lawskills
Loading
Did you know you can download our entire database for free?


Resources
[more] 

Georgia Caselaw:
Browse
Greatest Hits

Georgia Code: Browse

(external) Findlaw Georgia Law Resources


This site exists because of donors like you.

Thanks!


Georgia State Code
Title      10
Chapter       5  
Section Navigation     1 ... 10           11 ... 20    
    21 ... 24      
Section<<< 11 12 13 14 15 16 17 18 19 20 >>>  
Title 10, Chapter 5, Section 12 (10-5-12)

(a) It shall be unlawful for any person:

(1) To offer to sell or to sell any security in violation of Code Section 10-5-3, 10-5-5, or 10-5-19 or any rule, regulation, or order promulgated or issued by the commissioner under this chapter;

(2) In connection with an offer to sell, sale, offer to purchase, or purchase of any 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 omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are 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 a person;

(3) To offer or sell any security:

(A) Registered under subsection (b) of Code Section 10-5-5 by means of any prospectus except a prospectus which complies with paragraph (3) of subsection (b) of Code Section 10-5-5;

(B) Registered under subsection (e) of Code Section 10-5-5 by means of any prospectus except a prospectus which complies with paragraph (3) of subsection (e) of Code Section 10-5-5; or

(C) Registered under subsection (f) of Code Section 10-5-5 by means of any prospectus except a prospectus which complies with paragraph (4) of subsection (f) of Code Section 10-5-5; or

(4) In connection with the sale of any securities registered under this chapter:

(A) To make any representation concerning any future sales of securities of the same class by the issuer at a price higher than the current offering price; or

(B) To make any representations as to the future existence of any public market for the securities offered for sale.

(b) It shall be unlawful for any person to make to any prospective purchaser, customer, or client any representation that the filing or effectiveness of a registration statement or the registration of any security under Code Section 10-5-5 or the existence of any exemption for any security or transaction means that the commissioner has passed in any way upon the truth, completeness, or accuracy of such registration statement or the merits of such security or has recommended or given approval to such security or transaction.

(c) It shall be unlawful for any person who:

(1) Is a dealer, limited dealer, salesperson, limited salesperson, investment adviser, federal covered adviser, or investment adviser representative under this chapter; (2) Is making a notice filing or filing an application for registration as a dealer, limited dealer, salesperson, limited salesperson, investment adviser, or investment adviser representative under this chapter;

(3) Is an issuer which has filed a registration statement or notice filing with respect to securities it intends to issue; or

(4) Is an affiliate of any of the persons described in paragraph (1), (2), or (3) of this subsection

knowingly to cause to be made, in any document filed with the commissioner or in any proceeding under this chapter, any statement which is, at the time it is made and in light of the circumstances under which it is made, false or misleading in any material respect.

(d) Without limiting the general applicability of subsections (a), (b), and (c) of this Code section, it shall be unlawful to:

(1) Quote a fictitious price with respect to a security;

(2) Effect a transaction in a security which involves no change in the beneficial ownership of the security for the purpose of creating a false or misleading appearance of active trading in a security or with respect to the market for the security;

(3) Enter an order for the purchase of a security with the knowledge that an order of substantially the same size and at substantially the same time and price for the sale of the security has been, or will be, entered by or for the same, or affiliated, person for the purpose of creating a false or misleading appearance of active trading in a security or with respect to the market for the security;

(4) Enter an order for the sale of a security with the knowledge that an order at substantially the same time and price for the purchase of the security has been, or will be, entered by or for the same, or affiliated, person for the purpose of creating a false or misleading appearance of active trading in a security or with respect to the market for the security;

(5) Misappropriate, convert, or improperly withhold any funds or other property in connection with an offer or sale of any security; or

(6) Employ any other deceptive or fraudulent device, scheme, or artifice to manipulate the market in a security.

(e) Transactions effected in compliance with the applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission thereunder shall not be deemed to constitute market manipulation under subsection (d) of this Code section.

(f) It shall be unlawful for any person to transact business within or from this state as an investment adviser or investment adviser representative in violation of Code Section 10-5-3 or any rule, regulation, or order promulgated or issued by the commissioner under this chapter. (g) It shall be unlawful for any person to hold himself or herself out as, or otherwise represent that he or she is, a "financial planner" or "investment adviser" or use as descriptive of his or her business the term "financial planner" or "investment adviser" or such similar term as may be specified in rules and regulations promulgated by the commissioner unless said person is a certified public accountant, is registered as an investment adviser or investment adviser representative under this chapter, or is a federal covered adviser who has made a notice filing under this chapter. The use of the term "financial planner" or "investment adviser" or a similar term to describe a person's business shall not be used in such a way so as to be deceptive, as that term may be defined in the rules and regulations promulgated by the commissioner.

