<section article="gca" article_name="Corporations and Associations" number="11-101" title_number="11" title_name="Maryland Securities Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>In this title, unless the context requires otherwise, the following words have the meanings indicated.</text> </level> <level label="b"> <level label="1"> <text>“Agent” means an individual other than a broker–dealer who represents a broker–dealer or issuer in effecting or attempting to effect the purchase or sale of securities.</text> </level> <level label="2"> <text>“Agent” includes a partner, officer, or director of a broker–dealer or issuer, or a person occupying a similar status or performing similar functions, only if the person otherwise comes within this definition.</text> </level> <level label="3"> <text>“Agent” does not include an individual who represents:</text> <level label="i"> <text>An issuer in:</text> <level label="1"> <text>Effecting a transaction in a security exempted by § 11–601(1), (2), (3), (9)(i), (10), (11), or (14)(i) of this title;</text> </level> <level label="2"> <text>Effecting a transaction exempted by § 11–602 of this title;</text> </level> <level label="3"> <text>Effecting a transaction with an existing employee, partner, or director of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting a person in this State; or</text> </level> <level label="4"> <text>Effecting a transaction in a federal covered security under § 18(b)(3) or § 18(b)(4)(F) of the Securities Act of 1933 if no commission or other remuneration is paid or given directly or indirectly for soliciting a person in this State; or</text> </level> </level> <level label="ii"> <text>A broker–dealer in effecting a transaction described in § 15(h)(2) of the Securities Exchange Act of 1934.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>“Broker–dealer” means a person engaged in the business of effecting transactions in securities for the account of others or for his own account.</text> </level> <level label="2"> <text>“Broker–dealer” does not include:</text> <level label="i"> <text>An agent;</text> </level> <level label="ii"> <text>An issuer;</text> </level> <level label="iii"> <text>A bank, savings institution, or trust company; or</text> </level> <level label="iv"> <text>A person who has no place of business in this State if:</text> <level label="1"> <text>He effects transactions in this State exclusively with or through the issuer of the securities involved in the transactions, another broker–dealer, or a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit–sharing trust, or other financial institution or institutional buyer, whether acting for itself or as trustee; or</text> </level> <level label="2"> <text>During any period of 12 consecutive months, he does not direct more than 15 offers to sell or buy into the State in any manner, other than to the persons specified in paragraph (2)(iv)1 of this subsection, whether or not the offeror or any offeree is then present in the State.</text> </level> </level> </level> </level> <level label="d"> <text>“Commissioner” means the Securities Commissioner of the Division of Securities.</text> </level> <level label="e"> <text>“Federal covered adviser” means a person who is registered under § 203 of the Investment Advisers Act of 1940.</text> </level> <level label="f"> <text>“Federal covered security” means a covered security under § 18(b) of the Securities Act of 1933.</text> </level> <level label="g"> <text>“Federal exempt broker–dealer” means a person who would qualify for the exemption from registration as a broker or dealer under § 4(c) of the Securities Act of 1933.</text> </level> <level label="h"> <text>“Guaranteed” means guaranteed as to payment of principal, interest, or dividends.</text> </level> <level label="i"> <level label="1"> <text>“Investment adviser” means a person who, for compensation:</text> <level label="i"> <text>Engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities; or</text> </level> <level label="ii"> <level label="1"> <text>Provides or offers to provide, directly or indirectly, financial and investment counseling or advice, on a group or individual basis;</text> </level> <level label="2"> <text>Gathers information relating to investments, establishes financial goals and objectives, processes and analyzes the information gathered, and recommends a financial plan; or</text> </level> <level label="3"> <text>Holds out as an investment adviser in any way, including indicating by advertisement, card, or letterhead, or in any other manner indicates that the person is, a financial or investment “planner”, “counselor”, “consultant”, or any other similar type of adviser or consultant.</text> </level> </level> </level> <level label="2"> <text>“Investment adviser” does not include:</text> <level label="i"> <text>An investment adviser representative;</text> </level> <level label="ii"> <text>A bank, savings institution, or trust company;</text> </level> <level label="iii"> <text>A lawyer, certified public accountant, engineer, insurance producer, or teacher whose performance of investment advisory services is solely incidental to the practice of the profession, provided that the performance of such services is not solely incidental unless:</text> <level label="1"> <text>The investment advisory services rendered are connected with and reasonably related to the other professional services rendered;</text> </level> <level label="2"> <text>The fee charged for the investment advisory services is based on the same factors as those used to determine the fee for other professional services; and</text> </level> <level label="3"> <text>The lawyer, certified public accountant, engineer, insurance producer, or teacher does not hold out as an investment adviser;</text> </level> </level> <level label="iv"> <text>A broker–dealer or its agent whose performance of these services is solely incidental to the conduct of business as a broker–dealer and who receives no special compensation for them;</text> </level> <level label="v"> <text>A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service, whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;</text> </level> <level label="vi"> <text>A federal covered adviser; or</text> </level> <level label="vii"> <text>Any other person not within the intent of this subsection as the Commissioner by rule or order designates.</text> </level> </level> </level> <level label="j"> <level label="1"> <text>“Investment adviser representative” or “representative” means any partner, officer, director of (or a person occupying a similar status or performing similar functions) or other individual who is employed by or associated with an investment adviser, or who has a place of business located in this State and is employed by or associated with a federal covered adviser, and who:</text> <level label="i"> <text>Makes any recommendations or otherwise renders investment advice to clients;</text> </level> <level label="ii"> <text>Represents an investment adviser in rendering the services described under subsection (h)(1) of this section;</text> </level> <level label="iii"> <text>Manages accounts or portfolios of clients;</text> </level> <level label="iv"> <text>Determines which recommendation or investment advice should be given with respect to a particular client account;</text> </level> <level label="v"> <text>Solicits, offers or negotiates for the sale of or sells investment advisory services;</text> </level> <level label="vi"> <text>Directly supervises employees who perform any of the foregoing; or</text> </level> <level label="vii"> <text>Holds out as an investment adviser.</text> </level> </level> <level label="2"> <text>“Investment adviser representative” or “representative” does not include:</text> <level label="i"> <text>Any other person not within the intent of this subsection as the Commissioner designates by rule or order; or</text> </level> <level label="ii"> <text>Clerical or ministerial personnel.</text> </level> </level> </level> <level label="k"> <text>“Investment Company Act of 1940” and “Investment Advisers Act of 1940” mean the federal statutes of those names, as amended.</text> </level> <level label="l"> <text>“Issuer” means any person who issues or proposes to issue a security, except that:</text> <level label="1"> <text>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 term “issuer” means the person performing the acts and assuming the duties of depositor or manager under the provisions of the trust or other agreement or instrument under which the security is issued; and</text> </level> <level label="2"> <text>With respect to certificates of interest or participation in oil, gas, or mining titles or leases or in payments out of production under the titles or leases, there is not considered to be any “issuer”.</text> </level> </level> <level label="m"> <text>“Nonissuer distribution” and “nonissuer transaction” mean a distribution or transaction, as the case may be, not directly or indirectly for the benefit of the issuer.</text> </level> <level label="n"> <text>“Offer” or “offer to sell”, except as provided in § 11–102(a) of this subtitle, includes every attempt or offer to dispose of or solicitation of an offer to buy, a security or interest in a security for value.</text> </level> <level label="o"> <text>“Person” means an individual, a corporation, a partnership, an association, a joint–stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government.</text> </level> <level label="p"> <text>“Public Utility Holding Company Act of 1935” means the federal statute of that name, as amended.</text> </level> <level label="q"> <text>“Sale” or “sell”, except as provided in § 11–102(a) of this subtitle, includes every contract of sale of, contract to sell, or disposition of a security or interest in a security for value.</text> </level> <level label="r"> <text>“Securities Act of 1933” and “Securities Exchange Act of 1934” mean the federal statutes of those names, as amended.</text> </level> <level label="s"> <level label="1"> <text>“Security” means any:</text> <level label="i"> <text>Note;</text> </level> <level label="ii"> <text>Stock;</text> </level> <level label="iii"> <text>Treasury stock;</text> </level> <level label="iv"> <text>Bond;</text> </level> <level label="v"> <text>Debenture;</text> </level> <level label="vi"> <text>Evidence of indebtedness;</text> </level> <level label="vii"> <text>Certificate of interest or participation in any profit–sharing agreement;</text> </level> <level label="viii"> <text>Collateral–trust certificate;</text> </level> <level label="ix"> <text>Preorganization certificate or subscription;</text> </level> <level label="x"> <text>Transferable share;</text> </level> <level label="xi"> <text>Investment contract;</text> </level> <level label="xii"> <text>Voting–trust certificate;</text> </level> <level label="xiii"> <text>Certificate of deposit for a security;</text> </level> <level label="xiv"> <text>Certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under the title or lease;</text> </level> <level label="xv"> <text>In general, any interest or instrument commonly known as a “security”; or</text> </level> <level label="xvi"> <text>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 preceding.</text> </level> </level> <level label="2"> <text>“Security” does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum, periodically for life, or some other specified period.</text> </level> </level> <level label="t"> <text>“State” means any state, territory, or possession of the United States, the District of Columbia, and Puerto Rico.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-102" title_number="11" title_name="Maryland Securities Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>The terms “offer”, “offer to sell”, “sale”, and “sell”, as defined in § 11–101(n) and (q) of this subtitle, do not include:</text> <level label="1"> <text>Any bona fide pledge or loan;</text> </level> <level label="2"> <text>Any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash, property, or stock;</text> </level> <level label="3"> <text>Any act incident to a class vote by stockholders, under the certificate of incorporation or the applicable corporation statute, on a merger, consolidation, split–up, spin–off, share exchange, reclassification of securities, or transfer of corporate assets in consideration of the issuance, in whole or in part, of securities of another corporation;</text> </level> <level label="4"> <text>Any act incident to a judicially approved reorganization in which a security is issued:</text> <level label="i"> <text>In exchange for one or more outstanding securities, claims, or property interests; or</text> </level> <level label="ii"> <text>Partly in such exchange and partly for cash; or</text> </level> </level> <level label="5"> <text>Any act as to which the Commissioner by rule or order finds that:</text> <level label="i"> <text>Application of § 11–101(n) and (q) of this subtitle is not necessary or appropriate for the protection of investors; and</text> </level> <level label="ii"> <text>The finding is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </level> </level> <level label="b"> <text>As used in this title, “fraud”, “deceit”, and “defraud” are not limited to common–law deceit.</text> </level> <level label="c"> <text>Any security given or delivered with or as a bonus on account of any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.</text> </level> <level label="d"> <text>A purported gift of assessable stock is considered to involve an offer and sale.</text> </level> <level label="e"> <text>Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and 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.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-103" title_number="11" title_name="Maryland Securities Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <text>In accordance with § 6 of the federal Philanthropy Protection Act of 1995, the federal Philanthropy Protection Act of 1995 does not preempt the laws of this State.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-201" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <text>There is a Division of Securities in the Office of the Attorney General. The Division shall administer this title.</text> </level> <level label="b"> <level label="1"> <text>The principal executive officer of the Division of Securities shall be the Securities Commissioner to be appointed by the Attorney General, who also shall have the power to employ those officers and employees necessary to carry out the purposes of this title.</text> </level> <level label="2"> <text>The Securities Commissioner shall be a practicing lawyer of this State in good standing, shall hold his office at the pleasure of the Attorney General, and shall receive the salary provided in the State budget.</text> </level> </level> <level label="c"> <text>The Attorney General also shall appoint an assistant securities commissioner who, after appointment, shall hold that position subject generally to the provisions of Division I of the State Personnel and Pensions Article. If a vacancy occurs in the position of assistant securities commissioner, the vacancy shall be filled by a person appointed by the Attorney General subject to the provisions of Division I of the State Personnel and Pensions Article. Each person appointed shall hold his position subject generally to those provisions.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-203" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <level label="1"> <text>The Commissioner from time to time may make, amend, and rescind the rules, forms, and orders necessary to carry out the provisions of this title, including rules and forms governing registration statements, notice filings, applications, and reports and defining any terms, whether or not used in this title, to the extent that the definitions are not inconsistent with the provisions of this title.</text> </level> <level label="2"> <text>The Commissioner may by rule classify securities, persons, and matters within his jurisdiction, and prescribe different requirements for different classes.</text> </level> </level> <level label="b"> <level label="1"> <text>A rule, form, or order may not be made, amended, or rescinded unless the Commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this title.</text> </level> <level label="2"> <text>In prescribing rules and forms the Commissioner may cooperate with the securities administrators of the other states and the Securities and Exchange Commission with a view to effectuating the policy of this statute to achieve maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable.</text> </level> </level> <level label="c"> <level label="1"> <text>The Commissioner by rule or order may prescribe:</text> <level label="i"> <text>The form and content of financial statements required under this title;</text> </level> <level label="ii"> <text>The circumstances under which consolidated financial statements shall be filed; and</text> </level> <level label="iii"> <text>Whether any required financial statements shall be certified by independent certified public accountants.</text> </level> </level> <level label="2"> <text>All financial statements shall be prepared in accordance with generally accepted accounting practices.</text> </level> </level> <level label="d"> <text>All rules and forms of the Commissioner shall be published.</text> </level> <level label="e"> <text>A provision of this title imposing any liability does not apply to any act done or omitted in good faith in conformity with any rule, form, or order of the Commissioner, notwithstanding that the rule, form, or order may later be amended, rescinded, or determined by judicial or other authority to be invalid for any reason.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-204" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <text>Every hearing in an administrative proceeding shall be public unless the Commissioner in his discretion grants a request joined in by all the respondents that the hearing be conducted privately.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-205" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <text>The Commissioner by rule or order may require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication, whether communicated in hard copy, electronic means, or otherwise, addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser, unless the security or transaction is exempted by Subtitle 6 of this title or the security is a federal covered security or the transaction is with respect to a federal covered security.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-206" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <text>A document is filed when it is received by the Commissioner.</text> </level> <level label="b"> <level label="1"> <text>The Commissioner shall keep a register of every application for registration, every notice filing, and every registration statement which is or has ever been effective under this title and every denial, suspension, or revocation order which is entered under this title.</text> </level> <level label="2"> <text>The register shall be open for public inspection.</text> </level> </level> <level label="c"> <text>The information contained in or filed with any registration statement, application, notice filing, or report may be made available to the public under the rules which the Commissioner prescribes.</text> </level> <level label="d"> <level label="1"> <text>On request and at the reasonable charges which he prescribes, the Commissioner shall furnish to any person photostatic or other copies, certified under his seal of office if requested, of any entry in the register or any document which is a matter of public record.</text> </level> <level label="2"> <text>In any proceeding or prosecution under this title, any copy so certified is prima facie evidence of the contents of the entry or document certified.</text> </level> </level> <level label="e"> <text>The Commissioner may honor requests from interested persons for interpretative opinions. The fee for issuance of an interpretative opinion is $100.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-207" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <text>It is unlawful for the Commissioner or any of the officers or employees in the Division of Securities to use for personal benefit any information which is filed with or obtained by the Commissioner and which is not made public.</text> </level> <level label="b"> <text>No provision of this title authorizes the Commissioner or any of his officers or employees to disclose any such information except among themselves or when necessary or appropriate in a proceeding or investigation under this title.</text> </level> <level label="c"> <text>No provision of this title either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the Commissioner or any of his officers or employees.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-208" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <text>In this section, “Fund” means the Securities Act Registration Fund.</text> </level> <level label="b"> <text>There is a Securities Act Registration Fund.</text> </level> <level label="c"> <text>The purpose of the Fund is to help fund the direct and indirect costs of administering and enforcing the Maryland Securities Act.