US Laws, Codes, Statutes & Cases

Chapter 59 — Securities Regulation; Mortgage Bankers and Brokers

 

2005 EDITION

 

 

SECURITIES; MORTGAGE BANKERS AND BROKERS

 

CORPORATIONS AND PARTNERSHIPS

 

OREGON SECURITIES LAW

 

(Generally)

 

59.005       Short title

 

59.015       Definitions for Oregon Securities Law

 

59.025       Securities exempt from registration

 

59.035       Transactions exempt from registration

 

59.045       Authority of director to deny, withdraw or condition exemptions

 

59.049       Federal covered securities exempt from registration; notice filings; fees; rules

 

59.051       Statutory references to federal law

 

(Registration of Securities)

 

59.055       Conditions of offer and sale of securities

 

59.065       Registration procedures; application; fees; rules

 

59.070       Amended registration application; when required; fees

 

59.075       Registration by director; expiration; renewal; fee; rules

 

59.085       Conditions imposed on registration

 

59.095       Approval of plan to issue securities in exchange for other securities, claims or property

 

59.105       Denial, suspension or revocation of registration

 

59.115       Liability in connection with sale or successful solicitation of sale of securities; recovery by purchaser; limitations on proceeding; attorney fees

 

59.125       Effect of notice of offer to repay purchaser; exceptions; registration of transaction

 

59.127       Liability in connection with purchase or successful solicitation of purchase of securities; recovery by seller; limitations on proceeding; attorney fees

 

59.131       Effect of notice of intent to return unlawfully purchased security; contents of notice; registration of transaction

 

59.135       Fraud and deceit with respect to securities or securities business

 

59.137       Liability in connection with violation of ORS 59.135; damages; defense; attorney fees; limitations on proceeding

 

59.145       Effect of notice filing, registration or license

 

59.155       Director is agent for service of process; manner of service; exceptions

 

(Licensing of Broker-Dealers, Investment Advisers and Salespersons)

 

59.165       Licensing of broker-dealers, investment advisers and salespersons required; rules

 

59.175       Procedures for notice filing and licensing; rules; examination; bond, letter of credit or other security; filing trade name or assumed business name; fees

 

59.185       Expiration of license; rules for renewal; change in personnel

 

59.195       Licensees to keep records; inspection; filing of financial reports

 

59.205       Grounds for denying, suspending, revoking or imposing condition or restriction on license

 

59.215       Action against applicant or licensee for act or omission of associate; exceptions

 

59.225       Cancellation of license or application; application for withdrawal; effect of suspension or revocation

 

(Powers of Director)

 

59.235       General supervision over persons dealing in securities

 

59.245       Investigations; publicity with respect to violations; cease and desist order

 

59.255       Enjoining violations; fine; appointment of receiver; attorney fees; damages to private parties

 

59.265       Procedure when assets or capital of broker-dealer or investment adviser found impaired; involuntary liquidation

 

59.275       Burden of proof

 

59.285       Rules; financial statements

 

59.295       Notice of orders; hearings on orders

 

59.305       Judicial review of orders

 

59.315       Oaths and subpoenas in proceedings before director

 

59.325       Certified copies of documents; fee; effect of certification

 

(Miscellaneous Provisions)

 

59.335       Application of certain sections

 

59.345       When offer to sell or buy is made in this state

 

59.350       Treatment of certain transactions

 

59.355       Corporations subject to other laws

 

59.365       Common-law and statutory rights not limited

 

59.370       Limitation on liability for good faith act or omission; reports regarding salespersons or investment adviser representatives; limitation on liability related to reports; rules

 

(Required Reports and Statements)

 

59.451       Prohibition against filing false statement by person under investigation or examination

 

UNIFORM TOD SECURITY REGISTRATION ACT

 

59.535       Definitions for ORS 59.535 to 59.585

 

59.540       Registration in beneficiary form; sole or joint tenancy ownership

 

59.545       Registration in beneficiary form; applicable law

 

59.550       Origination of registration in beneficiary form

 

59.555       Form of registration in beneficiary form

 

59.560       Effect of registration in beneficiary form

 

59.565       Ownership on death of owner

 

59.570       Protection of registering entity

 

59.575       Nontestamentary transfer on death

 

59.580       Terms, conditions and forms for registration

 

59.585       Short title; rules of construction

 

REGULATION OF SALE OF BURIAL SHARES

 

59.660       Definition of “share”

 

59.670       Sale of burial shares; seller’s bond; attorney fees

 

59.680       Statement of seller; deposit of cash or securities for purchaser’s protection

 

59.690       Director may examine books of seller

 

59.700       Exemptions from ORS 59.660 to 59.690

 

PROHIBITION OF CERTAIN SECURITY TRANSACTIONS

 

59.710       Definitions for ORS 59.710 to 59.830

 

59.720       Application of ORS 59.710 to 59.830 to real estate contracts and brokers

 

59.730       Making contract involving securities without intending a bona fide sale or purchase

 

59.740       Conducting bucket shop or repeatedly making forbidden contracts

 

59.750       Receipt or communication of prices for purpose of forbidden contract

 

59.760       Reporting false sale of securities with intent to deceive

 

59.770       Manipulating market by pretended sales

 

59.780       Broker’s trading against customer’s order; violation of ORS 59.780 to 59.800 by member of broker’s firm

 

59.790       Insolvent broker-dealer receiving securities from customer

 

59.800       Pledge or sale by broker-dealer of customer’s securities

 

59.810       Delivery to customer of true statement of purchase or sale made by broker

 

59.820       Actions against corporation for second violation

 