(h)(1) It shall be unlawful for any investment adviser, federal covered adviser, or investment adviser representative in the course of his or her business as such:

(A) To employ any device, scheme, or artifice to defraud;

(B) To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit.

(2) It shall be unlawful for any investment adviser, federal covered adviser, or investment adviser representative in the course of business to engage in dishonest or unethical practices, as the commissioner may define by rule.

(i) It shall be unlawful for any person registered as an investment adviser or investment adviser representative under this chapter or for any federal covered adviser who has made a notice filing under this chapter to represent or imply in any manner whatsoever that such person has been sponsored, recommended, or approved or that his or her abilities or qualifications have in any respect been passed upon by the State of Georgia or any agency or any officer thereof; provided, however, that this provision shall not be construed to prohibit a statement that a person is so registered under this chapter if such statement is true in fact and if the effect of such registration is not misrepresented.

(j) Except as may be permitted by rule or order of the commissioner, it shall be unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing:

(1) That the investment adviser shall not be compensated on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client; provided, however, that the prohibitions of this paragraph shall not prohibit an investment advisory contract which provides for compensation based on the total value of a fund averaged over a definite period, as of definite dates, or taken as of definite date;

(2) That no assignment of the contract may be made by the investment adviser without the consent of the other party to the contract; and

(3) That the investment adviser, if a partnership, shall notify the other party to the contract of any change in the membership of the partnership within a reasonable time after the change.

(k) The provisions of subsections (h) and (i) of this Code section and paragraph (1) of subsection (j) of this Code section shall be applicable to any certified public accountant who holds himself out as a "financial planner" or "investment adviser."

(l) All records relating to the preparation of financial plans and the giving of investment advice prepared and maintained by a certified public accountant who holds himself out as a "financial planner" or "investment adviser" are subject to reasonable examination by representatives of the commissioner, within or outside this state, as the commissioner deems necessary or appropriate to determine whether any person has violated or is about to violate this chapter or any rule, regulation, or order under this chapter. This provision shall not be construed to require, or authorize the commissioner to require, such certified public accountant to disclose the identity, investments, or affairs of any client of such certified public accountant, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its object the enforcement of this chapter.

(m)(1) In order to prevent fraudulent, deceptive, or manipulative acts or practices, it shall be unlawful for any designated dealer or designated salesman to sell a designated security to, or to effect the purchase of a designated security by, any person unless the transaction is exempt under paragraph (6) of this subsection or, prior to the transaction, (A) the designated dealer and designated salesman, if involved, have approved the person's account for transactions in designated securities in accordance with the procedures set forth in paragraph (2) of this subsection and (B) the designated dealer and designated salesman, if involved, have submitted to the person a risk disclosure document in a form approved by the commissioner and have thereafter received from the person a written agreement to the transaction in compliance with the requirements of paragraph (3) of this subsection.

(2) In order to approve a person's account for transactions in designated securities, the designated dealer or designated salesman must:

(A) Obtain from the person information concerning the person's financial situation (including but not limited to net worth and annual income), investment experience, and investment objectives;

(B) Reasonably determine, based on the information required by subparagraph (A) of this paragraph and any other information known by the dealer or salesman, that transactions in designated securities are suitable for the person and that the person (or the person's independent adviser in these transactions) has sufficient knowledge and experience in financial matters, such that the person (or adviser) reasonably may be expected to be capable of evaluating the risks of transactions in designated securities;

(C) Deliver to the person a written statement: (i) Setting forth the basis on which the dealer and salesman made the determination required by subparagraph (B) of this paragraph;

(ii) Stating in a highlighted format that it is unlawful for the dealer or salesman to effect a transaction in a designated security subject to the provisions of subparagraph (B) of paragraph (1) of this subsection unless the dealer and salesman have received, prior to the transaction, a written agreement to the transaction from the person; and

(iii) Stating in a highlighted format immediately preceding the customer's signature line that:

(I) The dealer and salesman are required by this subsection to provide the person with the written statement; and

(II) The person should not sign and return the written statement to the dealer or salesman if it does not accurately reflect the person's financial situation, investment experience, and investment objectives; and

(D) Obtain from the person a manually signed and dated copy of the written statement required by subparagraph (C) of this paragraph.

