1Amending the act of December 5, 1972 (P.L.1280, No.284),
2entitled "An act relating to securities; prohibiting
3fraudulent practices in relation thereto; requiring the
4registration of broker-dealers, agents, investment advisers,
5and securities; and making uniform the law with reference
6thereto," making extensive substantive and editorial changes;
7further providing for definitions, exempt securities, exempt
8transactions, required documents for registration statements,
9rules for filing federally covered securities, exemptions
10from registration provisions, powers for the Department of
11Banking and Securities, administration of the act, increasing
12assessments, methods of payment of funds and requirements for
13administrative proceedings under the act; making a repeal;
14and establishing a restricted account in the General Fund.

15The General Assembly of the Commonwealth of Pennsylvania
16hereby enacts as follows:

17Section 1. Section 102(c), (d), (e), (f), (j), (j.1), (k),
18(s) and (t) of the act of December 5, 1972 (P.L.1280, No.284),
19known as the Pennsylvania Securities Act of 1972, amended or
20added December 7, 1994 (P.L.869, No.126), November 24, 1998
21(P.L.829, No.109), July 4, 2002 (P.L.721, No.108), November 23,
222004 (P.L.924, No.128) and November 23, 2004 (P.L.930, No.132),
23are amended and the section is amended by adding subsections to
24read:

1Section 102. Definitions.--When used in this act, the
2following definitions shall be applicable, unless the context 
3otherwise requires:

4* * *

5(c) "Agent" means any individual, other than a broker-
6dealer, who represents a broker-dealer or issuer in effecting or
7attempting to effect purchases or sales of securities. "Agent"
8does not include: (i) an individual who represents an issuer in
9effecting transactions in securities exempted by section 202,
10transactions exempted by section 203 or transactions in a
11covered security described in sections 18(b)(3) and (4)(D) of
12the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r) if no
13compensation is paid or given directly or indirectly for
14soliciting any person in this State in connection with any of
15the foregoing transactions; (ii) an individual who represents a
16broker-dealer in effecting transactions in this State, which
17transactions are limited to those described in section [15(h)
18(2)] 15(i)(3) of the Securities Exchange Act of 1934 (48 Stat. 
19881, 15 U.S.C. [§ 78o(h)(2)] § 78o(i)(3)); and (iii) an
20individual who has no place of business in this State if he
21effects transactions in this State exclusively with broker-
22dealers. Except where representing an issuer in effecting
23transactions in securities registered under section 205 or 206,
24a bona fide officer, director, or partner or employe of a
25broker-dealer or issuer, or an individual occupying a similar
26status or performing similar functions, is an agent only if he
27otherwise comes within this definition and receives compensation
28directly or indirectly related to purchases or sales of
29securities.

30(d) "Bank" means a bank, savings bank, savings institution,

1savings and loan association, thrift institution, trust company
2or similar organization which is organized or chartered under
3the laws of a state or of the United States, is authorized to
4and receives deposits and is supervised and examined by an
5official or agency of a state or by the United States if its
6deposits are insured by the Federal Deposit Insurance
7Corporation or a successor authorized by Federal law, and any 
8agency, branch or representative office of a foreign bank that 
9is subject to the same degree of regulation and supervision as a 
10domestic bank.

11(e) "Broker-dealer" means any person engaged in the business
12of effecting transactions in securities for the account of
13others or for his own account. "Broker-dealer" does not include:

14(i) An agent;

15(ii) An issuer;

16(iii) A bank which meets the exceptions from the definition
17of "broker" under section 3(a)(4)(B) or (E) or the definition of
18"dealer" under section 3(a)(5)(B) or (C) of the Securities
19Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78c(a)(4)(B) or
20(E) or (5)(B) or (C));

21(iv) An executor, administrator, guardian, conservator or
22pledgee;

23(v) A person who has no place of business in this State if
24he effects transactions in this State exclusively with or
25through (A) the issuers of the securities involved in the
26transactions, (B) broker-dealers or institutional investors;

27(vi) A person licensed as a real estate broker or agent
28under the act of February 19, 1980 (P.L.15, No.9), known as the
29Real Estate Licensing and Registration Act, and whose
30transactions in securities are isolated transactions incidental

1to that business; or

2(vii) Other persons not within the intent of this subsection
3whom the [commission] department by regulation designates.

4(f) "Commission" means the [Pennsylvania] Banking and
5Securities Commission[.] of the Commonwealth, as established 
6under Subarticle C of Article XI-A of the act of May 15, 1933 
7(P.L.565, No.111), known as the Department of Banking and 
8Securities Code.

9* * *

10(f.3) "Commissioner" means a member of the commission.

11* * *

12(g.1) "Department" means the Department of Banking and
13Securities of this Commonwealth.

14* * *

15(j) "Investment adviser" means any person who, for
16compensation, engages in the business of advising others, either
17directly or through publications [or writings,], writings or 
18electronic means, as to the value of securities or as to the
19advisability of investing in, purchasing or selling securities,
20or who, for compensation and as a part of a regular business,
21issues or promulgates analyses or reports concerning securities.
22"Investment adviser" does not include:

23(i) A bank;

24(ii) A lawyer, accountant, engineer or teacher whose
25performance of these services is solely incidental to the
26practice of his profession;

27(iii) A broker-dealer [registered under this act without the
28imposition of the condition referred to in section 305(b)(v);]
29or its agents whose performance of investment advice is solely 
30incidental to the conduct of business as a broker-dealer and
 

1does not receive special compensation for the investment advice;

2(iv) A publisher of any bona fide newspaper, news column,
3newsletter, news magazine or business or financial publication
4or service, whether communicated in hard copy form or by
5electronic means or otherwise, that does not consist of the
6rendering of advice on the basis of the specific investment
7situation of each client and is of general, regular and paid
8circulation; and the agents and servants thereof in the
9performance of their regular duties on behalf of such
10publication or service;

11(v) A person whose advice, analyses or reports relate only
12to securities exempted under section 202(a);

13(vi) A person who has no place of business in this State if
14his only clients in this State are other investment advisers,
15federally covered advisers, broker-dealers or institutional
16investors;

17(vii) A person who has a place of business in this State and
18during the preceding twelve-month period has had not more than
19five clients in or out of this State and does not hold himself
20out generally to the public as an investment adviser;

21(viii) A person that is an investment adviser
22representative;

23(ix) A federally covered adviser;

24(x) A person excluded from the definition of "investment
25adviser" under section 202(a)(11) of the Investment Advisers Act
26of 1940 (54 Stat. 847, 15 U.S.C. § 80b-2(a)(11)); or

27(xi) Other persons not within the intent of this subsection
28whom the [commission] department by regulation designates.

29((j) amended Nov. 24, 1998, P.L.829, No.109)

30(j.1) "Investment adviser representative" means:

1(i) Except as provided in paragraph (iii), with respect to
2any investment adviser registered or required to be registered
3under this act, any partner, officer, director or person
4occupying a similar status or performing similar functions, or
5other individuals employed by or associated with an investment
6adviser[, except clerical or administrative personnel,] who
7performs any of the following:

8(A) Makes any recommendations or otherwise renders advice
9regarding securities;

10(B) Manages accounts or portfolios of clients;

11(C) Determines which recommendation or advice regarding
12securities should be given;

13(D) [Solicits, offers or negotiates for the sale of or sells
14investment advisory services; or] Provides investment advice or 
15holds himself or herself out as providing investment advice;

16(E) Supervises employes who perform any of the foregoing;

17(ii) [with] With respect to any federally covered adviser,
18any individual employed by or associated with a federally
19covered adviser who is an "investment adviser representative"
20and who has a "place of business" in this State as those terms
21are defined in the rules and regulations of the Securities and
22Exchange Commission.

23(iii) An investment advisor representative may not include;

24(A) individuals who perform only clerical or ministerial
25acts;

26(B) an agent whose performance of investment advice is
27solely incidental to the individual acting as an agent and who
28does not receive special compensation for investment advisory
29services; or

30(C) other individuals that the department determines by

1regulation.

2(k) "Institutional investor" means any bank, insurance
3company, pension or profit sharing plan or trust (except a
4municipal pension plan or system), investment company, as
5defined in the Investment Company Act of 1940, or any person,
6other than an individual, which controls any of the foregoing,
7the Federal Government, State or any agency or political
8subdivision thereof, except public school districts of this
9State, or any other person so designated by regulation of the
10[commission] department.

11* * *

12(s) "Securities Act of 1933," "Securities Exchange Act of
131934," "Public Utility Holding Company Act of [1935] 2005,"
14"Trust Indenture Act of 1939," "Investment Advisers Act of
151940," "Investment Company Act of 1940" and "Internal Revenue
16Code of [1954] 1986" mean the Federal statutes of those names as
17amended [before or after the effective date of this act], or any
18successor statutes thereto. Section numbers of such statutes or
19regulations adopted thereunder and referred to herein include
20such amendments thereto as may be adopted [before or after the
21effective date of this act. "Securities and Exchange Commission"
22means the "United States Securities and Exchange Commission."].

23(s.1) "Securities and Exchange Commission" means the United
24States Securities and Exchange Commission.

25(s.2) "Self-regulatory organization" means a national
26securities exchange registered under the Securities Exchange Act
27of 1934, a national securities association registered under the
28Securities Exchange Act of 1934 or Investment Advisors Act of
291940, a clearing agency registered under the Securities Exchange
30Act of 1934, the Municipal Securities Rulemaking Board

1established under the Securities Exchange Act of 1934 or an
2organization operating under the authority of the Commodity
3Futures Trading Commission.

4(t) "Security" means any note; stock; treasury stock; bond;
5debenture; evidence of indebtedness; share of beneficial
6interest in a business trust; certificate of interest or
7participation in any profit-sharing agreement; collateral trust
8certificate; preorganization certificate or subscription;
9transferable share; investment contract; voting trust
10certificate; certificate of deposit for a security; limited
11partnership interest; [certificate of interest or participation
12in an oil, gas or mining title or lease or in payments out of
13production under such a title or lease;] fractional undivided 
14interest in oil, gas or other mineral rights; put, call, 
15straddle, option or privilege on a security, certificate of 
16deposit of a security or group or index of securities including 
17any interest in the securities or based upon the value of the 
18securities, or any put, call, straddle, option or privilege 
19entered into on a national securities exchange relating to 
20foreign currency; membership interest in a limited liability
21company of any class or series, including any fractional or
22other interest in such interest, unless excluded by clause (v);
23or, in general, any interest or instrument commonly known as [or
24having the incidents of] a "security"; or any certificate of
25interest or participation in, temporary or interim certificate
26for, receipt for, guarantee of, or warrant or right to subscribe
27to or purchase, any of the foregoing. All of the foregoing are
28securities whether or not evidenced by written document.
29"Security" does not include:

30(i) Any beneficial interest in any voluntary inter vivos

1trust which is not created for the purpose of carrying on any
2business; or

3(ii) Any beneficial interest in any testamentary trust; or

4(iii) Any insurance or endowment policy or annuity contract
5under which an insurance company admitted in this State promises
6to pay a sum of money (whether or not based upon the investment
7performance of a segregated fund) either in a lump sum or
8periodically for life or some other specified period; or

9(iv) Any certificate issued under section 809 of The
10Insurance Company Law of 1921, act of May 17, 1921 (P.L.682), as
11amended; or

12(v) A membership interest in a limited liability company
13where all of the following conditions are satisfied:

14(A) The membership interest is in a company that is not
15managed by managers;

16(B) The purchaser of the membership interest enters into a
17written commitment to be engaged actively and directly in the
18management of the company; and

19(C) The purchaser of the membership interest, in fact, does
20participate actively and directly in the management of the
21company.

22* * *

23Section 2. Section 202 of the act, amended or added December
247, 1994 (P.L.869, No.126), November 24, 1998 (P.L.829, No.109)
25and July 4, 2002 (P.L.721, No.108), is amended to read:

26Section 202. Exempt Securities.--The following securities
27are exempted from sections 201 and 211:

28(a) Any security issued or guaranteed by the United States,
29any state or Canadian Province, any political subdivision of a
30state or Canadian Province, foreign government with which the

1United States currently maintains diplomatic relations, or any
2agency or corporate or other instrumentality of any of the
3foregoing, or any certificate of deposit for any of the
4foregoing, provided that if the issuer or guarantor is a foreign
5government other than Canada or an instrumentality of a foreign
6government other than Canada, such security or certificate of
7deposit therefor is recognized as a valid obligation by the
8issuer or guarantor thereof or its or their successors.

9(b) Any security issued or guaranteed by any bank [or
10savings association and any security the offer, sale, issuance
11or guarantee of which (i) is subject to regulation by the
12Interstate Commerce Commission, or (ii) is registered under the
13Public Utility Holding Company Act of 1935 or the act of May 28,
141937 (P.L.1053), known as the "Public Utility Law," or (iii) the
15issuer of which is regulated as to the issuance or guarantee of
16such security by a governmental authority of the United States].

17(b.1) Any security issued or guaranteed by a railroad, other
18common carrier, public utility holding company that is: (i)
19regulated in respect to its rates and charges by the United
20States or any state; (ii) regulated in respect to the issuance
21or guarantee of the security to be issued in reliance on this
22section by the United States, any state, Canada or any Canadian
23province or territory; or (iii) a public utility holding company
24registered under the Public Utility Holding Company Act of 2005
25or a subsidiary of such a registered holding company within the
26meaning of that statute.

27(c) Any commercial paper which arises out of a current
28transaction or the proceeds of which have been or are to be used
29for current transactions, and which evidences an obligation to
30pay cash within nine months of the date after issuance,

1exclusive of days of grace, or any renewal of such paper which
2is likewise limited, or any guarantee of such paper or of any
3such renewal, except where such paper is proposed to be sold or
4offered to the public in units of less than five thousand
5dollars ($5,000) to any single person.

6(d) Any security issued or guaranteed by any Federal credit
7union or any credit union, industrial loan association or other
8similar association organized and supervised under the laws of
9this State.

10(e) Any security (except evidences of indebtedness, whether
11interest bearing or not) of an issuer (i) organized exclusively
12for educational, benevolent, fraternal, religious, charitable,
13social, athletic or reformatory purposes and not for pecuniary
14profit, if no part of the net earnings of the issuer inures to
15the benefit of any private shareholder or individual, or (ii)
16organized as a chamber of commerce or trade or professional
17association. The fact that amounts received from memberships, or
18dues, or both will or may be used to construct or otherwise
19acquire facilities for use by members of the nonprofit
20organization does not disqualify the organization from this
21exemption. This exemption shall not apply to the securities of
22any nonprofit organization if any promoter thereof expects or
23intends to make a profit directly or indirectly from any
24business or activity associated with the organization or
25operation of such nonprofit organization.

26(f) Any security listed, or approved for listing upon notice
27of issuance, [on the New York, American, or Philadelphia stock
28exchange or quoted on the National Market System of the Nasdaq
29Stock Market] a national securities exchange described in 
30section 18(b)(1) of the Securities Act of 1933 (48 Stat. 74, 15
 

1U.S.C. § 77r(b)(1); any other security of the same issuer which
2is of senior or substantially equal rank; any security called
3for by subscription rights or warrants so listed[,] or approved
4[or quoted]; and any warrant or right to purchase or subscribe
5to any of the foregoing.

6(g) Any security issued in connection with an employe's
7stock option, purchase, savings, pension, profit-sharing or
8similar benefit plan.

9(h) Any security of a registered broker-dealer issued to its
10officers, partners or employes, subject to such regulations as
11the [commission] department may establish.

12(i) Any security as to which the [commission] department by
13regulation or order finds that registration is not necessary or
14appropriate for the protection of investors.

15(j) Any membership interest in a limited liability company
16that renders one or more professional services. As used in this
17subsection, the term "professional services" shall have the
18meaning set forth in 15 Pa.C.S. § 2902 (relating to
19definitions).

20Section 3. Section 203 of the act, amended May 4, 1993
21(P.L.4, No.4), December 7, 1994 (P.L.869, No.126), November 24,
221998 (P.L.829, No.109), July 4, 2002 (P.L.721, No.108) and
23November 23, 2004 (P.L.918, No.126), is amended to read:

24Section 203. Exempt Transactions.--The following
25transactions are exempted from sections 201 and 211:

26(a) Any non-issuer transaction except where directly or
27indirectly for the benefit of an affiliate of the issuer.

28(b) Any non-issuer transaction directly or indirectly for
29the benefit of an affiliate of the issuer which is exempted from
30section 5 of the Securities Act of 1933, other than those

1transactions exempted pursuant to section 3(a)(11) or 3(b) of
2the Securities Act of 1933, and the rules and regulations now or
3hereafter adopted thereunder.

4(c) Any offer or sale to an institutional investor or to a
5broker-dealer, whether the buyer is acting for itself or in some
6fiduciary capacity.

7(d) Any sales by an issuer to not more than twenty-five
8persons in this State during a period of twelve consecutive
9months if (i) the issuer shall obtain the written agreement of
10each such person not to sell the security within twelve months
11after the date of purchase; (ii) no general solicitation through
12public media advertising, mass mailing, Internet or other means
13is used in connection with soliciting such sales; (iii) no cash
14or securities is given or paid, directly or indirectly, to any
15promoter as compensation in connection therewith unless such
16compensation is given or paid in connection with a sale made by
17a broker-dealer registered pursuant to section 301 and any
18person receiving such compensation is either such broker-dealer
19or an agent registered pursuant to section 301 of such broker-
20dealer; (iv) the filing fee specified in section 602(b.1) is
21paid; and (v) the issuer has provided written notice to each
22such person of the right to withdraw an acceptance as provided
23by section 207(m)(2). Purchasers of securities registered under
24this act or sold in reliance upon an exemption under this act
25other than this subsection (d), (f) or (s) shall not be included
26in computing the twenty-five persons for purposes of this
27exemption. A notice in the form prescribed by the [commission]
28department, signed by an officer of the issuer and stating the
29name, principal business address of the issuer, proposed use of
30the proceeds from the sale and such facts as are necessary to

1establish this exemption shall be filed, together with a copy of
2any offering literature used in connection with such offer or
3sale, with the [commission] department not later than the day on
4which the issuer receives from any person an executed
5subscription agreement or other contract to purchase the
6securities being offered or the issuer receives consideration
7from any person therefor, whichever is earlier.

8(e) Any offer to not more than fifty persons in this State
9during a period of twelve consecutive months (i) if no sales
10result from such offer or if sales resulting from such offer are
11exempt by reason of subsection (d) or (f) hereof and (ii) no
12general solicitation through public media advertising, mass
13mailing, Internet or other means is used in connection with
14making the offer. This subsection shall not be applicable to
15offers made pursuant to any other subsection of this section,
16except subsections (d) and (f).

17(f) Any offer or sale of a preorganization subscription or
18securities of a newly-formed person as part of its initial
19capitalization to not more than five persons, if no general 
20solicitation through public media advertising, mass mailing, 
21Internet or other means is used in connection with soliciting 
22the sales.

23(g) Any transaction between the issuer or other person on
24whose behalf the offering is made and an underwriter, or among
25underwriters.

26(h) Any offer, but not a sale, of a security for which a
27registration statement has been filed under the Securities Act
28of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.) or a notification
29of exemption from registration pursuant to Regulation A
30promulgated under section 3(b) of such act (15 U.S.C. § 77c(b))

1if (i) no stop order or refusal order is in effect and no public
2proceeding or examination looking toward such an order is
3pending under the Securities Act of 1933 or this act; and (ii)
4no such offer is made until after such registration statement,
5including a prospectus, has been filed with the [commission]
6department.

