SENATE BILL 362

49th legislature - STATE OF NEW MEXICO - first session, 2009

INTRODUCED BY

Peter Wirth

AN ACT

RELATING TO BUSINESS; REPEALING THE NEW MEXICO SECURITIES ACT OF 1986; ENACTING THE NEW MEXICO UNIFORM SECURITIES ACT; PROVIDING PENALTIES; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Article 1

GENERAL PROVISIONS

     Section 101. [NEW MATERIAL] SHORT TITLE.--Sections 101 through 701 of this act may be cited as the "New Mexico Uniform Securities Act".

     Section 102. [NEW MATERIAL] DEFINITIONS.--As used in the New Mexico Uniform Securities Act, unless the context otherwise requires:

          A. "agent" means an individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities or represents an issuer in effecting or attempting to effect purchases or sales of the issuer's securities, but a partner, officer or director of a broker-dealer or issuer, or an individual having a similar status or performing similar functions, is an agent only if the individual otherwise comes within the term. "Agent" does not include an individual excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          B. "bank" means:

                (1) a banking institution organized pursuant to the laws of the United States;

                (2) a member bank of the federal reserve system;

                (3) any other banking institution, whether incorporated or not, doing business pursuant to the laws of a state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to be exercised by national banks pursuant to the authority of the comptroller of the currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a) and that is supervised and examined by a state or federal agency having supervision over banks and that is not operated for the purpose of evading the New Mexico Uniform Securities Act; and

                (4) a receiver, conservator or other liquidating agent of any institution or firm included in Paragraph (1), (2) or (3) of this subsection;

          C. "broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account. "Broker-dealer" does not include:

                (1) an agent;

                (2) an issuer;

                (3) a bank or savings institution described in Paragraph (2) of Subsection D of this section if its activities as a broker-dealer are limited to those specified in Subsections 3(a)(4)(B)(i) through (vi), (viii) through (x) and (xi), if limited to unsolicited transactions; 3(a)(5)(B); and 3(a)(5)(C) of the federal Securities Exchange Act of 1934 (15 U.S.C. Sections 78c(a)(4) and (5)) or a bank that satisfies the conditions described in Subsection 3(a)(4)(E) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(4));

                (4) an international banking institution; or

                (5) a person excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          D. "depository institution" means:

                (1) a bank; or

                (2) a savings institution, trust company, credit union or similar institution that is organized or chartered pursuant to the laws of a state or of the United States, authorized to receive deposits and supervised and examined by an official or agency of a state or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the federal deposit insurance corporation, the national credit union share insurance fund or a successor authorized by federal law, or a receiver, conservator or other liquidating agent of such institutions or entities. "Depository institution" does not include:

                     (a) an insurance company or other organization primarily engaged in the business of insurance;

                     (b) a Morris plan bank; or

                     (c) an industrial loan company that is not an "insured depository institution" as defined in Section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2), or any successor federal statute;

          E. "director" means the director of the securities division of the regulation and licensing department;

          F. "division" means the securities division of the regulation and licensing department, which for purposes of administering the provisions of the New Mexico Uniform Securities Act and conducting investigations of violations of that act shall be considered a law enforcement agency;

          G. "federal covered investment adviser" means a person registered pursuant to the federal Investment Advisers Act of 1940;

          H. "federal covered security" means a security that is, or upon completion of a transaction will be, a covered security pursuant to Section 18(b) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)) or rules or regulations adopted pursuant to that section;

          I. "filing" means the receipt pursuant to the New Mexico Uniform Securities Act of a record by the director, or a designee of the director, in a form and format designated by the director;

          J. "fraud", "deceit" and "defraud" are not limited to common law deceit;

          K. "guaranteed" means guaranteed as to payment of all principal and all interest;

          L. "institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity:

                (1) a depository institution or international banking institution;

                (2) an insurance company;

                (3) a separate account of an insurance company;

                (4) an investment company as defined in the federal Investment Company Act of 1940;

                (5) a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934;

                (6) an employee pension, profit-sharing or benefit plan if the plan has total assets in excess of ten million dollars ($10,000,000) or its investment decisions are made by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration pursuant to the federal Investment Advisers Act of 1940, an investment adviser registered pursuant to the New Mexico Uniform Securities Act, a depository institution or an insurance company;

                (7) a plan established and maintained by a state, a political subdivision of a state or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees, if the plan has total assets in excess of ten million dollars ($10,000,000) or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration pursuant to the federal Investment Advisers Act of 1940, an investment adviser registered pursuant to the New Mexico Uniform Securities Act, a depository institution or an insurance company;

                (8) a trust, if it has total assets in excess of ten million dollars ($10,000,000), its trustee is a depository institution and its participants are exclusively plans of the types identified in Paragraph (6) or (7) of this subsection, regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

                (9) an organization described in Section 501(c)(3) of the federal Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)(3)), corporation, Massachusetts trust or similar business trust, limited liability company or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of ten million dollars ($10,000,000);

                (10) a small business investment company licensed by the small business administration pursuant to Section 301(c) of the federal Small Business Investment Act of 1958 (15 U.S.C. Section 681(c)) with total assets in excess of ten million dollars ($10,000,000);

                (11) a private business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(22)) with total assets in excess of ten million dollars ($10,000,000);

                (12) a federal covered investment adviser acting for its own account;

                (13) a "qualified institutional buyer", as defined in Rule 144A(a)(i)(1), other than Rule 144A(a)(1)(H), adopted pursuant to the federal Securities Act of 1933 (17 C.F.R. 230.144A);

                (14) a "major U.S. institutional investor" as defined in Rule 15a-6(b)(4)(i)(17 C.F.R. 240.15a-6) adopted pursuant to the federal Securities Exchange Act of 1934;

                (15) any other person, other than an individual, of institutional character with total assets in excess of ten million dollars ($10,000,000) not organized for the specific purpose of evading the New Mexico Uniform Securities Act; or

                (16) any other person specified by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          M. "insurance company" means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and that is subject to supervision by the insurance commissioner or a similar official or agency of a state;

          N. "insured" means insured as to payment of all principal and all interest;

          O. "international banking institution" means an international financial institution of which the United States is a member and whose securities are exempt from registration pursuant to the federal Securities Act of 1933;

          P. "investment adviser" means a person that, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing or selling securities or that, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" includes a financial planner or other person that, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or that holds itself out as providing investment advice to others for compensation. "Investment adviser" does not include:

                (1) an investment adviser representative;

                (2) a lawyer, accountant, engineer or teacher whose performance of investment advice is solely incidental to the practice of the person's profession;

                (3) a broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and that does not receive special compensation for the investment advice;

                (4) a publisher, employee or columnist of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation or an owner operator, producer or employee of a cable, radio or television network, station or production facility, if, in either case:

                     (a) the financial or business news or advice is contained in a publication or broadcast disseminated to the general public; and

                     (b) the content does not consist of rendering advice on the basis of the specific investment situation of each client;

                (5) a federal covered investment adviser;

                (6) a bank or a savings institution described in Paragraph (2) of Subsection D of this section; or

                (7) any other person excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          Q. "investment adviser representative" means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer or negotiate for the sale of or for selling investment advice or supervises employees who perform any of the foregoing. "Investment adviser representative" does not include an individual who:

                (1) performs only clerical or ministerial acts;

                (2) is an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services;

                (3) is employed by or associated with a federal covered investment adviser, unless the individual has a place of business in New Mexico, as "place of business" is defined by rule adopted pursuant to Section 203A of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a) and is:

                     (a) an investment adviser representative, as "investment adviser representative" is defined by rule adopted pursuant to Section 203A of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a); or

                     (b) not a supervised person as "supervised person" is defined in Section 202(a)(25) of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(25)); or

                (4) is excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          R. "issuer" means a person that issues or proposes to issue a security, subject to the following:

                (1) the issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued;

                (2) the issuer of an equipment trust certificate or similar security serving the same purpose is the person by which the property is or will be used or to which the property or equipment is or will be leased or conditionally sold or that is otherwise contractually responsible for assuring payment of the certificate; and

                (3) the issuer of a fractional undivided interest in an oil, gas or other mineral lease or in payments out of production pursuant to a lease, right or royalty is the owner of an interest in the lease or in payments out of production pursuant to a lease, right or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale;

          S. "legal rate of interest" means the rate of interest set by Subsection A of Section 56-8-4 NMSA 1978 or its successor statutes;

          T. "nonissuer transaction" or "nonissuer distribution" means a transaction or distribution not directly or indirectly for the benefit of the issuer;

          U. "offer to purchase" includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value. "Offer to purchase" does not include a tender offer that is subject to Section 14(d) of the federal Securities Exchange Act of 1934 (15 U.S.C. 78n(d));

          V. "person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity;

          W. "place of business" of a broker-dealer, an investment adviser or a federal covered investment adviser means:

                (1) an office at which the broker-dealer, investment adviser or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients; or

                (2) a location that is held out to the general public as a location at which the broker-dealer, investment adviser or federal covered investment adviser provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients;

          X. "predecessor act" means the New Mexico Securities Act of 1986;

          Y. "price amendment" means the amendment to a registration statement filed pursuant to the federal Securities Act of 1933 or, if an amendment is not filed, the prospectus or prospectus supplement filed pursuant to that act that includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices and other matters dependent upon the offering price;

          Z. "principal place of business" of a broker-dealer, investment adviser or federal covered investment adviser means the executive office of the broker-dealer, investment adviser or federal covered investment adviser from which the officers, partners or managers of the broker-dealer, investment adviser or federal covered investment adviser direct, control and coordinate the activities of the broker-dealer, investment adviser or federal covered investment adviser;

          AA. "record", except in the phrases "of record", "official record" and "public record", means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

          BB. "sale" includes every contract of sale, contract to sell or disposition of a security or interest in a security for value, and "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. Both terms include:

                (1) a security given or delivered with, or as a bonus on account of, a purchase of securities or any other thing constituting part of the subject of the purchase and having been offered and sold for value;

                (2) a gift of assessable stock involving an offer and sale; and

                (3) a sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and a sale or offer of a security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, including an offer of the other security;

          CC. "securities and exchange commission" means the United States securities and exchange commission;

          DD. "security" means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas or other mineral rights; put, call, straddle, option or privilege on a security, certificate of deposit or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of or warrant or right to subscribe to or purchase any of the foregoing. "Security":

                (1) includes both a certificated and an uncertificated security;

                (2) does not include an insurance or endowment policy or annuity contract pursuant to which an insurance company promises to pay a fixed or variable sum of money either in a lump sum or periodically for life or other specified period;

                (3) does not include an interest in a contributory or noncontributory pension or welfare plan subject to the federal Employee Retirement Income Security Act of 1974;

                (4) does not include landowner royalties in the production of oil, gas or other minerals created through the execution of a lease of the lessor's mineral interest;

                (5) includes an investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor. As used in this paragraph, "common enterprise" means an enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a third party or other investors; and

                (6) includes any interest in a limited partnership or a limited liability company and any investment in a viatical settlement or similar agreement;

          EE. "self-regulatory organization" means a national securities exchange registered pursuant to the federal Securities Exchange Act of 1934, a national securities association of broker-dealers registered pursuant to that act, a clearing agency registered pursuant to that act or the municipal securities rulemaking board established pursuant to that act;

          FF. "sign" means, with present intent to authenticate or adopt a record:

                (1) to execute or adopt a tangible symbol; or

                (2) to attach or logically associate with the record an electronic symbol, sound or process;

          GG. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States; and

          HH. "underwriter" means any person who has purchased from an issuer with the intent to offer or sell a security or to distribute any security; who participates or has a direct or indirect participation in any undertaking; or who participates or has a participation in the direct or indirect underwriting of any undertaking. "Underwriter" does 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. As used in this subsection, "issuer" includes any person directly or indirectly controlling or controlled by the issuer; or any person under direct or indirect common control with the issuer.

     Section 103. [NEW MATERIAL] REFERENCES TO FEDERAL STATUTES.--As used in the New Mexico Uniform Securities Act, "Securities Act of 1933" (15 U.S.C. Section 77a, et seq.), "Securities Exchange Act of 1934" (15 U.S.C. Section 78a, et seq.), "Public Utility Holding Company Act of 1935" (15 U.S.C. Section 79, et seq.), "Investment Company Act of 1940" (15 U.S.C. Section 80a-1, et seq.), "Investment Advisers Act of 1940" (15 U.S.C. Section 80b-1, et seq.), "Employee Retirement Income Security Act of 1974" (29 U.S.C. Section 1001, et seq.), "National Housing Act" (12 U.S.C. Section 1701, et seq.), "Commodity Exchange Act" (7 U.S.C. Section 1, et seq.), "Internal Revenue Code of 1986" (26 U.S.C. Section 1, et seq.), "Securities Investor Protection Act of 1970" (15 U.S.C. Section 78aaa, et seq.), "Securities Litigation Uniform Standards Act of 1998" (112 Stat. 3227), "Small Business Investment Act of 1958" (15 U.S.C. Section 661, et seq.) and "Electronic Signatures in Global and National Commerce Act" (15 U.S.C. Section 7001, et seq.) mean those statutes and the rules and regulations adopted pursuant to those statutes as in effect on the date of enactment of the New Mexico Uniform Securities Act, or as later amended.

     Section 104. [NEW MATERIAL] REFERENCES TO FEDERAL AGENCIES.--A reference in the New Mexico Uniform Securities Act to an agency or department of the United States is also a reference to a successor agency or department.

     Section 105. [NEW MATERIAL] ELECTRONIC RECORDS AND SIGNATURES.--The New Mexico Uniform Securities Act modifies, limits and supersedes the federal Electronic Signatures in Global and National Commerce Act, but does not modify, limit or supersede Section 101(c) of that act (15 U.S.C. Section 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 U.S.C. Section 7003(b)). The New Mexico Uniform Securities Act authorizes the filing of records and signatures, when specified by provisions of the New Mexico Uniform Securities Act or by a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act, in a manner consistent with Section 104(a) of the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7004(a)).

