2024 New Mexico Statutes
Chapter 58 - Financial Institutions and Regulations
Article 13C - New Mexico Uniform Securities
Article 5 - Fraud and Liabilities
Section 58-13C-501 - 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.
History: Laws 2009, ch. 82, § 501.
ANNOTATIONSEffective dates. — Laws 2009, ch. 82, § 704 made the New Mexico Uniform Securities Act effective January 1, 2010.
Cases under prior law. — The pre-2010 cases below were decided under the former New Mexico Securities Act of 1986, Chapter 58, Article 13B. Due to the similarities between the two laws, the case annotations have been retained and included as annotations to the New Mexico Uniform Securities Act.
The renewal or rollover of an existing promissory note constitutes an offer to sell, a sale, an offer to purchase or a purchase of a security. State v. Collins, 2007-NMCA-106, 142 N.M. 419, 166 P.3d 480, cert. denied, 2007-NMCERT-008, 142 N.M. 434, 166 P.3d 1088.
Fraud essential element of securities fraud. — It is necessary to prove conduct that would constitute the crime of fraud before one can be found guilty of securities fraud. State v. McCall, 1983-NMCA-109, 101 N.M. 616, 686 P.2d 958, rev'd on other grounds, 1984-NMSC-007, 101 N.M. 32, 677 P.2d 1068 (decided under former law).
Fraud and fraudulent securities practice separate offenses. — An analysis of the offense of fraud and the crime of fraudulent securities practice reveals that the two offenses have different elements; therefore, a defendant may be convicted and sentenced for both general fraud and securities fraud. State v. Ross, 1986-NMCA-015, 104 N.M. 23, 715 P.2d 471.
This offense does not require proof of the same elements of general fraud, as general fraud is defined under Section 30-16-6 NMSA 1978. State v. Shade, 1986-NMCA-072, 104 N.M. 710, 726 P.2d 864, overruled on other grounds by State v. Olguin, 1994-NMCA-050, 118 N.M. 91, 879 P.2d 92.
Defendant's intent in making fraudulent statement irrelevant under section. — Although in common-law fraud the plaintiff must prove that the defendant intentionally deceived him, the intent with which the defendant makes the statement is irrelevant under the terms of this section, which requires only that the statement made be false and material or that the omission be of a material fact necessary to make true the statement made. Treider v. Doherty & Co., 1974-NMCA-109, 86 N.M. 735, 527 P.2d 498, cert. denied, 86 N.M. 730, 527 P.2d 493 (decided under former law).
Under the former law, embodied in Section 58-13-39A NMSA 1978, defendants need not have had specific intent to defraud purchasers in order to be guilty of securities fraud. State v. Shade, 1986-NMCA-072, 104 N.M. 710, 726 P.2d 864, overruled on other grounds by State v. Olguin, 1994-NMCA-050, 118 N.M. 91, 879 P.2d 92.
Securities fraud is a general intent crime. — Where defendant was charged with one count of fraud over $20,000, one count of conspiracy to commit fraud over $20,000, one count of securities fraud, one count of sale of a security by an unlicensed agent and one count of offer or sale of an unregistered security, and where, at trial, defendant tendered jury instructions that added the term "purposefully" or "willfully" to the instructions for securities fraud, sale of an unregistered security, and sale of a security by an unlicensed agent, and where the district court denied defendant's specific intent jury instructions and provided the jury with a general criminal intent instruction for the securities offenses, the district court did not err in refusing defendant's instructions, because securities fraud, sale of an unregistered security, and sale of a security by an unlicensed agent only require that the state prove a defendant acted with general criminal intent. State v. Hixon, 2023-NMCA-048, cert. denied.