7(i.1) Any sale of an equity security, [except securities of
8an open-end or closed-end investment company, face amount
9certificate company or unit investment trust, as such persons
10are classified in the Investment Company Act of 1940 (54 Stat. 
11789, 15 U.S.C. § 80a-1 et seq.),] if: (i) the securities are
12proposed to be registered under section 5 of the Securities Act
13of 1933 (15 U.S.C. § 77e) and, in fact, become registered under
14section 5 of the Securities Act of 1933 (15 U.S.C. § 77e); (iv)
15the issuer of the security is a reporting company as defined in
16section 102(q); (v) no stop order or refusal order is in effect
17and no public proceeding or investigation looking toward such an
18order is pending under the Securities Act of 1933 or this act;
19(vi) the equity security is [listed on a national securities
20exchange registered under the Securities Exchange Act of 1934
21(48 Stat. 881, 15 U.S.C. § 78a et seq.) or quoted on the
22National Market System or Small Cap Market of the Nasdaq Stock
23Market] OTC Bulletin; (vii) the issuer, at the time the
24registration statement becomes effective under section 5 of the
25Securities Act of 1933, has not received an auditor's report for
26the immediately preceding fiscal year expressing substantial
27doubt about the issuer's ability to continue as a going concern
28unless the securities being sold in reliance upon this
29subsection are the subject of an offering that is being
30underwritten on a firm commitment basis by a broker-dealer

1registered under section 301. An exemption under this section
2shall terminate upon the termination of the effective period of 
3the registration statement under section 5 of the Securities Act
4of 1933. For purposes of this subsection, the [commission]
5department, by regulation, may define the term "equity
6security."

7(j) Any transaction in a bond or other evidence of
8indebtedness secured by a real or chattel mortgage or deed of
9trust, or by an agreement for the sale of real estate or
10chattels if: (i) the entire mortgage, deed of trust, or
11agreement, together with all the bonds or other evidences of
12indebtedness secured thereby, is offered and sold as a unit;
13(ii) no public media advertisement is used, mass mailing made or
14other form of general solicitation is utilized in connection
15with soliciting the transaction; and (iii) no compensation is
16paid or given directly or indirectly for soliciting any person
17in this State in connection with the transaction.

18(k) Any judicial sale or any transaction by an executor,
19administrator, sheriff, marshal, receiver, trustee in
20bankruptcy, guardian or conservator.

21(l) Any transaction now or hereafter exempted from section 5
22of the Securities Act of 1933 by virtue of sections 3(a)(9) or
233(a)(10) thereof.

24(m) Any transaction executed by a bona fide pledgee without
25any purpose of evading this act.

26(n) Any transaction pursuant to an offer of securities to
27existing equity security holders of (i) the issuer; (ii) a
28corporation which prior to the commencement of the offer owned
29substantially all of the voting stock of the issuer; or (iii) a
30corporation which organized the issuer for the purpose of the

1offer, if no compensation, other than a standby commission, is
2paid or given directly or indirectly for soliciting any equity
3security holder in this State. "Equity security holders" include
4persons who at the time of the transaction are holders of
5convertible securities, nontransferable warrants, or
6transferable warrants exercisable within not more than ninety
7days of their issuance.

8(o) Any transaction incident to a vote by security holders, 
9or written consent of some or all security holders in lieu of 
10such vote, pursuant to the articles of incorporation or the 
11applicable corporation statute or other statute governing such 
12person, or pursuant to a partnership agreement, a declaration of 
13trust, trust indenture or any agreement among security holders 
14on a merger, consolidation, sale of assets in consideration, in 
15whole or in part, of the issuance of securities of another 
16person, reclassification of securities, or reorganization 
17involving the exchange of securities, in whole or in part, for 
18the securities of any other person if, in the case of any 
19proposed transaction where no proxy materials are required or 
20permitted to be filed with the Securities and Exchange 
21Commission by either party to the transaction and where more 
22than twenty-five per cent of the security holders of either 
23party to the transaction are residents of this State, materials 
24specified by regulation of the [commission] department are 
25prepared in connection with the proposed transaction and, after 
26filing with and review by the [commission] department, 
27distributed to the security holders of each party to the 
28transaction prior to the vote or solicitation of written consent 
29and the filing fee specified in section 602(b.1) is paid.

30(o.1) Any transaction incident to a vote by security
 

1holders, or written consent of some or all security holders in 
2lieu of the vote, pursuant to the articles of incorporation or 
3the applicable corporation statute or other statute governing 
4the person, or pursuant to a partnership agreement, a 
5declaration of trust, trust indenture or an agreement among 
6security holders on a merger, consolidation, sale of assets in 
7consideration, in whole or in part, of the issuance of 
8securities of another person, reclassification of securities or 
9reorganization involving the exchange of securities, in whole or 
10in part, for the securities of another person if each of the 
11parties to a transaction described in this section is a bank 
12holding company registered under the Bank Holding Company Act of 
131956 (70 Stat. 133, 12 U.S.C. § 1841) and subject to the 
14supervision of the Board of Governors of the Federal Reserve 
15System.

16(p) Any offer or sale of an evidence of indebtedness of an
17issuer either: organized exclusively for educational,
18benevolent, fraternal, religious, charitable, social, athletic
19or reformatory purposes and not for pecuniary profit, if no part
20of the net earnings of the issuer inures to the benefit of any
21private shareholder or individual; or organized as a chamber of
22commerce or trade or professional association if all the
23following are met:

24(1) The issuer files a notice with the [commission]
25department in the form prescribed by the [commission] department
26not later than five business days before the issuer receives
27from any person an executed subscription agreement or other
28contract to purchase the securities being offered or the issuer
29receives consideration from any person therefor, whichever is
30earlier. The notice filed with the [commission] department shall

1be accompanied by a copy of a disclosure document and any
2offering literature to be used in connection with an offer or
3sale of securities under this section.

4(2) The filing fee prescribed in section 602(b.1)(x) has
5been paid.

6(3) Each person who accepts an offer to purchase securities
7under this subsection has received a written notice of a right
8to withdraw an acceptance as provided in section 207(m)(2).

9(4) The issuer and any predecessor of the issuer have not
10defaulted within the current fiscal year and the three preceding
11fiscal years with respect to any debt security previously sold
12by the issuer or its predecessor.

13(5) The total amount of securities proposed to be offered
14under this subsection are secured by a mortgage or deed of trust
15upon the existing land and buildings owned by the issuer which
16mortgage or deed of trust is or will become a first lien at or
17prior to the issuance of the securities or there exists a
18provision satisfactory to the [commission] department for
19escrowing of the proceeds from the sale of the securities until
20such first lien is established.

21(6) The total amount of securities proposed to be offered
22under this subsection does not exceed as of the time the form
23required by this subsection is filed with the [commission]
24department seventy-five per cent of the fair market value of the
25land and buildings to be included in the mortgage or deed of
26trust.

27(7) No promoter of the issuer expects or intends to make a
28profit directly or indirectly from any business activity
29associated with the organization or operation of the issuer.

30(8) The issuer complies with regulations of the [commission]

1department with respect to trust indentures and the use of an
2offering document.

3(q) Any bona fide distribution in partial or total
4liquidation of a person, whether or not the assets being
5distributed include securities of any other person and whether
6or not wholly or partially in exchange for the securities of the
7person making the distribution, and any stock split and any
8stock dividend, where the corporation distributing the dividend
9is not the issuer, if nothing of value is given by stockholders
10for the dividend other than the surrender of a right to a cash
11or property dividend in lieu of the stock and if the dividend is
12issued pro rata by class.

13(r) Any transaction or class of transactions as to which the
14[commission] department by regulation or order finds that
15registration is not necessary or appropriate for the protection
16of investors. As a condition of the availability of an exemption
17granted or established under this section, the [commission]
18department may require compliance with the provisions of section
19207(m)(2) and the rules and regulations promulgated thereunder.

20(s) Any offer or sale of a security which is exempt from
21registration under section 5 of the Securities Act of 1933 (48 
22Stat. 74, 15 U.S.C. § 77e) pursuant to Rule 505 of Regulation D
23promulgated under section 3(b) of the Securities Act of 1933 (15 
24U.S.C. § 77c(b)) if:

25(i) The issuer files a notice in the form prescribed by rule
26of the [commission] department, together with a copy of any
27offering document or literature proposed to be used in
28connection with such offer and sale, with the [commission]
29department not later than the day on which the issuer receives
30from any person an executed subscription agreement or other

1contract to purchase the securities being offered or the issuer
2receives consideration from any person therefor, whichever is
3earlier;

4(ii) The issuer pays the filing fee specified in section
5602(b.1);

6(iii) No mass mailing is used, public media advertising made
7or other form of general solicitation is utilized in connection
8with offers and sales under this subsection;

9(iv) No compensation is given or paid, directly or
10indirectly, to any person in connection with a sale under this
11subsection unless the compensation is given or paid in
12connection with a sale made by a broker-dealer who is registered
13under section 301; and

14(v) Neither the issuer nor a predecessor of the issuer;
15affiliated issuer; officer, director or general partner of the
16issuer; promoter of the issuer presently connected with the
17issuer in any capacity; beneficial owner of ten per cent or more
18of any class of equity securities of the issuer; underwriter of
19the securities to be offered under this subsection or any
20partner, director or officer of such underwriter has within five
21years of filing a notice pursuant to subparagraph (i):

22(A) Filed a registration statement which is the subject of a
23currently effective registration stop order entered by any state
24securities administrator or the Securities and Exchange
25Commission;

26(B) Been convicted of any criminal offense in connection
27with the offer, purchase or sale of a security or involving
28fraud or deceit;

29(C) Been subject to a state administrative enforcement order
30or judgment finding fraud or deceit in connection with the

1purchase, offer or sale of any security;

2(D) Been subject to a state administrative enforcement order
3or judgment which prohibits, denies or revokes the use of an
4exemption from registration in connection with the purchase,
5offer or sale of a security; or

6(E) Been subject to an order, judgment or decree of any
7court of competent jurisdiction temporarily, preliminarily or
8permanently restraining or enjoining such party from engaging in
9or continuing to engage in any conduct or practice involving
10fraud or deceit in connection with the purchase, offer or sale
11of any security.

12The provisions of this subparagraph shall not apply if the party
13subject to a disqualification described in clause (A), (B), (C),
14(D) or (E) is licensed or registered to conduct securities-
15related business in the state in which the order, judgment or
16decree creating the disqualification was entered against such
17party; the state securities administrator or the court or
18regulatory authority that entered the order judgment or decree
19waives the disqualification prior to the first offer being made
20in this State under this subsection; or the issuer establishes
21that it did not know and, in the exercise of reasonable care
22based on a factual inquiry, could not have known that a
23disqualification existed under this subparagraph.

24(t) Any offer and any sale resulting from such offer where
25the securities being offered, whether in or outside of this
26State, will be sold only to accredited investors as that term is
27defined in the rules and regulations of the Securities and
28Exchange Commission if:

29(i) The securities are sold in good faith reliance that the
30offering would qualify for an exemption from registration under

1section 5 of the Securities Act of 1933 (15 U.S.C. § 77e),
2pursuant to section 3(a)(11) of the Securities Act of 1933 (15 
3U.S.C. § 77c(a)(11)) or the regulations adopted by the
4Securities and Exchange Commission under section 3(b) of the
5Securities Act of 1933 (15 U.S.C. § 77c(b)), except an offering
6under Rule 505 of Regulation D promulgated by the Securities and
7Exchange Commission under section 3(b) of the Securities Act of
81933 (15 U.S.C. § 77c(b));

9(ii) The issuer files a notice in the form prescribed by
10rule of the [commission] department, together with a copy of any
11offering document or literature proposed to be used in
12connection with such offer and sale, with the [commission]
13department not later than the day on which the issuer receives
14from any person an executed subscription agreement or other
15contract to purchase the securities being offered or the issuer
16receives consideration from any person therefor, whichever is
17earlier;

18(iii) The issuer pays the filing fee specified in section
19602(b.1);

20(iv) No compensation is given or paid, directly or
21indirectly, to any person in connection with a sale under this
22subsection unless the compensation is given or paid in
23connection with a sale made by a broker-dealer who is registered
24under section 301;

25(v) Neither the issuer nor a predecessor of the issuer;
26affiliated issuer; officer, director or general partner of the
27issuer; promoter of the issuer presently connected with the
28issuer in any capacity; beneficial owner of ten per cent or more
29of any class of equity securities of the issuer; underwriter of
30the securities to be offered under this subsection or any

1partner, director or officer of such underwriter has within five
2years of filing a notice pursuant to subparagraph (i):

3(A) Filed a registration statement which is the subject of a
4currently effective registration stop order entered by any state
5securities administrator or the Securities and Exchange
6Commission;

7(B) Been convicted of any criminal offense in connection
8with the offer, purchase or sale of a security or involving
9fraud or deceit;

10(C) Been subject to a state administrative enforcement order
11or judgment finding fraud or deceit in connection with the
12purchase, offer or sale of any security;

13(D) Been subject to a state administrative enforcement order
14or judgment which prohibits, denies or revokes the use of an
15exemption from registration in connection with the purchase,
16offer or sale of a security; or

17(E) Been subject to an order, judgment or decree of any
18court of competent jurisdiction temporarily, preliminarily or
19permanently restraining or enjoining such party from engaging in
20or continuing to engage in any conduct or practice involving
21fraud or deceit in connection with the purchase, offer or sale
22of any security.

23The provisions of this subparagraph shall not apply if the party
24subject to a disqualification described in clause (A), (B), (C),
25(D) or (E) is licensed or registered to conduct securities-
26related business in the state in which the order, judgment or
27decree creating the disqualification was entered against such
28party; the state securities administrator or the court of
29regulatory authority that entered the order judgment or decree
30waives the disqualification prior to the first offer being made

1in this State under this subsection; or the issuer establishes
2that it did not know and, in the exercise of reasonable care
3based on a factual inquiry, could not have known that a
4disqualification existed under this subparagraph;

5(vi) The issuer specifies in any advertisement,
6communication, sales literature or other information which is
7publicly disseminated in connection with the offering of
8securities, including by means of electronic transmission or
9broadcast media, that the securities will be sold only to
10accredited investors. For purposes of this paragraph, "publicly
11disseminated" means communicated to 100 or more persons or
12otherwise communicated, used or circulated in a public manner;

13(vii) The issuer does not engage in any solicitation of
14prospective purchasers by telephone until the issuer has
15reasonable grounds to believe that the person to be solicited is
16an accredited investor;

17(viii) The issuer places a legend on the cover page of any
18disclosure document proposed to be used in connection with the
19offering or on the cover page of the subscription agreement
20advising that the securities described in the disclosure
21document or the subscription agreement will be sold only to
22accredited investors and that any resales of the securities made 
23within 12 months from the original date of purchase shall only 
24be made pursuant to an effective registration or to accredited 
25investors;

26(ix) The issuer is not an investment company as defined in
27the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.);
28[and]

29(x) The issuer is not a development stage company with no
30specific business plan or purpose or a development stage company

1that has indicated that its business plan is to engage in a
2merger or acquisition with an unidentified company or companies
3or other entity or person[.]; and

4(xi) The issuer reasonably believes that all purchasers are 
5purchasing for investment and not with the view to distribute, 
6or for sale in connection with a distribution of, the security. 
7A resale of a security sold in reliance on this exemption within 
812 months from the original date of purchase shall be presumed 
9to be with a view to distribution and not for investment, except 
10resales pursuant to a registration statement effective under 
11section 205 or 206, or accredited investors pursuant to an 
12exemption available under this act.

13(u) Any offer or sale of a security in an offering which is 
14exempt from registration under section 5 of the Securities Act 
15of 1933 (48 Stat. 74, 15 U.S.C. §77e) in good faith reliance on 
16section 3(b)(2) or 77c(b)(2) and rules and regulation adopted 
17thereunder, provided that the issuer of the securities files 
18with the department all documents that are required by rules of 
19the Securities and Exchange Commission to be filed with the 
20Securities and Exchange Commission at the same time that those 
21documents are filed with the Securities and Exchange Commission.

22Section 4. Section 204 of the act, amended July 4, 2002
23(P.L.721, No.108), is amended to read:

24Section 204. Exemption Proceedings.--(a) The [commission]
25department may by regulation as to any type of security or 
26transaction, or by order in a particular case, as to any 
27security or transaction increase the number of purchasers or 
28offerees permitted, or waive the conditions in either of 
29sections 202 or 203.

30(b) The [commission] department may by order deny or revoke

1any exemption specified in section 202 or 203 with respect to a
2specific security or transaction. The order shall be issued
3summarily without notice or hearing. Upon issuance of a summary
4order, the [commission] department shall promptly provide the
5order to the person against whom it is issued. The order shall
6contain findings of fact and conclusions of law and include a
7notice affording the person an opportunity for a hearing under
8section 607(a). No order under this section shall operate
9retroactively. No person shall be considered to have violated
10section 201 by reason of any offer or sale effected after the
11entry of an order under this section if he sustains the burden
12of proof that he did not know, and in the exercise of reasonable
13care could not have known, of the order.

14Section 5. Section 205 of the act, amended November 24, 1998
15(P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is amended
16to read:

17Section 205. Registration by Coordination.--(a)
18Registration by coordination may be used for any offering for
19which a registration statement has been filed under the
20Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.) or
21for any proposed sale pursuant to Regulation A promulgated under
22the exemption contained in section 3(b) of such act (15 U.S.C. § 
2377c(b)) provided, except in the case of open-end or closed-end
24investment company, face amount certificate company or unit
25investment trust, as such persons are classified in the
26Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1
27et seq.), such registration statement or notification of
28proposed sale has not become effective.

29(b) A registration statement under this section shall
30contain the following information and be accompanied by the

1following documents in addition to the information specified in
2section 207(b):

3(i) Two copies of the preliminary prospectus or offering
4circular filed under the Securities Act of 1933;

5(ii) If the [commission] department by regulation requires,
6a copy of the articles of incorporation and bylaws or their
7substantial equivalents currently in effect, a copy of any
8agreements with or among underwriters, a copy of any indenture
9or other instrument governing the issuance of the security to be
10registered, and a specimen or copy of the security;

11(iii) If the [commission] department by regulation or order
12requires, any other information, or copies of any documents,
13filed under the Securities Act of 1933; and

14(iv) An undertaking to forward to the [commission]
15department all future amendments to the Federal prospectus or
16offering circular, other than an amendment which merely delays
17the effective date of the registration statement, not later than
18the first business day after they are forwarded to or filed with
19the Securities and Exchange Commission, or such longer period as
20the [commission] department permits.

21(c) A registration statement or notification of any proposed
22sale filed under this section automatically [become] becomes
23effective at the moment the Federal registration statement or
24notification becomes effective if (i) no stop order is in effect
25in this State and no proceeding is pending under section 208;
26and (ii) the registration statement or notification has been on
27file with the [commission] department for at least ten days.

28(d) The registrant shall notify the [commission] department
29promptly [by telephone or telegram], in a manner determined by 
30the department, of the date and time when the Federal

1registration statement became effective and the content of the
2price amendment, if any, and shall file a post-effective
3amendment promptly containing the information and documents in
4the price amendment. "Price amendment" means the final Federal
5amendment which includes a statement of the offering price,
6underwriting and selling discounts or commissions, amount of
7proceeds, conversion rates, call prices and other matters
8dependent upon the offering price. Upon failure to receive the
9required notification and post-effective amendment with respect
10to the price amendment, the [commission] department may enter a
11stop order, without notice or hearing, retroactively denying
12effectiveness to the registration statement or suspending its
13effectiveness until compliance with this subsection is effected,
14if it promptly notifies the registrant by telephone or telegram
15of the issuance of such order. If the registrant proves
16compliance with the requirements of this subsection as to notice
17and post-effective amendment, the stop order shall be vacated as
18of the time of its entry. The [commission] department may by
19regulation or order waive any of the conditions specified in
20subsection (b) or (c).

