RSA 421-B:4-401 · Broker-Dealer Registration Requirements and Exemptions

421-B:4-401 Broker-Dealer Registration Requirements and Exemptions. –

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(a)

Registration requirement. It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under subsection (b) or (d).

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(b)

Exemptions from registration. The following persons are exempt from the registration requirement of subsection (a):

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(1)

a broker-dealer without a place of business in this state if its only transactions effected in this state are with:

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(A)

the issuer of the securities involved in the transactions;

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(B)

a person registered as a broker-dealer under this chapter or not required to be registered as a broker-dealer under this chapter;

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(C)

an institutional investor; or

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(D)

a bona fide preexisting customer whose principal place of residence is not in this state and the person is registered as a broker-dealer under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the customer maintains a principal place of residence;

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(2)

a person that deals solely in United States government securities and is supervised as a dealer in government securities by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. (3)(A) Except as otherwise provided by RSA 421-B:5-511, a person who exclusively facilitates the exchange of an open blockchain token if all of the following are met:

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(i)

The person, or the registered agent of the person, files a notice of intent with the secretary of state, as specified in RSA 421-B:2-202(26)(d);

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(ii)

The person has a reasonable and good faith belief that a token subject to exchange conforms to the requirements of paragraphs RSA 421-B:2-202(25)(a)-(c); and

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(iii)

The person takes reasonably prompt action to terminate the exchange of a token that does not conform to the requirements of this subsection.

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(c)

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

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(d)

Limited registration. The secretary of state may register a broker-dealer in a limited capacity determined by the secretary of state if that broker-dealer's activities are limited by FINRA.

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(e)

Canadian broker-dealers.

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(1)

A broker-dealer that is resident in Canada and has no office or other physical presence in this state may, provided the broker-dealer is licensed in accordance with this subsection (e), effect transactions in securities with or for, or induce or attempt to induce the purchase or sale of any security by:

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(A)

A person from Canada who is temporarily resident in this state, with whom the Canadian broker-dealer had a bona fide broker-dealer-client relationship before the person entered the United States; or

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(B)

A person from Canada who is resident in this state, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor.

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(2)

An agent representing a Canadian broker-dealer licensed under this section may, provided the agent is licensed in accordance with this section, effect transactions in securities in this state as permitted for the broker-dealer in subsection (e)(1).

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(3)

A Canadian broker-dealer may become licensed under subsection (e), provided that the broker-dealer:

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(A)

Files an application in the form required by the jurisdiction in which it has its head office;

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(B)

Files a consent to service of process;

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(C)

Is registered as a broker or dealer in good standing in the jurisdiction from which it is effecting transactions into this state and files evidence thereof; and

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(D)

Is a member of a self-regulatory organization or stock exchange in Canada.

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(4)

An agent representing a Canadian broker-dealer licensed under this subsection (e) in effecting transactions in securities in this state may become licensed under this section, provided that the agent:

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(A)

Files an application in the form required by the jurisdiction in which the broker-dealer has its head office;

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(B)

Files a consent to service of process; and

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(C)

Is registered in good standing in the jurisdiction from which he or she is effecting transactions into this state and files evidence thereof.

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(5)

If no denial order is in effect and no proceeding is pending under this chapter, the license becomes effective on the thirtieth day after an application is filed unless earlier made effective.

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(6)

A Canadian broker-dealer licensed under subsection (e) shall:

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(A)

Maintain its provincial or territorial registration and its membership in a self-regulatory organization or stock exchange in good standing;

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(B)

Provide the secretary of state upon request with its books and records relating to its business in this state as a broker-dealer;

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(C)

Inform the secretary of state forthwith of any criminal action taken against the broker-dealer or its agent or of any finding or sanction imposed on the broker-dealer as a result of any self-regulatory or regulatory action involving fraud, theft, deceit, misrepresentation, or similar conduct; and

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(D)

Disclose to its clients in the state that the broker-dealer and its agents are not subject to the full regulatory requirements in this chapter.

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(7)

An agent of a Canadian broker-dealer licensed under subsection (e) shall:

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(A)

Maintain his or her provincial or territorial registration in good standing;

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(B)

Inform the secretary of state forthwith of any criminal action, taken against him or her, or of any finding or sanction imposed on the agent as a result of any self-regulatory or regulatory action involving fraud, theft, deceit, misrepresentation, or similar conduct.

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(8)

Renewal applications for Canadian broker-dealers and agents under subsection (e) shall be filed before December 1 each year and may be made by filing the most recent renewal application, if any, filed in the jurisdiction in which the broker-dealer has its head office, or if no such renewal application is required, the most recent application filed pursuant to subsection (e)(3)(A) or subsection (e)(4)(A), as the case may be.