</text> </level> <level label="d"> <text>The Commissioner shall administer the Fund.</text> </level> <level label="e"> <level label="1"> <text>The Fund is a special, nonlapsing fund that is not subject to § 7–302 of the State Finance and Procurement Article.</text> </level> <level label="2"> <text>The State Treasurer shall hold the Fund separately, and the Comptroller shall account for the Fund.</text> </level> </level> <level label="f"> <text>The Fund consists of:</text> <level label="1"> <text>Fees distributed to the Fund under § 11–407(a)(2) of this title;</text> </level> <level label="2"> <text>Money appropriated in the State budget to the Fund; and</text> </level> <level label="3"> <text>Any other money from any other source accepted for the benefit of the Fund.</text> </level> </level> <level label="g"> <text>The Fund may be used to administer and enforce the Maryland Securities Act and to support the general operations of the Maryland Office of the Attorney General.</text> </level> <level label="h"> <level label="1"> <text>The State Treasurer shall invest the money of the Fund in the same manner as other State money may be invested.</text> </level> <level label="2"> <text>Any interest earnings of the Fund shall be credited to the General Fund of the State.</text> </level> </level> <level label="i"> <text>Expenditures from the Fund may be made only in accordance with the State budget.</text> </level> <level label="j"> <text>Money expended from the Fund used to administer and enforce the Maryland Securities Act is supplemental to and is not intended to take the place of funding that otherwise would be appropriated to administer and enforce the Maryland Securities Act.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-209" title_number="11" title_name="Maryland Securities Act" subtitle_number="2" subtitle_name="Division of Securities"> <level label="a"> <text>The Commissioner may:</text> <level label="1"> <level label="i"> <text>Bring a civil action for damages against a person that violates § 8–801 of the Criminal Law Article on behalf of a victim of the violation or, if the victim is deceased, the victim’s estate;</text> </level> </level> <level label="ii"> <text>Recover damages under this subsection for property loss or damage; and</text> </level> <level label="iii"> <text>If the Commissioner prevails in an action brought under this paragraph, recover the costs of the action for the use of the Office of the Attorney General; and</text> </level> <level label="2"> <level label="i"> <text>Bring a civil action for damages on behalf of a susceptible adult or older adult who is authorized to bring a cause of action under § 13–603 of the Estates and Trusts Article; and</text> </level> <level label="ii"> <text>If the Commissioner prevails in an action brought under this paragraph, recover the costs of the action for the use of the Office of the Attorney General.</text> </level> </level> </level> <level label="b"> <text>A conviction for a violation of § 8–801 of the Criminal Law Article is not a prerequisite for maintenance of an action under subsection (a) of this section.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-301" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <text>It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly to:</text> <level label="1"> <text>Employ any device, scheme, or artifice to defraud;</text> </level> <level label="2"> <text>Make any 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</text> </level> <level label="3"> <text>Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on any person.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-302" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <level label="a"> <text>It is unlawful for any person who receives, directly or indirectly, any consideration from another person for advising the other person as to the value of securities or their purchase or sale, or for acting as an investment adviser or representative under § 11–101(i) and (j) of this title, whether through the issuance of analyses, reports, or otherwise, to:</text> <level label="1"> <text>Employ any device, scheme, or artifice to defraud the other person;</text> </level> <level label="2"> <text>Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on the other person;</text> </level> <level label="3"> <text>Engage in dishonest or unethical practices; or</text> </level> <level label="4"> <text>When acting as principal for the person’s own account knowingly sell any security to or purchase any security from a client, or when acting in an agency capacity for a person other than such client knowingly effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which the person is acting and obtaining the consent of the client to such transaction.</text> </level> </level> <level label="b"> <text>The prohibitions of subsection (a)(4) of this section do not apply to any transaction with a customer of a broker-dealer if the broker-dealer is not acting as an investment adviser in relation to the transaction or to transactions by a federal covered adviser who is otherwise subject to the limitations on principal trades under the federal securities laws.</text> </level> <level label="c"> <text>In the solicitation of or in dealings with advisory clients, it is unlawful for any person willfully to make any untrue statement of a material fact, or omit 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.</text> </level> <level label="d"> <level label="1"> <text>The Commissioner by rule or order may require that certain information be furnished or disseminated by investment advisers as appropriate in the public interest or for the protection of investors and advisory clients.</text> </level> <level label="2"> <text>To the extent determined by the Commissioner in the Commissioner’s discretion, information furnished to clients or prospective clients of an investment adviser that would be in compliance with the disclosure requirements of the Investment Advisers Act of 1940 and the rules thereunder may be used in whole or partial satisfaction of this requirement.</text> </level> </level> <level label="e"> <level label="1"> <text>Except as permitted by rule or order of the Commissioner, it is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract, unless it provides in writing that:</text> <level label="i"> <text>The investment adviser shall not be compensated on the basis of a share of capital gains on or capital appreciation of the funds or any portion of the funds of the client;</text> </level> <level label="ii"> <text>An assignment of the contract may not be made by the investment adviser without the consent of the other party to the contract; and</text> </level> <level label="iii"> <text>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.</text> </level> </level> <level label="2"> <text>Paragraph (1)(i) of this subsection does not prohibit an investment advisory contract which provides for compensation based on the total value of a fund averaged over a definite period or as of definite dates or taken as of a definite date.</text> </level> <level label="3"> <text>“Assignment”, as used in paragraph (1)(ii) of this subsection, includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor or of controlling block of the assignor’s outstanding voting securities by a security holder of the assignor, but, if the investment adviser is a partnership, an assignment of an investment advisory contract is not considered to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one or more members who, after admission, will be only a minority of the members and will have only a minority interest in the business.</text> </level> </level> <level label="f"> <text>It is unlawful for any investment adviser to take or have custody of any securities or funds of any client if:</text> <level label="1"> <text>The Commissioner by rule prohibits custody; or</text> </level> <level label="2"> <text>In the absence of a rule, the investment adviser fails to notify the Commissioner that he has or may have custody.</text> </level> </level> <level label="g"> <text>The Commissioner by rule or order may adopt exemptions from subsections (a)(4), and (e)(1)(i), (ii), and (iii) of this section, where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-303" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <text>It is unlawful for any person to make or cause to be made, in any document filed with the Commissioner or in any proceeding under this title, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-304" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <level label="a"> <level label="1"> <text>Neither the fact that an application for registration under Subtitle 4 of this title or a registration statement or notice filing under Subtitle 5 of this title has been filed, nor the fact that a person or security is effectively registered constitutes a finding by the Commissioner that any document filed under this title is true, complete, and not misleading.</text> </level> <level label="2"> <text>Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the Commissioner has passed in any way on the merits or qualifications of, or has recommended or given approval to, any person, security, or transaction.</text> </level> </level> <level label="b"> <text>It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with subsection (a) of this section.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-305" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <level label="a"> <text>It is unlawful for any person to use a senior or retiree credential or designation in a way that is or would be misleading in connection with:</text> <level label="1"> <text>The offer, sale, or purchase of securities;</text> </level> <level label="2"> <text>Receiving, directly or indirectly, any consideration from another person for advising the other person as to the value of securities or their purchase or sale; or</text> </level> <level label="3"> <text>Acting as a broker–dealer, agent, investment adviser, or investment adviser representative.</text> </level> </level> <level label="b"> <text>The Commissioner by rule or order shall define what constitutes a misleading use of a senior or retiree credential or designation for purposes of subsection (a) of this section.</text> </level> <level label="c"> <text>A violation of a rule or order adopted under subsection (b) of this section also constitutes a dishonest or unethical practice for purposes of § 11–302(a)(3) of this subtitle and § 11–412(a)(7) of this title.</text> </level> <level label="d"> <text>The Commissioner by rule or order may provide exemptions from subsections (a) and (c) of this section, where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> <level label="e"> <text>This section does not limit any powers of the Commissioner granted under this title.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-306" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <text>A person who engages in the business of effecting transactions in securities for the account of others or for the person’s own account or who acts as a broker–dealer or agent may not engage in dishonest or unethical practices in the securities or investment advisory business.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-307" title_number="11" title_name="Maryland Securities Act" subtitle_number="3" subtitle_name="Fraudulent and Other Prohibited Practices"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Eligible adult” means an individual who resides in the State and is:</text> <level label="i"> <text>At least 65 years old; or</text> </level> <level label="ii"> <text>A vulnerable adult.</text> </level> </level> <level label="3"> <text>“Financial exploitation” means:</text> <level label="i"> <text>The wrongful or unauthorized taking, withholding, appropriation, or use of money, assets, or property of an eligible adult; or</text> </level> <level label="ii"> <text>An act or omission by a person, including through the use of a power of attorney, guardianship, or conservatorship of an eligible adult, to:</text> <level label="1"> <text>Obtain control, through deception, intimidation, or undue influence, over the eligible adult’s money, assets, or property in order to deprive the eligible adult of the ownership, use, benefit, or possession of the money, assets, or property; or</text> </level> <level label="2"> <text>Convert money, assets, or property of the eligible adult in order to deprive the eligible adult of the ownership, use, benefit, or possession of the money, assets, or property.</text> </level> </level> </level> <level label="4"> <text>“Law enforcement agency” means a State, county, or municipal police department, bureau, or agency.</text> </level> <level label="5"> <text>“Local department” has the meaning stated in § 14–101 of the Family Law Article.</text> </level> <level label="6"> <text>“Qualified individual” means an agent, an investment adviser representative, or a person who serves in a supervisory, compliance, or legal capacity for a broker–dealer or an investment adviser.</text> </level> <level label="7"> <text>“Vulnerable adult” has the meaning stated in § 14–101 of the Family Law Article.</text> </level> </level> <level label="b"> <level label="1"> <text>A broker–dealer, an investment adviser, or a qualified individual that reasonably believes that an eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation:</text> <level label="i"> <text>Shall notify:</text> <level label="1"> <text>The Commissioner; and</text> </level> <level label="2"> <text>A local department under § 14–302 of the Family Law Article; and</text> </level> </level> <level label="ii"> <text>May notify a third party designated by the eligible adult and any other third party permitted under State or federal laws or regulations, or the rules of a self–regulatory organization, if the third party is not suspected of financial exploitation, abuse, neglect, or other exploitation of the eligible adult.</text> </level> </level> <level label="2"> <text>The notice required under paragraph (1)(i) of this subsection shall be given:</text> <level label="i"> <text>Within 5 days after the broker–dealer, investment adviser, or qualified individual develops the reasonable belief that the eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation; or</text> </level> <level label="ii"> <text>Immediately on confirmation that the eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation if the confirmation is made before the 5–day period specified in item (i) of this paragraph expires.</text> </level> </level> <level label="3"> <text>This subsection may not be construed to require more than one notification under paragraph (1)(i) of this subsection for each occurrence.</text> </level> </level> <level label="c"> <level label="1"> <text>A broker–dealer or an investment adviser may delay a disbursement from an account of an eligible adult or an account on which an eligible adult is a beneficiary if:</text> <level label="i"> <text>The broker–dealer, the investment adviser, or a qualified individual reasonably believes, after initiating an internal review of the requested disbursement and any suspected financial exploitation, that the requested disbursement may result in the financial exploitation of an eligible adult; and</text> </level> <level label="ii"> <text>The broker–dealer, the investment adviser, or a qualified individual:</text> <level label="1"> <text>Within 2 business days after the requested disbursement:</text> </level> <level label="A"> <text>Subject to paragraph (2) of this subsection, provides written notice of the reason for the delay to all parties authorized to transact business on the account; and</text> </level> <level label="B"> <text>Notifies the Commissioner and the local department under § 14–302 of the Family Law Article; and</text> </level> <level label="2"> <text>Continues an internal review of the suspected financial exploitation of the eligible adult.</text> </level> </level> </level> <level label="2"> <text>The broker–dealer, investment adviser, or qualified individual:</text> <level label="i"> <text>May not provide the written notice required under paragraph (1) of this subsection to a party the broker–dealer, investment adviser, or qualified individual reasonably believes or suspects is engaging in or attempting to engage in the financial exploitation of the eligible adult; and</text> </level> <level label="ii"> <text>Shall provide, on request, a status report of the internal review required under paragraph (1) of this subsection to the Commissioner and the local department.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>A delay of a disbursement authorized under this section shall expire:</text> <level label="i"> <text>On a determination by the broker–dealer or investment adviser that the disbursement will not result in the financial exploitation of the eligible adult; or</text> </level> <level label="ii"> <text>Subject to paragraph (2) of this subsection, 15 business days after the date of the disbursement request.</text> </level> </level> <level label="2"> <level label="i"> <text>The Commissioner or the local department may request the delay of a disbursement for up to 25 business days after the date of the disbursement request.</text> </level> <level label="ii"> <text>If a request is made under this paragraph, the delay shall continue for 25 business days after the date of the disbursement request unless the Commissioner, the local department, or a court of competent jurisdiction enters an order that terminates or extends the delay.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>A broker–dealer, an investment adviser, or a qualified individual that in good faith and exercising reasonable care provides notice under subsection (b) of this section shall have immunity from any administrative or civil liability that might otherwise arise from the notice.</text> </level> <level label="2"> <text>A broker–dealer or an investment adviser that in good faith and exercising reasonable care delays a disbursement under subsection (c) of this section shall have immunity from any administrative or civil liability that might otherwise arise from the delay.</text> </level> </level> <level label="f"> <level label="1"> <text>A broker–dealer or an investment adviser shall provide access to or copies of records that are relevant to the suspected financial exploitation of an eligible adult:</text> <level label="i"> <text>As part of the referral to the Commissioner and a local department under subsection (c) of this section; or</text> </level> <level label="ii"> <text>At the request of the Commissioner, a local department, or a law enforcement agency.</text> </level> </level> <level label="2"> <text>The records under paragraph (1) of this subsection may include historical records and records that relate to the most recent transactions that may demonstrate the financial exploitation of an eligible adult.</text> </level> <level label="3"> <text>A record made available under this subsection is not a public record under Title 4 of the General Provisions Article.</text> </level> <level label="4"> <text>This subsection may not be interpreted to limit the authority of the Commissioner to access or examine the books or records of a broker–dealer or an investment adviser.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-401" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>Except as provided in subsection (d) of this section, a person may not transact business in this State as a broker–dealer or agent unless the person is registered under this subtitle.</text> </level> <level label="b"> <text>A person may not transact business in this State as an investment adviser or as an investment adviser representative unless:</text> <level label="1"> <text>The person is registered as an investment adviser or an investment adviser representative under this subtitle;</text> </level> <level label="2"> <text>The person’s only clients in this State are investment companies as defined in the Investment Company Act of 1940, or insurance companies; or</text> </level> <level label="3"> <text>The person has no place of business in this State, and:</text> <level label="i"> <text>The person’s only clients in this State are investment companies as defined in the Investment Company Act of 1940, other investment advisers, federal covered advisers, broker–dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets of not less than $1,000,000, and governmental agencies or instrumentalities, whether acting for themselves or as trustees or fiduciaries with investment control, or other institutional investors as are designated by rule or order of the Commissioner; or</text> </level> <level label="ii"> <text>During the preceding 12–month period, the person has had no more than five clients who:</text> <level label="1"> <text>Are residents of the State; and</text> </level> <level label="2"> <text>Are not the types of clients described in item (i) of this paragraph.</text> </level> </level> </level> </level> <level label="c"> <text>A federal covered adviser may not conduct advisory business in this State unless the federal covered adviser conducts the advisory business in accordance with § 11-405(b) of this subtitle or subsection (b)(2) or (3) of this section.