Article 2

EXEMPTIONS FROM REGISTRATION OF SECURITIES

     Section 201. [NEW MATERIAL] EXEMPT SECURITIES.--The following securities are exempt from the requirements of Sections 301 through 306 of the New Mexico Uniform Securities Act and, unless otherwise noted, Section 504 of that act:

          A. a security, including a revenue obligation or a separate security as defined in Rule 131 (17 C.F.R. 230.131) adopted pursuant to the federal Securities Act of 1933, issued, insured or guaranteed by the United States, by a state, by a political subdivision of a state, by a public authority, agency or instrumentality of one or more states, including the New Mexico mortgage finance authority, by a political subdivision of one or more states or by a person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the congress or a certificate of deposit for any of the foregoing; but this exemption does not include a security issued by a New Mexico governmental entity, payable solely from the revenues of a nongovernmental commercial or industrial enterprise, unless such security is directly or indirectly insured or guaranteed by, or such revenues are derived from, a person whose securities are exempt from registration by this subsection or Subsection B, C, D, E or G of this section. For purposes of this subsection, a nongovernmental commercial or industrial enterprise does not include the financing of student loans or single-family residential mortgage loans;

          B. a security issued, insured or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer or guarantor;

          C. a security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by:

                (1) an international banking institution;

                (2) a banking institution organized pursuant to the laws of the United States; a member bank of the federal reserve system; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the federal deposit insurance corporation, the national credit union share insurance fund or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks pursuant to the authority of the comptroller of currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a);

                (3) a trust company or other institution that is authorized by federal or state law to exercise fiduciary powers of the type a national bank is permitted to exercise pursuant to the authority of the comptroller of the currency and is regulated, supervised and examined by an official or agency of a state or the United States; or

                (4) any other depository institution, unless by rule or order the director proceeds pursuant to Section 204 of the New Mexico Uniform Securities Act;

          D. a security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to transact insurance in New Mexico pursuant to the New Mexico Insurance Code;

          E. a security issued or guaranteed by a railroad, other common carrier, public utility or public utility holding company that is:

                (1) regulated in respect to its rates and charges by the United States or a state;

                (2) regulated in respect to the issuance or guarantee of the security by the United States, a state, Canada or a Canadian province or territory; or

                (3) a public utility holding company registered pursuant to the federal Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act;

          F. a federal covered security specified in Section 18(b)(1) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)) or by rule adopted pursuant to that provision or a security listed or approved for listing on another securities market specified by rule pursuant to the New Mexico Uniform Securities Act; a put or a call option contract, a warrant or a subscription right on or with respect to such securities; an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered pursuant to the federal Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange or a facility of a national securities association registered pursuant to the federal Securities Exchange Act of 1934 or an offer or sale of the underlying security in connection with the offer, sale or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the securities and exchange commission pursuant to Section 9(b) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78i(b));

          G. a security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company pursuant to Section 3(c)(10)(B) of the federal Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(10)(B)); except that with respect to the offer or sale of a note, bond, debenture or other evidence of indebtedness issued by such a person, a rule may be adopted pursuant to the New Mexico Uniform Securities Act limiting the availability of this exemption by classifying securities, persons and transactions, imposing different requirements for different classes, specifying with respect to Paragraph (2) of this subsection the scope of the exemption and the grounds for denial or suspension and requiring an issuer:

                (1) to file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the director does not disallow the exemption within the period established by the rule;

                (2) to file a request for exemption authorization for which a rule pursuant to the New Mexico Uniform Securities Act may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act and grounds for denial or suspension of the exemption; or

                (3) to register pursuant to Section 304 of the New Mexico Uniform Securities Act;

          H. a member's or owner's interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative pursuant to the cooperative laws of a state, but not a member's or owner's interest, retention certificate or like security sold to persons other than bona fide members of the cooperative; and

          I. an equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt pursuant to this section or would be a federal covered security pursuant to Section 18(b)(1) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)).

     Section 202. [NEW MATERIAL] EXEMPT TRANSACTIONS.--The following transactions are exempt from the requirements of Sections 301 through 306 of the New Mexico Uniform Securities Act and, unless otherwise noted, Section 504 of that act:

          A. an isolated nonissuer transaction, whether effected by or through a broker-dealer or not;

          B. a nonissuer transaction by or through a broker-dealer registered, or exempt from registration pursuant to the New Mexico Uniform Securities Act, and a resale transaction by a sponsor of a unit investment trust registered pursuant to the federal Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety days if, at the date of the transaction:

                (1) the issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership and the issuer is not a blank check, blind pool or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

                (2) the security is sold at a price reasonably related to its current market price;

                (3) the security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution;

                (4) a nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act or a record filed with the securities and exchange commission that is publicly available contains:

                     (a) a description of the business and operations of the issuer;

                     (b) the names of the issuer's executive officers and the names of the issuer's directors, if any;

                     (c) an audited balance sheet of the issuer as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and

                     (d) an audited income statement for each of the issuer's two immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; and

                (5) any one of the following requirements is met:

                     (a) the issuer of the security has a class of equity securities listed on a national securities exchange registered pursuant to the federal Securities Exchange Act of 1934 or designated for trading on the national association of securities dealers automated quotation system;                      (b) the issuer of the security is a unit investment trust registered pursuant to the federal Investment Company Act of 1940;

                     (c) the issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or

                     (d) the issuer of the security has total assets of at least two million dollars ($2,000,000) based on an audited balance sheet as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had the audited balance sheet, a pro forma balance sheet for the combined organization;

          C. a nonissuer transaction by or through a broker-dealer registered or exempt from registration pursuant to the New Mexico Uniform Securities Act in a security or the American depository receipt representing such security of a foreign issuer that is a margin security defined in regulations or rules adopted by the board of governors of the federal reserve system;

          D. a nonissuer transaction by or through a broker-dealer registered or exempt from registration pursuant to the New Mexico Uniform Securities Act in an outstanding security if the guarantor of the security is required to file reports with the securities and exchange commission pursuant to the reporting requirements of Section 13 or 15(d) of the federal Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and is current in such reporting;

          E. a nonissuer transaction by or through a broker-dealer registered or exempt from registration pursuant to the New Mexico Uniform Securities Act in a security that:

                (1) is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its four highest rating categories; or

                (2) has a fixed maturity or a fixed interest or dividend if:

                     (a) a default has not occurred during the current fiscal year or within the three previous fiscal years or during the existence of the issuer and any predecessor if less than three fiscal years in the payment of principal, interest or dividends on the security;

                     (b) the issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous twelve months a blank check, blind pool or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person; and

                     (c) the transaction complies with any additional requirements that the director may by rule impose as a condition of this exemption;

          F. a nonissuer transaction by or through a broker-dealer registered or exempt from registration pursuant to the New Mexico Uniform Securities Act effecting an unsolicited order or offer to purchase;

          G. a nonissuer transaction executed by a bona fide pledgee without the purpose of evading the New Mexico Uniform Securities Act;

          H. a nonissuer transaction by a federal covered investment adviser with investments under management in excess of one hundred million dollars ($100,000,000) acting in the exercise of discretionary authority in a signed record for the account of others;

          I. a transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the director after a hearing;

          J. a transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;

          K. a transaction in a note, bond, debenture or other evidence of indebtedness secured by a mortgage or other security agreement if:

                (1) the note, bond, debenture or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit;

                (2) a general solicitation or general advertisement of the transaction is not made; and

                (3) a commission or other remuneration is not paid or given, directly or indirectly, to a person not registered pursuant to the New Mexico Uniform Securities Act as a broker-dealer or as an agent;

          L. a transaction by an executor, personal representative or administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian or conservator;

          M. a sale or offer to sell to:

                (1) an institutional investor;

                (2) a federal covered investment adviser; or

                (3) any other person exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

          N. a sale or an offer to sell securities by or on behalf of an issuer, if the transaction is part of a single issue in which:

                (1) there are not more than ten purchasers who are New Mexico residents, other than purchasers designated in Subsection M of this section during any twelve consecutive months;

                (2) no general solicitation or general advertising is used in connection with the offer to sell or the sale of the securities; and

                (3) no commission or other remuneration is paid or given, directly or indirectly, to a person other than a broker-dealer registered or not required to be registered pursuant to the New Mexico Uniform Securities Act or an agent registered pursuant to that act for soliciting a prospective purchaser in New Mexico, and either:

                     (a) the seller reasonably believes that all of the purchasers in New Mexico are purchasing for investment; or

                     (b) immediately before and immediately after the transaction, the issuer reasonably believes that the securities of the issuer are held by fifty or fewer beneficial owners and the transaction is part of an aggregate offering that does not exceed one million dollars ($1,000,000) during any twelve consecutive months; but the director, by rule or order as to a security or transaction or a type of security or transaction, may withdraw or further condition this exemption or may waive one or more of the conditions of this subsection;

          O. a transaction pursuant to an offer to existing security holders of the issuer, including persons that at the date of the transaction are holders of convertible securities, options or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in New Mexico;

          P. an offer to sell, but not a sale, of a security not exempt from registration pursuant to the federal Securities Act of 1933 if:

                (1) a registration or offering statement or similar record as required pursuant to the federal Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 (17 C.F.R. 230.165) adopted pursuant to the federal Securities Act of 1933; and

                (2) a stop order of which the offeror is aware has not been issued against the offeror by the director or the securities and exchange commission and an audit, inspection or proceeding that is public and that may culminate in a stop order is not known by the offeror to be pending;

          Q. an offer to sell, but not a sale, of a security exempt from registration pursuant to the federal Securities Act of 1933 if:

                (1) a registration statement has been filed pursuant to the New Mexico Uniform Securities Act, but is not effective;

                (2) a solicitation of interest is provided in a record to offerees in compliance with a rule adopted by the director pursuant to the New Mexico Uniform Securities Act; and

                (3) a stop order of which the offeror is aware has not been issued by the director pursuant to the New Mexico Uniform Securities Act and an audit, inspection or proceeding that may culminate in a stop order is not known by the offeror to be pending;

          R. a transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets or other reorganization or conversion to which the issuer, or its parent or subsidiary, and the other person, or its parent or subsidiary, are parties;

          S. a rescission offer, sale or purchase pursuant to Section 510 of the New Mexico Uniform Securities Act;

          T. an offer or sale of a security to a person not a resident of New Mexico and not present in New Mexico if the offer or sale does not constitute a violation of the laws of the state or foreign jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or scheme to evade the New Mexico Uniform Securities Act;

          U. employees' stock purchase, savings, option, profit-sharing, pension or similar employees' benefit plan, including any securities, plan interests and guarantees issued pursuant to a compensatory benefit plan or compensation contract, contained in a record established by the issuer, its parents, its majority-owned subsidiaries or the majority-owned subsidiaries of the issuer's parent for the participation of their employees, including offers or sales of such securities to:

                (1) bona fide directors; general partners; trustees, if the issuer is a business trust; officers; consultants; and advisors;

                (2) family members who acquire such securities from those persons through gifts or domestic relations orders;

                (3) former employees, directors, general partners, trustees, officers, consultants and advisors if those individuals were employed by or providing services to the issuer when the securities were offered; and

                (4) insurance agents who are exclusive insurance agents of the issuer, or the issuer's subsidiaries or parents, or who derive more than fifty percent of their annual income from those organizations;

          V. a transaction involving:

                (1) a stock dividend or equivalent equity distribution, whether the corporation or other business organization distributing the dividend or equivalent equity distribution is the issuer or not, if nothing of value is given by stockholders or other equity holders for the dividend or equivalent equity distribution other than the surrender of a right to a cash or property dividend if each stockholder or other equity holder may elect to take the dividend or equivalent equity distribution in cash, property or stock;

                (2) an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims or property interests, or partly in such exchange and partly for cash; or

                (3) the solicitation of tenders of securities by an offeror in a tender offer in compliance with Rule 162 (17 C.F.R. 230.162) adopted pursuant to the federal Securities Act of 1933;

          W. a nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration pursuant to the New Mexico Uniform Securities Act, if the issuer is a reporting issuer in a foreign jurisdiction designated by this subsection or by rule adopted or order issued pursuant to that act; has been subject to continuous reporting requirements in the foreign jurisdiction for not less than one hundred eighty days before the transaction; and the security is listed on the foreign jurisdiction's securities exchange that has been designated by this subsection or by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act, or is a security of the same issuer that is of senior or substantially equal rank to the listed security or is a warrant or right to purchase or subscribe to any of the foregoing. For purposes of this subsection, Canada, together with its provinces and territories, is a designated foreign jurisdiction and the Toronto stock exchange, inc., is a designated securities exchange. After an administrative hearing in compliance with Subsection B of Section 604 of the New Mexico Uniform Securities Act, the director, by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act, may revoke the designation of a securities exchange pursuant to this subsection if the director finds that revocation is necessary or appropriate in the public interest and for the protection of investors;

          X. the issuance and offer and sale of securities by any issuer if:

                (1) the issuer's principal office or principal place of business or a majority of its employees or assets are located in New Mexico;

                (2) more than one-half of the proceeds from the offering shall be used by the issuer in operations of the issuer in New Mexico;

                 (3) no commission or other remuneration is paid or given, directly or indirectly, for soliciting or selling to any person in New Mexico except to broker-dealers and agents registered pursuant to the New Mexico Uniform Securities Act;

                (4) an offering document is delivered to each purchaser or prospective purchaser prior to the sale of the securities disclosing such information as the director by rule or order may require;

                (5) the total offering, including interest on installment payments, does not exceed two million five hundred thousand dollars ($2,500,000); and

                (6) the issuer claiming this exemption files notice with the director on a form prescribed by the director prior to the first offer and pays a fee of three hundred fifty dollars ($350). The director may require any issuer using this exemption to file periodic reports not more often than quarterly to keep reasonably current the information contained in the notice and to disclose the progress of the offering. The director may impose conditions by rule or order with respect to issuers, broker-dealers or affiliates that by reason of prior misconduct will not be eligible to utilize this exemption. The issuance and offer and sale of securities pursuant to this subsection shall be subject to Subsection A of Section 504 of the New Mexico Uniform Securities Act;

          Y. the issuance and offer and sale of securities by any issuer if:

                (1) the total number of security holders does not and will not in consequence of the sale exceed twenty-five;

                (2) the issuer reasonably believes that all buyers are purchasing for investment;

                (3) no public advertising or general solicitation is used in connection with the offer or sale; and

                (4) no commission or other remuneration is paid or given, directly or indirectly, for soliciting or selling to any person in New Mexico except to broker-dealers and sales representatives registered pursuant to the New Mexico Uniform Securities Act. The director by rule or order may impose additional requirements as a condition of the exemption established in this subsection as necessary for the protection of investors and to specify its application. Any notice filing that may be imposed pursuant to Section 203 of the New Mexico Uniform Securities Act shall not be deemed a condition of this exemption;

          Z. any offer or sale of a preorganization certificate or subscription if:

                (1) when such sale or offer is made by an agent, the agent is registered pursuant to the New Mexico Uniform Securities Act. No commission shall be paid to an agent not registered pursuant to that act;

                (2) no public advertising or general solicitation is used in connection with the offer or sale;

                (3) the number of subscribers does not exceed ten; and

                (4) either no payment is made by any subscriber or any payment made by a subscriber is put into escrow until the entire issue is subscribed;

          AA. a transaction:

                (1) involving the offer to sell or the sale of one or more promissory notes each of which is directly secured by a first lien on a single parcel of real estate, or a transaction involving the offer to sell or the sale of participation interests in the notes if the notes and participation interests are originated by a depository institution and are offered and sold subject to the following conditions:

                     (a) the minimum aggregate sales price paid by each purchaser shall not be less than two hundred fifty thousand dollars ($250,000);

                     (b) each purchaser must pay cash either at the time of the sale or within sixty days after the sale; and

                     (c) each purchaser may buy for that person's own account only;

                (2) involving the offer to sell or the sale of one or more promissory notes directly secured by a first lien on a single parcel of real estate or participation interests in the notes, if the notes and participation interests are originated by a mortgagee approved by the secretary of housing and urban development pursuant to Sections 203 and 211 of the National Housing Act and are offered or sold, subject to the conditions specified in Paragraph (1) of this subsection, to a depository institution or insurance company, the federal home loan mortgage corporation, the federal national mortgage association or the government national mortgage association; and

                (3) between any of the persons described in Paragraph (2) of this subsection involving a nonassignable contract to buy or sell the securities described in Paragraph (1) of this subsection, which contract is to be completed within two years, if:

                     (a) the seller of the securities pursuant to the contract is one of the parties described in Paragraph (1) or (2) of this subsection that may originate securities;

                     (b) the purchaser of securities pursuant to any contract is any other institution described in Paragraph (2) of this subsection; and

                     (c) the three conditions described in Paragraph (1) of this subsection are fulfilled;

          BB. any transaction involving leases or interests in leases in oil, gas or other mineral rights between parties, each of whom is engaged in the business of exploring for or producing oil and gas or other valuable minerals as an ongoing business. For purposes of this subsection, "a party engaged in the business of exploring for or producing oil and gas or other valuable minerals as an ongoing business" means:

                (1) any corporation, limited liability company, partnership or other business entity that is directly engaged in and derives at least eighty percent of its annual gross income from the exploration or production of oil, gas or other valuable minerals;

                (2) any general partner or any employee who spends at least eighty percent of work time in the daily management of a business entity that is directly engaged in and derives at least eighty percent of its gross annual income from the exploration or production of oil, gas or other valuable minerals; or

                (3) any corporation, limited liability company, partnership or other business entity that is directly engaged in the business of exploration and production of oil, gas or other valuable minerals and derives at least five million dollars ($5,000,000) of annual gross income from such business; and

          CC. any transaction involving the sale or offer of interests in and under oil, gas or mining rights located in New Mexico or fees, titles or contracts relating thereto, or such sale or offer of such interests, wherever located, made by an entity principally operating in New Mexico, provided that:

                (1) the total number of sales by any one owner of interests, whether whole, fractional, segregated or undivided, in any oil, gas or mineral lease, fee or title, or contract relating thereto, shall not exceed twenty-five, provided that such sales shall be made only to persons meeting suitability standards established by rule or order of the director and that investors are provided with such disclosure documents and other information as the director may require by rule or order;

                (2) no use is made of advertisement or public solicitation; and

                (3) if such sale or offer is made by an agent for such owner or owners, such agent shall be registered pursuant to the New Mexico Uniform Securities Act. No commission shall be paid to an agent not registered pursuant to that act.