59.830       Self-incrimination by witness; immunity from prosecution

 

MORTGAGE BANKERS; MORTGAGE BROKERS; LOAN ORIGINATORS

 

59.840       Definitions for ORS 59.840 to 59.980

 

59.845       License required to engage in residential mortgage transactions as mortgage banker or mortgage broker

 

59.850       Procedures for licensing; experience required; surety bond or letter of credit; fees; rules

 

59.855       Expiration of license; renewal; duration of renewed license; change in personnel; rules

 

59.860       Licensees to keep records; inspection; filing of financial reports

 

59.865       Grounds for denying, suspending, conditioning or revoking license

 

59.870       Action against applicant or licensee for act or omission of associate; exception

 

59.875       Cancellation of license or application; application for withdrawal

 

59.880       Supervisory authority of director over mortgage bankers, mortgage brokers and loan originators

 

59.885       Investigations; publicity with respect to violations; cease and desist order

 

59.890       Enjoining violations; fine; appointment of receiver; attorney fees; damages to private parties

 

59.895       Procedures where assets or capital of mortgage banker or broker found impaired; involuntary liquidation

 

59.900       Rules; financial statements

 

59.905       Notice of orders; hearings on orders

 

59.910       Judicial review of orders

 

59.915       Oaths and subpoenas in proceedings before director

 

59.920       Copies of documents; fees; effect of certification

 

59.925       Liability of mortgage banker or mortgage broker; recovery of damages; limitations on proceeding; action against bond or letter of credit; attorney fees

 

59.930       Fraud and deceit with respect to mortgage banker or broker business

 

59.935       Clients’ Trust Account; examination; deposit of funds; interest; rules

 

59.940       Notice to bank regarding Clients’ Trust Account

 

59.945       Prohibited advertisements

 

59.950       Designation of principal place of business; other offices; change of personnel; registered agent

 

59.955       Disclosure required before closing mortgage loan or mortgage banking loan

 

59.960       Consultation with licensees before rules adopted

 

59.962       Servicing or collecting mortgage banking loan or mortgage loan by mortgage banker or mortgage broker

 

59.967       Legislative findings regarding loan originators

 

59.969       List of loan originators; qualifications; voluntary reporting; records; waiver; rules

 

59.970       Qualifications for insurance licensees acting as loan originators

 

59.971       Prohibited conduct for loan originators; effect of criminal conviction; rules

 

59.972       Loan originator criminal records checks; rules

 

59.973       Complaints against loan originators; investigation; hearing; rules; action by director

 

59.975       Continuing education requirements for loan originators; rules

 

59.977       Certification of organizations to provide training for loan originators; rules

 

59.980       Short title

 

PENALTIES

 

59.991       Criminal penalties for ORS 59.005 to 59.451 and 59.660 to 59.830; exceptions

 

59.992       Criminal penalties for ORS 59.840 to 59.980

 

59.995       Civil penalties for ORS 59.005 to 59.451 and 59.660 to 59.830; exceptions

 

59.996       Civil penalties for ORS 59.840 to 59.980

 

OREGON SECURITIES LAW

 

(Generally)

 

      59.005 Short title. ORS 59.005 to 59.451, 59.991 and 59.995 may be cited as the Oregon Securities Law. [1967 c.537 §2]

 

      59.010 [Repealed by 1967 c.537 §36]

 

      59.015 Definitions for Oregon Securities Law. As used in the Oregon Securities Law, unless the context otherwise requires:

      (1) “Broker-dealer” means a person who engages, all or part of the time, in effecting transactions in securities for the account of others or for the person’s own account. “Broker-dealer” does not include:

      (a) An issuer effecting sales in its own securities;

      (b) The following institutions:

      (A) A financial institution or trust company, as defined in ORS 706.008; or

      (B) A financial holding company or a bank holding company, as defined in ORS 706.008, holding an institution described in subparagraph (A) of this paragraph; a savings and loan holding company as defined in section 408 of the National Housing Act, 12 U.S.C. section 1730a, holding an association described in subparagraph (A) of this paragraph; the subsidiaries and affiliates of the financial holding company, bank holding company or savings and loan holding company; or subsidiaries and affiliates of institutions described in subparagraph (A) of this paragraph, if the appropriate statutory regulatory authority is exercising control over, or is regulating or supervising the person in the sale of securities in accord with the purposes of the Oregon Securities Law;

      (c) A person who has no place of business in this state effecting transactions in this state exclusively with broker-dealers;

      (d) A person effecting sales exempted by ORS 59.035;

      (e) A salesperson;

      (f) A person effecting sales of securities owned by the person registered for sale pursuant to ORS 59.065;

      (g) A person effecting sales of securities exempted by ORS 59.025 (7);

      (h) A person licensed as a mortgage banker or a mortgage broker under ORS 59.840 to 59.980 when effecting sales of securities involving real estate paper registered for sale pursuant to ORS 59.065; or

      (i) A person designated by rule or order by the director.

      (2) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

      (3) “Director” means the Director of the Department of Consumer and Business Services.

      (4) “Federal covered investment adviser” means a person who is registered as an investment adviser pursuant to section 203 of the Investment Advisers Act of 1940, as amended.

      (5) “Federal covered security” means any security that is a covered security under section 18 of the Securities Act of 1933, as amended, and for which such Act provides that the director may require filing of a notice and payment of a fee.

      (6) “Fraud,” “deceit” and “defraud” are not limited to common-law deceit.

      (7) “Guaranteed” means guaranteed as to payment of principal, interest or dividends.