21(e) If the Federal registration statement becomes effective
22before all the conditions in this section are satisfied and they
23are not waived, the registration statement automatically becomes
24effective as soon as all the conditions are satisfied. If the
25registrant advises the [commission] department of the date when
26the Federal registration statement is expected to become
27effective, the [commission] department shall promptly advise the
28registrant [by telephone or telegram, at the registrant's
29expense] in a manner determined by the department, whether all
30the conditions are satisfied and whether it then contemplates

1the institution of a proceeding under section 208; but this
2advice by the [commission] department does not preclude the
3institution of such a proceeding at any time.

4Section 6. Section 206(b)(16) and (17), (c), and (d) of the
5act, amended March 25, 1981 (P.L.1, No.1), are amended to read:

6Section 206. Registration by Qualification.--* * *

7(b) A registration statement under this section shall
8contain the information specified in section 207(b), and shall
9contain the following information and be accompanied by the
10following documents:

11* * *

12(16) [a balance sheet of the issuer as of a date within four
13months prior to the filing of the registration statement; a
14profit and loss statement and analysis of surplus for each of
15the three fiscal years preceding the date of the balance sheet
16and for any period between the close of the last fiscal year and
17the date of the balance sheet, or for the period of the issuer's
18and any predecessors' existence if less than three years; and,
19if any part of the proceeds of the offering is to be applied to
20the purchase of any business, the same financial statements
21which would be required if that business were the registrant, or
22such other] the financial statements as may be required pursuant
23to section 609(c) and regulations adopted under that section;
24and

25(17) such additional information as the [commission]
26department requires by regulation or order.

27For purposes of this section 206(b) the [commission]
28department may classify issuers and types of securities.

29(c) Registration under this section becomes effective when
30the [commission] department so orders. If a registration

1statement has been on file for at least thirty days and all
2information required by the [commission] department has been
3furnished, the person filing the statement may at any time file
4a written request that the [commission] department take action
5within ten days following the filing of such request. If a
6request is filed and the [commission] department takes no action
7within the period, the registration becomes effective at the end
8of the ten-day period.

9(d) The [commission] department may by regulation or order
10require as a condition of registration under this section that a
11prospectus containing any designated part of the information
12contained in the registration statement or filed with it be sent
13or given to each person to whom an offer is made before or
14concurrently with: the first written offer made to him,
15otherwise than by means of a public advertisement, by or for the
16account of the issuer or any other person on whose behalf the
17offering is made, or by any underwriter or broker-dealer who is
18offering part of an unsold allotment or subscription taken by
19him as a participant in the distribution; or the confirmation of
20any sale made by or for the account of any person; or the
21payment pursuant to any sale; or the delivery of the security
22pursuant to any sale; whichever first occurs.

23Section 7. Section 207 of the act, amended December 7, 1994
24(P.L.869, No.126), November 24, 1998 (P.L.829, No.109), and July
254, 2002 (P.L.721, No.108), is amended to read:

26Section 207. General Registration Provisions.--(a) A
27registration statement may be filed by the issuer, any other
28person on whose behalf the offering is to be made or a licensed
29broker-dealer.

30(b) Every registration statement shall specify: (i) the

1amount of securities to be offered in this State; (ii) the
2states in which a registration statement or application in
3connection with the offering has been or is to be filed; (iii)
4any adverse order, judgment or decree entered in connection with
5the offering by the regulatory authorities in any state or by
6any court or the Securities and Exchange Commission, or any
7withdrawal with prejudice of a registration statement or
8application relating to the offering; and (iv) the names of all
9underwriters and broker-dealers selling or offering the
10securities in this State. Where the names of all underwriters or
11broker-dealers are not known at the time of filing of the
12registration statement, such list may be supplemented from time
13to time prior to or after effectiveness, provided that no delay
14of effectiveness or suspension shall be caused by the filing of
15any such supplement.

16(c) Any document filed under this act or a predecessor law
17within five years preceding the filing of a registration
18statement may be incorporated by reference in the registration
19statement.

20(d) The [commission] department may by regulation or
21otherwise permit the omission of any item of information or
22document from any registration statement.

23(e) The [commission] department may by regulation or order
24require as a condition of registration by qualification or as a
25condition of registration by coordination (if more than sixty-
26six and two-thirds per cent of the issue of securities part or
27all of which is to be registered by coordination is to be sold
28in Pennsylvania) that a report by an accountant, engineer,
29appraiser or other professional person be filed. The
30[commission] department may also designate one of its employes

1to make an examination of the business and records of an issuer
2of securities for which a registration statement has been filed
3by qualification.

4(f) In the case of a non-issuer distribution, information
5may not be required under section 206(b) or section 207(k)
6unless it is known to the person filing the registration
7statement or to the persons on whose behalf the distribution is
8to be made, or can be furnished by them without unreasonable
9effort or expense.

10(g) The [commission] department may by regulation or order
11require as a condition of registration that any security issued
12within the past five years or to be issued to a promoter for a
13consideration substantially different from the public offering
14price, or to any person for a consideration other than cash, be
15deposited in escrow; or that the proceeds from the sale of the
16registered security in this State be escrowed until the issuer
17receives a specified amount from the sale of the security either
18in this State or elsewhere; or that the proceeds from the sale
19of the registered security in this State be escrowed for a
20specific use as set forth in the prospectus; or it may impose
21any or all of these requirements. With respect to securities
22registered by coordination, no escrow of promotional shares
23hereunder shall be required to extend beyond four years. The
24[commission] department may by regulation or order determine the
25conditions of any escrow required hereunder, but may not reject
26a depository solely because of location in another state.

27(h) The [commission] department may by regulation require
28that debt securities of designated classes to be registered by
29qualification shall be issued under a trust indenture containing
30such provisions as it determines, but such provisions shall not

1be in addition to or inconsistent with the terms required or
2permitted by the Trust Indenture Act of 1939.

3(i) The [commission] department may by regulation require
4(i) with respect to registration by coordination that a copy of
5each form of subscription or sale contract used or proposed to
6be used in this State be filed with the [commission] department
7prior to its use in this State; and (ii) with respect to
8registration by qualification that, as a condition of
9registration, any security registered be sold only on a
10specified form of subscription or sale contract; and (iii) that
11a signed or conformed copy of each such contract be preserved
12for any period up to three years.

13(j.1) A registration by coordination is effective for one
14year from its effective date. The effectiveness of a
15registration by coordination may be extended beyond the initial
16one-year effectiveness period in increments of one-year periods
17up to a maximum of three years from the initial effectiveness
18date, provided that the security is being offered or distributed
19in a nonexempted transaction by or for the account of the issuer
20or other person on whose behalf the offering is being made, or
21by any underwriter or broker-dealer who is still offering part
22of an unsold allotment or subscription taken by him as a
23participant in the distribution and the [commission] department
24has been notified of such continued offering and the period
25thereof. [A registration by qualification is effective for one
26year from its effective date. The fact that a registration
27statement has been effective in this State with respect to any
28security does not permit sales of securities of the same class
29by the issuer or an affiliate of the issuer if such person did
30not file the registration statement, unless a separate

1registration statement is filed and declared effective with
2respect thereto, or an exemption from registration is available.
3A registration statement may not be withdrawn after its
4effective date if any of the securities registered have been
5sold in this State, unless permitted by regulation or order of
6the commission. No registration statement is effective during
7the time a stop order is in effect under section 208.]

8(j.2) A registration by qualification is effective for one 
9year from its effective date. The fact that a registration 
10statement has been effective in this State with respect to a 
11security does not permit sales of securities of the same class 
12by the issuer or an affiliate of the issuer if that person did 
13not file the registration statement, unless a separate 
14registration statement is filed and declared effective with 
15respect to the security, or an exemption from registration is 
16available. A registration statement may not be withdrawn after 
17its effective date if any of the securities registered have been 
18sold in this State, unless permitted by regulation or order of 
19the department. No registration statement is effective during 
20the time a stop order is in effect under section 208.

21(k) During the effective period of a registration statement,
22the [commission] department may by regulation require the person
23who filed the registration statement to file reports with the
24[commission] department, not more often than quarterly, to keep
25reasonably current the information contained in the registration
26statement and to disclose the progress of the offering;
27provided, however, that no person need comply with any such
28regulation of the [commission] department if such person files
29with the [commission] department copies of all reports such
30person is required to file with the Securities and Exchange

1Commission and if such reports are filed in a timely manner. If
2any of the securities registered have been sold in the State,
3the [commission] department may by regulation extend the period
4for filing the reports for an additional term not exceeding two
5years from the date the registration became effective or the
6date of its last amendment or extension.

7(l) A registration statement relating to any offering of
8securities may be amended after its effective date so as to
9increase the specified amount of securities proposed to be
10offered in this State. The amendment becomes effective upon the
11payment of the required filing fee, if any, and when the
12[commission] department so orders.

13(m) (1) Except where such securities are registered under
14section 5 of the Securities Act of 1933, each person who accepts
15an offer to purchase securities registered by qualification
16directly from an issuer or an affiliate of an issuer shall have
17the right to withdraw his acceptance without incurring any
18liability to the seller, underwriter (if any) or any other
19person, within two business days after he receives a prospectus
20relating to the offering (which is not materially different from
21the final prospectus relating to such offering) and a notice
22explaining the provisions of this subsection. As used herein,
23the term "final prospectus" shall mean the document prepared in
24accordance with such regulations as the [commission] department
25may provide, to be used by the seller in connection with an
26offering of securities in this State after the registration of
27such securities has become effective under this act.

28(2) Each person who accepts an offer to purchase securities
29exempted from registration by section 203(d) and (p) directly
30from an issuer or affiliate of an issuer shall receive a written

1notice in such form as the [commission] department, by rule, may
2prescribe informing such person of his right under this
3subsection to withdraw his acceptance without incurring any
4liability to the seller, underwriter (if any) or any other
5person, within two business days from the date of receipt by the
6issuer of his written binding contract of purchase or, in the
7case of a transaction in which there is no written binding
8contract of purchase, within two business days after he makes
9the initial payment for the securities being offered.

10(n) For purposes of coordinating the provisions of this act 
11with uniform procedures to facilitate electronic filings of 
12registration statements and notice filings, including, without 
13limitation, by a securities registration depository, the 
14[commission] department, by regulation, may adopt appropriate 
15procedures or forms or waive or modify any provision of section 
16205 or 206 or this section. The [commission] department, by 
17regulation, also may prescribe methods for accepting electronic 
18or digital signatures on forms to be filed electronically with 
19the [commission] department.

20Section 8. Section 208 of the act, amended November 24, 1998
21(P.L.829, No.109), July 4, 2002 (P.L.721, No.108) and November
2223, 2004 (P.L.928, No.131), is amended to read:

23Section 208. Denial, Suspension, and Revocation of
24Registrations.--(a) The [commission] department may issue a
25stop order denying effectiveness to, or suspending or revoking
26the effectiveness of, any registration statement if it finds
27that the order is in the public interest and that:

28(i) The registration statement as of its effective date or
29as of any earlier date in the case of an order denying
30effectiveness, or any amendment filed under section 207(l) as of

1its effective date, or any report under section 207(k) is
2incomplete in any material respect or contains any statement
3which was, in the light of the circumstances under which it was
4made, false or misleading with respect to any material fact, or
5omitted to state a material fact necessary in order to make the
6statements made, in the light of the circumstances under which
7they are made, not misleading;

8(ii) Any provision of this act or any regulation, order or
9condition lawfully imposed under this act has been wilfully
10violated, in connection with the offering by: (A) the person
11filing the registration statement, (B) the issuer, (C) any
12partner, officer or director of the issuer, (D) any person
13occupying a similar status or performing similar functions, (E)
14any affiliate of the issuer, but only if the person filing the
15registration statement is an affiliate of the issuer, or (F) any
16broker-dealer;

17(iii) The securities are the subject of an administrative
18stop order or similar order or a permanent or temporary
19injunction of any court of competent jurisdiction entered under
20any other Federal or State act applicable to the offering, but
21the [commission] department may not institute a proceeding
22against an effective registration statement under this section
23more than one year from the date of the order or injunction
24relied on, and it may not enter an order under this section on
25the basis of an order or injunction entered under any other
26state act unless that order or injunction was based on facts
27which would currently constitute a ground for a stop order under
28this act;

29(iv) The issuer's enterprise or method of business includes
30or would include activities which are illegal where performed;

1(v) The offering has been or would be made with unreasonable
2amounts of underwriters' and sellers' discounts, commissions or
3other compensation, or promoters' profits or participation, or
4unreasonable amounts or kinds of options, or has worked or
5tended to work a fraud upon purchasers or would so operate,
6provided that any underwriting compensation approved by a
7national securities association registered under the Securities
8Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a et seq.)
9with respect to the underwriting activities of its members shall
10not be deemed unreasonable under this section;

11(vi) The applicant or registrant has failed to pay the
12proper filing fee but the [commission] department shall vacate
13any such order when the deficiency has been corrected;

14(vii) Advertising prohibited by section 606 has been used in
15connection with the sale or offering of the securities;

16(viii) In the case of an offering of debt securities, the
17offering involves an excessive debt-to-equity ratio or the
18issuer, at the time it filed an application under section 205 or
19206, had received an auditor's report for the immediately
20preceding fiscal year expressing substantial doubt about the
21issuer's ability to continue as a going concern;

22(ix) The offering is being made by a development stage
23company which has no specific business plan or purpose or has
24indicated that its business plan is to engage in a merger or
25acquisition with an unidentified company or companies or other
26entity or person; or

27(x) The issuer has loaned money to an officer, director or
28general partner of the issuer or a person who legally or
29beneficially owns five per cent or more of a class of equity
30securities of the issuer or any affiliate of such person which

1moneys have not been repaid to the issuer prior to effectiveness
2of the registration statement under this act, except that this
3provision shall not apply to loans described in section 13(k)(2)
4or (3) of the Securities Exchange Act of 1934 (48 Stat. 881, 15 
5U.S.C. § 78(m)(2) or(3).

6(b) The [commission] department may not institute a stop
7order proceeding against an effective registration statement on
8the basis of a fact or transaction known to it when the
9registration statement became effective unless the proceeding is
10instituted within thirty days after effectiveness.

11(c) The [commission] department may by order deny, postpone,
12suspend or revoke the effectiveness of a registration statement.
13The order may be issued summarily without notice or hearing.
14Upon issuance of a summary order, the [commission] department
15shall promptly provide the order to the applicant or registrant.
16The order shall contain findings of fact and conclusions of law
17and include a notice affording the applicant or registrant an
18opportunity for a hearing under section 607(a). No order shall
19operate retroactively. No person shall be considered to have
20violated section 201 solely by reason of an order entered under
21this section for any offer or sale effected after the entry of
22an order under this section if the person sustains the burden of
23proof that the person did not know and in the exercise of
24reasonable care could not have known of the order.

25Section 9. Sections 209 and 210 of the act, amended November
2624, 1998 (P.L.829, No.109), are amended to read:

27Section 209. Books, Records and Accounts.--(a) Every issuer
28registering securities for sale in this State or who has sold
29securities in this State pursuant to an exemption contained in
30section 202(e), 203(d), 203(p) or 203(r) shall at all times keep

1and maintain a complete set of books, records, and accounts of
2such sales and the disposition of the proceeds thereof for a
3period of three years following the last sale of securities in
4this State or one year after the disposition of all proceeds,
5whichever is longer, and shall thereafter, at such times as are
6required by the [commission] department, make and file in the
7office of the [commission] department, a report, setting forth
8the securities sold by it under such registration or exemption,
9the proceeds derived therefrom and the disposition thereof.

10(b) Subject to the limitations of section 18 of the
11Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r), every
12open-end or closed-end investment company, face amount
13certificate company or unit investment trust, as such persons
14are classified in the Investment Company Act of 1940 (54 Stat. 
15789, 15 U.S.C. § 80a-1 et seq.), making a filing under section
16205, 206 or 211 shall file reports with the [commission]
17department at such times and in such manner as the [commission]
18department, by rule, may prescribe which, at a minimum, set
19forth the total amount of securities offered and sold in this
20State during the effective period of the registration statement
21or notice filing.

22(c) Except open-end and closed-end investment companies,
23face amount certificate companies and unit investment trusts, as
24such persons are classified in the Investment Company Act of
251940, every issuer registering securities for sale in this State
26under section 206 shall file an annual report with the
27[commission] department, no earlier than three hundred sixty-
28five days and no later than four hundred twenty days from the
29effective date of the registration, setting forth the total
30amount of securities sold in this State during the effective

1period of the registration statement.

2Section 210. Retroactive Registration or Amendment of Notice
3of Filing for Certain Securities.--The [commission] department,
4by regulation, may establish procedures whereby an issuer that 
5has an effective registration pursuant to section 205 or 206 
6where an effective registration statement is on file with the 
7Securities and Exchange Commission regarding the same securities 
8or an open-end or closed-end investment company, face amount
9certificate company or unit investment trust, as such persons
10are classified in the Investment Company Act of 1940 (54 Stat. 
11789, 15 U.S.C. § 80a-1 et seq.), which, during the effective
12period of registration under section 205 or 206 or the effective
13period of a notice filing, sold securities in this State in
14excess of the aggregate amount of securities registered for sale
15in this State under section 205 or 206 or covered by the notice
16filing may apply to the [commission] department to register such
17securities retroactive to the date of the initial registration
18or to amend the notice filing retroactive to the date of the
19initial notice filing. An application for retroactive
20registration or amendment of a notice filing for such securities
21shall not be granted if, at the time the application is filed, a
22civil, criminal or administrative proceeding is pending alleging
23violations of section 201 for the sale of such securities in
24this State, or such securities were sold more than twenty-four
25months prior to the date the application was filed with the
26[commission] department. An application under this section shall
27not be granted unless the applicable oversale assessment
28prescribed by section 602.1(d) has been paid.

29Section 10. Section 211 of the act, added or amended
30November 24, 1998 (P.L.829, No.109) and July 4, 2002 (P.L.721,

1No.108), is amended to read:

2Section 211. Federally Covered Securities.--(a) With
3respect to any security that is a covered security under section
418(b)(2) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 
577r(b)(2)), the following shall apply:

6(1) An open-end or closed-end investment company, unit
7investment trust or face amount certificate company, as such
8persons are classified in the Investment Company Act of 1940 (54 
9Stat. 789, 15 U.S.C. § 80a-1 et seq.), annually shall notify the
10[commission] department of its intent to offer such federally
11covered securities for sale in this State by paying the filing
12fee specified in section 602(b.1) and, if applicable, the
13assessment specified in section 602.1(a)(5) and filing any or
14all of the following documents which the [commission]
15department, by rule or order, may require:

16(i) Prior to the initial offer of such federally covered
17security in this State, all documents that are part of a Federal
18registration statement filed with the Securities and Exchange
19Commission under the Securities Act of 1933 (15 U.S.C. § 77a et
20seq.) or, as an alternative thereto, a notice form adopted by
21the [commission] department.