     For the purposes of this subsection, "an entity principally operating in New Mexico" means a corporation or limited liability company organized pursuant to the law of New Mexico, a corporation in which a majority in interest of the shareholders are residents of New Mexico, a limited liability company in which a majority in interest of the members are residents of New Mexico, a partnership in which a majority in interest of the partners are residents of New Mexico, a trust in which a majority in interest of the beneficiaries are residents of New Mexico or a sole proprietorship in which the owner is a resident of New Mexico.

     Section 203. [NEW MATERIAL] ADDITIONAL EXEMPTIONS AND WAIVERS.--A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may exempt a security, transaction or offer; a rule pursuant to the New Mexico Uniform Securities Act may exempt a class of securities, transactions or offers from any or all of the requirements of Sections 301 through 306 and 504 of that act; and an order pursuant to the New Mexico Uniform Securities Act may waive, in whole or in part, any or all of the conditions for an exemption or offer pursuant to Sections 201 and 202 of that act. The director may by rule require notice of filing for any exemption contained in Section 201 or 202 of the New Mexico Uniform Securities Act and may require payment of a fee not to exceed three hundred fifty dollars ($350) for any such notice of filing, except that no fee shall be required for filing a notice of exemption pursuant to Subsection Y of Section 202 of that act.

     Section 204. [NEW MATERIAL] DENIAL, SUSPENSION, REVOCATION, CONDITION OR LIMITATION OF EXEMPTIONS.--

          A. Except with respect to a federal covered security or a transaction involving a federal covered security, an order pursuant to the New Mexico Uniform Securities Act may deny, suspend application of, condition, limit or revoke an exemption created pursuant to Paragraph (4) of Subsection C of Section 201 of that act, Subsection G or H of Section 201 of that act or Section 202 of that act or an exemption or waiver created pursuant to Section 203 of that act with respect to a specific security, transaction or offer. An order pursuant to this section may be issued only pursuant to the procedures set forth in Subsection D of Section 306 or Section 604 of the New Mexico Uniform Securities Act and only prospectively.

          B. A person does not violate Section 301, 303 through 306, 504 or 510 of the New Mexico Uniform Securities Act by an offer to sell, offer to purchase, sale or purchase effected after the entry of an order issued pursuant to this section if the person did not know, and in the exercise of reasonable care could not have known, of the order.

Article 3

REGISTRATION OF SECURITIES AND

NOTICE FILING OF FEDERAL COVERED SECURITIES

     Section 301. [NEW MATERIAL] SECURITIES REGISTRATION REQUIREMENT.--It is unlawful for a person to offer or sell a security in New Mexico unless:

          A. the security is a federal covered security;

          B. the security, transaction or offer is exempted from registration pursuant to Sections 201 through 203 of the New Mexico Uniform Securities Act; or

          C. the security is registered pursuant to the New Mexico Uniform Securities Act.

     Section 302. [NEW MATERIAL] NOTICE FILING.--

          A. With respect to a federal covered security, as defined in Section 18(b)(2) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)(2)), that is not otherwise exempt pursuant to Sections 201 through 203 of the New Mexico Uniform Securities Act, a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require the filing of any or all of the following records:

                (1) before the initial offer of a federal covered security in New Mexico, all records that are part of a federal registration statement filed with the securities and exchange commission pursuant to the federal Securities Act of 1933 and a consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act signed by the issuer and the payment of a fee of five hundred twenty-five dollars ($525) for all investment companies other than a unit investment trust or two hundred dollars ($200) for a unit investment trust; and

                (2) after the initial offer of the federal covered security in New Mexico, all records that are part of an amendment to a federal registration statement filed with the securities and exchange commission pursuant to the federal Securities Act of 1933.

          B. A notice filing pursuant to Subsection A of this section is effective for one year commencing on the later of the notice filing or the effectiveness of the offering filed with the securities and exchange commission. On or before expiration, the issuer may renew a notice filing by filing a copy of those records filed by the issuer with the securities and exchange commission that are required by rule or order pursuant to the New Mexico Uniform Securities Act to be filed and by paying a renewal fee of five hundred twenty-five dollars ($525) for all investment companies other than a unit investment trust or two hundred dollars ($200) for a unit investment trust. A previously filed consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act may be incorporated by reference in a renewal. A renewed notice filing becomes effective upon the expiration of the filing being renewed.

          C. With respect to a security that is a federal covered security pursuant to Section 18(b)(4)(D) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)(4)(D)), including Rule 506 of Regulation D (17 C.F.R. 230.506), a rule pursuant to the New Mexico Uniform Securities Act may require a notice filing by or on behalf of an issuer to include a copy of Form D, including the appendix, as promulgated by the securities and exchange commission, and a consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act signed by the issuer not later than fifteen days after the first sale of the federal covered security in New Mexico and the payment of a fee of three hundred fifty dollars ($350) and the payment of a fee in an amount up to one thousand fifty dollars ($1,050) as specified by the director by rule for any late filing.

          D. Except with respect to a federal security pursuant to Section 18(b)(1) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)), if the director finds that there is a failure to comply with a notice or fee requirement of this section, the director may issue a stop order suspending the offer and sale of a federal covered security in New Mexico. If the deficiency is corrected, the stop order is void as of the time of its issuance and no penalty may be imposed by the director.

     Section 303. [NEW MATERIAL] SECURITIES REGISTRATION BY COORDINATION.--

          A. A security for which a registration statement has been filed pursuant to the federal Securities Act of 1933 in connection with the same offering may be registered by coordination pursuant to this section.

          B. A registration statement and accompanying records pursuant to this section must contain or be accompanied by the following records in addition to the information specified in Section 305 of the New Mexico Uniform Securities Act and a consent to service of process complying with Section 611 of that act:

                (1) a copy of the latest form of prospectus filed pursuant to the federal Securities Act of 1933;

                (2) a copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect; a copy of any agreement with or among underwriters; a copy of any indenture or other instrument governing the issuance of the security to be registered; and a specimen, copy or description of the security that is required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

                (3) copies of any other information or any other records filed by the issuer pursuant to the federal Securities Act of 1933 requested by the director; and

                (4) an undertaking to forward each amendment to the federal prospectus, other than an amendment that delays the effective date of the registration statement, promptly after it is filed with the securities and exchange commission.

          C. A registration statement pursuant to this section becomes effective simultaneously with or subsequent to the federal registration statement when all of the following conditions are satisfied:

                (1) a stop order pursuant to Subsection D of this section or Section 306 of the New Mexico Uniform Securities Act or issued by the securities and exchange commission is not in effect and a proceeding is not pending against the issuer pursuant to Section 306 of the New Mexico Uniform Securities Act; and

                (2) the registration statement has been on file for at least twenty days or a shorter period provided by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          D. The registrant shall promptly notify the director in a record of the date when the federal registration statement becomes effective and of the content of any price amendment and shall promptly file a record containing the price amendment. If the notice is not timely received, the director may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section. The director shall promptly notify the registrant of an order by telegram, telephone or electronic means and promptly confirm this notice by a record. If the registrant subsequently complies with the notice requirements of this section, the stop order is void as of the date of its issuance.

          E. If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the director, the registration statement is automatically effective pursuant to the New Mexico Uniform Securities Act when all the conditions are satisfied or waived. If the registrant notifies the director of the date when the federal registration statement is expected to become effective, the director shall promptly notify the registrant by telegram, telephone or electronic means and promptly confirm this notice by a record, indicating whether all the conditions are satisfied or waived and whether the director intends the institution of a proceeding pursuant to Section 306 of the New Mexico Uniform Securities Act. The notice by the director does not preclude the institution of such a proceeding.

     Section 304. [NEW MATERIAL] SECURITIES REGISTRATION BY QUALIFICATION.--

          A. A security may be registered by qualification pursuant to this section.

          B. A registration statement pursuant to this section shall contain the information or records specified in Section 305 of the New Mexico Uniform Securities Act, a consent to service of process complying with Section 611 of that act and, if required by rule adopted pursuant to that act, the following information or records:

                (1) with respect to the issuer and any significant subsidiary, its name, address and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;

                (2) with respect to each director and officer of the issuer, and other person having a similar status or performing similar functions, the person's name, address and principal occupation for the previous five years; the amount of securities of the issuer held by the person as of the thirtieth day before the filing of the registration statement; the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest of the person in any material transaction with the issuer or a significant subsidiary effected within the previous three years or proposed to be effected;

                (3) with respect to persons covered by Paragraph (2) of this subsection, the aggregate sum of the remuneration paid to those persons during the previous twelve months and estimated to be paid during the next twelve months, directly or indirectly, by the issuer, and all predecessors, parents, subsidiaries and affiliates of the issuer;

                (4) with respect to a person owning of record or owning beneficially, if known, ten percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in Paragraph (2) of this subsection other than the person's occupation;

                (5) with respect to a promoter, if the issuer was organized within the previous three years, the information or records specified in Paragraph (2) of this subsection, any amount paid to the promoter within that period or intended to be paid to the promoter and the consideration for the payment;

                (6) with respect to a person on whose behalf any part of the offering is to be made in a nonissuer distribution, the person's name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest of the person in any material transaction with the issuer or any significant subsidiary effected within the previous three years or proposed to be effected; and a statement of the reasons for making the offering;

                (7) the capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill or anything else of value, for which the issuer or any subsidiary has issued its securities within the previous two years or is obligated to issue its securities;

                (8) the kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis on which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finder's fees, including separately cash, securities, contracts or anything else of value to accrue to the underwriters or finders in connection with the offering or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering and accounting charges; the name and address of each underwriter and each recipient of a finder's fee; a copy of any underwriting or selling group agreement pursuant to which the distribution is to be made or the proposed form of any such agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities that are to be offered otherwise than through an underwriter;

                (9) the estimated monetary proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the estimated amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if a part of the proceeds is to be used to acquire property, including goodwill, otherwise than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons that have received commissions in connection with the acquisition and the amounts of the commissions and other expenses in connection with the acquisition, including the cost of borrowing money to finance the acquisition;

                (10) a description of any stock options or other security options outstanding, or to be created in connection with the offering, and the amount of those options held or to be held by each person required to be named in Paragraph (2), (4), (5), (6) or (8) of this subsection and by any person that holds or will hold ten percent or more in the aggregate of those options;

                (11) the dates of, parties to and general effect concisely stated of each managerial or other material contract made or to be made otherwise than in the ordinary course of business to be performed in whole or in part at or after the filing of the registration statement or that was made within the previous two years, and a copy of the contract;

                (12) a description of any pending litigation, action or proceeding to which the issuer is a party and that materially affects its business or assets and any litigation, action or proceeding known to be contemplated by governmental authorities;

                (13) a copy of any prospectus, pamphlet, circular, form letter, advertisement or other sales literature intended as of the effective date to be used in connection with the offering and any solicitation of interest used in compliance with Paragraph (2) of Subsection Q of Section 202 of the New Mexico Uniform Securities Act;

                (14) a specimen or copy of the security being registered, unless the security is uncertificated; a copy of the issuer's articles of incorporation and bylaws or their substantial equivalents, in effect; and a copy of any indenture or other instrument covering the security to be registered;

                (15) a signed or conformed copy of an opinion of counsel concerning the legality of the security being registered, with an English translation if it is in a language other than English, that states whether the security when sold will be validly issued, fully paid and nonassessable and, if a debt security, a binding obligation of the issuer;

                (16) a signed or conformed copy of a consent of any accountant, engineer, appraiser or other person whose profession gives authority for a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than an official record, that is public, which is used in connection with the registration statement;

                (17) a balance sheet of the issuer as of a date within four months before the filing of the registration statement; a statement of income and a statement of cash flow for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the immediately previous fiscal year and the date of the balance sheet, or for the period of the issuer's and any predecessor's existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the financial statements that would be required if that business were the registrant; and

                (18) any additional information or records required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          C. A registration statement pursuant to this section becomes effective thirty days, or any shorter period provided by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act, after the date the registration statement or the last amendment other than a price amendment is filed, if:

                (1) a stop order is not in effect and a proceeding is not pending pursuant to Section 306 of the New Mexico Uniform Securities Act;

                (2) the director has not issued an order pursuant to Section 306 of the New Mexico Uniform Securities Act delaying effectiveness; or

                (3) the applicant or registrant has not requested that effectiveness be delayed.

          D. The director may delay effectiveness once for not more than ninety days if the director determines the registration statement is not complete in all material respects and promptly notifies the applicant or registrant of that determination. The director may also delay effectiveness for a further period of not more than thirty days if the director determines that the delay is necessary or appropriate.

          E. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require as a condition of registration pursuant to this section that a prospectus containing a specified part of the information or record specified in Subsection B of this section be sent or given to each person to which an offer is made, before or concurrently, with the earliest of:

                (1) the first offer made in a record to the person otherwise than by means of a public advertisement, by or for the account of the issuer or another person on whose behalf the offering is being made or by an underwriter or broker- dealer that is offering part of an unsold allotment or subscription taken by the person as a participant in the distribution;

                (2) the confirmation of a sale made by or for the account of the person;

                (3) payment pursuant to such a sale; or

                (4) delivery of the security pursuant to such a sale.