      (8)(a) “Investment adviser representative” means any partner, officer, director or person occupying a similar status or performing a similar function, or other individual, except clerical or ministerial personnel, who is employed by or associated with:

      (A) A state investment adviser that is licensed or required to be licensed in this state and who does any of the following:

      (i) Makes any recommendations or otherwise renders advice regarding securities;

      (ii) Manages accounts or portfolios of clients;

      (iii) Determines which recommendation or advice regarding securities should be given;

      (iv) Solicits, offers or negotiates for the sale of or sells investment advisory services; or

      (v) Supervises employees acting under this subparagraph; or

      (B) A federal covered investment adviser, subject to the limitations of section 203A of the Investment Advisers Act of 1940, as amended, as the director may designate by rule or order.

      (b) “Investment adviser representative” does not include a person designated by rule or order of the director.

      (9) “Issuer” means a person who issues, proposes to issue or has issued a security and includes an issuer to be formed. With respect to certificates of deposit, voting-trust certificates or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management or unit type, the “issuer” is the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other instrument or agreement under which the security is issued.

      (10) “License” means a license as provided under the Oregon Securities Law.

      (11) “Mortgage banker” means a mortgage banker as defined in ORS 59.840.

      (12) “Mortgage broker” means a mortgage broker as defined in ORS 59.840.

      (13) “Offer” or “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value. Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.

      (14) “Person” includes an individual, a joint venture, a partnership, a cooperative, a limited liability company, an association, a joint stock company, a corporation, a trust, an unincorporated organization or a government or political subdivision of a government.

      (15) “Real estate paper” means any obligation secured or purportedly secured by an interest in real property. Real estate paper includes, but is not limited to, mortgage-backed securities, collateralized mortgage obligations, and real estate mortgage investment conduits.

      (16) “Registered” means registered as provided in the Oregon Securities Law.

      (17)(a) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value. Any security given or delivered with, or as a bonus on account of, a purchase of securities or any other thing shall constitute a part of the subject of the purchase and shall have been offered and sold for value. A gift of assessable stock by or for any issuer or promoter shall constitute a sale.

      (b) For purposes of the authority of the director under ORS 59.245 and 59.255, the terms “sale” and “sell” include the terms “offer” and “offer to sell.”

      (c) “Sale” and “sell” do not include:

      (A) A bona fide pledge or loan of securities;

      (B) A bona fide security dividend, whether the corporation distributing the dividend is the issuer of the security or not, if nothing of value is given by the recipients for the dividend other than payments in connection with the elimination of fractional shares; or

      (C) 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.

      (18)(a) “Salesperson” means a person, other than a broker-dealer, who represents or purports to represent a broker-dealer, issuer or owner of securities in effecting or attempting to effect in any manner transactions in securities.

      (b) “Salesperson” does not include:

      (A) A person who represents an issuer in effecting sales in a security exempted by ORS 59.025;

      (B) A person who represents an issuer in effecting sales exempted by ORS 59.035;

      (C) A person who represents an issuer in effecting sales with existing partners or directors of the issuer, if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state;

      (D) An employee of an institution or organization described in subsection (1)(b) of this section to the extent the employee is not a dual employee of the institution and a broker-dealer;

      (E) A person effecting transactions in this state limited to those transactions described in section 15(h)(2) and (3) of the Securities Exchange Act of 1934, as amended; or

      (F) A person designated by rule or order by the director.

      (c) A person who is a partner, director or officer of a broker-dealer, issuer or owner of securities, or a person who occupies a similar status or performing similar functions, is a “salesperson” only if the person otherwise comes within this definition.

      (19)(a) “Security” means a note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in a pension plan or profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such title or lease, real estate paper sold by a broker-dealer, mortgage banker, mortgage broker or a person described in subsection (1)(b) of this section to persons other than persons enumerated in ORS 59.035 (4), or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificates for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the foregoing.

      (b) “Security” does not include:

      (A) An insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed or variable sum of money either in a lump sum or periodically for life or some other specified period;

      (B) A beneficial interest in a voluntary inter vivos trust unless the trust is created solely for the purpose of voting or is part of an attempt to evade the provisions of ORS 59.005 to 59.451; or

      (C) A beneficial interest in a testamentary trust.

      (20)(a) “State investment adviser” means a person who, for compensation:

      (A) Engages all or part of the time of the person, in this state, in the business of advising others, either directly or by mail or through publication or writing, as to the value of securities or as to the advisability of investing in, purchasing or selling securities;

      (B) Engages all or part of the time of the person, in this state, in the business of managing an investment or trading account in securities for other persons; or

      (C) Issues or promulgates, as part of a regular business in this state, analyses or reports concerning securities.

      (b) “State investment adviser” does not include:

      (A) An investment adviser representative;

      (B) An institution or organization described in subsection (1)(b) of this section;

      (C) A licensed broker-dealer whose performance of investment advisory services is solely incidental to the conduct of business as a broker-dealer and who receives no special compensation for such services;

      (D) A salesperson licensed to a broker-dealer whose performance of investment advisory services is solely incidental to that person’s activities as a salesperson and who receives no special compensation for such services;

      (E) A publisher of or contributor to a bona fide newspaper, newsmagazine, investment manual or service, or business or financial publication of general, regular and paid circulation;

      (F) A person whose only clients are federal covered investment advisers, state investment advisers, broker-dealers, mortgage bankers, mortgage brokers, banks, savings institutions or trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, as amended, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees;

      (G) A duly licensed lawyer, engineer or accountant whose performance of investment advisory services is solely incidental to the practice of the profession;

      (H) A person whose advice, analyses or reports relate only to securities exempted by ORS 59.025 (1);