22(ii) After the initial offer of such federally covered
23security in this State, all documents that are part of an
24amendment to a Federal registration statement filed with the
25Securities and Exchange Commission under the Securities Act of
261933 or, as an alternative thereto, a notice form adopted by the
27[commission] department, which shall be filed concurrently with
28the [commission] department.

29(iii) Any other documents that are part of a Federal
30registration statement filed with the Securities and Exchange

1Commission under the Securities Act of 1933, which shall be
2filed concurrently with the [commission] department.

3(2) An initial notice filing by a unit investment trust
4shall be effective for the period beginning with its effective
5date in this State and ending one year after the date the
6registration statement for the same securities became effective
7with the Securities and Exchange Commission. A renewal notice
8filing by a unit investment trust shall be effective for a
9period of one year. An initial or renewal notice filing by a
10unit investment trust becomes effective upon receipt by the
11[commission] department of a properly completed filing,
12including documents required by paragraph (1), and a correct fee
13and, if applicable, the correct assessment unless another date
14is requested in writing by the issuer in the notice filing made
15with the [commission] department.

16(3) A notice filing by an open-end or closed-end investment
17company or face amount certificate company, as such terms are
18classified in the Investment Company Act of 1940, shall be
19effective for the period beginning with its effective date in
20this State and ending sixty days after the filer's fiscal year
21end for the year in which the notice filing was made. A notice
22filing by an open-end or closed-end investment company or face
23amount certificate company becomes effective upon receipt by the
24[commission] department of a properly completed filing,
25including documents required by paragraph (1), and a correct fee
26and, if applicable, the correct assessment unless another date
27is requested in writing by the issuer in the notice filing made
28with the [commission] department.

29(b) With respect to any security that is a covered security
30under section [18(b)(4)(D)] 18(b)(4)(E) of the Securities Act of

11933 (48 Stat. 74, 15 U.S.C. [§ 77r(b)(4)(D)] § 77r(b)(4)(E)),
2an issuer shall file a notice with the [commission] department
3on Form D promulgated by the Securities and Exchange Commission
4[and effective as of September 1, 1996,] not later than fifteen
5calendar days after the first sale of such federally covered
6security occurs in this State, together with the filing fee
7specified in section 602(b.1).

8(b.1) With respect to any security that is a covered
9security under section 18(b)(4)(C) of the Securities Act of 1933
10where: (i) the principal place of business (as that term is
11defined in the rules and regulations of the Securities and
12Exchange Commission) is in this State; or (ii) purchasers of 50%
13or more of the securities sold by the issuer pursuant to an
14offering made in reliance on section 18(b)(4)(C) of the
15Securities Act of 1933 are residents of this State, the issuer
16shall file with the department a copy of the document filed with
17the Securities and Exchange Commission pursuant to section 4A(b)
18of the Securities Act of 1933 when it files such document with
19the Securities and Exchange Commission and within 15 days of
20when it becomes aware of the facts set forth in this subsection.
21There shall be no fee for making such filing with the
22department.

23(c) (1) The [commission] department may issue a stop order
24suspending the offer or sale of a security described in
25[subsection (a) or (b)] subsection (a), (b) or (b.1) upon
26finding that:

27(i) The order is necessary or appropriate in the public
28interest for protection of investors; and

29(ii) There is a failure to comply with any condition
30established under this section.

1(2) A stop order under this section may be issued summarily
2without notice or hearing. Upon issuance of a summary order, the
3[commission] department shall promptly provide the order to the
4person against whom it is issued. The order shall contain
5findings of fact and conclusions of law and include a notice
6affording the person an opportunity for a hearing under section
7607(a). No person shall be considered to have violated section
8201 solely by reason of an order entered under this section for
9an offer or sale effected after the entry of an order under this
10section if the person sustains the burden of proof that the
11person did not know and in the exercise of reasonable care could
12not have known of the order.

13(e) A failure to file or timely file documents with the 
14department or a failure to pay or timely pay a filing fee as 
15required by this section may not create any cause of action for 
16civil liability on the part of any person under section 502 or 
17503.

18Section 11. Section 301 of the act, amended November 24,
191998 (P.L.829, No.109), is amended to read:

20Section 301. Registration Requirement.--Unless exempted
21under section 302 hereof:

22(a) It is unlawful for any person to transact business in
23this State as a broker-dealer or agent unless he is registered
24under this act.

25(b) It is unlawful for any broker-dealer or issuer to employ
26an agent to represent him in this State unless the agent is
27registered under this act. The registration of an agent is not
28effective during any period when he is not associated with a
29specified broker-dealer registered under this act or a specified
30issuer. No agent shall at any time represent more than one

1broker-dealer or issuer, except that where affiliated
2organizations are registered broker-dealers, an agent may
3represent one or more of such organizations. When an agent
4begins or terminates [a connection] an affiliation with a
5broker-dealer or issuer, or [begins or terminates those] engages 
6in activities which make him an agent, the agent as well as the
7broker-dealer or issuer shall promptly notify the [commission]
8department. The [commission] department may adopt a temporary
9registration procedure to permit agents to change employers
10without suspension of their registrations hereunder.

11(c) It is unlawful for any person to transact business in
12this State as an investment adviser unless he is so registered
13or registered as a broker-dealer under this act or unless he is
14exempted from registration. It is unlawful for any person to
15transact business in this State as an investment adviser
16representative unless he is so registered or exempted from
17registration.

18(c.1) The following apply:

19(1) It is unlawful for any:

20(i) Person required to be registered as an investment
21adviser under this act to employ an investment adviser
22representative unless the investment adviser representative is
23registered under this act or exempted from registration,
24provided that the registration of an investment adviser
25representative is not effective during any period when he is not
26employed by an investment adviser registered under this act; or

27(ii) Federally covered adviser to employ, supervise or
28associate with an investment adviser representative having a
29place of business in this Commonwealth unless such investment
30adviser representative is registered under this act or exempted

1from registration.

2(2) If a registered investment adviser representative begins
3or terminates employment with an investment adviser or a
4federally covered adviser, the investment adviser in the case
5under paragraph (1)(i) or the investment adviser representative
6in the case of paragraph (1)(ii) shall promptly notify the
7[commission] department.

8(3) The [commission] department may adopt a temporary
9registration procedure to permit investment adviser
10representatives to change employers without suspension of their
11registrations under this act.

12(d) It is unlawful for any licensed broker-dealer, agent
13[or], investment adviser or investment adviser representative to
14effect a transaction in securities, directly or indirectly, in
15this State if the registrant is in violation of this act, or any
16regulation or order promulgated under this act of which he has
17notice, if such violation (i) is a material violation; (ii)
18relates to transactions effected in this State; and (iii) has
19been committed by such registrant, or if the information
20contained in his application for registration, as of the date of
21such transaction, is incomplete in any material respect or is
22false or misleading with respect to any material fact.

23(e) Every registration or notice filing expires on December
2431 of each year unless renewed. No registration or notice filing
25is effective after its expiration, unless a renewal application
26has been timely filed, and expiration of a registration for
27which no renewal application has been filed is deemed an
28application for withdrawal under section 305(f).

29(f) It is unlawful for any federally covered adviser to
30conduct advisory business in this State unless such person

1complies with the provisions of section 303(a)(iii).

2Section 12. Sections 302 and 303 of the act, amended
3November 24, 1998 (P.L.829, No.109) and July 4, 2002 (P.L.721,
4No.108), are amended to read:

5Section 302. Exemptions.--The following persons shall be
6exempted from the registration provisions of section 301:

7(a) A broker-dealer registered under the Securities Exchange
8Act of 1934, who has not previously had any [certificate]
9registration denied or revoked under this act or any predecessor
10statute, if he has no place of business in this State and,
11during [any period of twelve consecutive] the preceding 12 
12months, he does not direct offers to sell or buy into this State
13in any manner to persons other than broker-dealers,
14institutional investors or governmental agencies and other
15instrumentalities designated by regulation of the [commission]
16department, or to more than five other customers in this State,
17whether or not the offeror or any of the offerees is then
18present in this State.

19(b) An agent in so far as he effects transactions on behalf
20of a broker-dealer who is exempted by the provisions of
21subsection (a).

22(c) A person who represents an issuer in effecting
23transactions in securities registered under section 205 or 206
24who:

25(1) Is a bona fide officer, director, partner or employe of
26the issuer or an individual occupying similar status or
27performing similar functions; and

28(2) Does not receive any compensation, directly or
29indirectly, for effecting the transactions.

30(d) An investment adviser who does not have a place of

1business in this State that is registered or exempt from 
2registration under the securities act of the state in which the 
3person has his principal place of business and during the
4preceding twelve-month period has had not more than five clients
5who are residents of this State exclusive of other investment
6advisers, federally covered advisers, broker-dealers or
7institutional investors.

8(d.1) An investment adviser representative who is employed
9by or associated with an investment adviser insofar as he
10transacts business in this State on behalf of an investment
11adviser who is exempted by the provisions of subsection (d).

12(d.2) An investment adviser representative who has a place
13of business in this State and is employed by or associated with
14a federally covered adviser and the federally covered adviser
15meets any of the criteria described in section 303(a)(iii)(A),
16(B) or (C).

17(e) Any person who represents an issuer in effecting
18transactions in:

19(1) Securities that are exempted by section 202(e), (f) or
20(g);

21(2) Securities involved in a transaction exempted by section
22203(c), (g), (k), (l) or (m); or

23(3) Securities which are covered securities under section
2418(b)(1) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 
2577r(b)(1)).

26(e.2) A person that comes within the exclusion described in
27section 4(b)(1) and (2) of the Securities Act of 1933 (48 Stat.
2874, 15 U.S.C. § 77d(b)).

29(e.3) A funding portal, as that term is defined in § 3(a)
30(80) of the Securities Exchange Act of 1934 (48 Stat. 881, 15

1U.S.C. § 78c(a)(80)), that is registered as a funding portal
2with the Securities and Exchange Commission and has its
3principal place of business (as such term is defined by rules of
4the Securities and Exchange Commission) in this State. Such
5funding portal, however, shall be subject to the provisions of
6Sections 304(d) and 510(f) of the act.

7(f) The [commission] department may by such regulations as
8it deems necessary or appropriate in the public interest or for
9the protection of investors, either unconditionally or upon
10specified terms and conditions or for specified periods, exempt
11from the provisions of section 301 any class of persons
12specified in such regulations.

13Section 303. Registration and Notice Filing Procedure.--(a)
14(i) Except as provided by clause (iii), any broker-dealer,
15agent, investment adviser or investment adviser representative
16may obtain an initial or renewal license by filing an
17application with the [commission] department. The application
18shall contain such information, and in such detail, as the
19[commission] department by rule requires concerning the
20applicant's form and place of organization, proposed method of
21doing business, and financial condition, the qualifications and
22experience of the applicant, including, in the case of a broker-
23dealer or investment adviser, the qualifications and experience
24of any partner, officer, director, or affiliate, or a person
25occupying a similar status or performing similar functions any
26injunction or administrative order or conviction referred to in
27section 305(a)(ii), information about affiliates or predecessors
28of the applicant, and any other matters which the [commission]
29department determines are relevant to the application. If a
30broker-dealer, agent, investment adviser or investment adviser

1representative seeks to obtain an initial or renewal license
2and, in connection therewith, requests a waiver of any
3requirement imposed under this section or section 304 or any
4regulation promulgated thereunder, the [commission] department
5in granting the waiver may impose conditions on or limit the
6scope of the initial or renewal license.

7(ii) If no denial order is in effect and no proceeding is
8pending under section 305, the registration becomes effective on
9the forty-fifth day after the filing of the application therefor
10or any material amendment thereto, or on such earlier date as
11the [commission] department may order. The [commission]
12department is directed to cooperate with other securities
13administrators and regulatory authorities to simplify and
14coordinate registration, application and renewal procedures.

15(iii) A federally covered adviser shall file with the
16[commission] department, prior to acting as a federally covered
17adviser in this State, a copy of such documents as have been
18filed with the Securities and Exchange Commission which the
19[commission] department by regulation may require, together with
20the fee specified in section 602(d.1). This requirement shall
21not apply to a federally covered adviser that:

22(A) Has a place of business in this State and whose only
23clients in this State are investment advisers, federally covered
24advisers, broker-dealers or institutional investors;

25(B) Does not have a place of business in this State and
26during the preceding twelve-month period has had not more than
27five clients who are residents of this State, exclusive of other
28investment advisers, federally covered advisers, broker-dealers
29or institutional investors; or

30(C) Meets the definition of any person described in section

1102(j)(i) through (viii), (x) or (xi), except a federally
2covered adviser that is also a broker-dealer registered under
3section 301, that has an individual employed by or associated
4with such person who meets the definition of investment adviser
5representative in section 102(j.1)(ii).

6(b) A registered broker-dealer or investment adviser may
7file an application for registration of a successor, whether or
8not the successor is then in existence, for the unexpired
9portion of the registrant's term. A federally covered adviser
10may file a notice filing for a successor, whether or not the
11successor is then in existence, for the unexpired portion of the
12notice period. There shall be no filing fee.

13(c) The [commission] department may by regulation prescribe
14standards of qualification with respect to training, experience
15and knowledge of the securities business and provide for an
16examination, which may be written or oral or both, to be taken
17by any class of or all applicants, as well as persons who
18represent or will represent a broker-dealer or an investment
19adviser, and the [commission] department may by order require an
20examination of a licensed broker-dealer, agent [or], investment
21adviser or investment adviser representative for due cause.

22(d) The [commission] department may by regulation require a
23minimum capital for registered broker-dealers subject to the
24limitations of section 15 of the Securities Exchange Act of 1934
25(48 Stat. 881, 15 U.S.C. § 78o) and establish minimum financial
26requirements for investment advisers subject to the limitations
27of section 222 of the Investment Advisers Act of 1940 (54 Stat. 
28847, 15 U.S.C. § 80b-18a). The [commission] department may
29classify broker-dealers for purposes of such requirements and
30may establish different requirements for those investment

1advisers who maintain custody of clients' funds or securities or
2who have discretionary authority over same and those investment
3advisers who do not.

4(e) The [commission] department may by regulation require
5surety bonds to be posted by any broker-dealer, investment
6adviser, and any issuer who employs agents subject to
7registration under section 301 in connection with effecting
8transactions in any security not exempted by section 202(e), (f)
9or (g) or effecting securities transactions not exempted by
10section 203(c), (g), (k), (l) or (m) in any amount the
11[commission] department may prescribe, subject to the
12limitations of section 15 of the Securities Exchange Act of 1934
13(48 Stat. 881, 15 U.S.C. § 78o) for broker-dealers and section
14222 of the Investment Advisers Act of 1940 for investment
15advisers and may determine their conditions. All bonds required
16shall provide for suit thereon by injured customers, clients or
17purchasers, but no bond may be required of any registered
18broker-dealer or investment adviser whose net capital or minimum
19financial requirements exceeds the amount prescribed by
20regulation for this purpose. Such bond, unless cancelled as
21provided herein, shall be in effect during the entire period
22that a registration is in effect. Every bond shall contain a
23provision that such bond is not cancellable, except on thirty-
24days prior written notice to the person by whom the bond was
25posted and the [commission] department, provided that such
26cancellation shall not affect any liability incurred or accrued
27prior to the effective date of such cancellation.

28Section 13. Section 304 of the act, amended November 24,
291998 (P.L.829, No.109), is amended to read:

30Section 304. Post-registration Provisions.--(a) Every

1registered broker-dealer and investment adviser shall make and
2keep all accounts, correspondence, memoranda, papers, books and
3other records which the [commission] department by regulation
4prescribes, except as provided by section 15 of the Securities
5Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78o) in the case
6of a broker-dealer and section 222 of the Investment Advisers
7Act of 1940 (54 Stat. 847, 15 U.S.C. § 80b-18a) in the case of
8an investment adviser. All records so required with respect to
9an investment adviser shall be preserved for such period as the
10[commission] department prescribes by regulation. Subject to the
11limitations of section 15 of the Securities Exchange Act of 1934
12in the case of a broker-dealer and section 222 of the Investment
13Advisers Act of 1940 in the case of an investment adviser, all
14records required shall be preserved for three years unless the
15[commission] department by regulation prescribes otherwise for
16particular types of records, and all required records shall be
17kept within this State or shall, at the request of the
18[commission] department, be made available at any time for
19examination by it either in the principal office of the
20registrant or by production of exact copies thereof in this
21State.

22(b) Every registered broker-dealer and investment adviser
23shall file such financial reports as the [commission] department
24by regulation prescribes, except as provided by section 15 of
25the Securities Exchange Act of 1934 in the case of a broker-
26dealer and section 222 of the Investment Advisers Act of 1940 in
27the case of an investment adviser.

28(c) If the information contained in any document filed with
29the [commission] department is or becomes inaccurate or
30incomplete in any material respect, the registrant or federally

1covered adviser shall promptly file a correcting amendment if
2the document is filed with respect to a registrant or when such
3amendment is required to be filed with the Securities and
4Exchange Commission if the document is filed with respect to a
5federally covered adviser.

6(d) The [commission] department shall make periodic
7examinations, within or without this State, of each broker-
8dealer and investment adviser at reasonable times and in
9reasonable scope. These examinations may be made without prior
10notice to the broker-dealer or investment adviser. For the
11purpose of avoiding unnecessary duplication of examinations, the
12[commission] department, in so far as it deems it practicable in
13administering this subsection, shall cooperate with securities
14administrators of other states, the Securities and Exchange
15Commission, and any national securities exchange or national
16securities association registered under the Securities Exchange
17Act of 1934 (15 U.S.C. § 78a et seq.) or any other department or
18agency of this State. The department shall have examination 
19authority under this subsection with respect to a funding 
20portal, as that term is defined in section 3(a)(80) of the 
21Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 
22§ 78c(a)(80)), that is registered as a funding portal with the 
23Securities and Exchange Commission and has its principal place 
24of business (as defined by rules of the Securities and Exchange 
25Commission) in this State, provided that the department shall 
26not apply any provision of this act or any rule or regulation 
27adopted under this act or take an administrative action that is 
28in addition to, or different from, the requirements for 
29registered funding portals established by the Securities and 
30Exchange Commission.

1(e) The [commission] department may by regulation prohibit
2unreasonable charges, commissions or other compensation of
3broker-dealers and investment advisers, provided that any
4charges, commissions, or other compensation consistent with
5rates set by a national securities exchange, when applied to
6transactions on that exchange, or by the Securities and Exchange
7Commission or national securities association registered under
8the Securities Exchange Act of 1934, shall not be deemed
9unreasonable under this section. Any underwriting compensation
10permitted by a national securities association registered under
11the Securities Exchange Act of 1934 with respect to the
12underwriting activities of its members shall not be deemed
13unreasonable under this section.

14(f) The [commission] department may prescribe [rules]
15regulations and statements of policy which it finds appropriate
16in the public interest and for the protection of investors for
17the conduct of business by broker-dealers and investment
18advisers who are not members of [the National Association of
19Securities Dealers, Inc. or any other national securities
20association registered under the Securities Exchange Act of
211934] a self-regulatory organization, which association has
22adopted rules of conduct. The department may adopt a regulation 
23or order requiring an agent or investment adviser representative 
24to participate in a continuing education program approved by the 
25Securities and Exchange Commission and administered by a self-
26regulatory organization or, in the absence of such a program, a 
27regulation or order issued under this act may require continuing 
28education for an individual registered as an agent or investment 
29adviser representative.