     Section 305. [NEW MATERIAL] SECURITIES REGISTRATION FILINGS.--

          A. A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made or a broker-dealer registered pursuant to the New Mexico Uniform Securities Act.

          B. A person filing a registration statement shall pay a filing fee of one-tenth of one percent of the maximum aggregate offering price at which the registered securities are to be offered in New Mexico, but not less than five hundred twenty-five dollars ($525) nor more than two thousand five hundred dollars ($2,500) or five hundred twenty-five dollars ($525) if the person is an issuer or a person acting on behalf of an issuer and is claiming an exemption from the registration requirements of federal law regarding small company offerings under Rule 504 of Regulation D (17 C.F.R. 230.504). If a registration statement is withdrawn before the effective date or a preeffective stop order is issued pursuant to Section 306 of the New Mexico Uniform Securities Act, the director shall retain the fee set forth in this subsection.

          C. A registration statement filed pursuant to Section 303 or 304 of the New Mexico Uniform Securities Act shall specify:

                (1) the amount of securities to be offered in New Mexico;

                 (2) the states in which a registration statement or similar record in connection with the offering has been or is to be filed; and

                (3) any adverse order, judgment or decree issued in connection with the offering by a state securities regulator, the securities and exchange commission or a court.

          D. A record filed pursuant to the New Mexico Uniform Securities Act or the predecessor act within five years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate.

          E. In the case of a nonissuer distribution, information or a record may not be required pursuant to Subsection I of this section or Section 304 of the New Mexico Uniform Securities Act, unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense.

          F. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require as a condition of registration that a security issued within the previous five years or to be issued to a promoter for a consideration substantially less than the public offering price or to a person for a consideration other than cash be deposited in escrow; and that the proceeds from the sale of the registered security in New Mexico be impounded until the issuer receives a specified amount from the sale of the security either in New Mexico or elsewhere. The conditions of any escrow or impoundment required pursuant to this subsection may be established by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act, but the director shall not reject a depository institution solely because of its location in another state.

          G. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require as a condition of registration that a security registered pursuant to that act be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed pursuant to that act or preserved for a period specified by the rule or order, which shall not be longer than five years.

          H. Except while a stop order is in effect pursuant to Section 306 of the New Mexico Uniform Securities Act, a registration statement is effective for one year after its effective date, or for any longer period designated in an order pursuant to that act during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution. For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered pursuant to the New Mexico Uniform Securities Act are considered to be registered while the registration statement is effective. If any securities of the same class are outstanding, a registration statement shall not be withdrawn until one year after its effective date. A registration statement may be withdrawn only with the approval of the director.

          I. While a registration statement is effective, a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering.

          J. A registration statement may be amended after its effective date. The posteffective amendment becomes effective when the director so orders. If a posteffective amendment is made to increase the number of securities specified to be offered or sold, the person filing the amendment shall pay an additional registration fee of three times the fee otherwise payable, calculated in the manner specified in Subsection B of this section, with respect to the additional securities to be offered and sold, unless the maximum filing fee has been paid. If the maximum filing fee was paid at the time of filing the original registration statement, no additional filing fee is required to be paid with the amendment. A posteffective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid.

     Section 306. [NEW MATERIAL] DENIAL, SUSPENSION AND REVOCATION OF SECURITIES REGISTRATION.--

          A. The director may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the director finds that the order is in the public interest and that:

                (1) the registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment pursuant to Subsection J of Section 305 of the New Mexico Uniform Securities Act as of its effective date or a report pursuant to Subsection I of Section 305 of that act, is incomplete in a material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact;

                (2) the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act or a condition imposed pursuant to that act has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; or a person directly or indirectly controlling or controlled by the issuer; but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or by an underwriter;

                (3) the security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued pursuant to any federal, foreign or state law other than the New Mexico Uniform Securities Act applicable to the offering, but the director shall not institute a proceeding against an effective registration statement pursuant to this paragraph more than one year after the date of the order or injunction on which it is based, and the director shall not issue an order pursuant to this paragraph on the basis of an order or injunction issued pursuant to the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, a ground for a stop order pursuant to this section;

                (4) the issuer's enterprise or method of business includes or would include activities that are unlawful where performed;

                (5) with respect to a security sought to be registered pursuant to Section 303 of the New Mexico Uniform Securities Act, there has been a failure to comply with the undertaking required by Paragraph (4) of Subsection B of Section 303 of that act;

                (6) the applicant or registrant has not paid the filing fee, but the director shall void the order if the deficiency is corrected; or

                (7) the offering:

                     (a) will work or tend to work a fraud upon purchasers or would so operate;

                     (b) has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions or other compensation, or promoters' profits or participations or unreasonable amounts or kinds of options; or

                     (c) is being made on terms that are unfair, unjust or inequitable.

          B. To the extent practicable, the director by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act shall publish standards that provide notice of conduct that violates Paragraph (7) of Subsection A of this section.

          C. The director shall not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the director when the registration statement became effective unless the proceeding is instituted within thirty days after the registration statement became effective.

          D. The director may summarily revoke, deny, postpone or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the director shall promptly notify each person specified in Subsection E of this section that the order has been issued, the reasons for the revocation, denial, postponement or suspension and that within fifteen days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the director within thirty days after the date of service of the order, the order becomes final. If a hearing is requested or ordered, the director, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.

          E. If a hearing is requested or ordered, such hearing shall be conducted pursuant to Subsection B of Section 604 of the New Mexico Uniform Securities Act. A stop order shall not be issued pursuant to this section, except in accordance with Subsection D of this section, without:

                (1) appropriate notice to the applicant or registrant, the issuer and the person on whose behalf the securities are to be or have been offered;

                (2) opportunity for hearing; and

                (3) findings of fact and conclusions of law in a record.

          F. The director shall modify or vacate a stop order entered pursuant to this section if the director finds that the conditions that prompted entry have changed or that it is otherwise in the public interest or for the protection of investors.

     Section 307. [NEW MATERIAL] WAIVER AND MODIFICATION.--The director may waive or modify, in whole or in part, any or all of the requirements of Sections 302 and 303 of the New Mexico Uniform Securities Act and Subsection B of Section 304 of that act or the requirement of any information or record in a registration statement or in a periodic report filed pursuant to Subsection I of Section 305 of that act.

Article 4

BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS,

INVESTMENT ADVISER REPRESENTATIVES AND FEDERAL

COVERED INVESTMENT ADVISERS

     Section 401. [NEW MATERIAL] BROKER-DEALER REGISTRATION REQUIREMENT AND EXEMPTIONS.--

          A. It is unlawful for a person to transact business in New Mexico as a broker-dealer unless the person is registered pursuant to the New Mexico Uniform Securities Act as a broker-dealer or is exempt from registration as a broker-dealer pursuant to Subsection B or D of this section.

          B. The following persons are exempt from the registration requirement of Subsection A of this section:

                (1) a broker-dealer without a place of business in New Mexico if its only transactions effected in New Mexico are with:

                     (a) the issuer of the securities involved in the transactions;

                     (b) a broker-dealer registered as a broker-dealer pursuant to the New Mexico Uniform Securities Act or not required to be registered as a broker-dealer pursuant to that act;

                     (c) an institutional investor;

                     (d) a nonaffiliated federal covered investment adviser with investments under management in excess of one hundred million dollars ($100,000,000) acting for the account of others pursuant to discretionary authority in a signed record;

                     (e) a bona fide preexisting customer whose principal place of residence is not in New Mexico and the person is registered as a broker-dealer pursuant to the federal Securities Exchange Act of 1934 or not required to be registered pursuant to that act and is registered pursuant to the securities act of the state in which the customer maintains a principal place of residence;

                     (f) a bona fide preexisting customer whose principal place of residence is in New Mexico but was not present in New Mexico when the customer relationship was established, if: 1) the broker-dealer is registered pursuant to the federal Securities Exchange Act of 1934 or not required to be registered or licensed pursuant to that act and is registered pursuant to the securities laws of the state in which the customer relationship was established and where the customer had maintained a principal place of residence; and 2) within forty-five days after the customer's first transaction in New Mexico, the person files an application for registration as a broker-dealer in New Mexico and no further transactions are effected more than forty-five days after the date on which the application is filed. Only unsolicited transactions are permitted pursuant to this subparagraph; or

                     (g) any other person exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act; and

                (2) a person that deals solely in United States government securities and is supervised as a dealer in government securities by the board of governors of the federal reserve system, the comptroller of the currency, the federal deposit insurance corporation or the office of thrift supervision.

          C. It is unlawful for a broker-dealer, or for an issuer engaged in offering, offering to purchase, purchasing or selling securities in New Mexico, directly or indirectly, to employ or associate with an individual to engage in an activity related to securities transactions in New Mexico if the registration of the individual is suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser or a federal covered investment adviser by an order of the director pursuant to the New Mexico Uniform Securities Act, the securities and exchange commission or a self-regulatory organization. A broker-dealer or issuer does not violate this subsection if the broker-dealer or issuer did not know, and in the exercise of reasonable care could not have known, of the suspension, revocation or bar. Upon request from a broker-dealer or issuer and for good cause, an order pursuant to the New Mexico Uniform Securities Act may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer.

          D. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may permit:

                (1) a broker-dealer that is registered in Canada or other foreign jurisdiction and that does not have a place of business in New Mexico to effect transactions in securities with or for, or attempt to effect the purchase or sale of any securities by:

                     (a) an individual from Canada or other foreign jurisdiction who is temporarily present in New Mexico and with whom the broker-dealer had a bona fide customer relationship before the individual entered the United States;

                     (b) an individual from Canada or other foreign jurisdiction who is present in New Mexico and whose transactions are in a self-directed tax advantaged retirement plan of which the individual is the holder or contributor in that foreign jurisdiction; or

                     (c) an individual who is present in New Mexico, with whom the broker-dealer customer relationship arose while the individual was temporarily or permanently a resident in Canada or the other foreign jurisdiction; and

                (2) an agent who represents a broker-dealer that is exempt pursuant to this subsection to effect transactions in securities or attempt to effect the purchase or sale of securities in New Mexico as permitted for a broker-

dealer described in Paragraph (1) of this subsection.

     Section 402. [NEW MATERIAL] AGENT REGISTRATION REQUIREMENT AND EXEMPTIONS.--

          A. It is unlawful for an individual to transact business in New Mexico as an agent unless the individual is registered pursuant to the New Mexico Uniform Securities Act as an agent or is exempt from registration as an agent pursuant to Subsection B of this section.

          B. The following individuals are exempt from the registration requirement of Subsection A of this section:

                (1) an individual who represents a broker-

dealer in effecting transactions in New Mexico limited to those described in Section 15(h)(2) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78(h)(2));

                (2) an individual who represents a broker- dealer that is exempt pursuant to Subsection B or D of Section 401 of the New Mexico Uniform Securities Act;

                (3) an individual who represents an issuer with respect to an offer or sale of the issuer's own securities or those of the issuer's parent or any of the issuer's subsidiaries, and who is not compensated in connection with the individual's participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;

                (4) an individual who represents a broker- dealer registered in New Mexico pursuant to Subsection A of Section 401 of the New Mexico Uniform Securities Act or exempt from registration pursuant to Subsection B of Section 401 of that act in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of one hundred million dollars ($100,000,000) acting for the account of others pursuant to discretionary authority in a signed record;

                (5) an individual who represents an issuer in connection with the purchase by the issuer of the issuer's own securities;

                (6) an individual who represents an issuer and who restricts participation to performing clerical or ministerial acts; or

                (7) any other individual exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          C. The registration of an agent is effective only while the agent is employed by or associated with a broker- dealer registered pursuant to the New Mexico Uniform Securities Act or an issuer that is offering, selling or purchasing its securities in New Mexico. The registration of an agent is only effective with respect to transactions effected as an employee or agent on behalf of the broker-dealer or issuer for whom the agent is registered.

          D. It is unlawful for a broker-dealer, or an issuer engaged in offering, selling or purchasing securities in New Mexico, to employ or associate with an agent who transacts business in New Mexico on behalf of broker-dealers or issuers unless the agent is registered pursuant to Subsection A of this section or exempt from registration pursuant to Subsection B of this section.

          E. An individual shall not act as an agent for more than one broker-dealer or one issuer at a time, unless the broker-dealer or the issuer for which the agent acts is affiliated by direct or indirect common control or is authorized by rule or order pursuant to the New Mexico Uniform Securities Act.

     Section 403. [NEW MATERIAL] INVESTMENT ADVISER REGISTRATION REQUIREMENT AND EXEMPTIONS.--

          A. It is unlawful for a person to transact business in New Mexico as an investment adviser unless the person is registered pursuant to the New Mexico Uniform Securities Act as an investment adviser or is exempt from registration as an investment adviser pursuant to Subsection B of this section.

          B. The following persons are exempt from the registration requirement of Subsection A of this section:

                (1) a person without a place of business in New Mexico that is registered pursuant to the securities act of the state in which the person has its principal place of business if its only clients in New Mexico are:

                     (a) federal covered investment advisers, investment advisers registered pursuant to the New Mexico Uniform Securities Act or broker-dealers registered pursuant to that act;

                     (b) institutional investors;

                     (c) bona fide preexisting clients whose principal places of residence are not in New Mexico if the investment adviser is registered pursuant to the securities act of the state in which the clients maintain principal places of residence; or

                     (d) any other client exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

                (2) a person without a place of business in New Mexico if the person has had, during the preceding twelve months, not more than five clients that are residents in New Mexico in addition to those specified pursuant to Paragraph (1) of this subsection; or

                (3) any other person exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          C. It is unlawful for an investment adviser, directly or indirectly, to employ or associate with an individual to engage in an activity related to investment advice in New Mexico if the registration of the individual is suspended or revoked or the individual is barred from employment or association with an investment adviser, federal covered investment adviser or broker-dealer by an order of the director pursuant to the New Mexico Uniform Securities Act, the securities and exchange commission or a self-regulatory organization, unless the investment adviser did not know, and in the exercise of reasonable care could not have known, of the suspension, revocation or bar. Upon request from the investment adviser and for good cause, the director, by order, may waive, in whole or in part, the application of the prohibitions of this subsection to the investment adviser.

          D. It is unlawful for an investment adviser to employ or associate with an individual required to be registered pursuant to the New Mexico Uniform Securities Act as an investment adviser representative who transacts business in New Mexico on behalf of the investment adviser unless the individual is registered pursuant to Subsection A of Section 404 of the New Mexico Uniform Securities Act or is exempt from registration pursuant to Subsection B of Section 404 of that act.

     Section 404. [NEW MATERIAL] INVESTMENT ADVISER REPRESENTATIVE REGISTRATION REQUIREMENT AND EXEMPTIONS.--

          A. It is unlawful for an individual to transact business in New Mexico as an investment adviser representative unless the individual is registered pursuant to the New Mexico Uniform Securities Act as an investment adviser representative or is exempt from registration as an investment adviser.