      (I) A federal covered investment adviser in compliance with ORS 59.165 (7);

      (J) A person, advising others, that has no place of business in this state and during the preceding 12-month period has had fewer than six clients, other than those persons included in subparagraph (F) of this paragraph, who are residents of this state; or

      (K) Such other persons as the director may by rule or order designate. [1967 c.537 §3; 1971 c.624 §1; 1971 c.641 §1; 1973 c.366 §1; 1975 c.491 §1; 1985 c.349 §1; 1987 c.414 §§69, 69a; 1987 c.603 §1; 1989 c.197 §1; 1991 c.5 §18; 1993 c.158 §1; 1993 c.508 §27; 1993 c.744 §13; 1995 c.93 §26; 1995 c.622 §11; 1997 c.631 §375; 1997 c.772 §1; 1999 c.53 §1; 1999 c.315 §1; 2001 c.104 §14; 2001 c.377 §39a; 2003 c.270 §1]

 

      59.020 [Repealed by 1967 c.537 §36]

 

      59.025 Securities exempt from registration. The following securities are exempt from ORS 59.049 and 59.055:

      (1)(a) A security issued or guaranteed by the United States or by a state, a political subdivision of a state or an agency or other instrumentality of any of the foregoing.

      (b) Any other security offered in connection with or as part of the security set forth in paragraph (a) of this subsection if the security cannot be severed and sold separately from the security in paragraph (a) of this subsection.

      (2) A security issued or guaranteed by a foreign government with which the United States is at the time of the sale maintaining diplomatic relations, or by a state, province or political subdivision thereof having the power of taxation or assessment, if the security is recognized as a valid obligation by such foreign government or state, province or political subdivision thereof.

      (3) A security that represents an interest in or a direct obligation of or is guaranteed by a national bank, federal savings and loan association, federal credit union or federal land bank or joint stock land bank or national farm loan association.

      (4) Any of the following securities:

      (a) A security listed or approved for listing upon notice of issuance on the New York Stock Exchange, the American Stock Exchange, the Midwest Stock Exchange, the Pacific Stock Exchange or any other exchange recognized by rule of the Director of the Department of Consumer and Business Services;

      (b) A security designated or approved for designation upon notice of issuance under the National Association of Securities Dealers Automated Quotation System, Inc. National Market System;

      (c) Any other security of the issuer of a security listed or designated under paragraph (a) or (b) of this subsection, that is of senior or substantially equal rank to the listed or designated security;

      (d) A security issuable under rights or warrants listed or approved under paragraph (a), (b) or (c) of this subsection; or

      (e) A warrant or right to purchase or subscribe to any security referred to in paragraph (a), (b), (c) or (d) of this subsection.

      (5) A security maintaining a rating approved by the director in a recognized securities manual.

      (6) A security that represents an interest in or a direct obligation of and that has been or is to be issued by a bank, trust company, savings and loan association, or credit union, that is subject to the examination, supervision and control of a regulatory agency of this state.

      (7) Commercial paper issued, given or acquired in a bona fide way in the ordinary course of legitimate business, trade or commerce, when the commercial paper is not made the subject of a public offering.

      (8) A security, the issuance of which is under supervision, regulation or control by the Public Utility Commission of this state, if the Public Utility Commission is exercising control over, or is regulating or supervising, the issuer thereof.

      (9) Stock or membership certificates issued by an agricultural cooperative corporation or irrigation association when the stock is issued to evidence membership in the cooperative or association or as a patronage dividend and certificates issued to members or patrons by such a cooperative or association evidencing their respective interests in reserves or as patronage dividends. This exemption shall not apply to any cooperative or association that expects to engage in or is engaged in the production, processing or marketing of forest products.

      (10) Stock or membership certificates issued by a fishing cooperative corporation, when the stock or certificates are issued to members of the cooperative corporation either for the purpose of showing membership in the cooperative corporation or for the purpose of showing their respective interests in reserves or patronage dividends. For purposes of this subsection, a fishing cooperative corporation is an association of persons engaged commercially in harvesting, marketing or processing products of aquatic life from fresh and salt water, that is formed or operated under ORS chapter 62 with the purpose of commercially harvesting, marketing or processing such products or engaging in group bargaining with respect to the sale of such products.

      (11) Stock or membership certificates issued by an association of consumers formed or operated under ORS chapter 62 with the purpose of providing groceries to its consumer members, when the stock or certificates are issued to members either for the purpose of showing membership in the association or for the purpose of showing their respective interests in patronage dividends or reserves. For purposes of the exemption under this subsection:

      (a) The price of stock or a membership certificate may not exceed $300.

      (b) The benefits shall be limited to discounts on purchases or patronage dividends, or any combination of such discounts and dividends.

      (c) The association may issue only one stock or membership certificate to an individual.

      (12) Any security issued in connection with an employee’s stock purchase, savings, pension, profit sharing or similar employee’s benefit plan, provided:

      (a) That the plan meets the requirements for qualification under section 401 of the Internal Revenue Code of 1986; and

      (b) That the terms of the plan are fair, just and equitable to employees under rules of the director.

      (13) Any security issued by a person:

      (a) Organized and operated exclusively for religious, educational, benevolent, fraternal, charitable or reformatory purpose and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual; and

      (b) Designated by rule of the director.