30[(g) All broker-dealers and investment advisers registered

1hereunder shall display copies of their currently effective
2licenses, bearing the seal of the commission, prominently in
3each place of business within this State. Each such certificate
4shall contain the names of such persons as the commission shall
5by rule provide.]

6Section 14. Section 305 of the act, amended or added June
725, 1986 (P.L.256, No.68), December 18, 1990 (P.L.755, No.190),
8November 24, 1998 (P.L.829, No.109), July 4, 2002 (P.L.721,
9No.108) and November 23, 2004 (P.L.930, No.132), is amended to
10read:

11Section 305. Denial, Suspension, Revocation and Conditioning
12of Registration.

13(a) The [commission] department may, by order, deny,
14suspend, revoke or condition any registration or may censure any
15registrant if it finds that such order is in the public interest
16and that such registrant or applicant, or in the case of any
17broker-dealer or investment adviser, any affiliate thereof,
18whether prior or subsequent to becoming associated with such
19person:

20(i) Has filed an application for registration or a document
21in connection with an application for registration which as of
22its effective date or as of a date after filing in the case of
23an order denying effectiveness, was incomplete in a material
24respect or contained a statement which was, in light of the
25circumstances under which it was made, false or misleading with
26respect to a material fact; or

27(ii) Has been: (A) convicted within ten years of the date of
28the [commission's] department's action of any felony or
29misdemeanor, or of any substantially equivalent crime by a
30foreign court of competent jurisdiction, or held liable in a

1civil action by final judgment of a court and the [commission]
2department finds that such felony, misdemeanor or civil action:
3(I) involved the purchase or sale of any security, the taking of
4a false oath, the making of a false report, bribery, perjury,
5burglary and any substantially equivalent activity however
6denominated by the laws of a relevant foreign government or
7conspiracy to commit any such offense; (II) arose out of the
8conduct of the business of an issuer, broker-dealer, municipal
9securities dealer, government securities broker, government
10securities dealer, investment adviser, bank, insurance company,
11fiduciary, transfer agent, foreign person performing a function
12substantially equivalent to any of the foregoing or any entity
13or person required to be registered under the Commodity Exchange
14Act (42 Stat. 988, 7 U.S.C. § 1 et seq.) or any substantially
15equivalent foreign statute or regulation; (III) involved the
16larceny, theft, robbery, extortion, forgery, counterfeiting,
17fraudulent concealment, embezzlement, fraudulent conversion or
18misappropriation of funds or securities or any substantially
19equivalent activity however denominated by the laws of a
20relevant foreign government; or (IV) involved the violation of
2118 U.S.C. § 152 (relating to concealment of assets; false oaths
22and claims; bribery), 1341 (relating to frauds and swindles),
231342 (relating to fictitious name or address) or 1343 (relating
24to fraud by wire, radio, or television) or Ch. 25 (relating to
25counterfeiting and forgery) or 47 (relating to fraud and false
26statements) or a violation of any substantially equivalent
27foreign statute; or (B) convicted of any other felony; or

28(iii) Is permanently or temporarily enjoined by any court of
29competent jurisdiction from engaging in or continuing any
30conduct or practice involving any aspect of the securities or

1commodities future contract business or involving fraudulent
2conduct in the banking or insurance business; or

3(iv) Is subject to (A) any currently effective order or
4order entered within the past five years of the Securities and
5Exchange Commission, the Commodity Futures Trading Commission or
6the securities administrator of any other state denying
7registration to or revoking or suspending the registration of
8such person as a broker-dealer, agent, investment adviser,
9investment adviser representative, futures commission merchant,
10commodity pool operator, commodity trading [advisor] adviser or
11a person associated with a futures commission merchant,
12commodity pool operator or commodity trading adviser, or (B) any
13currently effective order of any [national securities
14association, national securities exchange (as defined in the
15Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 78a et
16seq.)) or self-regulatory organization operating under the
17authority of the Commodity Futures Trading Commission] self-
18regulatory organization suspending or expelling such person from
19membership in such [association, exchange or] self-regulatory
20organization, or (C) any currently effective cease and desist
21order or a cease and desist order entered within the past five
22years by the Securities and Exchange Commission, the Commodity
23Futures Trading Commission or the securities administrator of
24any other state and where, in the case of a cease and desist
25order entered by a state, the cease and desist order contained a
26finding of a wilful violation of that state's securities law, or
27(D) a currently effective United States Postal Service fraud
28order; but the [commission] department may not institute a
29revocation or suspension proceeding under this subsection on the
30basis of an order under another state law more than one year

1after termination of the effectiveness of the order relied on
2and unless the order was based on facts which would currently
3constitute grounds for an order under this section; or

4(v) Has wilfully violated any provision of the Securities
5Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.), the
6Securities Exchange Act of 1934, the Trust Indenture Act of 1939
7(53 Stat. 1149, 15 U.S.C. § 77aaa et seq.), the Investment
8Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80b-1 et seq.),
9the Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 
1080a-1 et seq.), the Commodity Exchange Act, any law of a foreign
11country governing or regulating any aspect of the business of
12securities, commodities futures or banking or this act, or of
13any rule, regulation or order under any of such statutes within 
14the previous ten years; or

15(vi) Has wilfully aided, abetted, counseled, commanded,
16induced, or procured the violation by any other person of any of
17the statutes, rules, regulations or orders referred to in
18subsection (v) within the previous ten years; or

19(vii) Has failed reasonably to supervise his agents or
20employes, if he is a broker-dealer, or his investment adviser
21representatives or employes, if he is an investment adviser
22within the previous ten years; or

23(viii) Is the subject of a currently effective order of the
24[commission] department denying, suspending or revoking his
25registration in any other capacity under this act; or

26(ix) Has engaged in dishonest or unethical practices in the
27securities business or has taken unfair advantage of a customer
28within the previous ten years; or

29(x) Is insolvent, either in the sense that his liabilities
30exceed his assets or in the sense that he cannot meet his

1obligations as they mature, or is in such financial condition
2that he cannot continue in business with safety to his
3customers, or has not sufficient financial responsibility to
4carry out the obligations incident to his operations provided
5that the [commission] department has made a specific finding of
6insolvency, absence of safety or insufficient financial
7responsibility; or

8(xi) Is not qualified on the basis of such factors as
9training, experience and knowledge of the securities business;
10except as otherwise provided in subsection (b); or

11(xii) Is selling or has sold, or is offering or has offered
12for sale, in this State securities through any unregistered
13agent required to be registered under this act or for any
14broker-dealer or issuer with knowledge that such broker-dealer
15or issuer had not or has not complied with this act; or

16(xiii) Has made any material misrepresentation to or
17withheld or concealed from or omitted to state to the
18[commission] department or any of its representatives any
19material fact necessary in order to make the statements made, in
20the light of the circumstances under which they are made, not
21misleading, or has refused to furnish information reasonably
22requested by the [commission] department within the previous ten 
23years; or

24(xiv) Is subject to any currently effective order or orders
25entered within the past five years by any regulator of another
26country:

27(A) denying registration to or revoking or suspending the
28registration of such person as a broker-dealer, agent,
29investment adviser, investment adviser representative, futures
30commission merchant, commodity pool operator, commodity trading

1adviser or a person associated with a futures commission
2merchant, commodity pool operator or commodity trading adviser;
3or

4(B) denying, revoking or suspending the person's legal
5authorization to engage in the business of banking or insurance;
6or

7(xv) Is subject to any currently effective order of any
8securities exchange or self-regulatory organization operating
9under the authority of the securities regulator of another
10country suspending or expelling such person from membership in
11such exchange or self-regulatory association; or

12(xvi) Is subject to a currently effective order or orders
13entered within the past five years by a state insurance
14regulator or Federal or state banking regulator denying
15registration, articles of incorporation or association,
16certificate of organization or authorization to do business,
17charter or license, or revoking or suspending the registration,
18articles of incorporation or association, certificate of
19organization or authorization to do business, charter or license
20of such person to engage in the insurance, banking or other
21financial services industry, or finding that such person has
22engaged in fraudulent, unethical, dishonest or abusive practices
23in connection with any aspect of the business of insurance,
24banking or other financial services.

25(a.1) The [commission] department, by order, may deny the
26application of:

27(i) an agent or investment adviser representative if the
28individual is obligated pursuant to an award of an arbitration
29panel to pay compensation to purchasers of securities or 
30investment advice and, as of the date the application is filed

1with the [commission] department, has not paid the awarded
2compensation to the purchasers in full and within the time
3period specified by the arbitration panel; or

4(ii) a broker-dealer or investment adviser if a promoter,
5director, chief executive officer, chief financial officer,
6chief operations officer, chief legal officer, chief compliance
7officer or general partner (or person occupying a similar status
8or performing similar functions) of the applicant held a similar
9position with another broker-dealer, investment adviser or
10federally covered adviser which entity pursuant to an award of
11an arbitration panel is obligated to pay compensation to
12purchasers of securities and, as of the date the application is
13filed with the [commission] department, has not paid the awarded
14compensation to the purchasers in full within the time period
15specified by the arbitration panel.

16The [commission] department may issue an order prospectively
17rescinding a denial order issued under this subsection if the
18person whose application has been denied under this subsection
19provides credible evidence that the compensation awarded by the
20arbitration panel which was the basis for denial of the
21application under this subsection has been paid in full and in
22cash.

23(a.2) The [commission] department, by order, may suspend the
24registration of a broker-dealer, investment adviser, agent or
25investment adviser representative if such person is obligated,
26pursuant to an award of an arbitration panel, to pay
27compensation to purchasers of securities in this Commonwealth
28and has not paid the awarded compensation in full and in cash.
29The [commission] department shall rescind the suspension order
30prospectively if the person provides credible evidence to the

1[commission] department that the compensation awarded by the
2arbitration panel has been paid in full and in cash to
3purchasers of securities in this Commonwealth. Rescission of a
4suspension order issued under this section shall reinstate the
5person as a registrant in the same category held at the time the
6suspension order was issued but only if:

7(i) the person otherwise currently meets all requirements
8for registration in that category set forth in this act and
9regulations promulgated thereunder;

10(ii) there is no basis for the [commission] department to
11act pursuant to subsection (a) or (a.1); and

12(iii) applicable fees and compliance assessments set forth
13in sections 602 and 602.1 have been paid as if the person had
14been registered during the period of suspension.

15(b) The following provisions govern the application of
16section 305(a)(xi):

17(i) The [commission] department may not enter an order
18against a broker-dealer on the basis of the lack of
19qualification of any person other than (A) the broker-dealer
20himself if he is an individual, or (B) an agent of the broker-
21dealer.

22(ii) The [commission] department may not enter an order
23against an investment adviser on the basis of the lack of
24qualification of any person other than (A) the investment
25adviser himself if he is an individual, (B) any other person who
26represents the investment adviser in doing any of the acts which
27make him an investment adviser or (C) an investment adviser
28representative.

29(iii) The [commission] department may not enter an order
30solely on the basis of lack of experience if the applicant or

1registrant is qualified by training or knowledge or both.

2(iv) The [commission] department shall consider that an
3agent who will work under the supervision of a registered
4broker-dealer need not have the same qualifications as a broker-
5dealer.

6(v) The [commission] department shall consider that an
7investment adviser is not necessarily qualified solely on the
8basis of experience as a broker-dealer or agent. When it finds
9that an applicant for initial or renewal registration as a
10broker-dealer is not qualified as an investment adviser, it may
11by order condition the applicant's registration as a broker-
12dealer upon his not transacting business in this State as an
13investment adviser.

14(vi) The [commission] department may by rule provide for an
15examination, which may be written or oral or both, to be taken
16by any class of or all applicants, as well as persons who
17represent or will represent an investment adviser in doing any
18of the acts which make him an investment adviser.

19(c) The [commission] department may not institute a
20suspension or revocation proceeding solely on the basis of a
21final judicial or administrative order made known to it by the
22applicant prior to the effective date of the registration unless
23the proceeding is instituted within the next ninety days
24following registration. This provision shall not apply to
25renewals of registrations.

26(d) The [commission] department may by order summarily deny,
27postpone or suspend an application or registration pending final
28determination of any proceeding under this section. The order
29may be issued summarily without notice or hearing. Upon issuance
30of a summary order, the [commission] department shall promptly

1provide the order to the applicant or registrant and the
2employer or prospective employer if the applicant or registrant
3is an agent or investment adviser representative. The order
4shall contain findings of fact and conclusions of law and
5include a notice affording the applicant or registrant an
6opportunity for a hearing in accordance with section 607(a).

7(e) If the [commission] department finds that any registrant
8or applicant is no longer in existence or has ceased to do
9business as a broker-dealer, agent [or], investment adviser or 
10investment adviser representative, or is subject to an
11adjudication of mental incompetence or to the control of a
12committee, conservator or guardian, or cannot be located after
13reasonable search, the [commission] department may by order
14revoke the registration or deny the application.

15(f) Withdrawal from the status of a registered broker-
16dealer, agent, investment adviser or investment adviser
17representative becomes effective on the thirtieth day after
18receipt of an application to withdraw, or within such shorter
19period as the [commission] department determines, unless a
20revocation or suspension proceeding is pending before the
21[commission] department when the application is filed or a
22proceeding to revoke or suspend or to impose conditions upon the
23withdrawal is instituted before the [commission] department
24within thirty days after the withdrawal application is filed. If
25a proceeding is so pending or instituted, withdrawal becomes
26effective at such time and upon such conditions as the
27[commission] department by order determines. If no proceeding is
28so pending or instituted and withdrawal automatically becomes
29effective, the commission may institute a revocation or
30suspension proceeding under subsections (a)(i), (v), (vi),

1(vii), (viii), (ix), (xii) and (xiii) within one year after
2withdrawal became effective and enter a revocation or suspension
3order as of the last date on which the registration was in
4effect.

5(g) No order may be entered under this section except under
6subsection (d) without appropriate prior notice to the applicant
7or registrant as well as the employer or prospective employer if
8the applicant or registrant is an agent or associated person,
9opportunity for hearing and written findings of fact and
10conclusions of law. In cases of denial orders, such findings and
11conclusions shall be provided only if requested by the
12applicant.

13(h) A person that controls, directly or indirectly, a person 
14who is subject to an action of the department under subsection 
15(a) may be subjected to the same discipline by the department 
16and to the same extent as the controlled person unless the 
17controlling person did not know, and in the exercise of 
18reasonable care could not have known, of the existence of 
19conduct that is the basis for the action by the department 
20against the controlled person.

21Section 15. Section 306 of the act is amended to read:

22Section 306. Prohibited Employment.--(a) It is unlawful for
23any person, as to whom an order suspending or revoking his
24registration is in effect, wilfully to become or to be employed
25in any capacity by any broker-dealer or investment adviser or in
26the position of agent for an issuer without the consent of the
27[commission] department; and it is unlawful for any broker-
28dealer, investment adviser or issuer to permit such a person to
29become or to remain a person employed by him without the consent
30of the [commission] department if such broker-dealer, investment

1adviser or issuer knew, or in the exercise of reasonable care
2should have known, of such order.

3(b) No issuer (except for a broker-dealer registered
4hereunder) shall employ any person as an agent hereunder if such
5issuer knew, or in the exercise of reasonable care should have
6known, that such person has at any time within the twelve
7previous months participated in this State as an agent, officer
8or director of another issuer in the sale of securities of that
9issuer, which securities were registered under section 205 or
10206.

11Section 16. Section 404 of the act, amended November 24,
121998 (P.L.829, No.109) and November 23, 2004 (P.L.924, No.128),
13is amended to read:

14Section 404. Prohibited Advisory Activities.--(a) It is
15unlawful for any person who receives, directly or indirectly, 
16any consideration from another person for advising the other 
17person as to the value of securities or their purchase or sale, 
18whether through the issuance of analyses or reports or 
19otherwise, in this State:

20(1) To employ any device, scheme, or artifice to defraud the
21other person.

22(2) To engage in any transaction, act, practice, or course
23of business which operates as a fraud or deceit upon any other
24person.

25(3) Acting as principal for his own account, knowingly to
26sell any security to or purchase any security from a client, or,
27acting as broker for a person other than such client, knowingly
28to effect any sale or purchase of any security for the account
29of such client, without disclosing to such client in writing
30before the completion of the transaction the capacity in which

1he is acting and obtaining the consent of the client to such
2transaction. The prohibitions of this paragraph shall not apply
3to any transaction with a customer of a broker-dealer if such
4broker-dealer is not acting as an investment adviser in relation
5to such transaction.

6(4) To engage in any act, practice, or course of business
7which is fraudulent, deceptive, or manipulative.

8(5) To fail to disclose to the board of school directors of
9a public school district or to a municipal pension plan or
10system in this Commonwealth the compensation that such person
11will give, directly or indirectly, to another person in
12connection with either obtaining the board of school directors
13or municipal pension plan or system as an advisory client or
14advising the board of school directors or municipal pension plan
15or system as to any transaction involving the purchase or sale
16of a security with respect to an investment of public school
17district funds pursuant to section 440.1 of the act of March 10, 
181949 (P.L.30, No.14), known as the "Public School Code of 1949,"
19and 53 Pa.C.S. Pt. VII Subpt. B (relating to indebtedness and
20borrowing) or investment of funds of the municipal pension plan
21or system. ((5) amended Nov. 23, 2004, P.L.924, No.128)

22(6) To represent that he is an investment counsel or to use
23the name "investment counsel" as descriptive of his business
24unless a substantial part of his business consists of rendering
25investment advisory services on the basis of the individual
26needs of his clients.

27(7) Unless the person is registered as a broker-dealer under
28this act, to take and have custody of any securities or funds of
29any client if he fails to meet such requirements therefor as may
30be prescribed by the [commission] department by regulation.

1(b) In the solicitation of advisory clients, it is unlawful
2for any person to make any untrue statement of material fact or
3omit to state a material fact necessary in order to make the
4statements made, in light of the circumstances under which they
5are made, not misleading.

6(c) The prohibitions of this section shall apply to
7federally covered advisers and other persons excluded from the
8definition of investment adviser under section 102(j)(i) through
9(viii), (x) and (xi) only to the extent that the prohibited
10conduct involves fraud or deceit.

11Section 17. Section 407 of the act, amended November 24, 
121998 (P.L.829, No.109), is amended to read:

13Section 407. Misleading Filings; Misrepresentations of
14[Commission] Department Approval.--(a) It is unlawful for any
15person to make or cause to be made, in any document filed with
16the [commission] department or in any proceeding under this act,
17any statement which is, at the time and in the light of the
18circumstances under which it is made, false or misleading in any
19material respect or, in connection with such statement, to omit
20to state a material fact necessary in order to make the
21statements made, in the light of the circumstances under which
22they are made, not misleading. Where any person has failed to
23make reasonable inquiry as to the accuracy of the information
24being filed with the [commission] department, such person may
25not rely upon that failure as a defense to a violation of this
26section.

27(b) It is unlawful for any person registered as a broker-
28dealer, agent [or], investment adviser or investment adviser 
29representative under this act to represent or imply in any
30manner whatsoever that such person has been sponsored,

1recommended, or approved or that his abilities or qualifications
2have in any respect been passed upon by the [commission]
3department. Nothing in this section prohibits a statement (other
4than in a paid advertisement) that a person is registered under
5this act, if such statement is true in fact and if the effect of
6such registration is not misrepresented.

7(c) (i) Neither the fact that an application for
8registration of securities or a notice filing under this act has
9been filed nor the fact that such application or notice filing
10becomes effective constitutes a finding by the [commission]
11department that any document filed under this act is true,
12complete or not misleading. Neither any such fact nor the fact
13that an exemption is available for a security or a transaction
14means that the [commission] department has passed upon the
15merits or qualifications of, or recommended or given approval to
16any person, security or transaction.