</text> </level> <level label="d"> <text>A person that transacts business in this State as a federal exempt broker–dealer is not required to register under subsection (a) of this section.</text> </level> <level label="e"> <text>By rule or order, the Commissioner may modify the requirements of this section or exempt any broker–dealer, investment adviser, or federal covered adviser from the requirements of this section if the Commissioner determines that:</text> <level label="1"> <text>Compliance with this section is not necessary or appropriate for the protection of investors; and</text> </level> <level label="2"> <text>The exemption is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-402" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (3) of this subsection, a broker–dealer or issuer may not employ or associate with an agent unless the agent is registered.</text> </level> <level label="2"> <text>Except as provided in paragraph (3) of this subsection, when an agent terminates a connection with a broker–dealer or issuer or terminates those activities which make the individual an agent, the agent and the broker–dealer or issuer shall promptly notify the Commissioner.</text> </level> <level label="3"> <text>This subsection does not apply to a federal exempt broker–dealer.</text> </level> </level> <level label="b"> <level label="1"> <text>An investment adviser required to be registered may not employ or associate with an investment adviser representative unless the representative is registered under this subtitle.</text> </level> <level label="2"> <text>An investment adviser representative who has a place of business located in this State may not transact business on behalf of a federal covered adviser, unless the investment adviser representative is registered or exempt from registration under this subtitle.</text> </level> <level label="3"> <text>The registration of a representative is not effective during any period when the representative is not employed by or associated with:</text> <level label="i"> <text>A registered investment adviser; or</text> </level> <level label="ii"> <text>A federal covered adviser that has filed a notice under § 11-405(b) of this subtitle.</text> </level> </level> <level label="4"> <text>When an investment adviser representative begins or terminates a connection with a registered investment adviser or terminates those activities that make the representative an investment adviser representative, the investment adviser shall promptly notify the Commissioner.</text> </level> <level label="5"> <text>When an investment adviser representative begins or terminates a connection with a federal covered adviser or terminates those activities that make the representative an investment adviser representative, the investment adviser representative shall promptly notify the Commissioner.</text> </level> </level> <level label="c"> <level label="1"> <text>It is unlawful for a broker–dealer or issuer engaged in offering, offering to purchase, purchasing, or selling securities in this State or an investment adviser offering or providing investment advice in this State, directly or indirectly, to employ or associate with an individual who is participating in the securities transaction or investment advice in this State if:</text> <level label="i"> <text>The registration of the individual is suspended or revoked; or</text> </level> <level label="ii"> <text>The individual is barred from employment or association with a broker–dealer, an issuer, an investment adviser, or a federal covered adviser by an order of the Commissioner under this title, the Securities and Exchange Commission, or a self–regulatory organization.</text> </level> </level> <level label="2"> <text>A broker–dealer, an investment adviser, or an issuer may not be considered to have violated this subsection if the broker–dealer, investment adviser, or issuer did not know, and in the exercise of reasonable care could not have known, of the suspension, revocation, or bar.</text> </level> <level label="3"> <text>On request from a broker–dealer, an investment adviser, or an issuer and for good cause, the Commissioner, by order under subsection (d) of this section, may modify or waive, in whole or in part, the prohibitions of this subsection.</text> </level> </level> <level label="d"> <text>By rule or order, the Commissioner may modify the requirements of this section or exempt any broker–dealer, agent, investment adviser, federal covered adviser, or investment adviser representative from the requirements of this section if the Commissioner determines that:</text> <level label="1"> <text>Compliance with this section is not necessary or appropriate for the protection of investors; and</text> </level> <level label="2"> <text>The exemption is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-403" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <text>Unless sooner terminated under other provisions of this title, the registration of each broker-dealer, agent, investment adviser, and investment adviser representative and the notice filing of each federal covered adviser expires December 31, unless renewed.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-404" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <level label="1"> <text>The registration of an agent expires when the agent terminates a connection with a registered broker-dealer or with an issuer.</text> </level> <level label="2"> <text>The registration of an investment adviser representative expires when the representative terminates a connection with:</text> <level label="i"> <text>An investment adviser registered under this subtitle; or</text> </level> <level label="ii"> <text>A federal covered adviser subject to notice filing under § 11-405(b) of this subtitle.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>When a person who is currently registered as an agent under this subtitle begins a connection with another broker-dealer or issuer, the person shall file an application for initial registration as provided in § 11-405 of this subtitle and shall pay the fee required by § 11-407 of this subtitle.</text> </level> <level label="2"> <text>When a person who is currently registered as an investment adviser representative under this subtitle begins a connection with another investment adviser or federal covered adviser, the person shall file an application for initial registration as provided in § 11-405 of this subtitle and pay the fee required by § 11-407 of this subtitle.</text> </level> </level> <level label="c"> <text>Unless the Commissioner takes action under §§ 11-412 through 11-414 of this subtitle to deny or suspend the registration, the agent or investment adviser representative registration shall become effective 30 days after receipt of the application by the Commissioner and shall continue in effect until it expires under the provisions of § 11-403 of this subtitle or under the provisions of this section, whichever would occur earlier. The Commissioner may waive the 30-day period or any portion of it at the Commissioner’s discretion.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-405" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>A broker-dealer, agent, investment adviser, or investment adviser representative may obtain an initial registration by filing with the Commissioner, or any entity the Commissioner designates by rule or order, an application together with a consent to service of process under § 11-802(a) of this title. The application shall contain whatever information the Commissioner by rule or order requires.</text> </level> <level label="b"> <level label="1"> <text>This subsection does not apply to a federal covered adviser who conducts advisory business in accordance with § 11-401(b)(2) or (3) of this subtitle.</text> </level> <level label="2"> <text>Before acting as a federal covered adviser in this State, a person shall pay the fee required by § 11-407 of this subtitle and shall file the following documents as the Commissioner may require by rule or order:</text> <level label="i"> <text>The documents that the person filed with the Securities and Exchange Commission; and</text> </level> <level label="ii"> <text>A consent to service of process under § 11-802(a) of this title.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>For purposes of this subsection, “private fund adviser” means an investment adviser that provides advice solely to one or more qualifying private funds, as defined in Securities and Exchange Commission Rule 203(m)–1 (17 C.F.R. 275.203(m)–1).</text> </level> <level label="2"> <text>Before acting as a private fund adviser, a person who is not a federal covered adviser shall pay the fee required under § 11–407 of this subtitle and shall file the following documents as the Commissioner may require by rule or order:</text> <level label="i"> <text>The documents that the person filed with the Securities and Exchange Commission; and</text> </level> <level label="ii"> <text>A consent to service of process under § 11–802(a) of this title.</text> </level> </level> </level> <level label="d"> <text>Notwithstanding the provisions of subsection (a) of this section, a registered broker–dealer who is also a registered investment adviser in this State may effect the initial registration of any or all of its registered agents in this State as investment adviser representatives by the filing of:</text> <level label="1"> <text>A notice with the Commissioner designating the registered agents as representatives of the investment adviser;</text> </level> <level label="2"> <text>A consent to service of process under § 11–802(a) of this title; and</text> </level> <level label="3"> <text>Such other information as the Commissioner by rule or order may require.</text> </level> </level> <level label="e"> <text>Notwithstanding the provisions of subsection (a) of this section, a registered broker–dealer who is also a federal covered adviser that has filed a notice under subsection (b) of this section may effect the initial registration of its registered agents with a place of business in this State as investment adviser representatives by the filing of:</text> <level label="1"> <text>A notice with the Commissioner designating the registered agents as representatives of the federal covered adviser;</text> </level> <level label="2"> <text>A consent to service of process under § 11–802(a) of this title; and</text> </level> <level label="3"> <text>Such other information as the Commissioner by rule or order may require.</text> </level> </level> <level label="f"> <text>The Commissioner in the Commissioner’s discretion may publish an announcement of the applicants for registration in the media the Commissioner determines.</text> </level> <level label="g"> <text>If a denial order is not in effect and a proceeding is not pending under §§ 11–412 through 11–414 of this subtitle, registration becomes effective at noon of the 30th day after an application is filed. The Commissioner by rule or order may specify an earlier effective date, and the Commissioner by order may defer the effective date until noon of the 30th day after the filing of any amendment.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-406" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>A broker-dealer or investment adviser may obtain a renewal registration by filing with the Commissioner or any entity the Commissioner designates by rule or order an application containing whatever information the Commissioner by rule requires to keep current the information contained in the application for initial registration.</text> </level> <level label="b"> <text>A broker-dealer or issuer may obtain a renewal registration for the agents associated with it by filing with the Commissioner or any entity the Commissioner designates by rule or order an application containing the names of the agents associated with it and a certification that, to the best knowledge, information, and belief of the broker-dealer or issuer:</text> <level label="1"> <text>There has been no change in the information contained in the agents’ applications for the registration then currently in effect; or</text> </level> <level label="2"> <text>If there has been any such change, specifying the change.</text> </level> </level> <level label="c"> <text>A federal covered adviser who has filed a notice under § 11-405(b) of this subtitle or an investment adviser may obtain a renewal registration for the investment adviser representatives associated with it by filing with the Commissioner or any entity the Commissioner designates by rule or order an application containing the names of the representatives associated with it and a certification that, to the best knowledge, information, and belief of the federal covered adviser or the investment adviser:</text> <level label="1"> <text>There has been no change in the information contained in the investment adviser representatives’ applications for the registration currently in effect; or</text> </level> <level label="2"> <text>If there has been any such change, specifying the change.</text> </level> </level> <level label="d"> <text>An application for renewal registration is effective on receipt by the Commissioner of the proper application and fee or on the expiration of the previous registration, whichever date is later.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-407" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <level label="1"> <text>An applicant for initial or renewal registration as a broker–dealer shall pay a fee of $250.</text> </level> <level label="2"> <level label="i"> <text>An applicant for initial or renewal registration or transfer of registration as an agent shall pay a fee of $65.</text> </level> <level label="ii"> <text>From the fee paid under this paragraph, $25 shall be distributed to the Securities Act Registration Fund established under § 11–208 of this title.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>An applicant for initial or renewal registration as an investment adviser shall pay a fee of $300.</text> </level> <level label="2"> <text>A federal covered adviser filing notice under § 11–405(b) of this subtitle shall pay an initial fee of $300 and a renewal fee of $300.</text> </level> <level label="3"> <text>A private fund adviser filing notice under § 11–405(c) of this subtitle shall pay an initial fee of $300 and a renewal fee of $300.</text> </level> <level label="4"> <text>An applicant for initial or renewal registration or transfer of registration as an investment adviser representative shall pay a fee of $50.</text> </level> </level> <level label="c"> <text>The Commissioner by rule may waive or reduce for any class of applicant the application of the fee requirements set forth in subsection (b) of this section.</text> </level> <level label="d"> <text>If an application is denied or an application or notice filing is withdrawn, the Commissioner shall retain the fee.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-408" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>A registered broker-dealer or investment adviser may file an application for registration of a successor, whether or not the successor is then in existence, for the unexpired portion of the year. There is no fee.</text> </level> <level label="b"> <text>The registration of a predecessor remains effective as the registration of a successor for 60 days after the succession, if:</text> <level label="1"> <text>A broker-dealer or investment adviser succeeds to and continues the business of a registered broker-dealer or investment adviser; and</text> </level> <level label="2"> <text>The successor files an application for registration within 30 days after the succession.</text> </level> </level> <level label="c"> <text>A federal covered adviser who has filed a notice under § 11-405(b) of this subtitle may file a notice filing of a successor for the unexpired portion of the year, whether or not the successor is in existence at the time of the filing. There is no fee.</text> </level> <level label="d"> <text>The notice filing of a federal covered adviser stands as the notice filing of a successor for 60 days after the succession if:</text> <level label="1"> <text>The federal covered adviser succeeds to and continues the business of a federal covered adviser that has filed a notice under § 11-405(b) of this subtitle; and</text> </level> <level label="2"> <text>The successor files a notice filing within 30 days after the succession.</text> </level> </level> <level label="e"> <level label="1"> <text>Each registered agent of a broker-dealer and each registered representative of an investment adviser whose successor is registered in accordance with subsection (a) or (b) of this section shall continue to be registered in accordance with rules that the Commissioner adopts.</text> </level> <level label="2"> <text>A registered investment adviser representative of a federal covered adviser whose successor has filed in accordance with subsection (d) of this section shall continue to be registered in accordance with rules that the Commissioner adopts.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-409" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>The Commissioner may require by rule or order:</text> <level label="1"> <text>A minimum capital for a registered broker-dealer, subject to the limitations of § 15 of the Securities Exchange Act of 1934; and</text> </level> <level label="2"> <text>Minimum financial requirements for an investment adviser, subject to the limitations of § 222 of the Investment Advisers Act of 1940.</text> </level> </level> <level label="b"> <text>These financial requirements may include different requirements for those investment advisers who maintain custody of clients’ funds or securities, or who require payment more than 6 months in advance of fees in excess of $500, and those investment advisers who do not.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-410" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <level label="1"> <text>The Commissioner may require by rule or order a registered broker-dealer or agent to post a bond or deposit cash or any other equivalent form of security in amounts that the Commissioner may require.</text> </level> <level label="2"> <text>The Commissioner’s authority to adopt rules or issue orders under paragraph (1) of this subsection is subject to the limitations of § 15 of the Securities Exchange Act of 1934.</text> </level> <level label="3"> <text>The Commissioner may require by rule or order a registered investment adviser or representative who has custody of client funds or securities or requires payments of more than 6 months in advance of fees in excess of $500 to post a bond or deposit cash or any other equivalent form of security in amounts that the Commissioner requires.</text> </level> <level label="4"> <text>The Commissioner’s authority to adopt rules or issue orders under paragraph (3) of this subsection is subject to the limitations of § 222 of the Investment Advisers Act of 1940.</text> </level> </level> <level label="b"> <text>The condition of such bond or equivalent form of security shall be that the registrant will comply with the provisions of this title and the rules and regulations issued under this title.</text> </level> <level label="c"> <text>The bond or equivalent form of security may be drawn to cover the original registration and any renewals of the registration.</text> </level> <level label="d"> <text>Every bond or equivalent form of security shall provide that:</text> <level label="1"> <text>A suit may not be maintained to enforce any liability on the bond or equivalent form of security unless brought within two years after the contract of sale or other act on which the suit is based; and</text> </level> <level label="2"> <text>The liability of the surety on each bond or equivalent form of security to all persons aggrieved may not in any event exceed in the aggregate the penal sum of the bond.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-411" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <level label="1"> <text>A registered broker-dealer shall make and keep correspondence, memoranda, papers, books, and other records that the Commissioner requires by rule.</text> </level> <level label="2"> <text>The Commissioner’s authority to adopt rules under paragraph (1) of this subsection is subject to the limitations of § 15 of the Securities Exchange Act of 1934.</text> </level> <level label="3"> <text>A registered investment adviser shall make, keep, and preserve accounts, correspondence, memoranda, papers, books, and other records that the Commissioner requires by rule.</text> </level> <level label="4"> <text>The Commissioner’s authority to adopt rules under paragraph (3) of this subsection is subject to the limitations of § 222 of the Investment Advisers Act of 1940.</text> </level> </level> <level label="b"> <level label="1"> <text>With respect to investment advisers, the Commissioner by rule or order may require that certain information be furnished or disseminated as appropriate in the public interest or for the protection of investors and advisory clients.