          B. The following individuals are exempt from the registration requirement of Subsection A of this section:

                (1) an individual who is employed by or associated with an investment adviser that is exempt from registration pursuant to Subsection B of Section 403 of the New Mexico Uniform Securities Act or a federal covered investment adviser that is excluded from the notice filing requirements of Section 405 of that act; and

                (2) any other individual exempted by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          C. The registration of an investment adviser representative is not effective while the investment adviser representative is not employed by or associated with an investment adviser registered pursuant to the New Mexico Uniform Securities Act or a federal covered investment adviser that has made or is required to make a notice filing under that act.

          D. The registration of an investment adviser representative is only effective with respect to transactions effected or advice rendered as an employee or agent on behalf of the investment adviser for whom the investment adviser representative is registered.

          E. An individual may transact business as an investment adviser representative for more than one investment adviser or federal covered investment adviser unless a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act prohibits or limits an individual from acting as an investment adviser representative for more than one investment adviser or federal covered investment adviser.

          F. It is unlawful for an individual acting as an investment adviser representative, directly or indirectly, to conduct business in New Mexico on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order of the director pursuant to the New Mexico Uniform Securities Act, the securities and exchange commission or a self-regulatory organization. Upon request from an investment adviser or a federal covered investment adviser and for good cause, the director, by order issued, may waive, in whole or in part, the application of the requirements of this subsection to the investment adviser or the federal covered investment adviser.

          G. An investment adviser registered pursuant to the New Mexico Uniform Securities Act, a federal covered investment adviser that has filed a notice pursuant to Section 405 of that act or a broker-dealer registered pursuant to that act is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered pursuant to the New Mexico Uniform Securities Act, a federal covered investment adviser that has filed a notice pursuant to Section 405 of that act or a broker-dealer registered pursuant to that act with which the individual is employed or associated as an investment adviser representative, subject to such conditions as the director may impose by rule or by order.

     Section 405. [NEW MATERIAL] FEDERAL COVERED INVESTMENT ADVISER NOTICE FILING REQUIREMENT.--

          A. Except with respect to a federal covered investment adviser described in Subsection B of this section, it is unlawful for a federal covered investment adviser to transact business in New Mexico as a federal covered investment adviser unless the federal covered investment adviser complies with Subsection C of this section.

          B. The following federal covered investment advisers are not required to comply with Subsection C of this section:

                (1) a federal covered investment adviser without a place of business in New Mexico if its only clients in New Mexico are:

                     (a) federal covered investment advisers, investment advisers registered pursuant to the New Mexico Uniform Securities Act and broker-dealers registered pursuant to that act;

                     (b) institutional investors;

                     (c) bona fide preexisting clients whose principal places of residence are not in New Mexico; or

                     (d) other clients specified by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

                (2) a federal covered investment adviser without a place of business in New Mexico if the person has had, during the preceding twelve months, not more than five clients that are residents in New Mexico in addition to those specified pursuant to Paragraph (1) of this subsection; and

                (3) any other person excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          C. A person acting as a federal covered investment adviser not excluded pursuant to Subsection B of this section shall file a notice, a consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act and such records as have been filed with the securities and exchange commission pursuant to the federal Investment Advisers Act of 1940 required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act and pay the fees specified in Subsection E of Section 410 of that act.

          D. The notice pursuant to Subsection C of this section becomes effective upon its filing.

     Section 406. [NEW MATERIAL] REGISTRATION BY BROKER-DEALER, AGENT, INVESTMENT ADVISER AND INVESTMENT ADVISER REPRESENTATIVE.--

          A. A person shall register as a broker-dealer, agent, investment adviser or investment adviser representative by filing an application and a consent to service of process complying with Section 611 of the New Mexico Uniform Securities Act and paying the fee specified in Section 410 of that act and any reasonable fees charged by the designee of the director for processing the filing. The application shall contain:

                (1) the information or record required for the filing of a uniform application; and

                (2) upon request by the director, any other financial or other information or record that the director determines is appropriate.

          B. If the information or record contained in an application filed pursuant to Subsection A of this section is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

          C. If an order is not in effect or a proceeding is not pending pursuant to Section 412 of the New Mexico Uniform Securities Act, registration becomes effective at noon on the forty-fifth day after a completed application is filed, unless the registration is denied. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may set an earlier effective date or may defer the effective date until noon on the forty-fifth day after the filing of any amendment completing the application.

          D. A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect pursuant to Section 412 of the New Mexico Uniform Securities Act, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued pursuant to that act by paying the fee specified in Section 410 of that act and by paying costs charged by the designee of the director for processing the filings.

          E. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may impose such other conditions, not inconsistent with the federal National Securities Markets Improvement Act of 1996. An order issued pursuant to the New Mexico Uniform Securities Act may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.

     Section 407. [NEW MATERIAL] SUCCESSION AND CHANGE IN REGISTRATION OF BROKER-DEALER OR INVESTMENT ADVISER.--

          A. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to Section 401 or 403 of the New Mexico Uniform Securities Act or a notice pursuant to Section 405 of that act for the unexpired portion of the current registration or notice filing.

          B. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a material change in its financial condition or management. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of the New Mexico Uniform Securities Act. If there is a material change in financial condition or management, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered pursuant to the New Mexico Uniform Securities Act shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within forty-five days after filing its amendment to effect succession.

          C. A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration. The amendment becomes effective when filed or on a date designated by the registrant.

          D. A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

     Section 408. [NEW MATERIAL] TERMINATION OF EMPLOYMENT OR ASSOCIATION OF AGENT AND INVESTMENT ADVISER REPRESENTATIVE AND TRANSFER OF EMPLOYMENT OR ASSOCIATION.--

          A. If an agent registered pursuant to the New Mexico Uniform Securities Act terminates employment by or association with a broker-dealer or issuer, or if an investment adviser representative registered pursuant to that act terminates employment by or association with an investment adviser or federal covered investment adviser, or if either registrant terminates activities that require registration as an agent or investment adviser representative, the broker-dealer, issuer, investment adviser or federal covered investment adviser shall promptly file a notice of termination.

          B. If an agent registered pursuant to the New Mexico Uniform Securities Act terminates employment by or association with a broker-dealer registered pursuant to that act and begins employment by or association with another broker-dealer registered pursuant to that act; or if an investment adviser representative registered pursuant to the New Mexico Uniform Securities Act terminates employment by or association with an investment adviser registered pursuant to that act or a federal covered investment adviser that has filed a notice pursuant to Section 405 of that act and begins employment by or association with another investment adviser registered pursuant to that act or a federal covered investment adviser that has filed a notice pursuant to Section 405 of that act then, upon the filing by or on behalf of the registrant, within thirty days after the filing of notice of termination pursuant to Subsection A of this section, of an application for registration that complies with the requirement of Subsection A of Section 406 of that act and payment of the filing fee required pursuant to Section 410 of that act, the registration of the agent or investment adviser representative is immediately effective as of the date of the completed filing if the agent's central registration depository record or successor record or the investment adviser representative's investment adviser registration depository record or successor record does not contain a new or amended disciplinary disclosure within the previous twelve months.

          C. The director may prevent the effectiveness of a transfer of an agent or investment adviser representative pursuant to Subsection B of this section based on the public interest and the protection of investors.

          D. If the director determines that a registrant or applicant for registration is no longer in existence or has ceased to act as a broker-dealer, agent, investment adviser or investment adviser representative, or is the subject of an adjudication of incapacity or is subject to the control of a committee, conservator or guardian, or cannot reasonably be located, a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require the registration be canceled or terminated or the application denied. The director may reinstate a canceled or terminated registration, with or without hearing, and may make the registration retroactive.

     Section 409. [NEW MATERIAL] WITHDRAWAL OF REGISTRATION OF BROKER-DEALER, AGENT, INVESTMENT ADVISER AND INVESTMENT ADVISER REPRESENTATIVE.--Withdrawal of registration by a broker-dealer, agent, investment adviser or investment adviser representative becomes effective sixty days after the filing of the application to withdraw or within any shorter period as provided by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act unless a revocation or suspension proceeding is pending when the application is filed. If a proceeding is pending, withdrawal becomes effective when and upon such conditions as required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act. The director may institute a revocation or suspension proceeding pursuant to Section 412 of the New Mexico Uniform Securities Act within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending.

     Section 410. [NEW MATERIAL] FILING FEES.--

          A. A person shall pay a fee of three hundred dollars ($300) when initially filing an application for registration as a broker-dealer and when filing a renewal of registration as a broker-dealer.

          B. The fee for an individual shall be fifty dollars ($50.00) when filing an application for registration as an agent, when filing a renewal of registration as an agent and when filing for a change of registration as an agent.

          C. A person shall pay a fee of three hundred dollars ($300) when filing an application for registration as an investment adviser and when filing a renewal of registration as an investment adviser.

          D. The fee for an individual shall be fifty dollars ($50.00) when filing an application for registration as an investment adviser representative, when filing a renewal of registration as an investment adviser representative and when filing a change of registration as an investment adviser representative.

          E. A federal covered investment adviser required to file a notice pursuant to Section 405 of the New Mexico Uniform Securities Act shall pay an initial fee of three hundred dollars ($300) and an annual fee of three hundred dollars ($300).

          F. A person required to pay a filing or notice fee pursuant to this section may transmit the fee through or to a designee as a rule or order provides pursuant to the New Mexico Uniform Securities Act.

          G. An investment adviser representative who is registered as an agent pursuant to Section 402 of the New Mexico Uniform Securities Act and who represents a person that is both registered as a broker-dealer pursuant to Section 401 of that act and registered as an investment adviser pursuant to Section 403 of that act or required as a federal covered investment adviser to make a notice filing pursuant to Section 405 of that act is not required to pay an initial or annual registration fee for registration as an investment adviser representative.

          H. If an application made pursuant to Subsection A, B, C, D or E of this section is denied or withdrawn, the director shall retain any fees paid.

     Section 411. [NEW MATERIAL] POST-REGISTRATION REQUIREMENTS.--

          A. Subject to Section 15(h) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may establish minimum financial requirements for broker-dealers registered or required to be registered pursuant to the New Mexico Uniform Securities Act and investment advisers registered or required to be registered pursuant to the New Mexico Uniform Securities Act.

          B. Subject to Section 15(h) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222(b) of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a broker-dealer registered or required to be registered pursuant to the New Mexico Uniform Securities Act and an investment adviser registered or required to be registered pursuant to the New Mexico Uniform Securities Act shall file such financial reports as are required by a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act. If the information contained in a record filed pursuant to this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

          C. Subject to Section 15(h) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22):

                (1) a broker-dealer registered or required to be registered pursuant to the New Mexico Uniform Securities Act and an investment adviser registered or required to be registered pursuant to the New Mexico Uniform Securities Act shall make and maintain the accounts, correspondence, memoranda, papers, books and other records required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

                (2) broker-dealer records required to be maintained pursuant to Paragraph (1) of this subsection may be maintained in any form of data storage acceptable pursuant to Section 17(a) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78q(a)) if they are readily accessible to the director; and

                (3) investment adviser records required to be maintained pursuant to Paragraph (1) of this subsection may be maintained in any form of data storage required by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act.

          D. The records of a broker-dealer registered or required to be registered pursuant to the New Mexico Uniform Securities Act and of an investment adviser registered or required to be registered pursuant to that act are subject to such reasonable periodic, special or other audits or inspections by a representative of the director, within or without New Mexico, as the director considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The director may copy, and remove for audit or inspection copies of, all records the director reasonably considers necessary or appropriate to conduct the audit or inspection. The director may assess a reasonable charge for conducting an audit or inspection pursuant to this subsection.

          E. Subject to Section 15(h) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount not to exceed two million dollars ($2,000,000). The director may determine the requirements of the insurance, bond or other satisfactory form of security. Insurance or a bond or other satisfactory form of security shall not be required of a broker-dealer registered pursuant to the New Mexico Uniform Securities Act whose net capital exceeds, or of an investment adviser registered pursuant to that act whose minimum financial requirements exceed, the amounts required by rule or order pursuant to that act. The insurance, bond or other satisfactory form of security shall permit an action by a person to enforce any liability on the insurance, bond or other satisfactory form of security if instituted within the time limitations in Paragraph (2) of Subsection J of Section 509 of the New Mexico Uniform Securities Act.

          F. Subject to Section 15(h) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), an agent shall not have custody of funds or securities of a customer except under the supervision of a broker-dealer, and an investment adviser representative shall not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may prohibit, limit or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client.

          G. With respect to an investment adviser registered or required to be registered pursuant to the New Mexico Uniform Securities Act, a rule adopted or order issued pursuant to that act may require that information or other records be furnished or disseminated to clients or prospective clients in New Mexico as necessary or appropriate in the public interest and for the protection of investors and advisory clients.

          H. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require an individual registered pursuant to Section 402 or 404 of that act to participate in a continuing education program approved by the securities and exchange commission and administered by a self-regulatory organization, or, in the absence of such a program, a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require continuing education for an individual registered pursuant to Section 404 of that act.

     Section 412. [NEW MATERIAL] DENIAL, REVOCATION, SUSPENSION, WITHDRAWAL, RESTRICTION, CONDITION OR LIMITATION OF REGISTRATION.--

          A. If the director finds that the order is in the public interest and that Subsection C of this section authorizes the action, an order issued pursuant to the New Mexico Uniform Securities Act may postpone, deny, suspend or revoke any registration, limit the investment advisory activities that an applicant or registered person may perform in New Mexico or bar an applicant or registered person or a person who is a partner, officer or director or a person occupying a similar status or performing a similar function for an applicant or registered person from association with a registered broker-dealer or investment adviser or a federal covered investment adviser.

          B. If the director finds that the order is in the public interest and Subsection C of this section authorizes the action, an order pursuant to the New Mexico Uniform Securities Act may censure or impose a bar or a civil penalty on a registrant in an amount not to exceed a maximum of ten thousand dollars ($10,000) for each violation.