      (14) Any other security exempted by rule of the director. [1967 c.537 §4; 1969 c.688 §1; 1973 c.428 §9; 1975 c.491 §2; 1985 c.193 §1; 1985 c.349 §2a; 1987 c.603 §1a; 1987 c.677 §9; 1989 c.171 §6; 1989 c.197 §2; 1991 c.67 §10; 1993 c.18 §14; 1997 c.772 §2]

 

      59.030 [Repealed by 1967 c.537 §36]

 

      59.035 Transactions exempt from registration. The following transactions are exempt from ORS 59.049 and 59.055 if they are not part of an attempt to evade fraudulently any provision of the Oregon Securities Law:

      (1) Any transaction by a sheriff, marshal or court appointed fiduciary.

      (2) An isolated nonissuer transaction in this state, whether effected through a broker-dealer or not.

      (3) Any transaction by an issuer in its securities pursuant to a pro rata offering to its existing security holders, if:

      (a) No commission or remuneration, other than a standby fee, is paid or given directly or indirectly in connection with the transaction; and

      (b) The issuer has not had an effective registration under the Oregon Securities Law nor has used this exemption within one year prior to the date of the offering or sale.

      (4) Any offer, sale, transfer or delivery of securities to a bank, savings institution, trust company, insurance company, investment company, pension or profit-sharing trust, or other financial institution or institutional buyer (including but not limited to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Housing Administration, the United States Department of Veterans Affairs and the Government National Mortgage Association), or to a broker-dealer, mortgage broker or mortgage banker, whether the purchaser is acting for itself or in a fiduciary capacity when the purchaser has discretionary authority to make investment decisions.

      (5) Any transaction by an offeror with an accredited investor as defined in section 2 (15)(i) or (ii) of the Securities Act of 1933, as amended, or rules of the Director of the Department of Consumer and Business Services, but only if there is no public advertising or general solicitation in connection with the transaction.

      (6) The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make the conversion without the payment of additional consideration, if the security surrendered was, when issued, convertible and registered or exempt from registration.

      (7) Any transaction in a vendor’s interest in a land sale contract, or a bond or note secured by a mortgage or trust deed upon real estate, so long as the entire vendor’s interest or mortgage or trust deed, with all the bonds or notes secured thereby, are sold to a single purchaser, in a single sale.

      (8) Agency or principal sales by licensed broker-dealers, executed upon customers’ orders on any exchange or on the over-the-counter market, but not the solicitation of such orders, where there is no intent to avoid the provisions of the Oregon Securities Law and a public offering is not involved. Such broker-dealers shall keep and maintain, for two years from the date of the order, a record of all the sales executed upon customers’ orders, giving the name and address of each customer, the name and identity of the security involved, the dates of the sales, the price paid or received for the security, and the commission or other expenses charged to the customer.

      (9) The offer or sale by a licensed broker-dealer of any security acquired in the ordinary and usual course of business, when such security is a part of an issue which has been registered in whole or in part, if the offer or sale is made in good faith and not directly or indirectly for the benefit of the issuer or for the promotion of any scheme or enterprise effecting a violation or an evasion of any provisions of the Oregon Securities Law, unless:

      (a) The registration has been revoked or suspended; or

      (b) The continued sale of the security has been enjoined.

      (10) The offer or sale by licensed broker-dealer, acting either as principal or agent, of securities theretofore sold and distributed to the public, if the sale meets the requirements of paragraphs (a), (b) and (c) or (a), (b) and (d) of this subsection:

      (a) Such securities are sold at prices reasonably related to the current market price thereof at the time of sale, and, if such licensed broker-dealer is acting as agent, the commission collected by such licensed broker-dealer on account of the sale thereof is not in excess of usual and customary commissions collected with respect to securities and transactions having comparable characteristics;

      (b) Such securities do not constitute an unsold allotment to or subscription by such broker-dealer as a participant in the distribution of such securities by the issuer or by or through an underwriter;

      (c) The issuer is listed in any recognized securities manual approved by rule by the director, and the listing contains the names of the issuer’s officers and directors, a balance sheet of the issuer as of a date not more than 18 months prior to the date of such sale, and a profit and loss statement for either the fiscal year preceding the date of the balance sheet or the most recent year of operations; and

      (d) The securities are authorized for quotation on a nationwide automated quotations system approved by rule or order of the director.

      (11) An offer, but not the sale, of a security meeting either of the following descriptions:

      (a) A security for which registration statements have been filed under both the Oregon Securities Law and the Securities Act of 1933, as amended, if no stop or refusal order or order under ORS 59.105 is in effect and no public proceeding or examination looking toward such an order is pending. However, an offer for such a security may not be accepted until the securities have been registered as provided in the Oregon Securities Law.

      (b) A security for which a registration statement has been filed under the Oregon Securities Law and the offer is allowed by the director. However, an offer for such a security may not be accepted until the securities have been registered as provided in the Oregon Securities Law.

      (12)(a) Any transactions in securities by an offeror within or without this state that meet all of the requirements of subparagraph (A) or (B) of this paragraph and all of the requirements of subparagraphs (C), (D) and (E) of this paragraph:

      (A) When the offeror is an issuer, the transactions result in not more than 10 purchasers within this state of securities of the issuer during any 12 consecutive months.

      (B) When the offeror is a nonissuer the securities must have been bought and held for at least 12 consecutive months and the transactions result in not more than 10 purchasers within this state of securities from the nonissuer during any 12 consecutive months.

      (C) No commission or other remuneration is paid or given directly or indirectly in connection with the offer or sale of the securities.

      (D) No public advertising or general solicitation is used in connection with any transaction under this exemption.

      (E) At the time of any transaction under this exemption the offeror does not have under the Oregon Securities Law an application for registration or an effective registration of securities which are part of the same offering.

      (b) In connection with transactions under paragraph (a) of this subsection:

      (A) Purchasers of securities of the offeror registered under ORS 59.065, exempt under ORS 59.025, exempt under any other subsection of this section, or for which a notice has been filed under ORS 59.049, are not counted as purchasers under this exemption.