17(ii) It is unlawful to make, or cause to be made, to any
18prospective purchaser or any other person, any representation
19inconsistent with clause (i) of this subsection.

20Section 18. Section 504 of the act, amended July 4, 2002
21(P.L.721, No.108) and November 23, 2004 (P.L.927, No.130), is
22amended to read:

23Section 504. Time Limitations on Rights of Action.--(a) No
24action shall be maintained to enforce any liability created
25under section 501 (or section 503 in so far as it relates to
26that section) unless brought before the expiration of five years
27after the act or transaction constituting the violation or the
28expiration of one year after the plaintiff receives actual
29notice or upon the exercise of reasonable diligence should have
30known of the facts constituting the violation, whichever shall

1first expire.

2(b) No action shall be maintained to enforce any liability
3created under section 502 (or section 503 in so far as it
4relates to that section) unless brought before the expiration of
5two years after the violation upon which it is based or the
6expiration of one year after the plaintiff receives actual
7notice or upon the exercise of reasonable diligence should have
8known of the facts constituting such violation, whichever shall
9first expire.

10(c) No action shall be maintained to enforce any right of
11indemnification or contribution created by section 503 unless
12brought before the expiration of one year after final judgment
13based upon the liability for which the right of indemnification
14or contribution exists.

15(d) No purchaser may commence an action under section 501,
16502 or 503 if, before suit is commenced, the purchaser has
17received a written offer: (i) stating the respect in which
18liability under such section may have arisen and fairly advising
19the purchaser of his rights; offering to repurchase the security
20for cash, payable on delivery of the security, equal to the
21consideration paid, together with interest at the legal rate
22from the date of payment, less the amount of any income or
23distributions, in cash or in kind, received thereon or, if the
24purchaser no longer owns the security, offering to pay the
25purchaser upon acceptance of the offer an amount in cash equal
26to the damages computed in accordance with section 501(a); and
27(ii) stating that the offer may be accepted by the purchaser at
28any time within a specified period of not less than thirty days
29after the date of receipt thereof, or such shorter period as the
30[commission] department may by rule prescribe; and the purchaser

1has failed to accept such offer in writing within the specified
2period. The limitations on a purchaser commencing an action
3under this subsection shall not apply if the purchaser has
4accepted an offer to repurchase made under this subsection
5within the time period specified under this subsection and has
6complied with all the terms of this subsection but has not
7received the cash payment specified by this subsection within
8ninety days of the date of acceptance of the offer to
9repurchase. For purposes of this subsection, the term "cash" 
10shall mean legal tender of the United States, a certified or 
11cashier's check drawn upon a bank as that term is defined in 
12section 102(d), a United States Postal Service money order or a 
13money order issued by a person licensed by the department to 
14conduct such business.

15(e) No seller may commence an action under section 501, 502
16or 503 if, before suit is commenced, the seller has received a
17written offer: (i) stating the respect in which liability under
18such section may have arisen and fairly advising the seller of
19his rights; (ii) offering to return the security plus the amount
20of any income or distributions, in cash or in kind, received
21thereon upon payment of the consideration received, or, if the
22purchaser no longer owns the security, offering to pay the
23seller upon acceptance of the offer an amount in cash equal to
24the damages computed in accordance with section 501(b); and
25(iii) providing that the offer may be accepted by the seller at
26any time within a specified period of not less than thirty days
27after the date of receipt thereof, or such shorter period as the
28[commission] department may by regulation prescribe; and the
29seller has failed to accept the offer in writing within the
30specified period.

1(f) Offers under subsection (d) or (e) of this section 504
2shall be in the form and contain the information the
3[commission] department by rule prescribes. Every offer under
4this subsection shall be delivered to the offeree personally or
5sent by certified mail addressed to him at his last known
6address. If an offer is not performed in accordance with its
7terms, suit by the offeree under section 501, 502 or 503, shall
8be permitted without regard to subsections (d) and (e) of this
9section 504.

10Section 19. Section 509 of the act, amended or added
11November 24, 1998 (P.L.829, No.109), July 4, 2002 (P.L.721,
12No.108) and November 23, 2004 (P.L.926, No.129), is amended to
13read:

14Section 509. Right of [Commission] Department to Bring
15Actions for Injunction and Equitable Relief; Class Actions;
16Contempt of [Commission] Department Orders.--(a) Whenever it
17appears to the [commission] department that any person has
18engaged or is about to engage in any act or practice
19constituting a violation of any provision of this act or any
20rule or order hereunder, it may in its discretion bring an
21action in the name of the people of the Commonwealth of
22Pennsylvania in the Commonwealth Court or in any of the several
23courts of common pleas to enjoin, through a preliminary or
24permanent injunction, temporary restraining order or writ of
25mandamus, the acts or practices or to enforce compliance with
26this act or any rule or order hereunder. The [commission]
27department also may seek and the court upon proper showing shall
28grant such other ancillary and equitable relief as the facts
29warrant, including, without limitation, appointment of a
30receiver, temporary receiver or conservator of the defendant's

1assets, a freeze of the defendant's assets, obtaining of an
2accounting, orders of rescission, orders of restitution, orders
3of disgorgement or other relief as may be appropriate in the
4public interest. The court shall not require the [commission]
5department to meet the criteria for an equitable injunction in
6order for the court to grant an injunction, restraining order or
7writ of mandamus. The court shall not require the [commission]
8department to post a bond.

9(b) The [commission] department may, with the approval of
10the Attorney General, include in any action authorized by
11subsection (a) a claim for damages under section 501, 502 or 503
12on behalf of the persons injured by the act or practice
13constituting the subject matter of the action, and the court
14shall have jurisdiction to award appropriate relief to such
15persons, if the court finds that enforcement of the rights of
16such persons by private civil action, whether by class action or
17otherwise, would be so burdensome or expensive as to be
18impractical.

19(c) Any person violating any (i) stop order issued under
20section 208, (ii) cease advertising order issued under section
21606(c), (iii) cease and desist order issued under section
22606(c.1), (iv) order of the [commission] department requiring a
23rescission pursuant to section 513, (v) order of the
24[commission] department imposing any bar described in section
25512, (vi) order of the [commission] department requiring return
26of sales compensation under section 514(a) or (vii) any order of
27the [commission] department imposing an administrative
28assessment under section 602.1(b) or (c) from which no appeal of
29such an order has been taken pursuant to section 607(d) of the
30act or which has been sustained on appeal, or which has been

1appealed but where no supersedeas has been granted for the
2period during which the order has been violated, shall be deemed
3to be in contempt of such order. Upon petition and certification
4of such order by the [commission] department, the Commonwealth
5Court or any of the courts of common pleas if it finds after
6hearing or otherwise that the person is not in compliance with
7the order shall adjudge the person in contempt of the order and
8shall assess such civil penalties of an amount not less than
9five thousand dollars ($5,000) nor greater than fifteen thousand
10dollars ($15,000) per violation and grant such equitable relief
11as it may deem appropriate.

12(d) If the [commission] department provides work product or
13services to a receiver, trustee or conservator appointed by a
14court pursuant to subsection (a), the court, upon petition by
15the [commission] department for reimbursement of costs for
16providing such work product or services, may award the
17[commission] department reimbursement of all direct costs
18incurred in providing the work product or services to the
19receiver, trustee or conservator as well as a pro rata portion
20of salaries of [commission] department staff who were involved
21in providing the work product or services. This award may be
22made from funds recovered by and under the control of the
23receiver, trustee or conservator who holds the funds for the
24benefit of investors, provided that the award may not exceed ten
25per cent of the funds held. Reimbursements received by the
26[commission] department under this subsection shall be treated
27as moneys received under section 602.1.

28Section 20. Section 510 of the act, amended November 24,
291998 (P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is
30amended to read:

1Section 510. Investigations and Subpoenas.--(a) The
2[commission] department in its discretion:

3(i) May make such public or private investigations within or
4without this State as it deems necessary to determine whether
5any person has violated or is about to violate this act or any
6rule or order hereunder, or to aid in the enforcement of this
7act or in the prescribing of rules and forms hereunder;

8(ii) May, for a reasonable time not exceeding thirty days,
9take possession of the books, papers, accounts and other
10records, however created, produced or stored, pertaining to the
11business of any broker-dealer or investment adviser or
12pertaining to the activities of any issuer in connection with
13any transaction in a security, whether or not exempted under
14section 202 or 203 and the use of any proceeds obtained
15therefrom, and place a keeper in exclusive charge of them in the
16place where they are usually kept. During such possession no
17person shall remove or attempt to remove any of the books,
18records, accounts, or other papers except pursuant to a court
19order or with the consent of the [commission] department; but
20the directors, officers, partners, and employes of the broker-
21dealer, investment adviser or issuer may examine them, and
22employes shall be permitted to make entries therein reflecting
23current transactions;

24(iii) May require or permit any person to file a statement
25in writing, under oath or otherwise as the [commission]
26department determines, as to all the facts and circumstances
27concerning the matter being investigated;

28(iv) May publish information concerning any violation of
29this act or any rule or order hereunder or concerning
30securities, or practices in the sale thereof, which appear or

1tend to be unfair, inequitable or fraudulent, but only where it
2deems such publication to be in the public interest and for the
3protection of investors; [and]

4(v) May hold hearings, upon reasonable notice, in respect of
5any matters arising out of the administration of this act[.]; 
6and

7(vi) May record presentations made at meetings, seminars or
8other assemblies conducted in a public forum which may involve
9the offer or sale of securities in this State in any manner that
10the [commission] department determines appropriate.

11(b) For the purpose of any investigation, hearing or
12proceeding under this act, the [commission] department or any
13officer designated by it may administer oaths and affirmations,
14subpoena witnesses, compel their attendance, take evidence and
15require the production of any books, papers, correspondence,
16memoranda, agreements or other documents or records which the
17[commission] department deems relevant or material to the
18inquiry.

19(c) In case of contumacy by, or refusal to obey a subpoena
20issued to, any person, the Commonwealth Court or any of the
21several courts of common pleas of Pennsylvania, upon application
22by the [commission] department, may issue to the person an order
23requiring him to appear before the [commission] department, or
24the officer designated by it, there to produce documentary
25evidence, if so ordered, or to give evidence touching the matter
26under investigation or in question. Failure to obey the order of
27the court may be punished by the court as a contempt.

28(d) (i) If, in a proceeding before the [commission]
29department, any person shall refuse to testify or to produce
30evidence of any other kind on the ground that his testimony or

1evidence may tend to incriminate him, that person may be ordered
2to give such testimony. The order to testify shall not be given
3except upon an order of court after a hearing in which the
4Attorney General has established a need for the grant of
5immunity, as hereinafter provided;

6(ii) The Attorney General may petition the Commonwealth
7Court or the court of common pleas of the county in which such
8person resides (if he is a resident of this State) for an order
9requiring any person to testify or produce evidence, which
10petition may be joined in by the district attorney of such
11county. Such petition shall set forth the nature of the
12investigation and the need for the immunization of the witness;

13(iii) No such witness shall be prosecuted or subjected to
14any penalty or forfeiture, nor shall there be any liability on
15the part of and no cause of action of any nature shall arise
16against, any such witness for or on account of any transaction,
17matter or thing concerning which he is compelled, after having
18claimed his privilege against self-incrimination, to testify or
19produce evidence, nor shall testimony so compelled be used as
20evidence in any criminal proceeding against him in any court;

21(iv) No person so ordered to testify or to produce evidence,
22shall be exempt from any punishment or forfeiture for perjury
23committed by him while so testifying. Such testimony shall be
24admissible against him in any criminal action or other
25proceeding concerning such perjury;

26(v) Any person who shall refuse or decline to testify or
27produce evidence of any other kind after being granted immunity
28and ordered by the court shall be guilty of criminal contempt
29and, upon conviction thereof, shall be sentenced to pay a fine
30of not exceeding one thousand dollars ($1,000), or to undergo

1imprisonment for a period not exceeding one year, or both.

2(e) At the request of the securities regulatory authority of
3another jurisdiction, the [commission] department may provide
4assistance if the requesting authority states that it is
5conducting an investigation which it deems necessary to
6determine whether a person has violated, is violating or is
7about to violate laws or rules relating to securities matters
8that the requesting authority administers or enforces. The
9[commission] department may, in its sole discretion, conduct
10such investigation and use the powers conferred under this
11section as the [commission] department deems necessary to
12collect information and evidence pertinent to the request for
13assistance. The assistance may be provided without regard to
14whether the facts stated in the request would constitute a
15violation of this act or the laws of this Commonwealth. In
16deciding whether to provide such assistance, the [commission]
17department shall consider whether:

18(i) the requesting authority is permitted and has agreed to
19provide reciprocal assistance in securities matters to the
20[commission] department; and

21(ii) compliance with the request would prejudice the public
22interest.

23(f) Nothing in this act may prohibit the department from 
24investigating and bringing an administrative proceeding with 
25respect to fraud, deceit or unlawful conduct by a funding portal 
26as that term is defined in section 3(a)(80) of the Securities 
27Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78c(a)(80)), 
28provided that the department may not apply any provision of this 
29act or any rule or regulation adopted under this act or take an 
30administrative action that is in addition to, or different from,
 

1the requirements for registered funding portals established by 
2the Securities and Exchange Commission.

3Section 21. Section 511 of the act, amended November 23,
42004 (P.L.930, No.132), is amended to read:

5Section 511. Criminal Penalties.--(a) Except as provided in
6this section, a person who wilfully violates any material
7provision of this act, except section 407(a), or any rule under
8this act, or any order of which he has notice, or who violates
9section 407(a) knowing that the statement made was false or
10misleading in any material respect, commits a felony of the
11third degree and may be fined not more than two hundred fifty
12thousand dollars ($250,000) or imprisoned for not more than
13seven years, or both, if the amount of money paid by the
14purchaser for the securities involved in the violation is less
15than two hundred fifty thousand dollars ($250,000), and not more
16than five hundred thousand dollars ($500,000) or imprisoned for
17not more than seven years, or both, if the amount of money or
18securities involved in the violation is two hundred fifty
19thousand dollars ($250,000) or more. In addition to fine or
20imprisonment, or both, a person may be sentenced to make
21restitution.

22(b) A person who wilfully violates section 401, 408 or 409
23commits a felony of the second degree and may be fined not more
24than one million dollars ($1,000,000) or imprisoned for not more
25than ten years, or both. In addition to fine or imprisonment, or
26both, the person may be sentenced to make restitution.

27(c) (1) A person who wilfully violates section 401, 408 or
28409 commits a felony of the first degree and may be fined not
29more than five million dollars ($5,000,000) or imprisoned for
30not more than twenty years, or both, if one of the conditions

1specified in paragraph (2) or (3) is met, and not more than ten
2million dollars ($10,000,000) or imprisoned for not more than
3twenty years, or both, if both of the conditions specified in
4paragraphs (2) and (3) are met. In addition to a fine or
5imprisonment, or both, the person may be sentenced to make
6restitution.

7(2) Within ten years of being convicted under this
8subsection for wilful violation of section 401, 408 or 409, the
9person was the subject of:

10(i) a criminal felony conviction;

11(ii) an injunction issued by any court of competent
12jurisdiction; or

13(iii) an order of the Securities and Exchange Commission,
14the Commodity Futures Trading Commission, the securities,
15banking or insurance regulator of another state, a Federal
16banking regulator or the securities, banking or insurance
17regulatory authority of another country which found that the
18person wilfully violated any provision of the Federal or State
19securities, banking, insurance or commodities laws or the
20securities, commodities, insurance or banking laws of that
21country.

22(3) One or more of the victims of the unlawful conduct is
23sixty years of age or older.

24(d) A person who knowingly alters, destroys, shreds,
25mutilates, conceals, covers up, falsifies or makes a false entry
26in any record, document or tangible object with the intent to
27impede, obstruct or influence an investigation by the
28[commission] department under section 510 or an examination
29under section 304(d) commits a felony of the second degree and
30may be fined not more than five hundred thousand dollars

1($500,000) or imprisoned for not more than ten years, or both.

2(e) A person who knowingly alters, destroys, shreds,
3mutilates or conceals a record, document or other object or
4attempts to do so with the intent to impair its integrity or
5availability for use in a proceeding before the [commission]
6department or in a proceeding brought by the [commission]
7department or otherwise obstructs, influences or impedes such
8proceedings or attempts to do so commits a felony of the second
9degree and may be fined not more than five hundred thousand
10dollars ($500,000) or imprisoned for not more than ten years, or
11both.

12(f) A person who knowingly, with the intent to retaliate,
13takes any action harmful to another person, including
14interference with the lawful employment or livelihood of another
15person, for providing the [commission] department with any
16truthful information relating to a violation of this act commits
17a felony of the second degree and may be fined not more than
18five hundred thousand dollars ($500,000) or imprisoned for not
19more than ten years, or both.

20(g) (1) Each of the acts specified in subsections (a)
21through (f) shall constitute a separate offense, and a
22prosecution or conviction for any such offense shall not bar
23prosecution or conviction for any other offense. No indictment
24or information may be returned under this act more than five
25years after the alleged violation.

26(2) This section shall be construed to provide additional
27and cumulative remedies, and nothing contained in this act shall
28be construed to affect the ability of the Commonwealth to bring
29an information or indictment under common law or other criminal
30statutory provisions for the same conduct.

1(h) The following persons have jurisdiction to investigate
2violations of this section and institute criminal proceedings
3for any violation of this section:

4(1) The district attorney of a county.

5(2) The Attorney General, in addition to the authority
6conferred upon the Attorney General by the act of October 15,
71980 (P.L.950, No.164), known as the "Commonwealth Attorneys
8Act." This paragraph includes authority over a series of
9violations involving more than one county of this Commonwealth
10or involving any county of this Commonwealth and another state.
11No person charged with a violation of this section by the
12Attorney General shall have standing to challenge the authority
13of the Attorney General to investigate or prosecute the case,
14and, if any such challenge is made, the challenge shall be
15dismissed and no relief shall be available in the courts of this
16Commonwealth to the person making the challenge.

17(i) No person charged with a violation of this section by
18the Attorney General shall have standing to challenge the
19authority of the Attorney General to investigate or prosecute
20the case, and, if any such challenge is made, the challenge
21shall be dismissed and no relief shall be available in the
22courts of this Commonwealth to the person making the challenge.

23Section 22. Sections 512 and 513 of the act, added November
2424, 1998 (P.L.829, No.109), are amended to read:

25Section 512. Statutory Bars.--(a) After giving notice and
26opportunity for a hearing, the [commission] department, where it
27has determined that a person wilfully violated this act or any
28rule or order thereunder or knowingly aided in the act or
29transaction constituting such violation, may issue an order
30accompanied by written findings of fact and conclusions of law

1which bars, conditionally or unconditionally and either
2permanently or for such period of time as the [commission]
3department shall determine, such person from:

4(1) Representing an issuer offering or selling securities in
5this State;

6(2) Acting as promoter, officer, director or partner of an
7issuer (or an individual occupying a similar status or
8performing similar functions) offering or selling securities in
9this State or of a person who controls or is controlled by such
10issuer;

11(3) Being registered as a broker-dealer, agent, investment
12adviser or investment adviser representative under section 301;

13(4) Being an affiliate of any person registered under
14section 301; or

15(5) Relying upon an exemption from registration contained in
16section 202, 203 or 302.

17(b) The [commission] department shall not issue an order
18under this section with respect to any public proceeding which
19was instituted prior to the date of enactment.