          C. A person may be disciplined pursuant to Subsection A or B of this section, or both, if the person, or in the case of a broker-dealer or investment adviser, a partner, officer, director or a person having a similar status or performing similar functions or a person directly or indirectly controlling the broker-dealer or investment adviser:

                (1) has filed an application for registration in New Mexico pursuant to the New Mexico Uniform Securities Act or the predecessor act within the previous ten years that, as of the effective date of registration or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained a statement that, in light of the circumstances under which it was made, was false or misleading with respect to a material fact;

                (2) willfully violated or willfully failed to comply with the New Mexico Uniform Securities Act or the predecessor act or a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act or the predecessor act within the previous ten years;

                (3) has been convicted of a felony or within the previous ten years has been convicted of a misdemeanor involving a security, a commodity future or an option contract or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking or finance;

                (4) is enjoined or restrained by a court of competent jurisdiction in an action instituted by the director pursuant to the New Mexico Uniform Securities Act or the predecessor act, a state, the securities and exchange commission or the United States from engaging in or continuing an act, practice or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking or finance;

                (5) is the subject of an order, issued after notice and opportunity for hearing by:

                     (a) the securities, depository institution, insurance or other financial services regulator of a state or by the securities and exchange commission or other federal agency denying, revoking, barring or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser or investment adviser representative;

                     (b) the securities regulator of a state or by the securities and exchange commission against a broker-dealer, agent, investment adviser, investment adviser representative or federal covered investment adviser;

                     (c) the securities and exchange commission or by a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization;

                     (d) a court adjudicating a United States postal service fraud order;

                     (e) the insurance regulator of a state denying, suspending or revoking registration as an insurance agent; or

                     (f) a depository institution or financial services regulator suspending or barring the person from the depository institution or other financial services business;

                (6) is the subject of an adjudication or determination, after notice and opportunity for hearing, by the securities and exchange commission, the commodity futures trading commission, the federal trade commission, a federal depository institution regulator or a depository institution, insurance or other financial services regulator of a state that the person willfully violated the federal Securities Act of 1933, the federal Securities Exchange Act of 1934, the federal Investment Advisers Act of 1940, the federal Investment Company Act of 1940 or the federal Commodity Exchange Act, the securities or commodities law of a state or a federal or state law pursuant to which a business involving investments, franchises, insurance, banking or finance is regulated;

                (7) is insolvent, either because the person's liabilities exceed the person's assets or because the person cannot meet the person's obligations as they mature, but the director shall not enter an order against an applicant or registrant pursuant to this paragraph without a finding of insolvency as to the applicant or registrant;

                (8) refuses to allow or otherwise impedes the director from conducting an audit or inspection pursuant to Subsection D of Section 411 of the New Mexico Uniform Securities Act or refuses access to a registrant's office to conduct an audit or inspection pursuant to Subsection D of Section 411 of that act;

                (9) has failed to reasonably supervise an agent, investment adviser representative or other individual, if the agent, investment adviser representative or other individual was subject to the person's supervision and committed a violation of the New Mexico Uniform Securities Act or the predecessor act or a rule adopted or order issued pursuant to that act or the predecessor act within the previous ten years;

                (10) has not paid the proper filing fee within thirty days after having been notified by the director of a deficiency, but the director shall vacate an order pursuant to this paragraph when the deficiency is corrected;

                (11) after notice and opportunity for a hearing, has been found within the previous ten years:

                     (a) by a court of competent jurisdiction to have willfully violated the laws of a foreign jurisdiction pursuant to which the business of securities, commodities, investment, franchises, insurance, banking or finance is regulated;

                     (b) to have been the subject of an order of a securities regulator of a foreign jurisdiction denying, revoking or suspending the right to engage in the business of securities as a broker-dealer, agent, investment adviser, investment adviser representative or similar person; or

                     (c) to have been suspended or expelled from membership by or participation in a securities exchange or securities association operating pursuant to the securities laws of a foreign jurisdiction;

                (12) is the subject of a cease and desist order issued by the securities and exchange commission or issued pursuant to the securities, commodities, investment, franchise, banking, finance or insurance laws of a state;

                (13) has engaged in dishonest or unethical practices in the securities, commodities, investment, franchise, banking, finance or insurance business within the previous ten years; or

                (14) is not qualified on the basis of factors such as training, experience and knowledge of the securities business. However, in the case of an application by an agent for a broker-dealer that is a member of a self-regulatory organization or by an individual for registration as an investment adviser representative, a denial order shall not be based on this paragraph if the individual has successfully completed all examinations required by Subsection D of this section. The director may require an applicant for registration pursuant to Section 402 or 404 of the New Mexico Uniform Securities Act who has not been registered in a state within the two years preceding the filing of an application in New Mexico to successfully complete an examination.

          D. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require that an examination, including an examination developed or approved by an organization of securities regulators, be successfully completed by a class of individuals or all individuals. An order issued pursuant to the New Mexico Uniform Securities Act may waive, in whole or in part, an examination as to an individual and a rule adopted pursuant to that act may waive, in whole or in part, an examination as to a class of individuals if the director determines that the examination is not necessary or appropriate in the public interest and for the protection of investors.

          E. The director may postpone, suspend or deny an application summarily; restrict, condition, limit or suspend a registration; or censure, bar or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the director shall promptly notify each person subject to the order that the order has been issued, the reasons for the action and that within fifteen days after the receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the administrator within thirty days after the date of service of the order, the order becomes final by operation of law. If a hearing is requested or ordered, the director, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend the order until final determination.

          F. If a hearing is requested or ordered, such hearing shall be conducted pursuant to Subsection B of Section 604 of the New Mexico Uniform Securities Act. An order shall not be issued pursuant to this section, except in accordance with Subsection E of this section, without:

                (1) appropriate notice to the applicant or registrant;

                (2) opportunity for hearing; and

                (3) findings of fact and conclusions of law in a record.

          G. A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the director pursuant to Subsection A or B of this section, or both, to the same extent as the noncomplying person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct that is a ground for discipline pursuant to this section.

          H. The director shall not institute a proceeding pursuant to Subsection A or B of this section based solely on material facts actually known by the director unless an investigation or the proceeding is instituted within one year after the director actually acquires knowledge of the material facts.

Article 5

FRAUD AND LIABILITIES

     Section 501. [NEW MATERIAL] SECURITIES FRAUD.--It is unlawful for a person, in connection with the offer, sale or purchase of a security, directly or indirectly:

          A. to employ a device, scheme or artifice to defraud;

          B. to make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statement made, in the light of the circumstances pursuant to which it is made, not misleading; or

          C. to engage in an act, practice or course of business that operates or would operate as a fraud or deceit upon another person.

     Section 502. [NEW MATERIAL] PROHIBITED CONDUCT IN PROVIDING INVESTMENT ADVICE.--

          A. It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing or selling securities or that, for compensation and as part of a regular business, issues or promulgates analyses or reports relating to securities:

                (1) to employ a device, scheme or artifice to defraud another person; or

                (2) to engage in an act, practice or course of business that operates or would operate as a fraud or deceit upon another person.

          B. A rule adopted pursuant to the New Mexico Uniform Securities Act may define an act, practice or course of business of an investment adviser or an investment adviser representative as fraudulent, deceptive or manipulative and may prescribe means reasonably designed to prevent investment advisers and investment adviser representatives from engaging in acts, practices and courses of business defined as fraudulent, deceptive or manipulative.

          C. A rule adopted pursuant to the New Mexico Uniform Securities Act may specify the contents of an investment advisory contract entered into, extended or renewed by an investment adviser.

     Section 503. [NEW MATERIAL] EVIDENTIARY BURDEN.--

          A. In a civil action or administrative proceeding pursuant to the New Mexico Uniform Securities Act, a person claiming an exemption, exception, preemption or exclusion has the burden to prove the applicability of the claim.

          B. In a criminal proceeding pursuant to the New Mexico Uniform Securities Act, a person claiming an exemption, exception, preemption or exclusion has the burden of going forward with evidence of the claim.

     Section 504. [NEW MATERIAL] FILING OF SALES AND ADVERTISING LITERATURE.--

          A. Except as otherwise provided in Subsection B of this section, a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may require the filing of a prospectus, pamphlet, circular, form letter, advertisement, sales literature or other advertising record relating to a security or investment advice addressed or intended for distribution to prospective investors, including clients or prospective clients of a person registered or required to be registered as an investment adviser.

          B. This section does not apply to sales and advertising literature specified in Subsection A of this section that relates to a federal covered security or a federal covered investment adviser or that the director determines by rule or order to be excluded from the requirements of Subsection A of this section.

     Section 505. [NEW MATERIAL] MISLEADING FILINGS.--It is unlawful for a person to make or cause to be made, in a record that is used in an action or proceeding or filed pursuant to the New Mexico Uniform Securities Act, a statement that, at the time and in the light of the circumstances pursuant to which it is made, is false or misleading in a material respect or, in connection with the statement, to omit to state a material fact necessary to make the statement made, in the light of the circumstances pursuant to which it was made, not false or misleading.

     Section 506. [NEW MATERIAL] MISREPRESENTATIONS CONCERNING REGISTRATION OR EXEMPTION.--The filing of an application for registration, a registration statement, a notice filing pursuant to the New Mexico Uniform Securities Act, the registration of a person, the notice filing by a person or the registration of a security pursuant to that act does not constitute a finding by the director that a record filed pursuant to the New Mexico Uniform Securities Act is true, complete and not misleading. The filing or registration or the availability of an exemption, exception, preemption or exclusion for a security or a transaction does not mean that the director has passed upon the merits or qualifications of, or recommended or given approval to, a person, security or transaction. It is unlawful to make, or cause to be made, to a purchaser, customer, client or prospective customer or client a representation inconsistent with this section.

     Section 507. [NEW MATERIAL] QUALIFIED IMMUNITY.--A broker-dealer, agent, investment adviser, federal covered investment adviser or investment adviser representative is not liable to another broker-dealer, agent, investment adviser, federal covered investment adviser or investment adviser representative for defamation relating to a statement that is contained in a record required by the director, or designee of the director, the securities and exchange commission or a self-regulatory organization, unless the person knew, or should have known at the time that the statement was made, that it was false in a material respect or the person acted in reckless disregard of the statement's truth or falsity.

     Section 508. [NEW MATERIAL] CRIMINAL PENALTIES.--

          A. A person who willfully violates Section 501 or 502 of the New Mexico Uniform Securities Act is guilty of a third degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than three years, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is three years.

          B. A person who willfully violates Section 505 of the New Mexico Uniform Securities Act knowing the statement made to be false or misleading in a material respect is guilty of a third degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than three years, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is three years.

          C. No criminal penalties apply to violations of Section 504 of the New Mexico Uniform Securities Act or the notice filing requirements of Section 302 or 405 of that act.

          D. Except as provided in Subsections A through C of this section, a person who willfully violates any provision of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act is guilty of a fourth degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than eighteen months, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is eighteen months.

          E. An individual convicted of violating a rule or order pursuant to the New Mexico Uniform Securities Act may be fined, but shall not be imprisoned, if the individual did not have knowledge of the rule or order.

          F. For the purposes of this section, "willfully" means purposely or intentionally committing the act or making the omission and does not require an intent to violate the law or knowledge that the act or omission is unlawful.

          G. Each offense shall constitute a separate offense, and a prosecution for any one of such offenses shall not bar prosecution or conviction for any other offenses.

          H. All persons convicted of criminal violations of the New Mexico Uniform Securities Act shall be sentenced in accordance with the Criminal Sentencing Act or its successor statute.

          I. No indictment or information may be brought pursuant to this section more than five years after the alleged violation.

          J. The attorney general or the proper district attorney, with or without a referral from the director, may institute criminal proceedings pursuant to the New Mexico Uniform Securities Act. The attorney general or district attorney may request assistance from the director or employees of the division. When so requested by the director, the attorney general shall commission as a special assistant attorney general any attorney employed by the director or contracted with by the director and approved by the attorney general to assist the director in carrying out the director's duties, including providing legal advice and prosecuting offenders.

          K. The New Mexico Uniform Securities Act does not limit the power of New Mexico to punish a person for conduct that constitutes a crime pursuant to other laws of New Mexico.

     Section 509. [NEW MATERIAL] CIVIL LIABILITY.--

          A. Enforcement of civil liability pursuant to this section is subject to the federal Securities Litigation Uniform Standards Act of 1998 (P.L. 105-353, 112 Stat. 3227, et seq.).

          B. A person is liable to the purchaser if the person sells a security in violation of Section 301 of the New Mexico Uniform Securities Act or, by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action pursuant to this subsection is governed by the following:

                (1) the purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court, upon the tender of the security, or for actual damages as provided in Paragraph (3) of this subsection;

                (2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified. A purchaser that no longer owns the security may recover actual damages as provided in Paragraph (3) of this subsection; and

                (3) actual damages in an action arising pursuant to this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court.

          C. A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know, and in the exercise of reasonable care could not have known, of the untruth or omission. An action pursuant to this subsection is governed by the following:

                (1) the seller may maintain an action to recover the security, and any income received on the security, costs and reasonable attorney fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in Paragraph (3) of this subsection;

                (2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified. If the purchaser no longer owns the security, the seller may recover actual damages as provided in Paragraph (3) of this subsection; and

                (3) actual damages in an action arising pursuant to this subsection are the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser's conduct causing liability, and interest at the legal rate of interest from the date of the sale of the security, costs and reasonable attorney fees determined by the court.

          D. A person acting as a broker-dealer or agent that sells or buys a security in violation of Subsection A of Section 401 of the New Mexico Uniform Securities Act, Subsection A of Section 402 of that act or Section 506 of that act is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in Paragraphs (1) through (3) of Subsection B of this section, or, if a seller, for a remedy as specified in Paragraphs (1) through (3) of Subsection C of this section.

          E. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of Subsection A of Section 403 of the New Mexico Uniform Securities Act, Subsection A of Section 404 of that act or Section 506 of that act is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate of interest from the date of payment, costs and reasonable attorney fees determined by the court.

          F. A person that receives, directly or indirectly, any consideration for providing investment advice to another person and that employs a device, scheme or artifice to defraud the other person or engages in an act, practice or course of business that operates or would operate as a fraud or deceit on the other person, is liable to the other person. An action pursuant to this subsection is governed by the following:

                (1) the person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the legal rate of interest from the date of the fraudulent conduct, costs and reasonable attorney fees determined by the court, less the amount of any income received as a result of the fraudulent conduct; and

                (2) this subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.

          G. The following persons are liable jointly and severally with and to the same extent as persons liable pursuant to Subsections B through F of this section:

                (1) a person that directly or indirectly controls a person liable pursuant to Subsections B through F of this section, unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

                (2) an individual who is a managing partner, executive officer or director of a person liable pursuant to Subsections B through F of this section, including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

                (3) an individual who is an employee of or associated with a person liable pursuant to Subsections B through F of this section and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist; and

                (4) a person that is a broker-dealer, agent, investment adviser or investment adviser representative that materially aids the conduct giving rise to the liability pursuant to Subsections B through F of this section, unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.

          H. A person liable pursuant to this section has a right of contribution as in cases of contract against any other person liable pursuant to this section for the same conduct.

          I. A cause of action pursuant to this section survives the death of an individual who might have been a plaintiff or defendant.

          J. A person shall not obtain relief:

                (1) pursuant to Subsection B of this section for violation of Section 301 of the New Mexico Uniform Securities Act, or pursuant to Subsection D or E of this section, unless the action is instituted within one year after the violation occurred; or

                (2) pursuant to Subsection B of this section, other than for violation of Section 301 of the New Mexico Uniform Securities Act, or pursuant to Subsection C or F of this section, unless the action is instituted within the earlier of two years after discovery of the facts constituting the violation or five years after the violation.

          K. A person that has made, or has engaged in the performance of, a contract in violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, or that has acquired a purported right pursuant to the contract with knowledge of conduct by reason of which its making or performance was in violation of the New Mexico Uniform Securities Act, may not base an action on the contract.

          L. A condition, stipulation or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with the New Mexico Uniform Securities Act, or a rule adopted or order issued pursuant to that act, is void.

          M. The rights and remedies provided by the New Mexico Uniform Securities Act are in addition to any other rights or remedies that may exist, but that act does not create a cause of action not specified in this section or Subsection E of Section 411 of that act.