      (B) Repeat transactions with persons who are counted as purchasers within Oregon under paragraph (a) of this subsection do not increase the number of purchasers. However, a purchaser remains a purchaser for 12 months following the month of the last sale to that purchaser.

      (C) No limitations are placed on the number of transactions or purchasers without this state. No limitations are placed on the number of offers under this exemption.

      (13) A transaction with security holders, pursuant to a statutory vote by such security holders on a merger, consolidation, partial or complete liquidation, reclassification of securities, plan of exchange or sale of assets, in consideration of the issuance of securities of another issuer.

      (14) Capital stock issued by a professional corporation organized under ORS chapter 58.

      (15) Any other transaction exempted by rule of the director. [1967 c.537 §5; 1971 c.624 §2; 1973 c.823 §§91,156; 1985 c.349 §3; 1987 c.603 §2; 1989 c.197 §3; 1991 c.67 §11; 1997 c.772 §3; 2001 c.32 §1]

 

      59.045 Authority of director to deny, withdraw or condition exemptions. (1) The Director of the Department of Consumer and Business Services may by rule or order, as to any security or any type of security transaction:

      (a) Deny, withdraw or condition the exemptions allowed by ORS 59.025 and 59.035 if, in the director’s opinion, the further sale of the security in this state would work a fraud or imposition upon the purchaser.

      (b) Waive the conditions of ORS 59.035 (3)(b) and (12)(a)(B).

      (c) Provide which exemptions may or may not be used in connection with other exemptions or provide procedures for determining which offerings are or are not integrated with other offerings within the same or other exemptions.

      (2) The director may by order withdraw, condition or deny the use of any exemption by a person if the director has reason to believe that the person has engaged in or is about to engage in an act or practice constituting a violation of the Oregon Securities Law or that the use of any exemption by that person would work a fraud or imposition on purchasers.

      (3) No person shall be liable under the Oregon Securities Law by reason of the withdrawal of an exemption under this section if that person sustains the burden of proof that that person did not know, and in the exercise of reasonable care could not have known of the withdrawal. [1967 c.537 §6; 1973 c.366 §3; 1985 c.349 §4]

 

      59.047 [1981 c.292 §2; 1985 c.349 §5; repealed by 1987 c.603 §30]

 

      59.049 Federal covered securities exempt from registration; notice filings; fees; rules. Federal covered securities may be offered and sold in this state without registration, subject to the following:

      (1) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(2) of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the Director of the Department of Consumer and Business Services. In lieu of the notice, an issuer may file a copy of its registration statement as filed with the Securities and Exchange Commission together with fees required under this subsection. The form of notice shall be prescribed by the director. The director shall set the amount of the fee by rule. The fee is not refundable. The effective date of the notice is the later of the date the notice is received by the director or the date specified by the filer of the notice.

      (2) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(3) or (4), other than section 18(b)(4)(D), of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the director. The form of notice shall be prescribed by the director. The director shall set the fee by rule in an amount per $1,000 of the aggregate price of the securities which are to be offered in this state. The fee is not refundable. The effective date of the notice is the later of the date the notice is received by the director or the date specified by the filer of the notice.

      (3) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(4)(D) of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the director, not later than 15 days after the first sale of such federal covered security in this state. The notice shall be filed on Securities and Exchange Commission Form D or on a form of notice prescribed by the director. The director shall set the fee by rule in an amount per $1,000 of the aggregate price of the securities which are to be offered in this state. The fee is not refundable. The effective date of the notice is the later of the date the notice is received by the director or the date specified by the filer of the notice.

      (4)(a) The director shall set the fees described in subsections (1) to (3) of this section in an amount that the director determines is equal as nearly as possible to the national midpoint for similar fees charged by all other state regulatory agencies within the United States responsible for regulating securities.

      (b) The director may adjust the amount of a fee described in subsections (1) to (3) of this section every two years to reflect changes in the national midpoint for a similar fee.

      (c) In determining the national midpoint for similar fees under this section, the director may consider national midpoints determined by the North American Securities Administrators Association, the National Association of Securities Dealers or the United States Securities and Exchange Commission.

      (5) The director may issue an order suspending the offer and sale of a federal covered security if the director finds that there is a failure to comply with any requirement under this section.

      (6)(a) The filer of a notice under subsections (1) to (3) of this section shall amend the notice when there is a change in the name of the offering or, in the case of offerings for which notice is filed pursuant to subsection (2) or (3) of this section, when there is an increase in the aggregate price of the securities which are to be offered in this state. There is no fee required for an amendment that does not increase the aggregate offering amount. Notices amending the aggregate offering amount shall include the fee calculated in accordance with subsection (2) or (3) of this section, less amounts previously paid under the prior notice filing, but the fee may not be less than $100. The fee is not refundable.

      (b) If an issuer or person sells federal covered securities in this state for a price in excess of the aggregate price for which fees were initially paid under this section, the seller shall pay a fee of three times the difference between the initial fee paid and the fee required under this section for the federal covered securities sold in this state. The additional fee may not be less than $100. The fee is not refundable.