Securities fraud instruction did not amount to fundamental error. — Where defendant was convicted of one count of fraud over $20,000, one count of conspiracy to commit fraud over $20,000, one count of securities fraud, one count of sale of a security by an unlicensed agent and one count of offer or sale of an unregistered security, and where defendant claimed that his conviction for securities fraud was legally insufficient because the jury instruction allowed him to be convicted for his co-defendant's omissions and the jury instruction should require an affirmative fiduciary duty to exist for a defendant to be convicted of securities fraud based upon omissions, defendant's claim was without merit, because this section does not require an affirmative duty to disclose information to commit securities fraud, and defendant's jury was instructed that each charge should be considered separately for each defendant. The jury is presumed to follow the court's limiting instructions. State v. Hixon, 2023-NMCA-048, cert. denied.
Sufficient evidence to prove securities fraud beyond a reasonable doubt. — Where defendant was charged with one count of fraud over $20,000, one count of conspiracy to commit fraud over $20,000, one count of securities fraud, one count of sale of a security by an unlicensed agent and one count of offer or sale of an unregistered security, and where defendant claimed that the state failed to show that he knew he would be compensated from investments, and therefore, substantial evidence did not support his conviction for securities fraud, there was sufficient evidence to support the jury's finding that defendant acted with criminal intent where the state presented evidence that defendant received immediate payments after inducing investment, that defendant likely induced more investments than he originally indicated or admitted, and defendant knew he would be compensated after each investment he found. Moreover, defendant also failed to disclose that he would be compensated if certain victims invested, and he misrepresented his own personal investment and minimum amount required to invest to purposefully increase the victims' investments State v. Hixon, 2023-NMCA-048, cert. denied.
Standard of proof. — Since the term "fraud," as used in this section, is not the equivalent of actual fraud or conscious deceit, the quantum of proof requirements as to actual fraud are not controlling, and the trial court correctly instructed the jury that the standard of proof was by a preponderance of the evidence. Treider v. Doherty & Co., 1974-NMCA-109, 86 N.M. 735, 527 P.2d 498, cert. denied, 86 N.M. 730, 527 P.2d 493 (decided under former law).
Sufficient evidence to establish requisite fraudulent intent. State v. Gardner, 1985-NMCA-084, 103 N.M. 320, 706 P.2d 862, cert. denied, 103 N.M. 287, 705 P.2d 1138 (decided under former law).
By failing to object, defendant waives not requiring jury finding on security's presence. — There was no reversible error where the jury instructions failed to require the jury to make a finding that the essential element of a security was present in the case, and further failed to set forth the legal test of a security for jury deliberation, because defendant failed to object or to tender his own instruction. State v. Shade, 1986-NMCA-072, 104 N.M. 710, 726 P.2d 864, overruled on other grounds by State v. Olguin, 1994-NMCA-050, 118 N.M. 91, 879 P.2d 92 (decided under former law).
False statement that securities sold would be registered. — Defendants violated the New Mexico Securities Act in making a false statement to plaintiff that securities sold to plaintiff would be registered, when in fact defendants had no intention of registering plaintiff's stock, and one defendant knew that his representation to that effect was false at the time he made the statement to plaintiff. Stone v. Fossil Oil & Gas, 657 F. Supp. 1449 (D.N.M. 1987) (decided under former law).
Law reviews. — For article, "A Survey of the Securities Act of New Mexico," see 2 N.M.L. Rev. 1 (1972).
For article, "The Use (or Abuse) of the Limited Partnership in Financing Real Estate Ventures in New Mexico," see 3 N.M.L. Rev. 251 (1973).
For comment, "Securities: Private Placements in New Mexico," see 7 N.M.L. Rev. 105 (1976-77).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 69A Am. Jur. 2d Securities Regulations - State § 193 et seq.
Corporate insiders nondisclosure of information to seller or purchaser of corporation's stock as manipulative or deceptive device prohibited by § 10(b) of the Securities Exchange Act of 1934 (15 U.S.C., § 78j(b)), 22 A.L.R.3d 793.
When is it unnecessary to show direct reliance on misrepresentation or omission in civil securities fraud action under § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240.10b, § 240.10b-5), 93 A.L.R. Fed. 444.
Who may be liable in actions under § 12(2) of Securities Act of 1933 (15 USCS § 77l(2)), on basis of false or misleading statement in prospectus or oral communication, 106 A.L.R. Fed. 753.