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(9)

Every applicant for a license or renewal of a license under subsection (a) shall pay the fee for broker-dealers and agents as required under RSA 421-B:6-614.

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(10)

A Canadian broker-dealer or agent licensed under subsection (e) shall only effect transactions in this state:

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(A)

As permitted in subsection (e)(1) or (e)(2);

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(B)

With or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, and (iii) banks, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts or other financial institutions or institutional buyers, whether acting for themselves or as trustees; and

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(C)

As otherwise permitted by this chapter.

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(11)

A Canadian broker-dealer or agent licensed under subsection (e) and acting in accordance with the limitations set out in subsection (e)(10) is exempt from all of the requirements of this chapter, except the anti-fraud provisions and the requirements set out in subsection (e). Such Canadian broker-dealer or agent may only have its license under this section denied, suspended or revoked for a breach of the anti-fraud provisions of this chapter or the requirements in subsection (e).

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(f)

Branch offices.

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(1)

Prior to opening or closing a branch office in this state, a broker-dealer shall notify the secretary of state of the location of the branch office, telephone number, name of the individual supervising the office, the date of the opening or closing, and any other pertinent information required by the secretary of state. (2)(A) It is prohibited for any branch office or agent of a broker-dealer to conduct a securities business in this state under any name other than that of the broker-dealer with which the branch office is associated or agent is registered.

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(B)

If more than one business enterprise is conducted from a branch office location, disclosures shall clearly set forth the name of each business enterprise, what business activity is conducted by each organization, and each registered agent's relationship to each organization; provided, however, that this requirement shall not apply to television, radio, or billboard advertising that pertains exclusively to a non-securities product. (3)(A) Each broker-dealer branch office within this state shall be supervised by a manager who is a licensed agent in New Hampshire and who shall have qualified as a principal by passing a FINRA principal's examination applicable to the registrant's business conducted at that location.

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(B)

Each broker-dealer and investment adviser shall establish and maintain supervisory procedures that are reasonably designed to achieve compliance with all applicable securities laws and statutes. The responsibility for such supervisory procedure shall be determined by various factors, including:

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(i)

The firm's size, organizational structure, and scope of business activities, and the number and location of offices.

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(ii)

The nature and complexity of procedures and services offered.

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(iii)

The volume of business conducted.

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(iv)

The number of agents and investment advisors assigned to a location.

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(v)

Whether a location has an on-site principal.

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(vi)

Whether the office is a non-branch location.

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(g)

Senior-specific designations.

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(1)

The use of a senior-specific certification or designation by any person in connection with the offer, sale, or purchase of securities, or the provision of advice as to the value of, or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a dishonest and unethical practice in the securities business within the meaning of RSA 421-B:4-412(d)(13). The prohibited use of such certifications or professional designation includes, but is not limited to, the following:

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(A)

Use of a certification or professional designation by a person who has not actually earned, or is otherwise ineligible to use such certification or designation;

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(B)

Use of a nonexistent or self-conferred certification or professional designation;

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(C)

Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification or professional designation does not have; and

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(D)

Use of a certification or professional designation that was obtained from a designating or certifying organization that:

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(i)

Is primarily engaged in the business of instruction in sales or marketing;

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(ii)

Does not have reasonable standards or procedures for assuring the competency of its designees or certificants;

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(iii)

Does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or

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(iv)

Does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certificate.

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(2)

There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of RSA 421-B:4-401(g)(1)(D) when the organization has been accredited by:

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(A)

The American National Standards Institute; or

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(B)

The National Commission for Certifying Agencies; or

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(C)

An organization that is on the United States Department of Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes" and the designation or credential issued therefrom does not primarily apply to sales and/or marketing.

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(3)

In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include:

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(A)

Use of one or more words such as "senior," "retirement," "elder," or like words, combined with one or more words such as "certified," "registered," "chartered," "adviser," "specialist," "consultant," "planner," or like words, in the name of the certification or professional designation; and

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(B)

The manner in which those words are combined.

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(4)

For purposes of this subsection, "financial services regulatory agency" includes, but is not limited to, an agency that regulates broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940. For the purposes of this subsection, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title:

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(A)

Indicates seniority or standing within the organization; or

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(B)

Specifies an individual's area of specialization within the organization.

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(5)

Nothing in this subsection shall limit the secretary of state's authority to enforce existing provisions of law. Source. 2015, 273:1, eff. Jan. 1, 2016. 2018, 106:1, eff. July 24, 2018. 2022, 281:84, eff. Jan. 1, 2023.

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