      (7) The director, by rule or otherwise, may waive any or all of the provisions of this section. [1997 c.772 §6; 2001 c.104 §15; 2003 c.270 §2; 2003 c.785 §1]

 

      59.050 [1981 c.292 §3; 1985 c.349 §6; repealed by 1987 c.603 §30]

 

      59.051 Statutory references to federal law. References in ORS 59.005 to 59.451, 59.991 and 59.995 to federal statutes or federal regulations shall be construed to refer to those statutes or regulations as they are in effect on April 19, 1999. [1999 c.53 §8]

 

      59.052 [1981 c.292 §4; 1985 c.349 §7; repealed by 1987 c.603 §30]

 

(Registration of Securities)

 

      59.055 Conditions of offer and sale of securities. It is unlawful for any person to offer or sell any security in this state, unless:

      (1) The security is registered and the offer or sale is not in violation of any rule or order of the Director of the Department of Consumer and Business Services or any condition, limitation or restriction imposed by the director upon such registration;

      (2) The security is exempt under ORS 59.025 or the sale is exempt under ORS 59.035; or

      (3) The security is a federal covered security for which a notice has been filed and fees have been paid under ORS 59.049. [1967 c.537 §7; 1997 c.772 §4]

 

      59.065 Registration procedures; application; fees; rules. (1) The Director of the Department of Consumer and Business Services by rule shall establish procedures for registering securities. The director may coordinate registration in this state with any federal securities Act or national registration system.

      (2) Every registration application submitted shall be accompanied by a fee. The director shall set the fee by rule in an amount per $1,000 of the aggregate price of the securities that are to be offered in this state. The fee is not refundable.

      (3)(a) The director shall set the fee described in subsection (2) of this section in an amount that the director determines is equal as nearly as possible to the national midpoint for similar fees charged by all other state regulatory agencies within the United States responsible for regulating securities.

      (b) The director may adjust the amount of the fee described in subsection (2) of this section every two years to reflect changes in the national midpoint for a similar fee.

      (c) In determining the national midpoint for similar fees under this section, the director may consider national midpoints determined by the North American Securities Administrators Association, the National Association of Securities Dealers or the United States Securities and Exchange Commission.

      (4) If a registrant sells securities in Oregon in excess of the quantity registered or for a price in excess of the aggregate price for which fees were initially paid, the registrant may obtain registration of the excess securities by paying three times the difference between the initial fee paid and the fee required under subsection (2) of this section for the securities sold in Oregon. The additional fee may not be less than $100. Registration of the excess securities shall be effective retroactively to the date of sale. [1967 c.537 §8; 1973 c.366 §4; 1985 c.349 §8; 1987 c.603 §3; 1997 c.772 §7; 2003 c.270 §3; 2003 c.785 §2]

 

      59.070 Amended registration application; when required; fees. (1) A registrant under ORS 59.065 shall amend the registration application submitted under ORS 59.065 when there are material changes in the terms and conditions of the original registration. “Material changes in the terms and conditions of the original registration” includes an increase in the aggregate amount of securities to be offered in Oregon, change in the type of securities or change in the identity of the issuer or owner.

      (2) Applications for an amendment to increase the aggregate amount of securities to be offered in Oregon shall include the fee calculated in accordance with ORS 59.065 (2), less amounts previously paid under the prior registration. The fee may not be less than $100.

      (3) This section does not relieve a registrant from the obligation to notify the director concerning material changes in facts and circumstances concerning the offering. [1985 c.349 §10; 1987 c.603 §4; 2003 c.785 §3]

 

      59.075 Registration by director; expiration; renewal; fee; rules. (1) The Director of the Department of Consumer and Business Services shall register the securities unless the director finds that registration should be denied on one or more of the grounds specified in ORS 59.105. The securities may thereafter be sold in accordance with the registration and any conditions, limitations or restrictions imposed by the director.

      (2) Every registration of securities and every notice filed under ORS 59.049 shall expire one year after the date of the registration or effective date of the notice. The director may establish a different expiration date for purposes of coordination with any national registration or notice filing system. When a registration or notice filing is amended, the registration or notice filing expires one year after the date of the initial registration or effective date of the notice filing unless the amended registration or notice filing provides otherwise.

      (3) The director by rule shall establish procedures for renewing registrations of securities and notice filings.

      (4) Every renewal application and every renewal of a notice filing shall be accompanied by a fee computed in accordance with ORS 59.049 or ORS 59.065 (2), as applicable. The fee is not refundable.

      (5) If the director finds that no ground for suspension or revocation of the registration exists under ORS 59.105, the director shall renew the registration, subject to any conditions, limitations and restrictions imposed by the director. The renewed registration or notice filing shall expire one year after the date of expiration of the original registration, or effective date of the notice filing or last renewal thereof. The director may establish a different expiration date for purposes of coordination with any national registration or notice filing system. [1967 c.537 §9; 1985 c.349 §12; 1987 c.603 §5; 1997 c.772 §8]

 

      59.078 [1973 c.366 §8; repealed by 1987 c.603 §30]

 

      59.085 Conditions imposed on registration. The Director of the Department of Consumer and Business Services may, by rule or order, impose on a registration such conditions, limitations and restrictions as the director deems appropriate to make the issue fair, just and equitable, including the following:

      (1) That a prospectus containing any designated part of the information submitted in connection with registration be sent or given to each person to whom a security is offered or sold.

      (2) That the security be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed with the director or preserved for a period up to three years specified in the rule or order.

      (3) That any of the following be deposited in escrow on terms approved by the director:

      (a) Any security issued or to be issued for a consideration substantially different from the public offering price or for a consideration other than cash.

      (b) The proceeds from the sale of the security until the issuer receives an amount specified by the director. [1967 c.537 §10]

 

      59.095 Approval of plan to issue securities in exchange for other securities, claims or property. (1) The proponents of a plan pursuant to which a security is to be issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, except a security the issuance of which is under supervision, regulation or control by the Public Utility Commission of this state, may request approval of such plan by the Director of the Department of Consumer and Business Services.