     Section 510. [NEW MATERIAL] RESCISSION OFFERS.--A purchaser, seller or recipient of investment advice shall not maintain an action pursuant to Section 509 of the New Mexico Uniform Securities Act if:

          A. the purchaser, seller or recipient of investment advice receives in a record, before the action is instituted:

                (1) an offer stating the respect in which liability pursuant to Section 509 of the New Mexico Uniform Securities Act may have arisen and fairly advising the purchaser, seller or recipient of investment advice of that person's rights in connection with the offer, and any financial or other information necessary to correct all material misrepresentations or omissions in the information that was required by the New Mexico Uniform Securities Act to be furnished to that person at the time of the purchase, sale or investment advice;

                (2) if the basis for relief pursuant to this section may have been a violation of Subsection B of Section 509 of the New Mexico Uniform Securities Act, an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest at the legal rate of interest from the date of the purchase, less the amount of any income received on the security; or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection;

                (3) if the basis for relief pursuant to this section may have been a violation of Subsection C of Section 509 of the New Mexico Uniform Securities Act, an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at the legal rate of interest from the date of the sale; or if the purchaser no longer owns the security, an offer to pay the seller upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser's conduct that may have caused liability and interest at the legal rate of interest from the date of the sale;

                (4) if the basis for relief pursuant to this section may have been a violation of Subsection D of Section 509 of the New Mexico Uniform Securities Act; and if the customer is a purchaser, an offer to pay as specified in Paragraph (2) of this subsection; or, if the customer is a seller, an offer to tender or to pay as specified in Paragraph (3) of this subsection;

                (5) if the basis for relief pursuant to this section may have been a violation of Subsection E of Section 509 of the New Mexico Uniform Securities Act, an offer to reimburse in cash the consideration paid for the advice and interest at the legal rate of interest from the date of payment; or

                (6) if the basis for relief pursuant to this section may have been a violation of Subsection F of Section 509 of the New Mexico Uniform Securities Act, an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct and interest at the legal rate of interest from the date of the violation causing the loss;

          B. the offer pursuant to Subsection A of this section states that the offer must be accepted by the purchaser at any time without a specified period of not less than thirty days, or such shorter or longer period as the director by order prescribes, and contains such other terms and conditions, if any, as the director specifies;

          C. the offer pursuant to Subsection A of this section is delivered to the purchaser, seller or recipient of investment advice, or sent in a manner that ensures receipt by the purchaser, seller or recipient of investment advice;

          D. the purchaser, seller or recipient of investment advice timely accepts the offer made pursuant to Subsections A through C of this section in a record; and  

          E. the offer made and accepted in compliance with Subsections A through D of this section is paid in accordance with the terms of the offer; or

          F. the purchaser, seller or recipient of investment advice receives an offer in compliance with Subsections A through C of this section but fails to accept the offer in a record within the period specified in the offer.

Article 6

ADMINISTRATION AND JUDICIAL REVIEW

     Section 601. [NEW MATERIAL] ADMINISTRATION.--

          A. The director shall administer the New Mexico Uniform Securities Act. The director shall be appointed by the superintendent of regulation and licensing subject to confirmation by the senate. The director shall be chosen solely on the basis of fitness to perform the duties of the office and shall have a minimum of five years relevant experience in the securities or finance field, relevant education and demonstrable knowledge of securities laws and regulations. The division is under the supervision and control of the superintendent of regulation and licensing, subject, however, to the exemptions set forth in Section 9-16-11 NMSA 1978. The director shall, with the approval of the superintendent of regulation and licensing, hire pursuant to the Personnel Act and assign duties to employees necessary to assist the director in the director's duties, and the director may, with the approval of the superintendent of regulation and licensing, appoint commissioned peace officers who shall have the powers of police officers for the purpose of investigating and enforcing the provisions of the New Mexico Uniform Securities Act. Such peace officers shall comply with the certification provisions of Section 29-7-6 NMSA 1978.

          B. The director may by rule impose fees as necessary for examination, claims of exemption, requests for advisory opinions and other miscellaneous filings for which no fees are specified elsewhere in the New Mexico Uniform Securities Act and may also require payment of reasonable costs of investigation resulting from enforcement actions taken pursuant to Section 602, 603 or 604 of that act.

          C. It is unlawful for the director or an officer, employee or designee of the director to use for personal benefit or the benefit of others records or other information obtained by or filed with the director that are not public pursuant to Subsection B of Section 607 of the New Mexico Uniform Securities Act. The New Mexico Uniform Securities Act does not authorize the director or an officer, employee or designee of the director to disclose the record or information, except in accordance with Section 602 of that act, Subsection C of Section 607 of that act or Section 608 of that act.

          D. Except as stated in the New Mexico Uniform Securities Act, that act does not create or diminish a privilege or exemption that exists at common law, by statute or by rule or otherwise.

          E. The director may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud. In developing and implementing these initiatives, the director may collaborate with public and nonprofit organizations with an interest in investor education. The director may accept a grant or donation to the securities enforcement and investor education fund established in Subsection F of this section from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives. This subsection does not authorize the director to require participation or monetary contributions of a registrant in an investor education program.

          F. The "securities enforcement and investor education fund" is created as a nonreverting fund in the state treasury to provide money for the purposes specified in Subsections E and G of this section. The division may establish and adopt rules as required to administer the fund. The securities enforcement and investor education fund shall be administered by the division. The fund shall consist of:

                (1) five dollars ($5.00) of each fee collected from registrants pursuant to Subsections B and D of Section 410 of the New Mexico Uniform Securities Act;

                (2) all or any portion of civil penalties, costs of investigation and other administrative assessments collected by the division through enforcement actions pursuant to the New Mexico Uniform Securities Act;

                (3) appropriations, grants or donations to the fund; and

                (4) income from investment of the fund.

          G. Money in the securities enforcement and investor education fund shall be appropriated by the legislature to the division and shall be used for consumer education and training in matters concerning securities laws and investment issues; education and training of investigative and prosecutorial staff of the division; and costs incurred for the investigation and prosecution of civil and criminal violations of the New Mexico Uniform Securities Act, including expert and other consultant fees, witness fees, deposition costs and travel and training expenses. Money shall be disbursed from the fund only on warrant of the secretary of finance and administration upon vouchers signed by the director or the director's authorized representative. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

     Section 602. [NEW MATERIAL] INVESTIGATIONS AND SUBPOENAS.--

          A. The director may:

                (1) conduct public or private investigations within or outside of New Mexico that the director considers necessary or appropriate to determine whether a person has violated, is violating or is about to violate the New Mexico Uniform Securities Act, or a rule adopted or order issued pursuant to that act, or to aid in the enforcement of the New Mexico Uniform Securities Act or in the adoption of rules and forms pursuant to that act;

                (2) require or permit a person to testify, file a statement or produce a record, under oath or otherwise as the director determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted; and

                (3) publish a record concerning an action, proceeding or an investigation pursuant to or a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act if the director determines it is necessary or appropriate in the public interest and for the protection of investors.

          B. For the purpose of an investigation pursuant to the New Mexico Uniform Securities Act, the director or the director's designated officer may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements and require the production of any records that the director considers relevant or material to the investigation.

          C. If a person does not appear or refuses to testify, file a statement, produce records or otherwise does not obey a subpoena as required by the director pursuant to the New Mexico Uniform Securities Act, the director may apply to the district court of Santa Fe county or other appropriate district court or to a court of another state, a federal court or a court of a foreign jurisdiction, or the director may refer the matter to the attorney general or the proper district attorney to enforce compliance. The court may:

                (1) hold the person in contempt;

                (2) order the person to appear before the director;

                (3) order the person to testify about the matter under investigation or in question;

                (4) order the production of records;

                (5) grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice;

                (6) impose a civil penalty of not more than ten thousand dollars ($10,000) for each violation; and

                (7) grant any other necessary or appropriate relief.

          D. This section does not preclude a person from applying to the appropriate district court or a court of another state for relief from a request to appear, testify, file a statement, produce records or obey a subpoena.

          E. An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence or obeying a subpoena of the director pursuant to the New Mexico Uniform Securities Act or in an action or proceeding instituted by the director pursuant to that act on the grounds that the required testimony, statement, record or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty or forfeiture. If the individual refuses to testify, file a statement or produce a record or other evidence on the basis of the individual's privilege against self-incrimination, the director may apply to the district court of Santa Fe county or other appropriate district court or to a court of another state, a federal court or a court of a foreign jurisdiction to compel the testimony, the filing of the statement, the production of the record or the giving of other evidence. The testimony, record or other evidence compelled pursuant to such an order shall not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order.

          F. At the request of the securities regulator of another state or a foreign jurisdiction, the director may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating or is about to violate a law or rule of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces. The director may provide the assistance by using the authority to investigate and the powers conferred by this section as the director determines is necessary or appropriate. The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of the New Mexico Uniform Securities Act or other law of New Mexico if occurring in New Mexico. In deciding whether to provide the assistance, the director may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the director on securities matters when requested; whether compliance with the request would violate or prejudice the public policy of New Mexico; and the availability of resources and employees of the director to carry out the request for assistance.

     Section 603. [NEW MATERIAL] CIVIL ENFORCEMENT.--

          A. If the director believes that a person has engaged, is engaging or is about to engage in an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act or that a person has, is or is about to engage in an act, practice or course of business that materially aids a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, the director may maintain an action to enjoin the act, practice or course of business and to enforce compliance with the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act.

          B. In an action pursuant to this section and on a proper showing, the court may:

                (1) issue a permanent or temporary injunction, restraining order or declaratory judgment;

                (2) order other appropriate or ancillary relief, which may include:

                     (a) an asset freeze, accounting, writ of attachment, writ of general or specific execution and appointment of a receiver or conservator, that may be the director, for the defendant or the defendant's assets;

                     (b) ordering the director to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents and profits; to collect debts; and to acquire and dispose of property;

                     (c) imposing a civil penalty of up to ten thousand dollars ($10,000) for each violation;

                     (d) an order of rescission, restitution or disgorgement directed to a person that has engaged in an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or the predecessor act or a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act or the predecessor act;

                     (e) ordering the payment of prejudgment and postjudgment interest; and

                     (f) ordering the payment of litigation expenses of the director; and

                (3) order such other relief as the court considers appropriate.

          C. If a person violates a provision of the New Mexico Uniform Securities Act and the violation is directed toward, targets or is committed against a person who, at the time of the violation, is sixty-two years of age or older, the court, in addition to any other civil penalties provided for pursuant to the New Mexico Uniform Securities Act or a rule issued pursuant to that act, may impose an additional civil penalty not to exceed ten thousand dollars ($10,000) for each violation.

          D. The director shall not be required to post a bond in an action or proceeding pursuant to the New Mexico Uniform Securities Act.

     Section 604. [NEW MATERIAL] ADMINISTRATIVE ENFORCEMENT.--

          A. If the director determines that a person has engaged, is engaging or is about to engage in an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act or that a person has materially aided, is materially aiding or is about to materially aid an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, the director may:

                (1) issue an order directing the person to cease and desist from engaging in the act, practice or course of business or to take other action necessary or appropriate to comply with the New Mexico Uniform Securities Act;

                (2) issue an order denying, suspending, revoking or conditioning the exemptions for a broker-dealer pursuant to Subparagraph (d) or (f) of Paragraph (1) of Subsection B of Section 401 the New Mexico Uniform Securities Act or an investment adviser pursuant to Subparagraph (c) of Paragraph (1) of Subsection B of Section 403 of that act; or

                (3) issue an order pursuant to Section 204 of the New Mexico Uniform Securities Act.

          B. For any administrative proceeding authorized by the New Mexico Uniform Securities Act, including proceedings related to notices and orders pursuant to Section 204 of that act, Subsection E of Section 306 of that act, Subsection F of Section 412 of that act or Subsection A of this section:

                (1) the director may commence an administrative proceeding by entering either a notice of intent to do a contemplated act or a summary order. The notice of intent or summary order may be entered without notice and without opportunity for hearing and need not be supported by findings of fact or conclusions of law, but shall be in a record;

                (2) upon entry of a notice of intent or summary order, the director shall promptly notify in a record all parties against whom action is taken or contemplated that the notice or summary order has been entered and the reasons for the notice or summary order. The director shall send parties against whom action is taken or contemplated a notice of opportunity for hearing on the matters set forth in the order or notice of intent. The notice shall state that the parties have fifteen days from receipt of the notice to file with the director a request in a record for a hearing. The director shall set the matter for hearing no more than sixty nor less than fifteen days from receipt of the request for hearing and shall promptly notify the parties of the time and place for hearing;

                (3) the director, whether or not a request in a record for hearing is received from any interested party, may set the matter down for hearing on the director's own motion;

                (4) the director may by order take the action contemplated in the notice of intent or make a summary order final:

                     (a) fifteen days after the parties against whom action is taken or contemplated receive notice of the right to request a hearing if those parties fail to request a hearing; or

                     (b) one day following the date set for a hearing requested by a party if the party fails to appear at the hearing;

                (5) if a hearing is requested or ordered, the director, after notice of the opportunity for hearing to all persons against whom action is taken or contemplated, may modify or vacate the order or extend the order until final determination;

                (6) for the purpose of conducting any hearing pursuant to this section, the director shall have the power to call any party to testify under oath at such hearing to require the attendance of witnesses and the production of books, records and papers and to take the depositions of witnesses; and for that purpose the director is authorized, at the request of the person requesting such hearing or upon the director's own initiative, to issue a subpoena for any witness or a subpoena duces tecum to compel the production of any books, records or papers. At the director's option or when state law or court rules require such process, the subpoena may be directed to the sheriff or other law enforcement agency in the county where such witness resides;

                (7) a party entitled to a hearing pursuant to this section may appear on the party's own behalf or may be represented by an attorney. A party has the right to present all relevant evidence and to examine all opposing witnesses who appear on any matter relevant to the issues;

                (8) upon making a request in a record to another party, any party is entitled to:

                     (a) obtain the names and addresses of witnesses who will or may be called by the other party to testify at the hearing; and

                     (b) inspect and copy any documents or items that the other party will or may introduce in evidence at the hearing;

                (9) the director shall pass upon the admissibility of evidence and may exclude evidence that is incompetent, irrelevant, immaterial or unduly repetitious;

                (10) the director may conduct the hearing, or the director may appoint a hearing officer to conduct the hearing. A hearing officer shall have the same powers and authority in conducting a hearing as the director. The hearing officer shall be admitted to the practice of law in this state and shall be possessed of such additional qualifications as the director may require. The director may direct the hearing officer to submit to the director a report setting forth in a record proposed findings of fact and conclusions of law and a recommendation of the action to be taken by the director. The director may order additional testimony to be taken or permit the introduction of further documentary evidence; and

                (11) a final order or order after hearing shall include entry of findings of fact and conclusions of law in a record.

          C. In a final order pursuant to Subsection B of this section, the director may impose a civil penalty of up to ten thousand dollars ($10,000) for each violation. For purposes of determining the amount of a civil penalty imposed pursuant to this subsection, the director shall consider, among other factors, the frequency and persistence of the conduct constituting a violation of the New Mexico Uniform Securities Act or a rule or order of the director pursuant to that act, the number of persons adversely affected by the conduct and the resources of the person committing the violation.