</text> </level> <level label="2"> <text>To the extent determined by the Commissioner in the Commissioner’s discretion, information furnished to clients or prospective clients of an investment adviser that would be in compliance with the disclosure requirements of the Investment Advisers Act of 1940 and the rules thereunder may be used in whole or partial satisfaction of this requirement.</text> </level> </level> <level label="c"> <level label="1"> <text>A registered broker-dealer shall file financial reports that the Commissioner requires by rule or order.</text> </level> <level label="2"> <text>The Commissioner’s authority to adopt rules under paragraph (1) of this subsection is subject to the limitations of § 15 of the Securities Exchange Act of 1934.</text> </level> <level label="3"> <text>A registered investment adviser shall file the financial reports that the Commissioner requires by rule or order.</text> </level> <level label="4"> <text>The Commissioner’s authority to adopt rules under paragraph (3) of this subsection is subject to the limitations of § 222 of the Investment Advisers Act of 1940.</text> </level> </level> <level label="d"> <text>A registrant shall promptly file a correcting amendment, if:</text> <level label="1"> <text>The information contained in any document filed with the Commissioner is or becomes inaccurate or incomplete in any material respect; and</text> </level> <level label="2"> <text>The registrant has not provided notification of the correction under § 11-402 of this subtitle.</text> </level> </level> <level label="e"> <text>A federal covered adviser shall promptly file a correcting amendment with the Commissioner, if:</text> <level label="1"> <text>The information contained in any document filed with the Commissioner by the federal covered adviser is or becomes inaccurate in any material respect; and</text> </level> <level label="2"> <text>The Securities and Exchange Commission requires the correcting amendment.</text> </level> </level> <level label="f"> <level label="1"> <level label="i"> <text>All the records referred to in subsection (a) of this section are subject at any time or from time to time to the reasonable periodic, special, or other examinations by representatives of the Commissioner, within or without this State, which the Commissioner considers necessary or appropriate in the public interest or for the protection of investors.</text> </level> <level label="ii"> <text>The Commissioner may perform an audit or inspection at any time and without prior notice.</text> </level> <level label="iii"> <text>The Commissioner may copy and remove for audit or inspection copies of all records the Commissioner reasonably considers necessary or appropriate to conduct the audit or inspection.</text> </level> </level> <level label="2"> <text>For the purpose of avoiding unnecessary duplication of examinations, the Commissioner, to the extent the Commissioner considers it practicable in administering this subsection, may cooperate with the securities administrators of other states, the Securities and Exchange Commission, and any national securities exchange or national securities association registered under the Securities Exchange Act of 1934.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-412" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>The Commissioner by order may deny, suspend, or revoke any registration if the Commissioner finds that the order is in the public interest and that the applicant or registrant or, in the case of a broker–dealer or investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker–dealer or investment adviser:</text> <level label="1"> <text>Has filed an application for registration which, as of its effective date or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;</text> </level> <level label="2"> <text>Has willfully violated or willfully failed to comply with any provisions of this title, a predecessor act, or any rule or order under this title or a predecessor act;</text> </level> <level label="3"> <text>Has been convicted, within the last 10 years, of a felony, or of an offense that:</text> <level label="i"> <text>Involves the taking of a false oath, the making of a false report, bribery, perjury, burglary, or attempt or conspiracy to commit any of those offenses;</text> </level> <level label="ii"> <text>Arises out of the conduct of business as, or employment by or association with, a broker–dealer, municipal or government securities broker or dealer, investment adviser, bank, savings institution, trust company, credit union, savings and loan association, insurance company or insurance producer, fiduciary, investment company, accountant, or real estate agent or broker, or any entity or person required to be registered under the Commodity Exchange Act; or</text> </level> <level label="iii"> <text>Involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities, or an attempt or conspiracy to commit any of those offenses;</text> </level> </level> <level label="4"> <text>Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practices involving any aspect of the securities or investment advisory or any other financial services business;</text> </level> <level label="5"> <text>Is the subject of an order of the Commissioner denying, suspending, or revoking registration as a broker–dealer, agent, investment adviser, or investment adviser representative;</text> </level> <level label="6"> <text>Is the subject of an order entered within the past five years by the securities administrator or any other financial services regulator of any state or by the Securities and Exchange Commission denying, suspending, or revoking registration as a broker–dealer, investment adviser, investment adviser representative, or agent or the substantial equivalent of those terms as defined in this title, or any other financial services license or registration, or is the subject of an order by the Commodity Futures Trading Commission denying, suspending, or revoking registration under the Commodity Exchange Act, or is suspended, expelled, or barred from a national securities exchange or national securities association registered under the Securities Exchange Act of 1934 either by action of a national securities exchange or national securities association, the effect of which action has not been stayed by appeal or otherwise, or by order of the Securities and Exchange Commission, or is the subject of a United States post office fraud order, but:</text> <level label="i"> <text>The Commissioner may not institute a revocation or suspension proceeding under this item (6) more than one year from the date of the order or action relied on; and</text> </level> <level label="ii"> <text>The Commissioner may not enter an order under this item (6) on the basis of an order under another state act unless that order was based on facts which would currently constitute a ground for an order under this section;</text> </level> </level> <level label="7"> <text>Has engaged in dishonest or unethical practices in the securities or investment advisory or any other financial services business;</text> </level> <level label="8"> <text>Is insolvent, either in the sense that the person’s liabilities exceed assets or in the sense that the person cannot meet obligations as they mature, but the Commissioner may not enter an order against a broker–dealer or investment adviser under this item (8) without a finding of insolvency as to the broker–dealer or investment adviser;</text> </level> <level label="9"> <text>Is not qualified on the basis of factors such as training, experience, and knowledge of the securities or investment advisory or any other financial services business, except as otherwise provided in subsection (c) of this section;</text> </level> <level label="10"> <text>Has failed reasonably to supervise the broker–dealer’s agents, if the person is a broker–dealer, or the investment adviser’s representatives, if the person is an investment adviser;</text> </level> <level label="11"> <text>Has failed to pay the proper fee, but the Commissioner may enter only a denial order under this item (11), and the Commissioner shall vacate the order when the deficiency is corrected;</text> </level> <level label="12"> <text>Is subject to a request from the Child Support Administration to suspend or revoke a registration based on failure to pay support obligations;</text> </level> <level label="13"> <text>Refuses to allow the Commissioner to conduct or otherwise impedes the Commissioner in conducting an audit or inspection under § 11–411(f) of this subtitle or refuses access to a registrant’s office to conduct an audit or inspection under § 11–411(f) of this subtitle; or</text> </level> <level label="14"> <text>Is the subject of a cease and desist order issued by the Securities and Exchange Commission or issued under the securities, commodities, investment, franchise, banking, finance, or insurance laws of a state.</text> </level> </level> <level label="b"> <level label="1"> <text>In this subsection, “final administrative order” does not include an order that is stayed or subject to further review or appeal.</text> </level> <level label="2"> <text>If an applicant for initial registration discloses the existence of a final judicial or administrative order to the Commissioner before the effective date of the initial registration, the Commissioner may not institute a suspension or revocation proceeding based solely on the judicial or administrative order unless the proceeding is initiated within one year after the effective date of the applicant’s initial registration.</text> </level> </level> <level label="c"> <text>The following provisions govern the application of subsection (a)(9) of this section:</text> <level label="1"> <text>The Commissioner may not enter an order against a broker–dealer on the basis of the lack of qualification of any person other than that broker–dealer if the broker–dealer is an individual, or an agent of the broker–dealer;</text> </level> <level label="2"> <text>The Commissioner may not enter an order against an investment adviser on the basis of the lack of qualification of any person other than that investment adviser if the investment adviser is an individual, or an investment adviser representative of the investment adviser;</text> </level> <level label="3"> <text>The Commissioner may not enter an order solely on the basis of lack of experience if the applicant or registrant is qualified by training or knowledge or both;</text> </level> <level label="4"> <text>The Commissioner shall consider that an agent who will work under the supervision of a registered broker–dealer need not have the same qualifications as a broker–dealer and that an investment adviser representative who will work under the supervision of a registered investment adviser need not have the same qualifications as an investment adviser;</text> </level> <level label="5"> <text>The Commissioner shall consider that an investment adviser is not necessarily qualified solely on the basis of experience as a broker–dealer or agent. When the Commissioner finds that an applicant for initial or renewal registration as a broker–dealer is not qualified as an investment adviser, the Commissioner by order may condition the applicant’s registration as a broker–dealer upon the broker–dealer not transacting business in this State as an investment adviser; and</text> </level> <level label="6"> <text>The Commissioner by rule may provide for an examination, which may be written, oral, or both, to be taken by any class of or all applicants. The Commissioner by rule or order may waive the examination requirement as to a person or class of persons if the Commissioner determines that the examination is not necessary or appropriate in the public interest or for the protection of investors.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-413" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>The Commissioner by order summarily may postpone or suspend registration pending final determination of any proceeding under § 11-412 of this subtitle.</text> </level> <level label="b"> <text>On the entry of the order, the Commissioner promptly shall notify the applicant or registrant, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative:</text> <level label="1"> <text>That it has been entered;</text> </level> <level label="2"> <text>The reasons for its entry; and</text> </level> <level label="3"> <text>That within 15 days after the receipt of a written request the matter will be set down for hearing.</text> </level> </level> <level label="c"> <level label="1"> <text>If a hearing is not requested and one is not ordered by the Commissioner, the order will remain in effect until it is modified or vacated by the Commissioner.</text> </level> <level label="2"> <text>If a hearing is requested or ordered, the Commissioner, after notice and opportunity for hearing, may modify or vacate the order or extend it until final determination.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-414" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>By order, the Commissioner may cancel a registration or application, if the Commissioner finds that the applicant or registrant:</text> <level label="1"> <text>Has abandoned the application;</text> </level> <level label="2"> <text>Is no longer in existence;</text> </level> <level label="3"> <text>Has ceased to do business as a broker-dealer, agent, investment adviser, or investment adviser representative;</text> </level> <level label="4"> <text>Is subject to an adjudication of mental incompetence or the control of a committee, conservator, or guardian; or</text> </level> <level label="5"> <text>Cannot be located after reasonable search.</text> </level> </level> <level label="b"> <text>The Commissioner may deem abandoned a notice filing that a federal covered adviser has filed under § 11-405 of this subtitle, if the Commissioner finds that the federal covered adviser:</text> <level label="1"> <text>Has abandoned the notice filing;</text> </level> <level label="2"> <text>Is no longer in existence;</text> </level> <level label="3"> <text>Has ceased to do business as a federal covered adviser;</text> </level> <level label="4"> <text>Is subject to adjudication of mental incompetence or to the control of a committee, conservator, or guardian; or</text> </level> <level label="5"> <text>Cannot be located after a reasonable search.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-415" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <level label="a"> <text>Withdrawal from registration as a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective 90 days after receipt of an application to withdraw or within any shorter period of time which the Commissioner determines, unless:</text> <level label="1"> <text>A revocation or suspension proceeding is pending when the application is filed; or</text> </level> <level label="2"> <text>A proceeding to revoke, suspend, or impose conditions on the withdrawal is instituted within 90 days after the application is filed.</text> </level> </level> <level label="b"> <text>If a proceeding is pending or instituted, withdrawal becomes effective at the time and on the conditions the Commissioner by order determines.</text> </level> <level label="c"> <text>If no proceeding is pending or instituted and withdrawal automatically becomes effective, the Commissioner nevertheless may institute a revocation or suspension proceeding under § 11-412(a)(2) of this subtitle within 2 years after withdrawal became effective and enter a revocation or suspension order as of the last date on which registration was effective.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-416" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <text>An order may not be entered under any part of §§ 11-412 through 11-415 of this subtitle, except § 11-413(a), without:</text> <level label="1"> <text>Appropriate prior notice to the applicant or registrant, or person submitting a notice filing, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative;</text> </level> <level label="2"> <text>Opportunity for hearing; and</text> </level> <level label="3"> <text>Written findings of fact and conclusions of law.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-417" title_number="11" title_name="Maryland Securities Act" subtitle_number="4" subtitle_name="Requirements of Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers"> <text>On notice and hearing as provided in § 11-416 of this subtitle, the Commissioner may fine any broker-dealer, agent, investment adviser, or investment adviser representative up to a maximum amount of $5,000 for any single violation of this title.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-501" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <text>A person may not offer or sell any security in this State unless:</text> <level label="1"> <text>The security is registered under this title;</text> </level> <level label="2"> <text>The security or transaction is exempted under Subtitle 6 of this title; or</text> </level> <level label="3"> <text>The security is a federal covered security.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-502" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>The following securities may be registered by notification, whether or not they are also eligible for registration by coordination under § 11–503 of this subtitle:</text> <level label="1"> <text>Any security whose issuer and any predecessor have been in continuous operation for at least five years if:</text> <level label="i"> <text>There has been no default during the current fiscal year or within the three preceding fiscal years in the payment of principal, interest, or dividends on any security of the issuer or any predecessor with a fixed maturity or a fixed interest or dividend provision; and</text> </level> <level label="ii"> <text>The issuer and any predecessor during the past three fiscal years have had average net earnings, determined in accordance with generally accepted accounting practices, which:</text> <level label="1"> <text>Are applicable to all securities without a fixed maturity or a fixed interest or dividend provision outstanding at the date the registration statement is filed and equal at least 5 percent of the amount of the outstanding securities, as measured by the maximum offering price or the market price on a day selected by the registrant, within 30 days before the date of filing the registration statement, whichever is higher, or book value on a day, selected by the registrant within 90 days of the date of filing the registration statement, to the extent that there is neither a readily determinable market price nor a cash offering price; or</text> </level> <level label="2"> <text>If the issuer and any predecessor has not had any security of the type specified in paragraph (1)(ii)1 of this subsection outstanding for three full fiscal years, equal at least 5 percent of the amount, as measured in paragraph (1)(ii)1 of this subsection, of all securities which will be outstanding if all the securities being offered or proposed to be offered, whether or not they are proposed to be registered or offered in the State, are issued; and</text> </level> </level> </level> <level label="2"> <text>Any security, other than a certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease, registered for nonissuer distribution if:</text> <level label="i"> <text>Any security of the same class has ever been registered under this title; or</text> </level> <level label="ii"> <text>The security being registered was originally issued pursuant to an exemption under this title.</text> </level> </level> </level> <level label="b"> <text>A registration statement under this section shall contain the following information and be accompanied by the following documents, in addition to the information specified in § 11–507(a) of this subtitle and the consent to service of process required by § 11–802(a) of this title:</text> <level label="1"> <text>A statement demonstrating eligibility for registration by notification;</text> </level> <level label="2"> <text>With respect to the issuer and any significant subsidiary:</text> <level label="i"> <text>Its name, address, and form of organization;</text> </level> <level label="ii"> <text>The state or foreign jurisdiction and the date of its organization; and</text> </level> <level label="iii"> <text>The general character and location of its business;</text> </level> </level> <level label="3"> <text>With respect to any person on whose behalf any part of the offering is to be made in a nonissuer distribution:</text> <level label="i"> <text>His name and address;</text> </level> <level label="ii"> <text>The amount of securities of the issuer held by him as of the date of the filing of the registration statement; and</text> </level> <level label="iii"> <text>A statement of his reasons for making the offering;</text> </level> </level> <level label="4"> <text>A description of the security being registered;</text> </level> <level label="5"> <text>The information and documents specified in § 11–504(b)(2), (4), (7), (8), (9), (10), and (12) of this subtitle;</text> </level> <level label="6"> <text>A balance sheet of the issuer as of a date within four months before the filing of the registration statement;</text> </level> <level label="7"> <text>A summary of earnings:</text> <level label="i"> <text>For each of the two fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet; or</text> </level> <level label="ii"> <text>For the period of existence of the issuer and any predecessor, if less than two years; and</text> </level> </level> <level label="8"> <text>Two copies of the prospectus required by subsection (c) of this section.