      (2) The request for approval shall be made by filing a registration statement, as provided in ORS 59.065, with a detailed statement of the plan. The director shall set the plan down for hearing and require the proponents of the plan to give notice of the hearing to all persons to whom securities are to be issued in such exchange. All such persons shall have the right to appear at the hearing.

      (3) The director shall, after the hearing, consider the fairness of the terms and conditions of the plan, and, if the director finds that the plan is fair, just and equitable and free from fraud, shall approve it, subject to such conditions, limitations and restrictions as the director may impose. If the director finds that the plan is unfair, unjust or inequitable or not free from fraud, the director shall deny the request, and give notice of the denial, at the expense of the proponents, to all persons who were entitled to receive or received notice of the hearing. [1967 c.537 §11]

 

      59.105 Denial, suspension or revocation of registration. (1) Except as provided in subsection (2) of this section, the Director of the Department of Consumer and Business Services may by order deny, suspend or revoke any registration, if the director finds that:

      (a) The proposed plan of business of the issuer, the characteristics and terms of sale of the securities to be sold, or the proposed methods of sale and distribution are unfair, unjust or inequitable;

      (b) The issuer is insolvent or in unsound financial condition;

      (c) The applicant, registrant or issuer has violated any of the provisions of the Oregon Securities Law, or any rule or order of the director of which the applicant, registrant or issuer had notice;

      (d) The applicant, registrant or issuer has been or is engaged or is about to engage in dishonest or fraudulent conduct with regard to securities;

      (e) The applicant, registrant, or issuer has been convicted of a misdemeanor, an essential element of which is fraud, or of a felony;

      (f) The applicant, registrant or issuer has knowingly made or caused to be made to the director any false representation of a material fact, or has suppressed or withheld from the director any material information;

      (g) The applicant, registrant or issuer has refused to permit an examination to be made by the director, or has failed to file any report, including any certified financial report, or furnish any information required by the director in connection with the Oregon Securities Law; or

      (h) Unreasonable amounts or kinds of commissions or other remunerations, promoter’s profits or participation or unreasonable options have been or are to be given or allowed directly or indirectly in connection with the sale or distribution of the securities.

      (2) The director may enter an order against the applicant, registrant or issuer under subsection (1) of this section if any partner, officer or director of an applicant, registrant or issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the applicant, registrant or issuer has been guilty of any act or omission which would be cause for denying, suspending or revoking the registration of an individual applicant, registrant or issuer, except:

      (a) This subsection shall not apply to subsection (1)(a) and (b) of this section.

      (b) The director may not enter an order suspending or revoking a registration under this subsection, pursuant to subsection (1)(e) of this section, without 10 days’ prior written notice to the registrant. [1967 c.537 §12; 1989 c.197 §4]

 

      59.110 [Amended by 1953 c.690 §3; 1955 c.201 §1; 1957 c.47 §1; 1963 c.244 §1; 1965 c.241 §2; repealed by 1967 c.537 §36]

 

      59.115 Liability in connection with sale or successful solicitation of sale of securities; recovery by purchaser; limitations on proceeding; attorney fees. (1) A person is liable as provided in subsection (2) of this section to a purchaser of a security if the person:

      (a) Sells or successfully solicits the sale of a security, other than a federal covered security, in violation of the Oregon Securities Law or of any condition, limitation or restriction imposed upon a registration or license under the Oregon Securities Law; or

      (b) Sells or successfully solicits the sale of a security in violation of ORS 59.135 (1) or (3) 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 statements made, in light of the circumstances under which they are made, not misleading (the buyer not knowing of the untruth or omission), and who does not sustain the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

      (2) The purchaser may recover:

      (a) Upon tender of the security, the consideration paid for the security, and interest from the date of payment equal to the greater of the rate of interest specified in ORS 82.010 for judgments for the payment of money or the rate provided in the security if the security is an interest-bearing obligation, less any amount received on the security; or

      (b) If the purchaser no longer owns the security, damages in the amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it and less interest on such value at the rate of interest specified in ORS 82.010 for judgments for the payment of money from the date of disposition.

      (3) Every person who directly or indirectly controls a seller liable under subsection (1) of this section, every partner, limited liability company manager, including a member who is a manager, officer or director of such seller, every person occupying a similar status or performing similar functions, and every person who participates or materially aids in the sale is also liable jointly and severally with and to the same extent as the seller, unless the nonseller sustains the burden of proof that the nonseller did not know, and, in the exercise of reasonable care, could not have known, of the existence of facts on which the liability is based. Any person held liable under this section shall be entitled to contribution from those jointly and severally liable with that person.

      (4) Notwithstanding the provisions of subsection (3) of this section, a person whose sole function in connection with the sale of a security is to provide ministerial functions of escrow, custody or deposit services in accordance with applicable law is liable only if the person participates or materially aids in the sale and the purchaser sustains the burden of proof that the person knew of the existence of facts on which liability is based or that the person’s failure to know of the existence of such facts was the result of the person’s recklessness or gross negligence.

      (5) Any tender specified in this section may be made at any time before entry of judgment.

      (6) Except as otherwise provided in this subsection, no action or suit may be commenced under this section more than three years after the sale. An action under this section for a violation of subsection (1)(b) of this section or ORS 59.135 may be commenced within three years after the sale or two years after the person bringing the action discovered or should have discovered the facts on which the action is based, whichever is later. Failure to commence an action on a timely basis is an affirmative defense.

      (7) An action may not be commenced under this section solely because an offer was made prior to registration of the securities.

      (8) Any person having a right of action against a broker-dealer, state