          D. If a person violates a provision of the New Mexico Uniform Securities Act and the violation is directed toward, targets or is committed against a person who, at the time of the violation, is sixty-two years of age or older, the director, in addition to any other administrative penalties provided for pursuant to the New Mexico Uniform Securities Act or a rule issued pursuant to that act, may impose an additional administrative penalty not to exceed ten thousand dollars ($10,000) for each violation.

          E. In a final order, the director may charge the actual cost of an investigation or proceeding for a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act.

          F. If a petition for judicial review of a final order is not filed in accordance with Section 609 of the New Mexico Uniform Securities Act, the director may file a certified copy of the final order with the clerk of the appropriate district court. The order so filed has the same effect as a judgment of the court and may be recorded, enforced or satisfied in the same manner as a judgment of the court.

          G. If a person does not comply with an order pursuant to this section, the director may petition the district court of Santa Fe county or other appropriate district court or a court of another state, a federal court or a court of a foreign jurisdiction to enforce the order. The court shall not require the director to post a bond in an action or proceeding pursuant to this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not greater than ten thousand dollars ($10,000) for each violation and may grant any other relief the court determines is just and proper in the circumstances.

     Section 605. [NEW MATERIAL] RULES, FORMS, ORDERS, INTERPRETATIVE OPINIONS AND HEARINGS.--

          A. The director may:

                (1) issue forms and orders and, after notice and comment, may adopt and amend rules necessary or appropriate to carry out the New Mexico Uniform Securities Act and may repeal rules, including rules and forms governing registration statements, applications, notice filings, reports and other records;

                (2) by rule, define terms, whether or not used in the New Mexico Uniform Securities Act, but those definitions shall not be inconsistent with that act; and

                (3) by rule, classify securities, persons and transactions and adopt different requirements for different classes.

          B. Pursuant to the New Mexico Uniform Securities Act, a rule or form shall not be adopted or amended, or an order issued or amended, unless the director finds that the rule, form, order or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by the New Mexico Uniform Securities Act. In adopting a rule, the director may use the director's own experience, technical competence, specialized knowledge and judgment. In adopting, amending and repealing rules and forms, Section 608 of the New Mexico Uniform Securities Act applies in order to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports and other records, including the adoption of uniform rules, forms and procedures.

          C. Subject to Section 15(h) of the federal Securities Exchange Act and Section 222 of the federal Investment Advisers Act of 1940, the director may require that a financial statement filed pursuant to the New Mexico Uniform Securities Act be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may establish:

                (1) subject to Section 15(h) of the federal Securities Exchange Act and Section 222 of the federal Investment Advisors Act of 1940, the form and content of financial statements required pursuant to the New Mexico Uniform Securities Act;

                (2) whether unconsolidated financial statements shall be filed; and

                (3) whether required financial statements shall be audited by an independent certified public accountant.

          D. The director may provide interpretative opinions or issue determinations that the director will not institute a proceeding or an action pursuant to the New Mexico Uniform Securities Act against a specified person for engaging in a specified act, practice or course of business if the determination is consistent with that act. A rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may establish a reasonable charge for interpretative opinions or determinations that the director will not institute an action or a proceeding.

          E. A penalty pursuant to the New Mexico Uniform Securities Act shall not be imposed for, and liability does not arise from, conduct that is engaged in or omitted in good faith believing that conduct conforms to a rule, form or order of the director pursuant to the New Mexico Uniform Securities Act.

          F. A hearing in an administrative proceeding pursuant to the New Mexico Uniform Securities Act shall be conducted in public unless the director for good cause consistent with that act determines that the hearing will not be so conducted.

     Section 606. [NEW MATERIAL] ADMINISTRATIVE FILES AND OPINIONS.--

          A. The director shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective pursuant to the New Mexico Uniform Securities Act or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued pursuant to the New Mexico Uniform Securities Act or the predecessor act; and interpretative opinions or no action determinations issued pursuant to the New Mexico Uniform Securities Act.

          B. The director shall make all rules, forms, interpretative opinions and orders available to the public.

          C. The director shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person that so requests. A rule adopted pursuant to the New Mexico Uniform Securities Act may establish a reasonable charge for furnishing the record or certification. A copy of the record certified or a certificate by the director of a record's nonexistence is prima facie evidence of a record or its nonexistence.

     Section 607. [NEW MATERIAL] PUBLIC RECORDS--CONFIDENTIALITY.--

          A. Except as otherwise provided in Subsection B of this section, records obtained by the director or filed pursuant to the New Mexico Uniform Securities Act, including a record contained in or filed with a registration statement, application, notice filing or report, are public records and are available for public examination.

          B. The following records are not public records and are not available for public examination pursuant to Subsection A of this section:

                (1) a record obtained by the director in connection with an audit or inspection pursuant to Subsection D of Section 411 of the New Mexico Uniform Securities Act or an investigation pursuant to Section 602 of that act, except that information that is introduced at a hearing constitutes public information unless otherwise ordered by the director;

                (2) a part of a record filed in connection with a registration statement pursuant to Sections 301 and 303 through 305 of the New Mexico Uniform Securities Act or a record pursuant to Subsection D of Section 411 of that act that contains trade secrets or confidential information if the person filing the registration statement or report has asserted a claim of confidentiality or privilege that is authorized by law;

                (3) a record that is not required to be provided to the director or filed pursuant to the New Mexico Uniform Securities Act and is provided to the director only on the condition that the record will not be subject to public examination or disclosure;

                (4) a nonpublic record received from a person specified in Subsection A of Section 608 of the New Mexico Uniform Securities Act; and

                (5) any social security number, residential address unless used as a business address and residential telephone number unless used as a business telephone number contained in a record that is filed.

          C. If disclosure is for the purpose of a civil, administrative or criminal investigation, action or proceeding or to a person specified in Subsection A of Section 608 of the New Mexico Uniform Securities Act, the director may disclose a record obtained in connection with an audit or inspection pursuant to Subsection D of Section 411 of that act or a record obtained in connection with an investigation pursuant to Section 602 of that act.

     Section 608. [NEW MATERIAL] UNIFORMITY AND COOPERATION WITH OTHER AGENCIES.--

          A. The director shall, in the director's discretion, cooperate, coordinate, consult and, subject to Section 607 of the New Mexico Uniform Securities Act, share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the securities and exchange commission, the United States department of justice, the commodity futures trading commission, the federal trade commission, the securities investor protection corporation, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator and a governmental law enforcement agency to effectuate greater uniformity in securities matters among the federal government, self-regulatory organizations, states and foreign governments.

          B. In cooperating, coordinating, consulting and sharing records and information pursuant to this section and in acting by rule, order or waiver pursuant to the New Mexico Uniform Securities Act, the director shall, in the director's discretion, take into consideration in carrying out the public interest the following general policies:

                (1) maximizing effectiveness of regulation for the protection of investors;

                (2) maximizing uniformity in federal and state regulatory standards; and

                (3) minimizing burdens on the business of capital formation, without adversely affecting essentials of investor protection.

          C. The cooperation, coordination, consultation and sharing of records and information authorized by this section includes:

                (1) establishing or employing one or more designees as a central depository for registration and notice filings pursuant to the New Mexico Uniform Securities Act and for records required or allowed to be maintained pursuant to that act;

                (2) developing and maintaining uniform forms;

                (3) conducting a joint examination or investigation;

                (4) holding a joint administrative hearing;

                (5) instituting and prosecuting a joint civil or administrative proceeding;

                (6) sharing and exchanging personnel;

                (7) coordinating registrations pursuant to Sections 301 and 401 through 404 of the New Mexico Uniform Securities Act and exemptions pursuant to Section 203 of that act;

                (8) sharing and exchanging records, subject to Section 607 of the New Mexico Uniform Securities Act;

                (9) formulating rules, statements of policy, guidelines, forms and interpretative opinions and releases;

                (10) formulating common systems and procedures;

                (11) notifying the public of proposed rules, forms, statements of policy and guidelines;

                (12) attending conferences and other meetings among securities regulators, which may include representatives of governmental and private sector organizations involved in capital formation, deemed necessary or appropriate to promote or achieve uniformity; and

                (13) developing and maintaining a uniform exemption from registration for small issuers and taking other steps to reduce the burden of raising investment capital by small businesses.

     Section 609. [NEW MATERIAL] JUDICIAL REVIEW.--

          A. A final order issued by the director pursuant to the New Mexico Uniform Securities Act is subject to judicial review in accordance with the provisions of Section 39-3-1.1 NMSA 1978.

          B. The filing of an appeal pursuant to Subsection A of this section does not, unless specifically ordered by the court, operate as a stay of the director's order or rule, and the director may enforce or ask the court to enforce the order pending the outcome of the review proceedings.

     Section 610. [NEW MATERIAL] JURISDICTION.--

          A. Sections 301 and 302 of the New Mexico Uniform Securities Act, Subsection A of Section 401 of that act, Subsection A of Section 402 of that act, Subsection A of Section 403 of that act, Subsection A of Section 404 of that act and Sections 501, 506, 509 and 510 of that act do not apply to a person that sells or offers to sell a security, unless the offer to sell or the sale is made in New Mexico or the offer to purchase or the purchase is made and accepted in New Mexico.

          B. Subsection A of Section 401 of the New Mexico Uniform Securities Act, Subsection A of Section 402 of that act, Subsection A of Section 403 of that act, Subsection A of Section 404 of that act and Sections 501, 506, 509 and 510 of that act do not apply to a person that purchases or offers to purchase a security, unless the offer to purchase or the purchase is made in New Mexico or the offer to sell or the sale is made and accepted in New Mexico.

          C. For the purpose of this section, an offer to sell or to purchase a security is made in New Mexico, whether or not either party is then present in New Mexico, if the offer:

                (1) originates from within New Mexico; or

                (2) is directed by the offeror to a place in New Mexico and received at the place to which it is directed.

          D. For the purpose of this section, an offer to purchase or to sell is accepted in New Mexico, whether or not either party is then present in New Mexico, if the acceptance:

                (1) is communicated to the offeror in New Mexico and the offeree reasonably believes the offeror to be present in New Mexico and the acceptance is received at the place in New Mexico to which it is directed; and

                (2) has not previously been communicated to the offeror, orally or in a record, outside New Mexico.

          E. An offer to sell or to purchase is not made in New Mexico when a publisher circulates or there is circulated on the publisher's behalf in New Mexico a bona fide newspaper or other publication of general, regular and paid circulation that is not published in New Mexico, or that is published in New Mexico but has had more than two-thirds of its circulation outside New Mexico during the previous twelve months or when a radio or television program or other electronic communication, except specifically addressed electronic mail or messaging, originating outside New Mexico is received in New Mexico. A radio or television program or other electronic communication is considered as having originated in New Mexico if either the broadcast studio or the originating source of transmission is located in New Mexico, unless:

                (1) the program or communication is syndicated and distributed from outside New Mexico for redistribution to the general public in New Mexico;

                (2) the program or communication is supplied by a radio, television or other electronic network with the electronic signal originating from outside New Mexico for redistribution to the general public in New Mexico;

                (3) the program or communication is an electronic communication that originates outside New Mexico and is captured for redistribution to the general public in New Mexico by a community antenna or cable, radio, cable television or other electronic system; or

                (4) the program or communication consists of an electronic communication that originates in New Mexico, but that is not intended for distribution to the general public in New Mexico.

          F. Subsection A of Section 403 of the New Mexico Uniform Securities Act, Subsection A of Section 404 of that act, Subsection A of Section 405 of that act and Sections 502, 505 and 506 of that act apply to a person if the person engages in an act, practice or course of business instrumental in effecting prohibited or actionable conduct in New Mexico, whether or not either party is then present in New Mexico.

     Section 611. [NEW MATERIAL] SERVICE OF PROCESS.--

          A. A consent to service of process complying with this section shall be signed and filed in the form required by a rule or order pursuant to the New Mexico Uniform Securities Act. A consent appointing the director as the person's agent for service of process in a noncriminal action or proceeding against the person, or the person's successor or personal representative pursuant to the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act after the consent is filed, has the same force and validity as if the service were made personally on the person filing the consent. A person that has filed a consent complying with this subsection in connection with a previous application for registration or notice filing need not file an additional consent.

          B. If a person, including a nonresident of New Mexico, engages in an act, practice or course of business prohibited or made actionable by the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act and the person has not filed a consent to service of process pursuant to Subsection A of this section, the act, practice or course of business constitutes the appointment of the director as the person's agent for service of process in a noncriminal action or proceeding against the person or the person's successor or personal representative.

          C. Service pursuant to Subsection A or B of this section may be made by providing a copy of the process to the office of the director, but it is not effective unless:

                (1) the plaintiff, which may be the director, promptly sends notice of the service and a copy of the process, return receipt requested, to the defendant or respondent at the address set forth in the consent to service of process or, if a consent to service of process has not been filed, at the last known address, or takes other reasonable steps to give notice; and

                (2) the plaintiff files an affidavit of compliance with this subsection in the action or proceeding on or before the return day of the process, if any, or within the time that the court, or the director in a proceeding before the director, allows.

          D. Service pursuant to Subsection C of this section may be used in a proceeding before the director or by the director in a civil action in which the director is the moving party.

          E. If process is served pursuant to Subsection C of this section, the court, or the director in a proceeding before the director, shall order continuances as are necessary or appropriate to afford the defendant or respondent reasonable opportunity to defend.

     Section 612. [NEW MATERIAL] SEVERABILITY.--If any part or application of this act is held invalid, the remainder or its application to other situations or persons shall not be affected.

Article 7

TRANSITION

     Section 701. [NEW MATERIAL] APPLICATION OF ACT TO EXISTING PROCEEDINGS AND EXISTING RIGHTS AND DUTIES.--

          A. The predecessor act exclusively governs all actions or proceedings that are pending on the effective date of the New Mexico Uniform Securities Act or may be instituted on the basis of conduct occurring before the effective date of the New Mexico Uniform Securities Act, but a civil action shall not be maintained to enforce any liability pursuant to the predecessor act unless instituted within any period of limitation that applied when the cause of action accrued or within five years after the effective date of the New Mexico Uniform Securities Act, whichever is earlier.

          B. All effective registrations pursuant to the predecessor act, all administrative orders relating to the registrations, rules, statements of policy, interpretative opinions, declaratory rulings, no action determinations and conditions imposed on the registrations pursuant to the predecessor act remain in effect while they would have remained in effect if the New Mexico Uniform Securities Act had not been enacted. They are considered to have been filed, issued or imposed pursuant to the New Mexico Uniform Securities Act, but are exclusively governed by the predecessor act.

          C. The predecessor act exclusively applies to an offer or sale made within one year after the effective date of the New Mexico Uniform Securities Act pursuant to an offering made in good faith before the effective date of the New Mexico Uniform Securities Act on the basis of an exemption available pursuant to the predecessor act.

     Section 702. TEMPORARY PROVISION--TRANSFER OF FUNDS.--On the effective date of this act, all money in the securities education and training fund shall be transferred to the securities enforcement and investor education fund.

     Section 703. REPEAL.--Sections 58-13B-1 through 58-13B-57 NMSA 1978 (being Laws 1986, Chapter 7, Sections 1 through 56, and Laws 1989, Chapter 176, Section 9, as amended) are repealed.

     Section 704. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2010.

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