</text> </level> </level> <level label="c"> <level label="1"> <text>As a condition of registration under this section, a prospectus containing any designated part of the information specified in subsection (b) of this section shall be sent or given to each person to whom an offer is made before or concurrently with the first to occur of:</text> <level label="i"> <text>The first written offer to him, other than by means of a public advertisement, by or for the account of the issuer or any other person on whose behalf the offering is being made, or by any underwriter or broker–dealer who is offering part of an unsold allotment or subscription taken by him as a participant in the distribution;</text> </level> <level label="ii"> <text>The confirmation of any sale made by or for the account of the person;</text> </level> <level label="iii"> <text>Payment under the sale; or</text> </level> <level label="iv"> <text>Delivery of the security under the sale.</text> </level> </level> <level label="2"> <text>Paragraph (1)(i) of this subsection may be satisfied by the use of a preliminary prospectus, so designated and bearing the legend which the Commissioner prescribes, if a final prospectus is sent or given to each recipient of the preliminary prospectus before or concurrently with whichever event in paragraph (1)(ii), (iii), and (iv) first occurs.</text> </level> </level> <level label="d"> <text>If a stop order is not in effect and a proceeding is not pending under §§ 11–511 through 11–513 of this subtitle, a registration statement under this section automatically becomes effective at:</text> <level label="1"> <text>3 o’clock eastern standard time in the afternoon of the 10th full business day after the filing of the registration statement or the last amendment; or</text> </level> <level label="2"> <text>At any earlier time which the Commissioner determines.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-503" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>Any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination.</text> </level> <level label="b"> <text>A registration statement under this section shall contain the following information and be accompanied by the following documents, in addition to the information specified in § 11–507(a) of this subtitle and the consent to service of process required by § 11–802(a) of this title:</text> <level label="1"> <text>Two copies of the latest form of prospectus filed under the Securities Act of 1933;</text> </level> <level label="2"> <text>If the Commissioner by rule or otherwise requires:</text> <level label="i"> <text>A copy of the articles of incorporation and bylaws or their substantial equivalents, as currently in effect;</text> </level> <level label="ii"> <text>A copy of any agreements with or among underwriters;</text> </level> <level label="iii"> <text>A copy of any indenture or other instrument governing the issuance of the security to be registered; and</text> </level> <level label="iv"> <text>A specimen or copy of the security;</text> </level> </level> <level label="3"> <text>If the Commissioner requests, any other information or copies of any other documents filed under the Securities Act of 1933; and</text> </level> <level label="4"> <text>An undertaking to forward all future amendments to the federal prospectus, other than an amendment which merely delays the effective date of the registration statement, promptly and in any event not later than the first business day after the day they are forwarded to or filed with the Securities and Exchange Commission, whichever first occurs.</text> </level> </level> <level label="c"> <level label="1"> <text>A registration statement under this section automatically becomes effective at the moment the federal registration statement becomes effective, if all the following conditions are satisfied:</text> <level label="i"> <text>A stop order is not in effect and a proceeding is not pending under §§ 11–511 through 11–513 of this subtitle;</text> </level> <level label="ii"> <text>The registration statement has been on file with the Commissioner for at least ten business days; and</text> </level> <level label="iii"> <text>A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions has been on file for two full business days or any shorter period which the Commissioner permits by rule or otherwise, and the offering is made within those limitations.</text> </level> </level> <level label="2"> <text>The registrant promptly shall notify the Commissioner in writing, by facsimile transmission, telegram, or by any other means that the Commissioner by rule or order may deem appropriate, of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and promptly shall file a post–effective amendment containing the information and documents in the price amendment.</text> </level> <level label="3"> <text>“Price amendment” means the final federal amendment which includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent on the offering price.</text> </level> <level label="4"> <text>On failure to receive the required notification and post–effective amendment with respect to the price amendment, the Commissioner may enter a stop order without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this subsection, if he promptly notifies the registrant by telephone or telegram, and promptly confirms by letter, facsimile transmission, or telegram when he notifies by telephone, of the issuance of the order. If the registrant proves compliance with the requirements of this subsection as to notice and post–effective amendment, the stop order is void as of the time of its entry.</text> </level> <level label="5"> <text>The Commissioner by rule or otherwise may waive either or both of the conditions specified in paragraphs (1)(ii) and (iii) of this subsection.</text> </level> <level label="6"> <text>If the federal registration statement becomes effective before all the conditions in this subsection are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all the conditions are satisfied. If the registrant advises the Commissioner of the date when the federal registration statement is expected to become effective, the Commissioner promptly shall advise the registrant by telephone, facsimile transmission, or telegram, at the expense of the registrant, whether all the conditions are satisfied and whether he then contemplates the institution of a proceeding under §§ 11–511 through 11–513 of this subtitle, but this advice by the Commissioner does not preclude the institution of the proceeding at any time.</text> </level> </level> <level label="d"> <level label="1"> <text>Any security for which the documents required by any regulation adopted by the Securities and Exchange Commission under § 3(b) or § 3(c) of the Securities Act of 1933 have been filed with the Commission in connection with the same offering may be registered by coordination on compliance with subsections (b) and (c) of this section in the manner the Commissioner by rule or order may prescribe.</text> </level> <level label="2"> <text>For purposes of this subsection, the terms “federal registration statement” and “federal prospectus” include the documents, including the offering circular, if any, which may be filed with the Securities and Exchange Commission in accordance with any such regulation.</text> </level> </level> <level label="e"> <text>The Commissioner by rule or order may waive or modify the application of a requirement of this section if a provision or an amendment, repeal or other alteration of the provisions of the Securities Act of 1933, or the regulations adopted under that act, render the waiver or modification appropriate for further coordination of State and federal law.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-503.1" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>A person may not offer or sell a federal covered security in this State unless the documents required by this section are filed and the fees required by § 11–506 or § 11–510.1 of this subtitle are paid.</text> </level> <level label="b"> <text>With respect to a federal covered security specified in § 18(b)(2) of the Securities Act of 1933, the Commissioner may require, by rule, order, or otherwise, the filing of the following documents:</text> <level label="1"> <text>Before the initial offer of the federal covered security in this State:</text> <level label="i"> <text>A notice in a form that the Commissioner requires or the documents filed with the Securities and Exchange Commission under the Securities Act of 1933;</text> </level> <level label="ii"> <text>A consent to service of process signed by the issuer; and</text> </level> <level label="iii"> <text>The fee required under § 11–510.1 of this subtitle; and</text> </level> </level> <level label="2"> <text>After the initial offer of the federal covered security in this State:</text> <level label="i"> <text>Any document that is part of an amendment filed with the Securities and Exchange Commission under the Securities Act of 1933; and</text> </level> <level label="ii"> <text>As necessary to compute fees, an annual or periodic report of the value of the federal covered securities offered or sold in this State together with any fee required under § 11–510.1(b) and (c) of this subtitle.</text> </level> </level> </level> <level label="c"> <text>With respect to a security that is a federal covered security specified in § 18(b)(3) or (4) of the Securities Act of 1933, the Commissioner may require, by rule, order, or otherwise, the issuer to file:</text> <level label="1"> <text>A consent to service of process signed by the issuer;</text> </level> <level label="2"> <text>The fee required under § 11–506 of this subtitle; and</text> </level> <level label="3"> <text>Any document filed with the Securities and Exchange Commission under the Securities Act of 1933.</text> </level> </level> <level label="d"> <level label="1"> <text>If an issuer fails to timely file the items under subsection (b) or (c) of this section and a stop order has not been issued under subsection (e) of this section, the issuer may satisfy the requirements of subsection (b) or (c) of this section, as applicable, by making a late filing and paying the fees required for a late filing under § 11–506 or § 11–510.1 of this subtitle.</text> </level> <level label="2"> <text>An issuer that makes a late filing in accordance with paragraph (1) of this subsection will terminate any right or liability that accrues based on the failure to satisfy the requirements of subsection (b) or (c) of this section if:</text> <level label="i"> <text>There is no action pending under subsection (e) of this section or any other provision of this title;</text> </level> <level label="ii"> <text>A person with the right has not relied detrimentally on the absence of the filing; and</text> </level> <level label="iii"> <text>The late filing is made within 1 year of the original due date of the filing.</text> </level> </level> </level> <level label="e"> <text>Except for a federal covered security specified in § 18(b)(1) of the Securities Act of 1933, the Commissioner may issue a stop order suspending the offer and sale of a federal covered security, if the Commissioner finds that:</text> <level label="1"> <text>The order is in the public interest; and</text> </level> <level label="2"> <text>There is a failure to comply with any condition established under this section.</text> </level> </level> <level label="f"> <text>The Commissioner may waive, by rule, order, or otherwise, the filing of any document required under this section.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-504" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>Any security may be registered by qualification.</text> </level> <level label="b"> <text>A registration statement under this section shall contain the following information and be accompanied by the following documents, in addition to the information specified in § 11-507(a) of this subtitle and the consent to service of process required by § 11-802(a) of this title:</text> <level label="1"> <text>With respect to the issuer and any significant subsidiary:</text> <level label="i"> <text>Its name, address, and form of organization;</text> </level> <level label="ii"> <text>The state or foreign jurisdiction and date of its organization;</text> </level> <level label="iii"> <text>The general character and location of its business;</text> </level> <level label="iv"> <text>A description of its physical properties and equipment; and</text> </level> <level label="v"> <text>A statement of the general competitive conditions in the industry or business in which it is or will be engaged;</text> </level> </level> <level label="2"> <text>With respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions:</text> <level label="i"> <text>His name, address, and principal occupation for the past five years;</text> </level> <level label="ii"> <text>The amount of securities of the issuer held by him as of a specified date within 30 days of the filing of the registration statement;</text> </level> <level label="iii"> <text>The amount of the securities covered by the registration statement to which he has indicated his intention to subscribe; and</text> </level> <level label="iv"> <text>A description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the past three years or proposed to be effected;</text> </level> </level> <level label="3"> <text>With respect to every person covered by item (2) of this subsection, the remuneration paid during the past 12 months and estimated to be paid during the next 12 months, directly or indirectly, by the issuer, together with every predecessor, parent, subsidiary and affiliate, to all those persons in the aggregate;</text> </level> <level label="4"> <text>With respect to any person owning of record or, if known, beneficially 10 percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in item (2) of this subsection other than his occupation;</text> </level> <level label="5"> <text>With respect to every promoter, if the issuer was organized within the past three years:</text> <level label="i"> <text>The information specified in item (2) of this subsection;</text> </level> <level label="ii"> <text>Any amount paid to him within that period or intended to be paid to him; and</text> </level> <level label="iii"> <text>The consideration for the payment;</text> </level> </level> <level label="6"> <text>With respect to any person on whose behalf any part of the offering is to be made in a nonissuer distribution:</text> <level label="i"> <text>His name and address;</text> </level> <level label="ii"> <text>The amount of securities of the issuer held by him as of the date of the filing of the registration statement;</text> </level> <level label="iii"> <text>A description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the past three years or proposed to be effected; and</text> </level> <level label="iv"> <text>A statement of his reasons for making the offering;</text> </level> </level> <level label="7"> <text>The capitalization and long-term debt, on both a current and a pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding, 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, for which the issuer or any subsidiary has issued any of its securities within the past two years or is obligated to issue any of its securities;</text> </level> <level label="8"> <level label="i"> <text>The kind and amount of securities to be offered;</text> </level> <level label="ii"> <text>The proposed offering price or the method by which it is to be computed;</text> </level> <level label="iii"> <text>Any variation from the price or method at which any proportion of the offering is to be made to any person or class of persons other than the underwriters, with a specification of the person or class;</text> </level> <level label="iv"> <text>The basis on which the offering is to be made if other than for cash;</text> </level> <level label="v"> <text>The estimated aggregate underwriting and selling discounts or commissions and finders’ 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;</text> </level> <level label="vi"> <text>The name and address of every underwriter and every recipient of a finder’s fee;</text> </level> <level label="vii"> <text>A copy of any underwriting or selling-group agreement under which the distribution is to be made, or the proposed form of any agreement whose terms have not yet been determined; and</text> </level> <level label="viii"> <text>A description of the plan of distribution of any securities which are to be offered otherwise than through an underwriter;</text> </level> </level> <level label="9"> <level label="i"> <text>The estimated cash proceeds to be received by the issuer from the offering;</text> </level> <level label="ii"> <text>The purposes for which the proceeds are to be used by the issuer;</text> </level> <level label="iii"> <text>The amount to be used for each purpose;</text> </level> <level label="iv"> <text>The order or priority in which the proceeds will be used for the purposes stated;</text> </level> <level label="v"> <text>The amounts of any funds to be raised from other sources to achieve the purposes stated;</text> </level> <level label="vi"> <text>The names of the funds; and</text> </level> <level label="vii"> <text>If any part of the proceeds is to be used to acquire any property, including goodwill, other than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons who have received commissions in connection with the acquisition, and the amounts of the commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;</text> </level> </level> <level label="10"> <text>A description of any stock options or other security options outstanding or to be created in connection with the offering, together with the amount of the options held or to be held by every person required to be named in items (2), (4), (5), (6), or (8) of this subsection and by any person who holds or will hold 10 percent or more in the aggregate of the options;</text> </level> <level label="11"> <level label="i"> <text>The dates of, parties to, and general effect concisely stated of every management or other material contract made or to be made other than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the past two years, together with a copy of every such contract; and</text> </level> <level label="ii"> <text>A description of any pending litigation or proceeding to which the issuer is a party and which materially affects its business or assets, including any such litigation or proceeding known to be contemplated by governmental authorities;</text> </level> </level> <level label="12"> <text>Two copies of the prospectus required by subsection (d) of this section, together with a copy of any other prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering;</text> </level> <level label="13"> <level label="i"> <text>A specimen or copy of the security being registered;</text> </level> <level label="ii"> <text>A copy of the issuer’s articles of incorporation and bylaws or their substantial equivalents, as currently in effect; and</text> </level> <level label="iii"> <text>A copy of any indenture or other instrument covering the security to be registered;</text> </level> </level> <level label="14"> <text>A signed or conformed copy of an opinion of counsel as to the legality of the security being registered, with an English translation if it is in a foreign language, which shall state whether the security when sold will be legally issued, fully paid and nonassessable, and, if a debt security, a binding obligation of the issuer;</text> </level> <level label="15"> <text>The written consent of any accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by him, if any such person is named as having prepared or certified a report or valuation, other than a public and official document or statement, which is used in connection with the registration statement;</text> </level> <level label="16"> <level label="i"> <text>A balance sheet of the issuer as of a date within four months before the filing of the registration statement;</text> </level> <level label="ii"> <text>A profit and loss statement and analysis of surplus for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet, or for the period of the existence of the issuer and any predecessor if less than three years; and</text> </level> <level label="iii"> <text>If any part of the proceeds of the offering is to be applied to the purchase of any business, the same financial statements which would be required if that business were the registrant; and</text> </level> </level> <level label="17"> <text>Any additional information which the Commissioner requires by rule or order.</text> </level> </level> <level label="c"> <text>A registration statement under this section becomes effective when the Commissioner so orders.