20(c) It shall be unlawful for any broker-dealer or investment
21adviser to permit a person as to whom an order is in effect
22under this section, without the consent of the [commission]
23department, to become or remain associated with a broker-dealer
24or investment adviser in contravention of such order if the
25broker-dealer or investment adviser knew or in the exercise of
26reasonable care should have known of such order.

27(d) It shall be unlawful for any issuer to permit, without
28the consent of the [commission] department, a person as to whom
29an order is in effect under this section to participate in the
30offer or sale of the issuer's securities in this State in

1contravention of such order if the issuer knew or in the
2exercise of reasonable care should have known of such order.

3Section 513. [Commission] Department Orders of Rescission.--
4After giving notice and opportunity for a hearing, the
5[commission] department, where it has determined that an issuer
6wilfully violated section 201 or 401, may issue an order
7accompanied by written findings of fact and conclusions of law
8which requires the issuer or any control person of the issuer
9who knowingly aided in the act or transaction constituting such
10violation to effect a rescission offer in a manner which the
11[commission] department by rule or order may prescribe to
12persons who purchased securities of the issuer in this State
13involved in the violation. The [commission] department shall not
14issue an order under this section with respect to any public
15proceeding which was instituted prior to the date of enactment.

16Section 23. Section 514 of the act, added July 4, 2002
17(P.L.721, No.108), is amended to read:

18Section 514. Return of Sales Compensation.--(a) After
19giving notice and opportunity for hearing, the [commission]
20department, where it has determined that a person who
21represented an issuer in effecting transactions in securities in
22this Commonwealth while in willful violation of section 301(a)
23and received compensation in connection with these transactions,
24may issue an order, accompanied by written findings of fact and
25conclusions of law, which requires the person to return to
26purchasers of securities in this Commonwealth, in cash, the
27amount of compensation received for effecting those securities
28transactions.

29(b) No order shall be issued under this section if the
30transactions in securities meet any of the following criteria:

1(1) The transactions involved securities which were the
2subject of an effective registration statement filed with the
3United States Securities and Exchange Commission under section 5
4of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et
5seq.).

6(2) The transactions involved securities which are exempted
7securities under section 3(a) of the Securities Act of 1933
8except section 3(a)(4) and (11).

9(3) The transactions are exempt from registration under
10section 5 of the Securities Act of 1933 pursuant to section 4
11thereof except a transaction for which the issuer is relying on
12any rule or regulation promulgated by the United States
13Securities and Exchange Commission under section 4(2) of the
14Securities Act of 1933.

15(c) The [commission] department may issue more than one
16order under this section against the same person involving the
17same security.

18(d) An order issued under this section shall not be deemed
19conclusive as to the total number of purchasers in this
20Commonwealth of any particular security or the total dollar
21amount of sales compensation received by a person for
22transactions effected in a particular security with purchasers
23in this Commonwealth for which liability may be imposed under
24subsection (a).

25Section 24. Section 515 of the act, added November 23, 2004
26(P.L.922, No.127), is amended to read:

27Section 515. Temporary Freeze Authority.--(a) Whenever,
28during the course of a lawful investigation involving possible
29violations of this act or rule or order issued thereunder by an
30issuer that is not subject to the reporting requirements of

1section 13 or 15(d) of the Securities Exchange Act of 1934 (48 
2Stat. 881, 15 U.S.C. §§ 78m and 78o(d)) or any of its directors,
3officers, partners, controlling persons, agents or employes, it
4shall appear to the [commission] department that it is likely
5that the issuer will make extraordinary payments, whether
6compensation or otherwise, to any such persons, the [commission]
7department may petition the Commonwealth Court or any court of
8common pleas for a temporary order requiring the issuer to
9escrow, subject to court supervision, those payments in an
10interest-bearing account for forty-five days. A temporary order
11may be issued and entered under this subsection only after
12notice and opportunity for hearing unless the court determines
13that notice and hearing prior to entry of the order would be
14impracticable or contrary to the public interest.

15(b) A temporary order issued under subsection (a) shall:

16(i) become effective immediately;

17(ii) be served upon the parties subject to it; and

18(iii) be effective and enforceable for forty-five days
19unless set aside, limited or suspended by a court of competent
20jurisdiction and may be extended by the court upon good cause
21shown for not longer than forty-five additional days, provided
22that the combined period of the order shall not exceed ninety
23days.

24(c) If the issuer or other person described in subsection
25(a) is charged with a violation of this act or rule or order
26issued under this act before the expiration of the effective
27period of a temporary order as set forth in subsection (b),
28including any applicable extension period, the order shall
29remain in effect, subject to court approval, until the
30conclusion of any legal proceedings related thereto, and the

1affected issuer or other person shall have the right to petition
2the court for review of the order.

3(d) If the issuer or other person described in subsection
4(a) is not charged with a violation of this act or rule or order
5issued under this act before the expiration of the effective
6period of a temporary order as set forth in subsection (b),
7including any applicable extension period, the escrow shall
8terminate at the expiration of the forty-five-day effective
9period or the expiration of any extension period, as applicable,
10and the disputed payments with accrued interest shall be
11returned to the issuer or other affected person.

12(e) This section shall not apply to an issuer or director,
13officer, partner, controlling person, agent or employe of an
14issuer that has not more than one hundred equity security
15holders.

16Section 25. Section 601 of the act, amended December 19,
171975 (P.L.601, No.171) and July 4, 2002 (P.L.721, No.108), is
18amended to read:

19Section 601. Administration.--(a) This act shall be
20administered by the [commission, which shall be an independent 
21administrative board subject to the provisions of The 
22Administrative Code of 1929. It shall consist of three 
23commissioners appointed by the Governor with the advice and 
24consent of the Senate. The commissioners shall hold office at 
25the pleasure of the Governor and until their successors are duly 
26appointed and qualified. A quorum of the commission shall be a 
27majority of the commissioners then serving. Any action taken at 
28a meeting at which a quorum of the commission is present shall 
29be the lawful act of the commission for all purposes] 
30department.

1[(b) The commission shall also employ a secretary, who shall
2certify to all actions of the commission and shall make and keep
3all files and records of proceedings before it.]

4(c) It is unlawful for the [commission] department or any of
5its officers or employes to use for personal benefit any
6information which is filed with or obtained by the [commission]
7department and which is not generally available to the public.
8Nothing in this act authorizes the [commission] department or
9any of its officers or employes to disclose such confidential
10information except among themselves or to other securities
11administrators, regulatory authorities or governmental agencies,
12or when necessary or appropriate in a proceeding or
13investigation under this act or any other law of this State.

14(c.1) Except for the privileges created in this subsection,
15no provision of this act either creates or derogates from any
16privilege which exists at common law or otherwise when
17documentary or other evidence is sought under a subpoena
18directed to the [commission] department or any of its officers
19or employes.

20(1) The documents described in clause (2) and any testimony
21sought concerning information in those documents are privileged
22from disclosure under a subpoena directed to the [commission]
23department or any of its officers or employes if the documents
24relate to:

25(i) An investigation authorized under section 510 [which has
26not been closed].

27(ii) An action in which neither the [commission] department
28nor any of its officers or employes is a party.

29(2) The documents which are the subject of the privilege
30created in clause (1) include:

1(i) Documents relating to an investigation conducted under
2section 510, including, but not limited to, statements made or
3taken in accordance with section 510(a) or (b) and documents in
4possession of the [commission] department under section 510(a)
5(ii).

6(ii) Documents received in connection with a subpoena issued
7under section 510.

8(iii) Documents relating to an examination conducted under
9section 304(d).

10(iv) Documents obtained from a securities administrator,
11regulatory authority or law enforcement or governmental agency
12relating to an investigation authorized under section 510 or an
13examination conducted in accordance with section 304(d).

14(v) Documents deemed confidential by order of the
15[commission] department under section 603(c).

16(3) Complaints filed with the [commission] department and
17testimony concerning information in the complaints are
18privileged absolutely from disclosure under a subpoena directed
19to the [commission] department or its officers or employes.

20(4) No privilege is created under clause (1) or (3) if
21document sought under a subpoena directed to the [commission]
22department or its officers or employees is otherwise publicly
23available.

24[(d) The principal office of the commission shall be in
25Harrisburg. It shall establish and maintain offices in such
26other towns or cities throughout the State as it may, from time
27to time, determine.

28(e) The commission shall adopt a seal bearing the
29inscription: "Pennsylvania Securities Commission." The seal
30shall be affixed to or imprinted on all orders or certificates

1issued by it and such other instruments as the commission
2directs. All courts shall take judicial notice of the seal.]

3Section 26. Section 602 of the act, added November 23, 2004
4(P.L.918, No.126), is amended to read:

5Section 602. Fees.--(a) The [commission] department shall
6charge and collect the fees fixed in this section and remit them
7to the General Fund.

8(b) (Reserved).

9(b.1) Filing fees for sales of securities:

10(i) (Reserved).
11(ii) Registration statement filings under section 12205, except as provided in subclause (iv), based upon 13the maximum aggregate offering price at which such 14securities are to be offered in this State during the 15effective period of the registration statement:
16(A) less than $10,000,000.........................	$750
17(B) $10,000,000 or more...........................	1,000
18(iii) Registration statement filings under section 19206, except as provided in subclause (iv).............	500

20  21  22  23  24  25  26

Plus 1/20 of 1% of the maximum aggregate offering price at which such securities are to be offered in this State during the effective period of the registration up to a maximum filing fee of $3,000.

27(iv) In the case of registration statement filings 28under section 205 or 206 or notice filings under 29section 211 by an open-end or closed-end investment 30company, face amount certificate company or unit 20130SB1045PN1303 -93-     1investment trust, as such persons are classified in 2the Investment Company Act of 1940.

3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22

Based upon the maximum aggregate offering price at which such securities are to be offered in this State during the effective period of the registration or notice filing, the fee for (A) $4,000,000 or less, 1/20 of 1% with a minimum fee of $350; (B) more than $4,000,000 but less than $100,000,000, $3,000; (C) $100,000,000 or more, $3,500; or (D) for an indefinite amount of securities to be offered in this State during the effective period of registration or notice filing. The amount specified in clause (C) plus a $500 assessment specified in section 602.1(a)(5).

23(v) Exemption filings under section 203(o) shall 24be:...................................................	350
25(vi) When a registration statement or notice of 26filing made under section 211(a) is withdrawn before 27the effective date or a pre-effective stop order is 28entered under section 208, the amount that the 29[commission] department shall retain from the filing 30fee and, if applicable, an assessment imposed under 20130SB1045PN1303 -94-     1section 602.1(a)(5) shall be:
2(A) Under section 205 or a notice filing under 3section 211(a)........................................	400
4(B) Under section 206.............................	250
5(vii) Filing a notice on SEC Form D under section 6211(b)................................................	525
7(viii) Filing an application for exemption from 8registration under section 203(d) or (s):
9(A) Where the maximum aggregate offering price at 10which such securities are offered in this State is 11less than $1,000,000..................................	150
12(B) Where the maximum aggregate offering price at 13which such securities are offered in this State is 14$1,000,000 or more....................................	400
15(ix) Filing an application for exemption from 16registration under section 203(t).....................	500
17(x) Filing an application for exemption from 18registration under section 203(p).....................	100

19(b.2) There shall be no refund of any filing fee specified
20in subsection (b.1)(vii) through (x).

21(c) (Reserved).

22(d) (Reserved).

23(d.1) Every applicant for an initial or renewal license
24under section 301 shall pay a filing fee of three hundred fifty
25dollars ($350) in the case of a broker-dealer, eighty dollars
26($80) in the case of an agent, two hundred seventy-five dollars
27($275) in the case of an investment adviser and eighty dollars
28($80) in the case of an investment adviser representative. The
29term of an agent's or associated person's registration hereunder
30shall be concurrent with that of his employer, if a broker-

1dealer or an investment adviser. When an agent changes
2employers, an eighty dollar ($80) fee shall be paid. When an
3investment adviser representative changes employers, an eighty
4dollar ($80) fee shall be paid. When an application is denied or
5withdrawn or a registration revoked, the filing fee shall be
6retained. A federally covered adviser shall pay an annual notice
7filing fee of three hundred fifty dollars ($350).

8(e) The fee for the [commission's] department's acting as an
9escrow holder for securities under section 207 is one hundred
10dollars ($100).

11(f) The [commission] department may fix by regulation a
12reasonable charge for any publication issued under its
13authority.

14(g) The [commission] department may fix by regulation
15reasonable charges for the cost of administering examinations
16required for registration under this act by section 301.

17Section 27. Section 602.1 of the act, amended or added May
184, 1993 (P.L.4, No.4), December 7, 1994 (P.L.869, No.126),
19November 24, 1998 (P.L.829, No.109) July 4, 2002 (P.L.721,
20No.108) and November 23, 2004 (P.L.915, No.125), is amended to
21read:

22Section 602.1. Assessments.--(a) (1) Each agent and
23investment adviser representative, when applying for an initial 
24license under section 301 or changing employers, shall pay a 
25compliance assessment in accordance with the following schedule: 
26[thirty-two dollars ($32) for the period July 1, 2001, through 
27June 30, 2004, thirty-five dollars ($35) for the period July 1, 
282004, through June 30, 2007, thirty-seven dollars ($37) for the 
29period July 1, 2007, through June 30, 2010, and forty dollars 
30($40) thereafter] forty-five dollars ($45) for the period July
 

11, 2013, through June 30, 2016, fifty dollars ($50) for the 
2period July 1, 2016, through June 30, 2019, and fifty-five 
3dollars ($55) thereafter.

4(2) Each agent and investment adviser representative, when
5applying for a renewal license under section 301, shall pay a
6compliance assessment in accordance with the following schedule:
7[seventeen dollars ($17) for the period July 1, 2001, through
8June 30, 2004, twenty ($20) for the period July 1, 2004, through
9June 30, 2007, twenty-two dollars ($22) for the period July 1,
102007, through June 30, 2010, and twenty-five ($25) thereafter]
11thirty dollars ($30) for the period July 1, 2013, through June 
1230, 2016, thirty-five dollars ($35) for the period July 1, 2016, 
13through June 30, 2019, and forty dollars ($40) thereafter.

14(3) Each broker-dealer, when applying for an initial or
15renewal license under section 301, shall pay a compliance
16assessment in accordance with the following schedule: [one
17hundred dollars ($100) for the period beginning with the date of
18enactment of this paragraph through June 30, 2001, and one
19hundred fifty dollars ($150) thereafter] one hundred seventy-
20five dollars ($175) for the period July 1, 2013, through June 
2130, 2019, and two hundred dollars ($200) thereafter.

22(4) Each investment adviser, when applying for an initial or
23renewal license under section 301, shall pay a compliance
24assessment in accordance with the following schedule: [fifty
25dollars ($50) for the period beginning with the date of
26enactment of this paragraph through June 30, 2001, and seventy-
27five dollars ($75) thereafter] one hundred dollars ($100) for 
28the period July 1, 2013, through June 30, 2019, and one hundred 
29twenty-five dollars ($125) thereafter.

30(5) The assessment for a notice filing by an open-end or

1closed-end investment company, face amount certificate company
2or unit investment trust, as such persons are classified in the
3Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1
4et seq.), for an indefinite amount of securities to be offered
5in this State during the effective period of the notice filing
6shall be five hundred dollars ($500) beginning with the date of
7enactment of this paragraph.

8(b) A registrant, applicant for registration, issuer or
9other person upon whom the [commission] department has conducted
10an examination, audit, investigation or prosecution and who has
11been determined by the [commission] department to have violated
12this act or rule or order of the [commission] department under
13this act shall pay for all the costs incurred in the conduct of
14such examination, audit, investigation or prosecution. These
15costs shall include, but not be limited to, the salaries and
16other compensation paid to clerical, accounting, administrative,
17investigative, examiner and legal personnel, the actual amount
18of expenses reasonably incurred by such personnel and the
19[commission] department in the conduct of such examination,
20audit, investigation or prosecution, including a pro rata
21portion of the [commission's] department's administrative
22expenses.

23(c) After giving notice and opportunity for a hearing, the
24[commission] department may issue an order accompanied by
25written findings of fact and conclusions of law which imposes an
26administrative assessment in the amounts provided in paragraph
27(1) against a broker-dealer, agent, investment adviser or
28investment adviser representative registered under section 301
29or an affiliate of any broker-dealer or investment adviser where
30the [commission] department determines that the person within
 

1the previous ten years willfully has violated this act or a rule
2or order of the [commission] department under this act or has
3engaged in dishonest or unethical practices in the securities
4business; has taken unfair advantage of a customer; or has
5failed reasonably to supervise its agents or employes or against
6any other person if the [commission] department determines that
7the person wilfully violated section 301, 401, 404, 406 through
8409 or 512(d) or a cease and desist order issued by the
9[commission] department under section 606(c.1).

10(1) The [commission] department, in issuing an order under
11this subsection, may impose the administrative assessments set
12forth below. Each act or omission that provides a basis for
13issuing an order under this subsection shall constitute a
14separate violation.

15(i) In issuing an order against any broker-dealer, agent,
16investment adviser or investment adviser representative
17registered under section 301 or an affiliate of any broker-
18dealer or investment adviser, the [commission] department may
19impose a maximum administrative assessment of up to one hundred
20thousand dollars ($100,000) for each act or omission that
21constitutes a violation of the act or rule or order issued under
22this act or that constitutes a dishonest or unethical practice 
23in the securities business, taking unfair advantage of a 
24customer, or failure to reasonably supervise its agents or 
25employes. If any of the victims of the person's [violative]
26conduct were individuals aged 60 or more, the [commission]
27department also may impose a special administrative assessment
28in addition to the foregoing amounts of up to fifty thousand
29dollars ($50,000).

30(ii) In issuing an order against a person for wilful

1violation of section 401(a) or (c), 404, 406, 408, 409 or 512(d)
2or for wilful violation of a cease and desist order issued under
3section 606(c.1), the [commission] department may impose a
4maximum administrative assessment of up to one hundred thousand
5dollars ($100,000) for each act or omission that constitutes a
6violation of any of those sections. In addition to the foregoing
7assessment, the [commission] department also may impose a
8special administrative assessment of up to fifty thousand
9dollars ($50,000) for each of the provisions described as
10follows that the [commission] department determines are
11applicable:

12(A) The person, within seven years prior to the [commission]
13department taking action under this subsection, was the subject
14of: a criminal felony conviction; an injunction issued by any
15court of competent jurisdiction; or an order of the Securities
16and Exchange Commission, the Commodity Futures Trading
17Commission, the securities, banking or insurance regulator of
18another state, a Federal banking regulator or the securities,
19banking or insurance regulatory authority of another country
20which found that the person wilfully had violated any provision
21of the Federal or state securities, banking, insurance, or
22commodities laws or the securities, commodities, insurance or
23banking laws of another country.

24(B) The person's [violative] conduct involved individuals
25aged 60 or more.

26(C) The person's [violative] conduct involved use of the
27Internet or boiler room tactics which included, without
28limitation, use of any high-pressure sales tactics designed to
29create an artificially short time period for which the person
30being solicited is pressured to make an investment decision or

1overcome the person's reluctance to commit to the investment
2being offered, use of scripts designed to allay any objections
3or concerns expressed by the person being solicited or making
4repeated telephone calls or sending multiple e-mail messages to
5the same person pressuring the person to make an immediate
6investment decision.