(3) The written agreement to the transaction required by subparagraph (B) of paragraph (1) of this subsection shall:

(A) Be signed by the purchaser and dated;

(B) Set forth the identity and quantity of the designated security to be purchased;

(C) Prominently disclose, in close proximity to the signature lines of the agreement, that the purchaser has a right to rescind the agreement, in accordance with paragraph (4) of this subsection;

(D) Disclose all commissions, fees, bonuses, or other compensation payable to the dealer and salesman as a result of the transaction; and

(E) Disclose the price at which the dealer is currently selling or offering to sell the security and the price at which the dealer is currently buying or offering to buy the security.

(4)(A) Any person purchasing a designated security from a designated dealer or designated salesman shall have an unqualified right to rescind the transaction within three business days of receipt of the confirmation of the transaction.

(B) To exercise the right to rescind, the purchaser shall notify the designated dealer in writing and shall send the notice by mail or other means to the designated dealer's place of business by midnight of the third business day following receipt of the confirmation of the transaction.

(C) If the designated dealer does not send a confirmation as required by paragraph (2) of subsection (p) of Code Section 10-5-3, the right to rescind under this subsection shall expire two years after the purchase of securities or upon the purchaser's sale of the security, whichever occurs first.

(D) In a transaction subject to rescission under this paragraph, the designated dealer shall send to the purchaser a written notice of the right to rescind. Such notice shall be included in or accompany the confirmation of the transaction and shall include:

(i) A disclosure of the purchaser's right to rescind under subparagraphs (A) and (B) of this paragraph;

(ii) A description of how to exercise the right to rescind; and

(iii) A form which may be used to effect a rescission and which sets forth the dealer's address to which such form may be delivered.

(5) A designated dealer, or another dealer on behalf of such designated dealer, shall disclose, on each statement of account sent to account holders having a designated security shown as a "long" position in the person's account as of the statement date, the price at which the designated dealer is offering to buy such security or, if no such price is available, the average of the bid prices by other dealers and the date of the most recent bid available from the designated dealer and the amount of money represented by the long position, if it were to be sold at the bid price shown on the statement.

(6) The requirements of paragraph (1) of this subsection do not apply to:

(A) Transactions in which the purchaser is an accredited investor of the dealer or salesman;

(B) Transactions that are not recommended by the dealer or salesman;

(C) Transactions by a dealer or salesman who is not and has not been a market maker in the designated security that is the subject of the transaction in the immediately preceding 12 months;

(D) Transactions in which the purchaser is an established customer of the dealer or salesman; or

(E) Any transaction or transactions that, upon prior written request or upon his own motion, the commissioner conditionally or unconditionally exempts as not encompassed within the purposes of this subsection.

(7) The requirements of paragraph (4) of this subsection do not apply to:

(A) Transactions in which the purchaser is an accredited investor of the dealer or salesman;

(B) Transactions that are not recommended by the dealer or salesman;

(C) Any transaction or transactions that, upon prior written request or upon his own motion, the commissioner conditionally or unconditionally exempts as not encompassed within the purposes of this subsection.

(8) Compliance with SEC Rule 15c2-6 (17 CFR .240.15c2-6, as amended) shall be deemed to be compliance with paragraph (2) of this subsection.

(n) It shall be unlawful for any designated dealer or designated salesman to charge or receive any commission, fee, bonus, markup, or other compensation with respect to a transaction involving the purchase or sale of designated securities which, singly or in combination, exceeds 10 percent of the purchase or sales price of the securities involved in the transaction.

(o) It shall be unlawful for any dealer, limited dealer, salesman, or limited salesman who is participating or otherwise financially interested in the primary or secondary distribution of any security which is not admitted to trading on a national securities exchange to represent to a customer that any security is being offered to such customer "at the market" or at a price related to the market price unless such dealer, limited dealer, salesman, or limited salesman knows or has reasonable grounds to believe that a market for such security exists other than that made, created, or controlled by him, or by any person for whom he is acting or with whom he is associated in such distribution, or by any person controlled by, controlling, or under common control with him.

(p) It shall be unlawful for any designated dealer to offer or sell in or from the State of Georgia a designated security unless the designated dealer:

(1) At the time of the offer and sale has entered upon a quotation system approved by the commissioner, a firm bid to purchase at least 100 shares of the stock sold at a firm price; and

(2) Actually intends to purchase and, when called upon to do so by any person, actually will purchase at least 100 shares at such price, and does not intend to reduce, and does not reduce below the quoted bid price, the price for which it actually purchases additional shares, except in reasonable response to market or economic circumstances or conditions.

Saturday May 23 09:08 EDT


This site exists because of donors like you.

Thanks!


Valid HTML 4.0!

Valid CSS!





Home - Tour - Disclaimer - Privacy - Contact Us
Copyright © 2000,2002,2004 Lawskills.com