October 1, 2007, an applicant filing an application

8 for registration of a successor pursuant to subsection (d) shall

9 pay a filing fee of $125.00 for the unexpired portion of the

10 year. After September 30, 2003 and before October 1, 2007, a

11 registered agent who has terminated his or her connection with a

12 broker-dealer shall pay a transfer fee of $20.00 when

13 transferring his or her connection to another broker-dealer.

14 (d) A registered broker-dealer or investment adviser may file

15 an application for registration of a successor, whether or not

16 the successor is then in existence. The administrator may grant

17 or deny the application.

18 (e) An applicant for registration under this act or an issuer

19 who offers or sells a security in this state through any person

20 shall file with the administrator, in the form prescribed by the

21 administrator by rule or order, an irrevocable consent to service

22 of process.

23 (f) Subject to the requirements of section 15 ~~of title I~~ of

24 the securities exchange act of 1934, 15 U.S.C. 78o, and section

25 222 of the investment advisers act of 1940, 15 U.S.C. 80b-18a,

26 the administrator may by rule or order require a minimum capital

27 for registered broker-dealers and investment advisers and

1 prescribe a ratio between net capital and aggregate

2 indebtedness. If the registrant fails to comply with the minimum

3 net capital requirement, the registrant shall immediately cease

4 all investment advisory or securities business operations and

5 promptly notify the administrator of its failure to maintain the

6 required net capital, of the steps to be taken to cure the net

7 capital deficiency, and of its anticipated date of reopening

8 business operations. The registrant shall not reactivate its

9 securities or investment advisory business operations without

10 prior notification to the administrator.

11 (g) Except as otherwise provided in this section, the

12 administrator may require a fidelity bond from a broker-dealer,

13 agent, or investment adviser who is required to be registered

14 under this act. The administrator may not require a bond from a

15 broker-dealer that is registered under the securities exchange

16 act of 1934 or an investment adviser that maintains its principal

17 place of business in a state other than this state if the

18 investment adviser is registered in that other state and is in

19 compliance with that state's bonding requirements, if any.

20 (h) Unless the requirement is waived by rule or order of the

21 administrator, all persons, including but not limited to

22 partners, officers, directors, and agents employed by a

23 broker-dealer or investment adviser who are regularly employed

24 within this state shall, as a condition of employment, be

25 fingerprinted. The administrator may process the fingerprint

26 cards with the federal bureau of investigation and the department

27 of state police either directly or through the national