</text> </level> <level label="d"> <level label="1"> <text>As a condition of registration under this section, a prospectus containing any designated part of the information specified in subsection (b) of this section shall be sent or given to each person to whom an offer is made before or concurrently with the first to occur of:</text> <level label="i"> <text>The first written offer made to him, other than by means of a public advertisement, by or for the account of the issuer or any other person on whose behalf the offering is being made or by any underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by him as a participant in the distribution;</text> </level> <level label="ii"> <text>The confirmation of any sale made by or for the account of the person;</text> </level> <level label="iii"> <text>Payment under the sale; or</text> </level> <level label="iv"> <text>Delivery of the security under the sale.</text> </level> </level> <level label="2"> <text>Paragraph (1)(i) of this subsection may be satisfied by the use of a preliminary prospectus, so designated and bearing the legend which the Commissioner prescribes, if a final prospectus is sent or given to each recipient of the preliminary prospectus before or concurrently with whichever event in paragraph (1)(ii), (iii), and (iv) first occurs.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-505" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>A registration statement may be filed by the issuer, any other person on whose behalf the offering is to be made, or a registered broker-dealer.</text> </level> <level label="b"> <text>A registration statement may be filed in the manner and form designated by rule or order of the Commissioner, including filing by electronic transmission.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-506" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>Except as provided in § 11–510.1 of this subtitle, a person filing an application to register securities shall pay a fee of 0.1 percent of the maximum aggregate offering price at which the securities are to be offered in this State, but the fee may not be less than $500 or more than $1,500.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a person required to submit a filing in accordance with an exemption granted under this title shall pay a fee of $400 for each filing.</text> </level> <level label="2"> <text>A person required to submit a filing in accordance with the exemption granted under § 11–601(16) of this title shall pay a fee of $100 for each filing.</text> </level> <level label="3"> <text>A person required to submit a notice of the offer or sale of federal covered securities under § 11–503.1(c) of this subtitle shall pay:</text> <level label="i"> <text>A fee of $100 for each filing; and</text> </level> <level label="ii"> <text>An additional fee of $150 for each filing made after the filing due date.</text> </level> </level> </level> <level label="c"> <text>The Commissioner shall retain the fee, if:</text> <level label="1"> <text>An application to register securities is withdrawn before the effective date;</text> </level> <level label="2"> <text>A notice of the offer or sale of a federal covered security is withdrawn; or</text> </level> <level label="3"> <text>A preeffective stop order is entered under §§ 11–511 through 11–513 of this subtitle.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-507" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>Every registration statement shall specify:</text> <level label="1"> <text>The amount of securities to be offered in this State;</text> </level> <level label="2"> <text>The states in which a registration statement or similar document in connection with the offering has been or is to be filed; and</text> </level> <level label="3"> <text>Any adverse order, judgment, or decree entered in connection with the offering by the regulatory authorities in each state, any court, or the Securities and Exchange Commission.</text> </level> </level> <level label="b"> <text>Any document filed under this subtitle may be incorporated by reference in the registration statement to the extent that the document is currently accurate.</text> </level> <level label="c"> <text>The Commissioner by rule or otherwise may permit the omission of any item of information or document from any registration statement.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-508" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>A registration statement remains effective for 1 year after its effective date unless the Commissioner by rule or order extends the period of effectiveness. A registration statement is not effective while a stop order is in effect under §§ 11-511 through 11-513 of this subtitle.</text> </level> <level label="b"> <text>A registration statement may be withdrawn only in the discretion of the Commissioner.</text> </level> <level label="c"> <text>A registration statement that has not been made effective within 1 year from the date of initial filing may be deemed abandoned by the Commissioner.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-509" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <text>As long as a registration statement registered by qualification or notification is effective, the Commissioner by rule or order may require the person who filed the registration statement to file reports, not more often than quarterly, to keep reasonably current the information contained in the registration statement and to disclose the progress of the offering.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-510" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>A registration statement relating to a security registered under § 11-502, § 11-503, or § 11-504 of this subtitle may be amended after its effective date so as to increase the securities specified as proposed to be offered.</text> </level> <level label="b"> <text>The amendment becomes effective when the Commissioner so orders.</text> </level> <level label="c"> <text>The person filing the amendment shall pay a filing fee, calculated in the manner specified in § 11-506 of this subtitle, with respect to the additional securities proposed to be offered.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-510.1" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>A face–amount certificate company, an open–end management company, a closed–end management company that is not a federal covered security under § 18(b)(1) of the Securities Act of 1933, or a unit investment trust, as those terms are defined in the Investment Company Act of 1940, shall comply with the requirements of this section, if the company or trust files:</text> <level label="1"> <text>A notice under § 11–503.1 of this subtitle of the offer or sale in this State of an indefinite amount of federal covered securities specified in § 18(b)(2) of the Securities Act of 1933; or</text> </level> <level label="2"> <text>An application to register under § 11–503 of this subtitle the offer and sale in this State of an indefinite amount of securities.</text> </level> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (3) of this subsection, a face–amount certificate company or an open–end management company, at the time of filing, shall pay an initial fee of $500 and within 60 days after the issuer’s fiscal year end during which its registration statement is effective or notice required by § 11–503.1(b) of this subtitle is filed:</text> <level label="i"> <text>Pay a fee of $1,300; or</text> </level> <level label="ii"> <level label="1"> <text>File a report on a form the Commissioner by rule adopts, reporting all sales of securities to persons within this State during the fiscal year; and</text> </level> <level label="2"> <text>Pay a fee of 0.1 percent of the maximum aggregate offering price at which the securities were sold in this State.</text> </level> </level> </level> <level label="2"> <level label="i"> <text>When calculating the fee in accordance with paragraph (1)(ii)2 of this subsection, the initial fee of $500 shall be deducted from the aggregate fee due.</text> </level> <level label="ii"> <text>Except as provided in paragraph (3) of this subsection and subsection (d) of this section, the aggregate fee due under this paragraph may not exceed $1,500.</text> </level> <level label="iii"> <text>Except as provided in paragraph (3) of this subsection and subsection (d) of this section, if the amount due under paragraph (1)(ii)2 of this subsection is less than $500, no additional amount may be payable, and no credit or refund may be allowed or returned.</text> </level> </level> <level label="3"> <text>If a filing required under subsection (a) of this section and § 11–503.1 of this subtitle is not received by the Commissioner by the deadline established, the issuer, in addition to the fee required under this section, shall pay a late fee of $500.</text> </level> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (4) of this subsection, at the time of filing, a unit investment trust, or a closed–end management company that is not a federal covered security under § 18(b)(1) of the Securities Act of 1933, shall pay an initial fee of $500.</text> </level> <level label="2"> <text>Within 60 days after the anniversary of the date on which the issuer’s offer became effective or its notice filed under § 11–503(b) of this subtitle was accepted, a unit investment trust, or a closed–end management company that is not a federal covered security under § 18(b)(1) of the Securities Act of 1933, shall:</text> <level label="i"> <text>Pay a fee of $1,300; or</text> </level> <level label="ii"> <level label="1"> <text>File a report on a form the Commissioner by rule adopts, reporting all sales of securities to persons within this State during the effective period of the registration statement or the acceptance period of the notice filed under § 11–503.1(b) of this subtitle; and</text> </level> <level label="2"> <text>Pay a fee of 0.1 percent of the maximum aggregate offering price at which the securities were sold in this State.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>When calculating the fee in accordance with paragraph (1)(ii)2 of this subsection, the initial $500 fee shall be deducted from the aggregate fee due.</text> </level> <level label="ii"> <text>Except as provided in paragraph (4) of this subsection and subsection (d) of this section, the aggregate fee due under this paragraph may not exceed $1,500.</text> </level> <level label="iii"> <text>Except as provided in paragraph (4) of this subsection and subsection (d) of this section, if the amount due under paragraph (1)(ii)2 of this subsection is less than $500, no additional amount may be payable, and no credit or refund may be allowed or returned.</text> </level> </level> <level label="4"> <text>If a filing required under subsection (a) of this section and § 11–503.1 of this subtitle is not received by the Commissioner by the deadline established in paragraph (2) of this subsection, the issuer, in addition to the fee required under this section, shall pay a late fee of $500.</text> </level> </level> <level label="d"> <level label="1"> <text>The Commissioner, by rule, order, or otherwise, may extend the length of the renewal period to a period not exceeding 2 years for the effectiveness of a registered offering or for a notice filed under § 11–503.1 of this subtitle.</text> </level> <level label="2"> <text>If the Commissioner extends a renewal period in excess of 1 year, the fee shall be prorated to the extended renewal period.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-511" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>The Commissioner may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if he finds that the order is in the public interest and that:</text> <level label="1"> <text>The registration statement as of its effective date or as of any earlier date in the case of an order denying effectiveness, any amendment under § 11–510 of this subtitle as of its effective date, or any report under § 11–509 of this subtitle is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;</text> </level> <level label="2"> <text>Any provision of this title or any rule, order, or condition lawfully imposed under this title has been willfully violated, in connection with the offering, by:</text> <level label="i"> <text>The person filing the registration statement;</text> </level> <level label="ii"> <text>The issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any 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</text> </level> <level label="iii"> <text>Any underwriter;</text> </level> </level> <level label="3"> <text>The security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction of any court of competent jurisdiction entered under any other federal or State act applicable to the offering, but:</text> <level label="i"> <text>The Commissioner may not institute a proceeding against an effective registration statement under this item (3) more than one year from the date of the order or injunction relied on; and</text> </level> <level label="ii"> <text>He may not enter an order under this item (3) on the basis of an order or injunction entered under any other State act unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this section;</text> </level> </level> <level label="4"> <text>The enterprise or method of business of the issuer includes or would include activities which are illegal where performed;</text> </level> <level label="5"> <text>The offering has worked or tended to work a fraud on purchasers or would so operate;</text> </level> <level label="6"> <text>If a security is sought to be registered by notification, it is not eligible for the registration;</text> </level> <level label="7"> <text>If a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by § 11–503(b)(4) of this subtitle; or</text> </level> <level label="8"> <text>The applicant or registrant has failed to pay the proper filing fee, but the Commissioner may enter only a denial order under this item (8) and he shall vacate the order when the deficiency is corrected.</text> </level> </level> <level label="b"> <text>The Commissioner may not institute a stop–order proceeding against an effective registration statement on the basis of a fact or transaction known to him when the registration statement became effective unless the proceeding is instituted within the next 30 days.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-512" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <level label="a"> <text>The Commissioner by order summarily may postpone or suspend the effectiveness of the registration statement pending final determination of any proceeding under § 11-511 of this subtitle.</text> </level> <level label="b"> <text>On the entry of the order, the Commissioner promptly shall notify each person specified in § 11-513 of this subtitle:</text> <level label="1"> <text>That it has been entered;</text> </level> <level label="2"> <text>The reasons for its entry; and</text> </level> <level label="3"> <text>That within 15 days after the receipt of a written request the matter will be set down for hearing.</text> </level> </level> <level label="c"> <level label="1"> <text>If a hearing is not requested and one is not ordered by the Commissioner, the order will remain in effect until it is modified or vacated by the Commissioner.</text> </level> <level label="2"> <text>If a hearing is requested or ordered, the Commissioner, after notice of and opportunity for hearing to each person specified in § 11-513 of this subtitle, may modify or vacate the order or extend it until final determination.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-513" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <text>A stop order may not be entered under any part of § 11–503.1, § 11–511, or § 11–512 of this subtitle, except § 11–512(a) of this subtitle, without:</text> <level label="1"> <text>Appropriate prior notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;</text> </level> <level label="2"> <text>Opportunity for hearing; and</text> </level> <level label="3"> <text>Written findings of fact and conclusions of law.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-514" title_number="11" title_name="Maryland Securities Act" subtitle_number="5" subtitle_name="Registration of Securities"> <text>The Commissioner may vacate or modify a stop order if he finds that the conditions which prompted entry have changed or that it is otherwise in the public interest to do so.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-601" title_number="11" title_name="Maryland Securities Act" subtitle_number="6" subtitle_name="Exemptions"> <text>The following securities are exempted from §§ 11–205 and 11–501 of this title:</text> <level label="1"> <level label="i"> <text>Any security, including a revenue obligation, issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency or corporation or other instrumentality of one or more of them; or</text> </level> <level label="ii"> <text>Any certificate of deposit for any of these securities;</text> </level> </level> <level label="2"> <text>Any security issued or guaranteed by Canada, any Canadian province, any political subdivision of the province, any agency, corporate, or other instrumentality of one or more of them, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor;</text> </level> <level label="3"> <text>Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state;</text> </level> <level label="4"> <text>Any security issued by and representing an interest in or a debt of, or guaranteed by any federal savings and loan association, or any building and loan or similar association organized and supervised under the laws of any state and authorized to do business in this State;</text> </level> <level label="5"> <text>Any security issued by and representing an interest in or a debt of, or guaranteed by, any insurance company organized under the laws of any state and authorized to do business in this State;</text> </level> <level label="6"> <text>Any security issued or guaranteed by any federal credit union or any credit union, industrial loan association, or similar association organized and supervised under the laws of this State;</text> </level> <level label="7"> <text>Any security issued or guaranteed by any railroad, other common carrier, public utility, or holding company which is:</text> <level label="i"> <text>A registered holding company under the Public Utility Holding Company Act of 1935 or a subsidiary of such a company within the meaning of that Act;</text> </level> <level label="ii"> <text>Regulated in respect of its rates and charges by a governmental authority of the United States or any state; or</text> </level> <level label="iii"> <text>Regulated in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada, or any Canadian province;</text> </level> </level> <level label="8"> <level label="i"> <text>Any security listed or approved for listing on notice of issuance on the New York Stock Exchange, the American Stock Exchange, the Philadelphia Stock Exchange, or any other exchange which the Commissioner designates by order to have substantially the same standards for listing as required by these exchanges;</text> </level> <level label="ii"> <text>Any other security of the same issuer which is of senior or substantially equal rank;</text> </level> <level label="iii"> <text>Any security called for by subscription rights or warrants so listed or approved; or</text> </level> <level label="iv"> <text>Any warrant or right to purchase or subscribe to any of these;</text> </level> </level> <level label="9"> <text>Any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce, local industrial development corporation, or trade or professional association, if:</text> <level label="i"> <text>Such security is offered and sold as part of an issue having an aggregate offering price not in excess of such amount as the Commissioner by rule or order may prescribe and is offered and sold without payment of any commission or remuneration for soliciting any prospective buyer; or</text> </level> <level label="ii"> <text>10 days prior to the first sale of such security there is filed with the securities division such notice as the Commissioner may by rule or order prescribe, no offers or sales are made in this State by persons other than a broker–dealer or agent registered in this State, and no commission or remuneration for soliciting any prospective buyer is paid except to a broker–dealer or agent registered in this State;</text> </level> </level> <level label="10"> <text>Any commercial paper which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions and which evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal;</text> </level> <level label="11"> <text>Any investment contract or other security issued in connection with an employee’s stock purchase, savings, pension, profit–sharing, stock option, equity compensation, or similar benefit plan if:</text> <level label="i"> <text>No commission or other remuneration is paid in connection with the offering; and</text> </level> <level label="ii"> <level label="1"> <text>The plan is qualified under the Internal Revenue Code;</text> </level> <level label="2"> <text>The plan complies with Rule 701 under the Securities Act of 1933; or</text> </level> <level label="3"> <text>The security is effectively registered under §§ 6 through 8 of the Securities Act of 1933 and is offered and sold in compliance with the provisions of § 5 of the Securities Act of 1933;</text> </level> </level> </level> <level label="12"> <text>Any security traded