7(iii) In issuing an order against a person for wilful
8violation of section 401(b) or 407, the [commission] department
9may impose an administrative assessment of up to fifty thousand
10dollars ($50,000) for each of the criteria described in
11subclause (ii)(A) and (C) that the [commission] department
12determines are applicable. No assessment shall be imposed under
13this subclause if the person is subject to an administrative
14assessment imposed under any other provision of this subsection.

15(iv) In issuing an order against a person, other than a
16federally covered adviser, for wilful violation of section 301,
17the [commission] department may impose the following
18administrative assessments which may be in addition to an
19administrative assessment imposed under any other provision of
20this subsection:

21(A) For a person who at the time of the wilful violation was
22not registered under section 301, was not registered as a broker
23or dealer with the United States Securities and Exchange
24Commission under the Securities Exchange Act of 1934 (48 Stat. 
25881, 15 U.S.C. § 78a et seq.) and was not a member of a national
26securities association registered under that act, the
27[commission] department may impose a maximum administrative
28assessment of up to fifty thousand dollars ($50,000) for each
29act or omission which constitutes a violation of section 301.

30(B) For a person (not an individual) that at the time of the

1wilful violation was not registered under section 301 but was
2registered as a broker or dealer with the United States
3Securities and Exchange Commission under the Securities Exchange
4Act of 1934 and was a member of a national securities
5association registered under that act, the [commission]
6department may impose a maximum administrative assessment of up
7to fifty thousand dollars ($50,000) for each act or omission
8which constitutes a violation of section 301. An assessment
9imposed under this subclause shall be in addition to any
10liability a person may have under an order issued under section
11514.

12(v) In issuing an order for wilful violation of section
13301(c.1)(1)(ii) against a person that is a federally covered
14adviser, the [commission] department may impose the following
15administrative assessments:

16(A) Up to one hundred thousand dollars ($100,000) if the
17number of investment adviser representatives involved in the
18violation was less than five.

19(B) Up to two hundred thousand dollars ($200,000) if the
20number of investment adviser representatives involved in the
21violation was five or more.

22(vi) In issuing an order for a wilful violation of section
23301(f) against a person that is a federally covered adviser, the
24[commission] department may impose an administrative assessment
25of two thousand dollars ($2,000).

26(2) For purposes of determining the amount of administrative
27assessment to be imposed in an order issued under this
28subsection, the [commission] department shall consider:

29(i) The circumstances, nature, frequency, seriousness,
30magnitude, persistence and willfulness of the conduct

1constituting the violation.

2(ii) The scope of the violation, including the number of
3persons in and out of this Commonwealth affected by the conduct
4constituting the violation.

5(iii) The amount of restitution or compensation that the
6violator has made and the number of persons in this Commonwealth
7to whom the restitution or compensation has been made.

8(iv) Past and concurrent conduct of the violator that has
9given rise to any sanctions or judgment imposed by, or pleas of
10guilty or nolo contendere or settlement with, the [commission]
11department or any securities administrator of any other state or
12other country, any court of competent jurisdiction, the
13Securities and Exchange Commission, the Commodity Futures
14Trading Commission, any other Federal or State agency or any
15national securities association or national securities exchange
16as defined in the Securities Exchange Act of 1934 (48 Stat. 881, 
1715 U.S.C. § 78a et seq.).

18(v) Any other factor that the [commission] department finds
19appropriate in the public interest or for the protection of
20investors and consistent with the purposes fairly intended by
21the policy and provisions of this act.

22(3) An administrative assessment imposed by an order issued
23under this subsection is not mutually exclusive of any other
24remedy available under this act.

25(4) The [commission] department shall not impose an
26administrative assessment with respect to any public proceeding
27which was instituted prior to the date of its enactment.

28(d) Each application filed with the [commission] department
29under section 210 by an issuer that has an effective 
30registration statement on file with the department pursuant to
 

1section 205 or 206  or an open-end or closed-end investment
2company, face amount certificate company or unit investment
3trust, as those persons are classified in the Investment Company
4Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.), to
5register securities sold in this State in excess of the
6aggregate amount of securities registered under section 205 or
7206 and each amendment to a notice filing submitted relating to
8securities sold in the State in excess of those included on an
9earlier notice filing shall include the payment of an oversale
10assessment which shall be three times an amount which equals the
11difference between the registration or notice filing fee that
12would have been payable under section 602(b.1) based upon the
13total amount of securities sold in this State and the total
14registration or notice filing fees previously paid to the
15[commission] department with respect to such registration or
16notice filing, but in no case shall the oversale assessment be
17less than three hundred fifty dollars ($350) or be more than
18three thousand dollars ($3,000).

19(e) Moneys payable for assessments established by this
20section shall be collected by the [commission] department and
21deposited into the General Fund and shall be credited to the
22appropriation of the [commission] department for the fiscal year
23received. These moneys are intended to meet the expenses of the
24[commission] department in administering the provisions of this
25act, including any or all of the following activities:

26(1) expenses, including personnel, operating and fixed
27assets costs, relating to the registration of broker-dealers,
28agents, investment advisers and associated persons under section
29301 and the conduct of examinations of broker-dealers and
30investment [advisors] advisers registered under section 301 and

1other compliance-related activities of the [commission]
2department;

3(2) nonpersonnel expenses related to establishing and
4maintaining an entrepreneur education program to educate small
5business persons in this Commonwealth as to the issuance of
6securities as a means of raising capital;

7(3) nonpersonnel expenses related to establishing and
8maintaining a securities fraud awareness program to educate
9public investors in this Commonwealth about fraudulent and
10manipulative securities practices;

11(4) nonpersonnel expenses related to conducting enforcement-
12related activities of the [commission] department; and
13thereafter,

14(5) other expenses of the [commission] department necessary
15to implement the provisions of this act.

16Section 28. Section 603 of the act, amended July 4, 2002
17(P.L.721, No.108), is amended to read:

18Section 603. Administrative Files.--(a) A document is filed
19when it is received by the [commission] department or by any
20other person which the [commission] department by regulation or
21order may designate.

22(b) The [commission] department shall keep a register of all
23registrants, registration statements and notice filings which
24are or have ever been effective under this act and all denial,
25suspension or revocation orders which have been entered under
26this act. The register shall be open for public inspection.

27(c) The information contained in or filed with any
28registration statement, application, notice filing or report
29shall be made available to the public in accordance with
30regulations prescribed by the [commission] department; except

1that the [commission] department may make the following orders
2or regulations:

3(1) Upon proper showing of the registrant or issuer, the
4[commission] department may order certain filings or parts of
5filings nonpublic.

6(2) The [commission] department, by rule or order, may deem
7certain categories of information filed with the [commission]
8department as nonpublic.

9(d) The [commission] department upon request shall furnish
10to any person, at a reasonable charge, a copy of any document
11described in subsection (c) in any medium available to the
12[commission] department. Upon request and payment of a
13reasonable charge, the document may be certified under the seal
14of the [commission] department.

15(e) The [commission] department, by order, may subsequently
16make public information contained in the documents described in
17subsection (c)(1) and (2), and the order may limit the amount of
18information made public or place conditions on its use. Prior to
19issuing an order under this subsection, the [commission]
20department shall notify in writing the person who originally
21requested confidentiality at the person's last known address in
22the [commission's] department's files at least thirty days
23before the [commission] department may issue an order under this
24subsection.

25Section 29. Sections 604 and 605 of the act are amended to
26read:

27Section 604. Interpretive Opinions of [Commission]
28Department.--The [commission] department in its discretion may
29honor requests from interested persons for interpretive opinions
30and may make such opinions available to the public under section

1603(c).

2Section 605. Commissioners and [Commission] Department
3Employes; Relationship with Licensed Persons or Qualified
4Organizations.--(a) Neither the commissioners nor any employe,
5clerk or servant of the [commission] department, during their
6respective terms of employment, shall be interested as a
7director, officer, shareholder, member, partner, agent, or
8employe of any person who, during the period of such official's
9or employe's association with the [commission] department, (i)
10was licensed or applied for license as a broker-dealer, agent
11[or], investment adviser or investment adviser representative
12under this act, or (ii) applied for or secured the registration
13of securities under this act.

14(b) Nothing contained in subsection (a) shall prohibit the
15holding or purchasing of any securities by any employe, clerk,
16or servant in accordance with such regulations as the
17[commission] department shall adopt for the purpose of
18protecting the public interest and avoiding conflicts of
19interest with respect to such employes, clerks and servant.

20(c) Nothing contained in subsection (a) shall prohibit the
21holding or purchasing of any securities by any commissioner if:
22either (i) the commissioner, together with his spouse, minor
23children and parents or other relatives who are members of his
24household, owns less than one-tenth of one per cent of any class
25of outstanding securities of any issuer described in subsection
26(a)(ii); or (ii) such security is held or purchased through a
27management account or trust administered by a bank or trust
28company authorized to do business in this State which has sole
29investment discretion regarding the holding, purchase and sale
30of securities, and (A) the commissioner did not, directly or

1indirectly, advise, counsel, command or suggest the holding,
2purchase or sale of any such security or furnish any information
3relating to any such security to such bank or trust company, and
4(B) such account or trust does not at any time have more than
5ten per cent of its total assets invested in the securities of
6any one issuer or hold more than five per cent of the
7outstanding shares or units of any class of securities of any
8one issuer. Each commissioner shall report to the Governor not
9less often than quarterly all holdings, purchases, and sales of
10securities by him, which reports shall be retained by the
11Governor's office as public documents.

12Section 30. Sections 606 and 607 of the act, amended July 4,
132002 (P.L.721, No.108), are amended to read:

14Section 606. Miscellaneous Powers of [Commission]
15Department.--(a) The [commission] department may, by
16regulation, require any issuer of securities registered under
17this act or exempted from registration under section 203(d) or
18(p), which issuer has not filed reports with the Securities and
19Exchange Commission pursuant to sections 13 or 15(d) of the
20Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. §§ 78m
21or 78o(d)), to distribute financial information to its security
22holders at least annually.

23(b) If, in its opinion, the public interest and the
24protection of investors so require, the [commission] department
25may apply to a court of competent jurisdiction for an order
26suspending all trading in this Commonwealth by broker-dealers
27and agents in any security for any period.

28(c) No person shall publish in this State any advertisement
29concerning any security (other than advertisements relating to
30federally covered securities, tombstone advertisements permitted

1under the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a
2et seq.) and the Investment Company Act of 1940 (54 Stat. 789, 
315 U.S.C. § 80a-1 et seq.) and the rules and regulations
4promulgated thereunder) except in accordance with such rules as
5the [commission] department may promulgate from time to time. No
6person shall publish any advertisement concerning any security
7in this State after the [commission] department issues a cease
8advertising order in which it finds that the advertisement
9contained an untrue statement of a material fact or omitted to
10state a material fact necessary in order to make the statements
11made, in the light of the circumstances under which they were
12made, not misleading. The order may be issued summarily without
13notice or hearing. Upon issuance of a summary order, the
14[commission] department shall promptly provide the order to the
15person against whom it is issued. The order shall contain
16findings of fact and conclusions of law and include a notice
17affording the person an opportunity for a hearing under section
18607(a).

19(c.1) Whenever the [commission] department finds that any
20person has engaged or is about to engage in any act or practice
21constituting a violation of any provision of this act or any
22rule or order thereunder, the [commission] department may order
23such person to cease and desist from such act or practice. The
24order may be issued summarily without notice or hearing. Upon
25issuance of a summary order, the [commission] department shall
26promptly provide the order to the person against whom it is
27issued. The order shall contain findings of fact and conclusions
28of law and include a notice affording the person an opportunity
29for a hearing under section 607(a).

30[(d) The commission may, by regulation, delegate any powers

1specified in this act to be exercised by the commission to
2members of the commission's staff, except for powers related to
3hearings.]

4(e) Wherever the department is authorized to impose or
5accept payment of funds pursuant to this act, the following
6methods of payment shall apply:

7(1) The department may designate receipt of the payments by 
8any means, including wire transfer, credit card, debit card or 
9other similar device.

10(2) The department may permit the payment to be made using 
11any medium, including telephone, facsimile transmission, wire 
12transmission, electronic mail, Internet site or any other method 
13related to any transmission mechanism, including the Internet.

14(3) The department may enter into any agreement in order to
15implement this section.

16Section 607. Hearings and Judicial Review.--(a) Within
17thirty days after receipt of a summary order issued under
18section 204(b), 208(c), 211(c), 305(d), 606(c) or 606(c.1), the
19person against whom the order was issued and entered may file
20with the commission a written request for a hearing in respect
21to any matters determined by the order. Upon receipt of the
22written request, the matter shall be set down for a hearing to
23commence within thirty days after receipt of the request unless
24the person making the request consents to a later date. If the
25person making the request consents to a later date for the
26hearing but fails, after notification by first class mail to the
27person's last known address in the [commission's] department's
28files, to consent to a hearing date that is within one hundred
29eighty days of the date the written request for a hearing was
30filed with the commission under this subsection, the request for

1hearing shall be deemed abandoned, and the summary order shall
2be deemed a final order. After hearing, the commission may
3determine to [rescind,] modify or vacate the summary order or
4make it a final order. If no hearing is requested or a request
5for a hearing is filed untimely, the summary order shall be
6deemed to be a final order.

7[(b) Within thirty days after receipt of an order issued and
8entered by the commission after a hearing, the person against
9whom the order was issued and entered may apply to the
10commission for a rehearing. The commission, in its sole
11discretion, may grant the application and hold a rehearing.
12Failure of the commission to grant a rehearing within thirty
13days of receipt of an application shall constitute a denial.
14After rehearing, the commission may issue an order affirming,
15vacating or modifying the original order.]

16(c) Hearings and rehearings shall be public.

17(d) Orders of the [commission] department shall be subject
18to judicial review in accordance with law, but orders originally
19entered without a hearing may be reviewed only if the party
20seeking review has filed a request for a hearing within the time
21provided under subsection (a). Filing for judicial review of a
22[commission] department order shall not operate as a stay of the
23[commission's] department's order unless specifically ordered by
24the court.

25(e) All administrative proceedings conducted by the
26department pursuant to this act shall be subject to the
27requirements of 2 Pa.C.S. (relating to administrative law and
28procedure). For purposes of this subsection, the term
29"administrative proceeding" means any proceeding other than a
30judicial proceeding, the outcome of which is required to be

1based on a record or documentation prescribed by law, or in
2which law or regulation is particularized in application to a
3person subject to this act. The provisions of this subsection
4shall supplement and not repeal or limit requirements of 2
5Pa.C.S.

6Section 31. Section 609 of the act, amended November 24,
71998 (P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is
8amended to read:

9Section 609. Regulations, Forms and Orders.--(a) The
10[commission] department may make, amend and rescind any
11regulations, forms and orders that are necessary to carry out
12this act, including regulations and forms governing registration
13statements, notice filings, applications and reports, and
14defining any terms, whether or not used in this act, insofar as
15the definitions are not inconsistent with this act. All
16regulations of the [commission] department (other than those
17relating solely to its internal administration) shall be of
18general application and future effect and shall be made, amended
19or rescinded in accordance with the act of June 4, 1945 
20(P.L.1388, No.442), known as the "Administrative Agency Law,"
21and the act of July 31, 1968 (P.L.769, No.240), known as the
22"Commonwealth Documents Law." For the purpose of rules and
23forms, the [commission] department may classify securities,
24persons and matters within its jurisdiction, and prescribe
25different requirements for different classes. The [commission]
26department may, in its discretion, waive any requirement of any
27regulation or form in situations where, in its opinion, such
28requirement is not necessary in the public interest or for the
29protection of investors.

30(b) No regulation, form or order may be made, amended or

1rescinded unless the [commission] department finds that the
2action is necessary or appropriate in the public interest and
3for the protection of investors and consistent with the purposes
4fairly intended by the policy and provisions of this act.

5(c) Subject to the limitations of the Securities Act of 1933
6(48 Stat. 74, 15 U.S.C. § 77a et seq.), the Securities Exchange
7Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a et seq.) and the
8Investment Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80a-1
9et seq.), the [commission] department may by regulation or order
10prescribe the kind, form and content of financial statements
11required under this act, the fiscal or other periods and dates
12for such statements, the circumstances under which consolidated
13or other combining financial statements shall be filed, or other
14requirements it deems necessary for financial statement
15presentation purposes, and whether any required financial
16statements shall be certified by independent certified
17accountants in good standing with this State. All financial
18statements shall be prepared reflecting conformity with
19generally accepted accounting principles in the United States
20consistently applied, unless variance therefrom is disclosed in
21an acceptable manner, and shall reflect pertinent disclosures by
22financial notes or other form, where required for that data in
23compliance with pronouncements by recognized authoritative
24accounting bodies or if applicable, by governmental agencies,
25and if otherwise permitted by regulation or order of the
26commission.

27(d) No provision of this act imposing any liability applies
28to any act done or omitted in good faith in conformity with any
29regulation, form or order of the [commission] department,
30notwithstanding that the regulation form or order may later be

1amended or rescinded or be determined to be invalid for any
2reason.

3[(e) The commission may propose and adopt regulations under
4this act prior to its effective date, provided that such
5regulations do not take effect until on or after the effective
6date of this act.]

7(f) (1) An application for registration of securities shall
8be deemed abandoned if the application has been on file with the
9[commission] department for a minimum of twelve consecutive
10months and the applicant has failed to respond to the
11[commission's] department's notice of abandonment sent by first
12class mail to the applicant's last known address in the
13[commission's] department's files within sixty calendar days
14after the date the notification was mailed by the [commission]
15department. There shall be no refund of any fees paid by the
16applicant.

17(2) An application for registration as a broker-dealer,
18agent, investment [advisor] adviser or investment adviser
19representative shall be deemed abandoned if the application has
20been on file with the [commission] department for a minimum of
21six consecutive months and the applicant has failed to respond
22to the [commission's] department's notice of abandonment sent by
23first class mail to the applicant's last known address in the
24[commission's] department's files within sixty calendar days
25after the date the notification was mailed by the [commission]
26department. There shall be no refund of any fees or assessments
27paid by the applicant.

28Section 32. Section 610 of the act is repealed:

29[Section 610. Destruction of Documents and Records.--The
30commission may make such regulations with respect to record

1retention as it may deem appropriate and desirable, consistent
2with law.]

3Section 33. The act is amended by adding a section to read:

4Section 703.1. Securities Regulation Account.--(a) The
5Securities Regulation Account is established as a restricted
6account within the General Fund.

7(b) The Securities Regulation Account shall be funded from
8the following sources:

9(1) For the fiscal year in which the Securities Regulation
10Account is established, the auction rate securities settlement
11funds received by the former Pennsylvania Securities Commission
12shall be deposited into the account.

13(2) For each fiscal year following the fiscal year in which
14the account was established, the amount approved under
15subsection (d) shall be transferred from the General Fund to the
16Securities Regulation Account until it reaches a balance of
17$12.5 million.

18(c) The moneys in the Securities Regulation Account are
19appropriated to the department for the following administrative
20and operating costs:

21(1) Special initiatives or strategic regulatory needs or
22developments.

23(2) Investor and entrepreneurial education and outreach
24programs.

25(3) Unanticipated or adverse industry circumstances that
26require enhanced investor protection activities.

27(d) The department shall annually submit to the Governor,
28for approval or disapproval, an estimate, based on the
29department's assessment of prevailing economic and regulatory
30conditions, of the amount of the assessments, fees and

1administrative penalties generated from section 602.1(b) and (c)
2and deposited in the General Fund to be transferred from the
3General Fund to the Securities Regulation Account.

4Section 34. This act shall take effect in 60 days.