pursuant to the National Association of Securities Dealers Automated Quotations (NASDAQ) systems for which the Commissioner by rule has determined that registration is not necessary for the protection of investors;</text> </level> <level label="13"> <text>Any option issued by a clearing agency that is both designated by the Commissioner by rule and registered under the Securities Exchange Act of 1934, other than an off–exchange futures contract or substantially similar arrangement, if the security, currency, commodity, or other interest underlying the option:</text> <level label="i"> <text>Is registered under § 11–502, § 11–503, or § 11–504 of this title;</text> </level> <level label="ii"> <text>Is exempt under § 11–601 or § 11–602 of this subtitle; or</text> </level> <level label="iii"> <text>Is not otherwise required to be registered under this title;</text> </level> </level> <level label="14"> <text>A security exempt under § 3(a)(12)(A)(v) of the Securities Exchange Act of 1934, if:</text> <level label="i"> <text>The security is offered and sold as part of an issue having an aggregate offering price not in excess of an amount that the Commissioner may require, by rule, order, or otherwise, and is sold without payment of any commission or remuneration for soliciting a prospective buyer; or</text> </level> <level label="ii"> <text>10 days prior to the first sale of the security there is filed with the Commissioner notice that the Commissioner may require by rule, order, or otherwise, that no offers or sales are made in this State by persons other than a broker–dealer or agent registered in this State, and no commission or remuneration for soliciting a prospective buyer is paid except to a broker–dealer or agent registered in this State;</text> </level> </level> <level label="15"> <level label="i"> <text>A note, bond, or other evidence of indebtedness issued to the United States or an agency or instrumentality of the United States by a cooperative, as defined in § 5–601 of this article, or by a foreign corporation doing business in the State under Title 5, Subtitle 6 of this article;</text> </level> <level label="ii"> <text>A mortgage, deed of trust, or other instrument executed to secure a note, bond, or other evidence of indebtedness described in item (i) of this item; and</text> </level> <level label="iii"> <text>A membership certificate issued by a cooperative, as defined in § 5–601 of this article, or by a foreign corporation doing business in the State under Title 5, Subtitle 6 of this article;</text> </level> </level> <level label="16"> <text>To the extent the Commissioner by rule or order may permit, any security issued by an entity formed, organized, or existing under the laws of the State if:</text> <level label="i"> <text>The offering of the security is conducted in accordance with § 3(a)(11) of the Securities Act of 1933 and Rule 147 adopted under the Securities Act of 1933;</text> </level> <level label="ii"> <text>The offer and sale of the security are made only to residents of the State;</text> </level> <level label="iii"> <text>The aggregate price of securities in an offering under this item does not exceed $100,000;</text> </level> <level label="iv"> <text>The total consideration paid by any purchaser of securities in an offering under this item does not exceed $100;</text> </level> <level label="v"> <text>No commission or other remuneration is paid in connection with an offering of securities under this item to any person who is not registered as required under this title;</text> </level> <level label="vi"> <text>Neither the issuer nor any of its related persons is subject to a disqualification as defined by the Commissioner by rule or order; and</text> </level> <level label="vii"> <text>The security is sold in an offering conducted in compliance with any conditions established by rule or order of the Commissioner, which may include:</text> <level label="1"> <text>Restrictions on the nature of the issuer;</text> </level> <level label="2"> <text>Limitations on the number and manner of offerings;</text> </level> <level label="3"> <text>Required disclosures to investors, including risk factors related to the issuer and the offering; and</text> </level> <level label="4"> <text>Required filing with the Commissioner of notices and other materials related to the offering; and</text> </level> </level> </level> <level label="17"> <text>Any security as to which the Commissioner by rule or order finds that:</text> <level label="i"> <text>Compliance with §§ 11–205 and 11–501 of this title is not necessary or appropriate for the protection of investors; and</text> </level> <level label="ii"> <text>The exemption is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-602" title_number="11" title_name="Maryland Securities Act" subtitle_number="6" subtitle_name="Exemptions"> <text>The following transactions are exempted from §§ 11-205 and 11-501 of this title:</text> <level label="1"> <text>Any isolated nonissuer transaction, whether effected through a broker-dealer or not;</text> </level> <level label="2"> <text>Any nonissuer distribution of an outstanding security if:</text> <level label="i"> <text>A recognized securities manual contains the names of the officers and directors of the issuer, a balance sheet of the issuer as of a date within 18 months, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations; or</text> </level> <level label="ii"> <text>The security has a fixed maturity or a fixed interest or dividend provision and there has been no default during the current fiscal year or within the three preceding fiscal years, or during the existence of the issuer and any predecessor if less than three years, in the payment of principal, interest, or dividends on the security;</text> </level> </level> <level label="3"> <text>Any nonissuer transaction effected by or through a registered broker-dealer under an unsolicited order or offer to buy, but the Commissioner by rule may require that:</text> <level label="i"> <text>The customer acknowledge on a specified form that the sale was unsolicited; and</text> </level> <level label="ii"> <text>A signed copy of each form be preserved by the broker-dealer for a specified period;</text> </level> </level> <level label="4"> <text>Any transaction:</text> <level label="i"> <text>Between the issuer or other person on whose behalf the offering is made and an underwriter; or</text> </level> <level label="ii"> <text>Among underwriters;</text> </level> </level> <level label="5"> <text>Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage, deed of trust, or agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured by it, is offered and sold as a unit;</text> </level> <level label="6"> <text>Any transaction by a personal representative, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;</text> </level> <level label="7"> <text>Any transaction executed by a bona fide pledgee without any purpose of evading this title;</text> </level> <level label="8"> <text>Any offer or sale to an investment company as defined in the Investment Company Act of 1940, an investment adviser with assets under management of not less than $1,000,000, a broker-dealer, bank, trust company, savings and loan association, insurance company, employee benefit plan with assets of not less than $1,000,000, or governmental agency or instrumentality, whether acting for itself or as a trustee or a fiduciary with investment control, or other institutional investor as designated by rule or order of the Commissioner;</text> </level> <level label="9"> <text>To the extent the Commissioner by rule or order permits, any offer or sale in a transaction involving the sale by an issuer to not more than 35 persons, other than those designated in item (8) of this section, in this State during any period of 12 consecutive months, whether or not the seller or any purchaser is then present in this State, if the seller reasonably believes that all the purchasers in this State, other than those designated in item (8) of this section, are purchasing for investment, and if the securities have not been offered to the general public by advertisement or general solicitation but the Commissioner by rule or order, as to any security or transaction or any type of security or transaction, may withdraw or further condition this exemption, increase or decrease the number of purchasers permitted, or waive the condition relating to their investment intent;</text> </level> <level label="10"> <text>Any offer or sale of a preorganization certificate or subscription if:</text> <level label="i"> <text>No commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber;</text> </level> <level label="ii"> <text>The number of subscribers does not exceed ten; and</text> </level> <level label="iii"> <text>No payment is made by any subscriber;</text> </level> </level> <level label="11"> <text>Any transaction under an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than 90 days of their issuance, if:</text> <level label="i"> <text>No commission or other remuneration, other than a stand-by commission, is paid or given directly or indirectly for soliciting any security holder in this State; or</text> </level> <level label="ii"> <text>The issuer first files a notice specifying the terms of the offer and the Commissioner does not by order disallow the exemption within the next five full business days;</text> </level> </level> <level label="12"> <level label="i"> <text>Any offer, but not a sale, of a security for which a registration statement has been filed under both this title and the Securities Act of 1933 if a stop order or refusal order is not in effect and a public proceeding or examination looking toward such an order is not pending under either this title or the Securities Act of 1933;</text> </level> <level label="ii"> <text>Any offer, but not a sale, of a security for which a registration statement has been filed under this title if a stop order or refusal order is not in effect and a public proceeding or examination looking toward such an order is not pending, and if the offeror complies with § 11-502(c) or § 11-504(d) of this title;</text> </level> </level> <level label="13"> <text>Any offer or sale of a security by or through a registered broker-dealer if:</text> <level label="i"> <text>The offer or sale is not directly or indirectly for the benefit of the issuer or a person who is known or who reasonably should be known to the broker-dealer to be the record or beneficial owner of 10 percent or more of the outstanding voting securities of the issuer;</text> </level> <level label="ii"> <text>The security is not part of an unsold allotment or subscription taken by a participant in a distribution directly or indirectly for the benefit of the issuer or a person who is known or who reasonably should be known to the broker-dealer to be the record or beneficial owner of 10 percent or more of the outstanding voting securities of the issuer; and</text> </level> <level label="iii"> <text>An administrative stop order or similar order or permanent or temporary injunction of any court of competent jurisdiction is not in effect under this title or under any federal or State act against the offering or sale of the security or any security of the same class;</text> </level> </level> <level label="14"> <text>Any sale of securities to an employee stock ownership plan trust, as defined in the Internal Revenue Code, any accrual of interests of participants in the plan, and any distribution made under the plan to participants or beneficiaries of the plan;</text> </level> <level label="15"> <text>To the extent permitted by rule or order of the Commissioner, any offer or sale within this State by an issuer now or hereafter exempted from Section 5 of the Securities Act of 1933 by virtue of a rule or regulation adopted by the United States Securities and Exchange Commission under Section 3(b) or Section 4(2) of that Act; if the issuer files with the Commissioner a notice of intent to claim exemption under this paragraph, at such time or times, in such form, and containing such information as the Commissioner determines;</text> </level> <level label="16"> <text>Any offer or sale of units of fractional undivided interests in a unit investment trust registered under the Investment Company Act of 1940 if:</text> <level label="i"> <text>The units have been the subject of a previously effective registration statement under this title or were exempt from registration;</text> </level> <level label="ii"> <text>The units are offered or sold by a broker-dealer registered under this title; and</text> </level> <level label="iii"> <text>The broker-dealer is a sponsor or depositor of the unit investment trust or is an affiliate of the sponsor or depositor; and</text> </level> </level> <level label="17"> <text>Any transaction as to which the Commissioner by rule or order finds that:</text> <level label="i"> <text>Compliance with §§ 11-205 and 11-501 of this title is not necessary or appropriate for the protection of investors; and</text> </level> <level label="ii"> <text>The exemption is consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-603" title_number="11" title_name="Maryland Securities Act" subtitle_number="6" subtitle_name="Exemptions"> <level label="a"> <level label="1"> <text>The Commissioner by order may deny or revoke any exemption specified in § 11–601(9), (11), or (17) or § 11–602 of this subtitle with respect to a specific security or transaction.</text> </level> <level label="2"> <text>The order may not be entered without appropriate prior notice to all interested parties, opportunity for hearing, and written findings of fact and conclusions of law, except that the Commissioner by order summarily may deny or revoke any of the specified exemptions pending final determination of any proceeding under this subsection.</text> </level> </level> <level label="b"> <text>On the entry of a summary order, the Commissioner promptly shall notify every interested party:</text> <level label="1"> <text>That it has been entered;</text> </level> <level label="2"> <text>The reasons for its entry; and</text> </level> <level label="3"> <text>That within 15 days of the receipt of a written request the matter will be set down for hearing.</text> </level> </level> <level label="c"> <level label="1"> <text>If a hearing is not requested and one is not ordered by the Commissioner, the order will remain in effect until it is modified or vacated by the Commissioner.</text> </level> <level label="2"> <text>If a hearing is requested or ordered, the Commissioner, after notice of and opportunity for hearing to every interested person, may modify or vacate the order or extend it until final determination.</text> </level> <level label="3"> <text>An order under this section may not operate retroactively.</text> </level> <level label="4"> <text>A person may not be considered to have violated § 11–205 or § 11–501 of this title by reason of any offer or sale effected after the entry of an order under this section if he sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the order.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-604" title_number="11" title_name="Maryland Securities Act" subtitle_number="6" subtitle_name="Exemptions"> <level label="a"> <text>In a civil or administrative proceeding under this title, a person claiming an exemption or an exception from a definition has the burden of proving the exemption or exception.</text> </level> <level label="b"> <text>In a criminal proceeding under this title, the burden of going forward with evidence of a claim or exemption or exception from a definition is on the person claiming it.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-701" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <text>In his discretion, the Commissioner may:</text> <level label="1"> <text>Make public or private investigations within or outside of this State as he considers necessary to:</text> <level label="i"> <text>Determine whether any person has violated or is about to violate any provision of this title or any rule or order under this title; or</text> </level> <level label="ii"> <text>Aid in the enforcement of this title or in the prescribing of rules and forms under this title;</text> </level> </level> <level label="2"> <text>Require or permit any person to file a statement in writing, under oath or otherwise as the Commissioner determines, as to all the facts and circumstances concerning the matter to be investigated; and</text> </level> <level label="3"> <text>Publish information concerning any violation of this title or any rule or order under this title.</text> </level> </level> <level label="b"> <text>For the purpose of any investigation or proceeding under this title, the Commissioner or any officer designated by him may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the Commissioner considers relevant or material to the inquiry.</text> </level> <level label="c"> <level label="1"> <text>In case of contumacy by or refusal to obey a subpoena issued to any person, the circuit court of the county in which the person resides or transacts business, on application by the Commissioner, may issue to the person an order requiring him to appear before the Commissioner or the officer designated by him to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question.</text> </level> <level label="2"> <text>Failure to obey the order of the court may be punished by the court as a contempt of court.</text> </level> </level> <level label="d"> <text>A person is not excused from attending and testifying or from producing any document or record before the Commissioner, or in obedience to the subpoena of the Commissioner or any officer designated by him, or in any proceeding instituted by the Commissioner, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty or forfeiture. However, an individual may not be prosecuted or subjected to any penalty or forfeiture for or on account of any specific subject concerning which he is compelled, after claiming his privilege against self-incrimination as to that specific subject, to testify or produce evidence, documentary or otherwise, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-701.1" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <text>Whenever the Commissioner determines that a person has engaged or is about to engage in any act or practice constituting a violation of any provision of this title or any rule or order under this title or that a person has knowingly or recklessly provided substantial assistance, is knowingly or recklessly providing substantial assistance, or is about to knowingly or recklessly provide substantial assistance to another person in connection with an act, a practice, or a course of business constituting a violation of this title or a rule adopted or an order issued under this title, and that immediate action against such person is in the public interest, the Commissioner may in his discretion issue, without a prior hearing, a summary order directing such person to cease and desist from engaging in such activity, provided that the summary cease and desist order gives the person:</text> <level label="1"> <text>Notice of the opportunity for a hearing before the Commissioner to determine whether the summary cease and desist order should be vacated, modified, or entered as final; and</text> </level> <level label="2"> <text>Notice that the summary cease and desist order will be entered as final if such person does not request a hearing within 15 days of receipt of the summary cease and desist order.</text> </level> </level> <level label="b"> <text>Whenever the Commissioner determines after notice and a hearing (unless the right to notice and a hearing is waived) that a person has engaged in any act or practice constituting a violation of any provision of this title or any rule or order under this title or that a person has knowingly or recklessly provided substantial assistance to another person in connection with an act, a practice, or a course of business constituting a violation of this title or a rule adopted or an order issued under this title, the Commissioner may in his discretion and in addition to taking any other action authorized under this title:</text> <level label="1"> <text>Issue a final cease and desist order against such person;</text> </level> <level label="2"> <text>Censure such person if such person is registered under this title;</text> </level> <level label="3"> <text>Bar such person from engaging in the securities business or investment advisory business in this State;</text> </level> <level label="4"> <text>Issue a penalty order against such person imposing a civil penalty up to the maximum amount of $5,000 for any single violation of this title; or</text> </level> <level label="5"> <text>Take any combination of the actions specified in this subsection.</text> </level> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-702" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <text>Whenever it appears to the Commissioner that any person is about to engage in any act or practice constituting a violation of any provision of this title or any rule or order under this title or that the person is about to knowingly or recklessly provide substantial assistance to another person in connection with an act, a practice, or a course of business constituting a violation of this title or a rule adopted or an order issued under this title, he may in his discretion bring an action to obtain 1 or more of the following remedies:</text> <level label="1"> <text>A temporary restraining order; or</text> </level> <level label="2"> <text>A temporary or permanent injunction.</text> </level> </level> <level label="b"> <text>Whenever it appears to the Commissioner that any person has engaged in any act or practice constituting a violation of any provision of this title or any rule or order under this title or that a person has knowingly or recklessly provided substantial assistance, is knowingly or recklessly providing substantial assistance, or is about to knowingly or recklessly provide substantial assistance to another person in connection with an act, a practice, or a course of business constituting a violation of this title or a rule adopted or an order issued under this title, the Commissioner may in the Commissioner’s discretion bring an action to obtain one or more of the following remedies:</text> <level label="1"> <text>A temporary restraining order;</text> </level> <level label="2"> <text>A temporary or permanent injunction;</text> </level> <level label="3"> <text>A civil penalty up to a maximum amount of $5,000 for any single violation of this title;</text> </level> <level label="4"> <text>A declaratory judgment;</text> </level> <level label="5"> <text>The appointment of a receiver or conservator for the defendant or the defendant’s assets;</text> </level> <level label="6"> <text>A freeze of the defendant’s assets;</text> </level> <level label="7"> <text>Rescission;</text> </level> <level label="8"> <text>Restitution;</text> </level> <level label="9"> <text>Disgorgement;</text> </level> <level label="10"> <text>Payment of prejudgment and postjudgment interest; and</text> </level> <level label="11"> <text>Any other relief as the court deems just.</text> </level> </level> <level label="c"> <text>An action under this section is not subject to the provisions of § 5–107 of the Courts and Judicial Proceedings Article.</text> </level> <level label="d"> <text>The Commissioner may not be required to post a bond in any action under this section.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-703" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <level label="1"> <text>A person is civilly liable to the person buying a security from him if he:</text> <level label="i"> <text>Offers or sells the security in violation of § 11–304(b), § 11–401(a), § 11–402(a), or § 11–501 of this title, or of any rule or order under § 11–205 of this title which requires the affirmative approval of sales literature before it is used; or</text> </level> <level label="ii"> <text>Offers or sells the security by means of any untrue statement of a material fact or any omission 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, the buyer not knowing of the untruth or omission, and if he does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.</text> </level> </level> <level label="2"> <text>A person is civilly liable to the person selling a security to him if he offers to purchase or purchases the security by means of any untrue statement of a material fact or any 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 seller not knowing of the untruth or omission, and if he does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.</text> </level> <level label="3"> <text>A person is civilly liable to another person if the person:</text> <level label="i"> <text>Acts as an investment adviser or representative in violation of § 11–302(c), § 11–401(b), § 11–402(b), or § 11–304(b) of this title or any rule or order promulgated under it, except that an action based on a violation of § 11–402(b) of this title may not be maintained except by those persons who directly received advice from the unregistered investment adviser representative; or</text> </level> <level label="ii"> <text>Receives, directly or indirectly, any consideration from another person for advice as to the value of securities or their purchase or sale or for acting as an investment adviser or representative under § 11–101(i) and (j) of this title, whether through the issuance of analyses, reports, or otherwise, and employs any device, scheme, or artifice to defraud such other person or engages in any act, practice or course of business which operates or would operate as a fraud or deceit on such other person.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A buyer may sue either at law or in equity:</text> <level label="i"> <text>On tender of the security, to recover the consideration paid for the security, together with interest at the rate provided for in § 11–107(a) of the Courts Article, as amended, from the date of payment, costs, and reasonable attorneys’ fees, less the amount of any income received on the security; or</text> </level> <level label="ii"> <text>If he no longer owns the security, for damages.</text> </level> </level> <level label="2"> <text>A seller may sue either at law or in equity:</text> <level label="i"> <text>On tender of the consideration paid for the security, to recover the security, together with the amount of any income received on the security, costs, and reasonable attorneys’ fees; or</text> </level> <level label="ii"> <text>If the buyer no longer owns the security, for damages.</text> </level> </level> <level label="3"> <text>For the purposes of subsection (b)(1)(ii) of this section, damages are the amount that would be recoverable on a tender less the value of the security when the buyer disposed of it and interest at the rate provided for in § 11–107(a) of the Courts Article, as amended, from the date of disposition.</text> </level> <level label="4"> <level label="i"> <text>In any action brought under subsection (a)(3) of this section a person may sue either at law or in equity for the rescission of the advisory contract and any damages resulting from the violation, together with interest at the rate provided for in § 11–107(a) of the Courts Article, as amended, from the date of payment of the consideration, costs, and reasonable attorneys’ fees, less the amount of any income received from such advice.</text> </level> <level label="ii"> <text>An action based on a violation of § 11–302(c) of this title may not prevail where the person accused of the violation sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>Every person who directly or indirectly controls a person liable under subsection (a) of this section, every partner, officer, or director of the person liable, every person occupying a similar status or performing similar functions, every employee of the person liable who materially aids in the conduct giving rise to the liability, and every broker–dealer or agent who materially aids in such conduct are also liable jointly and severally with and to the same extent as the person liable, unless able to sustain the burden of proof that he did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.</text> </level> <level label="2"> <text>There is contribution as in cases of contract among the several persons so liable.</text> </level> </level> <level label="d"> <text>Any tender specified in this section may be made at any time before entry of judgment.</text> </level> <level label="e"> <text>Every cause of action under this statute survives the death of any person who might have been a plaintiff or defendant.</text> </level> <level label="f"> <level label="1"> <text>A person may not sue under subsections (a)(1) and (2) of this section after the earlier to occur of 3 years after the contract of sale or purchase or the time specified in paragraph (2) of this subsection.</text> </level> <level label="2"> <text>An action may not be maintained:</text> <level label="i"> <text>To enforce any liability created under subsection (a)(1)(i) of this section, unless brought within one year after the violation on which it is based; or</text> </level> <level label="ii"> <text>To enforce any liability created under subsection (a)(1)(ii) or (2) of this section, unless brought within one year after the discovery of the untrue statement or omission, or after the discovery should have been made by the exercise of reasonable diligence.</text> </level> </level> <level label="3"> <text>A person may not sue under subsection (a)(3) of this section more than 3 years after the date of the advisory contract or the rendering of investment advice, or the expiration of 2 years after the discovery of the facts constituting the violation, whichever first occurs.</text> </level> <level label="4"> <text>A person may not sue under this section:</text> <level label="i"> <text>If the buyer received a written offer, before suit and at a time when he owned the security or asset, to refund the consideration paid together with interest at the rate provided for in § 11–107(a) of the Courts Article, as amended, from the date of payment, less the amount of any income received on the security or asset, and he failed to accept the offer within 30 days of its receipt;</text> </level> <level label="ii"> <text>If the buyer received the offer before suit and at a time when he did not own the security or asset, unless he rejected the offer in writing within 30 days of its receipt; or</text> </level> <level label="iii"> <text>If the seller received a written offer from the buyer, before suit, to return the security or asset, together with the amount of any income received on the security, less interest at the rate provided for in § 11–107(a) of the Courts Article, as amended, from the date of payment, and he failed to accept the offer within 30 days of its receipt.</text> </level> </level> </level> <level label="g"> <text>A person may not base any suit on any contract if he:</text> <level label="1"> <text>Has made or engaged in the performance of the contract in violation of any provision of this title or any rule or order under this title; or</text> </level> <level label="2"> <text>Has acquired any purported right under the contract with knowledge of the facts by reason of which its making or performance was in violation.</text> </level> </level> <level label="h"> <text>Any condition, stipulation, or provision binding any person acquiring any security or asset or receiving any investment advice to waive compliance with any provision of this title or any rule or order under this title is void.</text> </level> <level label="i"> <text>The rights and remedies provided by this title are in addition to any other rights or remedies that may exist at law or in equity, but this title does not create any cause of action not specified in this section or § 11–410 of this title.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-704" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <text>Any person aggrieved by a final order of the Commissioner may obtain a review of the order in conformity with the procedure prescribed in the Maryland Rules and in the Administrative Procedure Act.</text> </level> <level label="b"> <text>The commencement of proceedings under subsection (a) of this section, unless specifically ordered by the court, does not operate as a stay of the Commissioner’s order.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-705" title_number="11" title_name="Maryland Securities Act" subtitle_number="7" subtitle_name="Enforcement and Penalties"> <level label="a"> <level label="1"> <text>Any person who willfully violates any provision of this title, except § 11–303 or § 11–305 of this title or who willfully violates any rule or order under this title except a rule or order under § 11–305 of this title, or who willfully violates § 11–303 of this title knowing the statement made to be false or misleading in any material respect, on conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 3 years or both.</text> </level> <level label="2"> <text>Any person who willfully violates § 11–305 of this title or who willfully violates a rule or order under § 11–305 of this title, on conviction is subject to a fine not exceeding $100,000 or imprisonment not exceeding 5 years or both.</text> </level> <level label="3"> <text>A person may not be imprisoned for the violation of any rule or order if the person proves that the person had no knowledge of the rule or order.</text> </level> <level label="4"> <text>An indictment or information may not be returned under this title more than 5 years after the alleged violation.</text> </level> </level> <level label="b"> <text>The Commissioner may refer available evidence concerning violations of this title or of any rule or order under this title to the State’s Attorney or the Attorney General who, with or without the reference, may institute the appropriate criminal proceedings under this title.</text> </level> <level label="c"> <text>Nothing in this title limits the power of this State to punish any person for any conduct which constitutes a crime by statute or at common law.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-801" title_number="11" title_name="Maryland Securities Act" subtitle_number="8" subtitle_name="Miscellaneous Provisions"> <level label="a"> <text>Sections 11-301, 11-302, 11-303, 11-304, 11-401, 11-501, and 11-703 of this title apply to any person who:</text> <level label="1"> <text>Sells or offers to sell if:</text> <level label="i"> <text>The offer to sell is made in this State; or</text> </level> <level label="ii"> <text>The offer to buy is made and accepted in this State; or</text> </level> </level> <level label="2"> <text>Offers or provides investment advisory services if:</text> <level label="i"> <text>The contract for the investment advisory services is executed in this State;</text> </level> <level label="ii"> <text>The investment advisory services are rendered in this State; or</text> </level> <level label="iii"> <text>Any action instrumental in effecting prohibited conduct is taken in this State, whether or not either party is then present in this State.</text> </level> </level> </level> <level label="b"> <text>Sections 11-301, 11-302, 11-303, 11-304, 11-401, and 11-703 of this title apply to any person who:</text> <level label="1"> <text>Buys or offers to buy if:</text> <level label="i"> <text>The offer to buy is made in this State; or</text> </level> <level label="ii"> <text>The offer to sell is made and accepted in this State; or</text> </level> </level> <level label="2"> <text>Offers or provides investment advisory services if:</text> <level label="i"> <text>The contract for the investment advisory services is executed in this State;</text> </level> <level label="ii"> <text>The investment advisory services are rendered in this State; or</text> </level> <level label="iii"> <text>Any action instrumental in effecting prohibited conduct is taken in this State, whether or not either party is then present in this State.</text> </level> </level> </level> <level label="c"> <text>For the purpose of this section, an offer to sell or to buy is made in this State, whether or not either party is then present in this State, if the offer:</text> <level label="1"> <text>Originates from this State; or</text> </level> <level label="2"> <text>Is directed by the offeror to this State and received at the place to which it is directed or, in the case of a mailed offer, at any post office in this State.</text> </level> </level> <level label="d"> <level label="1"> <text>For the purpose of this section, an offer to buy or to sell is accepted in this State if acceptance:</text> <level label="i"> <text>Is communicated to the offeror in this State; and</text> </level> <level label="ii"> <text>Has not been communicated previously to the offeror, orally or in writing, outside this State.</text> </level> </level> <level label="2"> <text>For purposes of this section, acceptance is communicated to the offeror in this State, whether or not either party is then present in this State, if the offeree directs it to the offeror in this State reasonably believing the offeror to be in this State and it is received at the place to which it is directed or, in the case of a mailed acceptance, at any post office in this State.</text> </level> </level> <level label="e"> <text>An offer to sell or to buy, or to provide investment advisory services, is not made in this State if:</text> <level label="1"> <text>The publisher circulates or there is circulated on his behalf in this State any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in this State, or which is published in this State but has had more than two thirds of its circulation outside this State during the past 12 months; or</text> </level> <level label="2"> <text>A radio or television program originating outside this State is received in this State.</text> </level> </level> <level label="f"> <text>Sections 11-302 and 11-401(b) of this title, as well as § 11-304 of this title so far as investment advisers and investment adviser representatives are concerned, apply if any act instrumental in effecting prohibited conduct is done in this State, whether or not either party is then present in this State.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-802" title_number="11" title_name="Maryland Securities Act" subtitle_number="8" subtitle_name="Miscellaneous Provisions"> <level label="a"> <level label="1"> <text>Every issuer filing an application for registration under this title and every issuer filing an application for, request for, or notice of an exemption from registration under this title, or a notice under § 11-503.1 of this title shall file with the Commissioner, in the form which the Commissioner by rule prescribes, an irrevocable consent appointing the Commissioner or the Commissioner’s successor in office to be the issuer’s attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against the issuer or the issuer’s successor or personal representative which arises under this title or any rules or order under this title after the consent has been filed, with the same force and validity as if served personally on the person filing the consent.</text> </level> <level label="2"> <text>A person who has filed the consent in connection with a previous filing need not file another.</text> </level> <level label="3"> <text>Service may be made by leaving a copy of the process in the office of the Commissioner, but it is not effective unless:</text> <level label="i"> <text>The plaintiff, who may be the Commissioner, in a suit, action, or proceeding instituted by him, immediately sends notice of the service and a copy of the process by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the defendant or respondent at the defendant’s or respondent’s last address on file with the Commissioner; and</text> </level> <level label="ii"> <text>The plaintiff’s affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within any further time the court allows.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>If any person, including any nonresident of this State, engages in conduct prohibited or made actionable by this title or any rule or order under this title, and he has not filed a consent to service of process under subsection (a) of this section and personal jurisdiction over him cannot otherwise be obtained in this State, that conduct is equivalent to his appointment of the Commissioner or his successor in office to be his attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against him or his successor or personal representative which grows out of that conduct and which is brought under this title or any rule or order under this title, with the same force and validity as if served on him personally.</text> </level> <level label="2"> <text>Service may be made by leaving a copy of the process in the office of the Commissioner, but it is not effective unless:</text> <level label="i"> <text>The plaintiff, who may be the Commissioner, in a suit, action, or proceeding instituted by him, immediately sends notice of the service and a copy of the process by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the defendant or respondent at his last known address or takes other steps which are reasonably calculated to give actual notice; and</text> </level> <level label="ii"> <text>The plaintiff’s affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within any further time the court allows.</text> </level> </level> </level> <level label="c"> <text>When process is served under this section, the court or the Commissioner in a proceeding before him, shall order the continuance necessary to afford the defendant or respondent reasonable opportunity to defend.</text> </level> </section> <section article="gca" article_name="Corporations and Associations" number="11-804" title_number="11" title_name="Maryland Securities Act" subtitle_number="8" subtitle_name="Miscellaneous Provisions"> <text>This title shall be construed to effectuate its general purpose to make uniform the law of those states which enact it and to coordinate the interpretation and administration of this title with the related federal regulation.</text> </section> <section article="gca" article_name="Corporations and Associations" number="11-805" title_number="11" title_name="Maryland Securities Act" subtitle_number="8" subtitle_name="Miscellaneous Provisions"> <text>This title may be cited as the Maryland Securities Act.</text> </section>