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

1read:

2Section 102. Definitions.--When used in this act, the
3following definitions shall be applicable, unless the context 
4otherwise requires:

5* * *

6(c) "Agent" means any individual, other than a broker-
7dealer, who represents a broker-dealer or issuer in effecting or
8attempting to effect purchases or sales of securities. "Agent"
9does not include: (i) an individual who represents an issuer in
10effecting transactions in securities exempted by section 202,
11transactions exempted by section 203 or transactions in a
12covered security described in sections 18(b)(3) and (4)(D) of
13the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r) if no
14compensation is paid or given directly or indirectly for
15soliciting any person in this State in connection with any of
16the foregoing transactions; (ii) an individual who represents a
17broker-dealer in effecting transactions in this State, which
18transactions are limited to those described in section [15(h)
19(2)] 15(i)(3) of the Securities Exchange Act of 1934 (48 Stat. 
20881, 15 U.S.C. [§ 78o(h)(2)] § 78o(i)(3)); and (iii) an
21individual who has no place of business in this State if he
22effects transactions in this State exclusively with broker-
23dealers. Except where representing an issuer in effecting
24transactions in securities registered under section 205 or 206,
25a bona fide officer, director, or partner or employe of a
26broker-dealer or issuer, or an individual occupying a similar
27status or performing similar functions, is an agent only if he
28otherwise comes within this definition and receives compensation
29directly or indirectly related to purchases or sales of
30securities.

1(d) "Bank" means a bank, savings bank, savings institution,
2savings and loan association, thrift institution, trust company
3or similar organization which is organized or chartered under
4the laws of a state or of the United States, is authorized to
5and receives deposits and is supervised and examined by an
6official or agency of a state or by the United States if its
7deposits are insured by the Federal Deposit Insurance
8Corporation or a successor authorized by Federal law, and any 
9agency, branch or representative office of a foreign bank that 
10is subject to the same degree of regulation and supervision as a 
11domestic bank.

12(e) "Broker-dealer" means any person engaged in the business
13of effecting transactions in securities for the account of
14others or for his own account. "Broker-dealer" does not include:

15(i) An agent;

16(ii) An issuer;

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

22(iv) An executor, administrator, guardian, conservator or
23pledgee;

24(v) A person who has no place of business in this State if
25he effects transactions in this State exclusively with or
26through (A) the issuers of the securities involved in the
27transactions, (B) broker-dealers or institutional investors;

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

1transactions in securities are isolated transactions incidental
2to that business; or

3(vii) Other persons not within the intent of this subsection
4whom the [commission] department by regulation designates.

5(f) "Commission" means the [Pennsylvania] Banking and
6Securities Commission[.] of the Commonwealth, as established 
7under Subarticle C of Article XI-A of the act of May 15, 1933 
8(P.L.565, No.111), known as the Department of Banking and 
9Securities Code.

10* * *

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

12* * *

13(g.1) "Department" means the Department of Banking and
14Securities of this Commonwealth.

15* * *

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

24(i) A bank;

25(ii) A lawyer, accountant, engineer or teacher whose
26performance of these services is solely incidental to the
27practice of his profession;

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

1incidental to the conduct of business as a broker-dealer and 
2does not receive special compensation for the investment advice;

3(iv) A publisher of any bona fide newspaper, news column,
4newsletter, news magazine or business or financial publication
5or service, whether communicated in hard copy form or by
6electronic means or otherwise, that does not consist of the
7rendering of advice on the basis of the specific investment
8situation of each client and is of general, regular and paid
9circulation; and the agents and servants thereof in the
10performance of their regular duties on behalf of such
11publication or service;

12(v) A person whose advice, analyses or reports relate only
13to securities exempted under section 202(a);

14(vi) A person who has no place of business in this State if
15his only clients in this State are other investment advisers,
16federally covered advisers, broker-dealers or institutional
17investors;

18(vii) A person who has a place of business in this State and
19during the preceding twelve-month period has had not more than
20five clients in or out of this State and does not hold himself
21out generally to the public as an investment adviser;

22(viii) A person that is an investment adviser
23representative;

24(ix) A federally covered adviser;

25(x) A person excluded from the definition of "investment
26adviser" under section 202(a)(11) of the Investment Advisers Act
27of 1940 (54 Stat. 847, 15 U.S.C. § 80b-2(a)(11)); or

28(xi) Other persons not within the intent of this subsection
29whom the [commission] department by regulation designates.

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

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

2(i) Except as provided in paragraph (iii), with respect to
3any investment adviser registered or required to be registered
4under this act, any partner, officer, director or person
5occupying a similar status or performing similar functions, or
6other individuals employed by or associated with an investment
7adviser[, except clerical or administrative personnel,] who
8performs any of the following:

9(A) Makes any recommendations or otherwise renders advice
10regarding securities;

11(B) Manages accounts or portfolios of clients;

12(C) Determines which recommendation or advice regarding
13securities should be given;

14(D) [Solicits, offers or negotiates for the sale of or sells
15investment advisory services; or] Provides investment advice or 
16holds himself or herself out as providing investment advice;

17(E) Supervises employes who perform any of the foregoing; <-or

18(F) Receives compensation to solicit, offer or negotiate for
19the sale of or for selling investment advice.

20(ii) [with] With respect to any federally covered adviser,
21any individual employed by or associated with a federally
22covered adviser who is an "investment adviser representative"
23and who has a "place of business" in this State as those terms
24are defined in the rules and regulations of the Securities and
25Exchange Commission.

26(iii) An investment <-advisor adviser representative may not
27include;

28(A) individuals who perform only clerical or ministerial
29acts;

30(B) an agent whose performance of investment advice is

1solely incidental to the individual acting as an agent and who
2does not receive special compensation for investment advisory
3services; or

4(C) other individuals that the department determines by
5regulation.

6(k) "Institutional investor" means any bank, insurance
7company, pension or profit sharing plan or trust (except a
8municipal pension plan or system), investment company, as
9defined in the Investment Company Act of 1940, or any person,
10other than an individual, which controls any of the foregoing,
11the Federal Government, State or any agency or political
12subdivision thereof, except public school districts of this
13State, or any other person so designated by regulation of the
14[commission] department.

15* * *

16(s) "Securities Act of 1933," "Securities Exchange Act of
171934," "Public Utility Holding Company Act of [1935] 2005,"
18"Trust Indenture Act of 1939," "Investment Advisers Act of
191940," "Investment Company Act of 1940" and "Internal Revenue
20Code of [1954] 1986" mean the Federal statutes of those names as
21amended [before or after the effective date of this act], or any
22successor statutes thereto. Section numbers of such statutes or
23regulations adopted thereunder and referred to herein include
24such amendments thereto as may be adopted [before or after the
25effective date of this act. "Securities and Exchange Commission"
26means the "United States Securities and Exchange Commission."].

27(s.1) "Securities and Exchange Commission" means the United
28States Securities and Exchange Commission.

29(s.2) "Self-regulatory organization" means a national
30securities exchange registered under the Securities Exchange Act

1of 1934, a national securities association registered under the
2Securities Exchange Act of 1934 or Investment Advisors Act of
31940, a clearing agency registered under the Securities Exchange
4Act of 1934, the Municipal Securities Rulemaking Board
5established under the Securities Exchange Act of 1934 or an
6organization operating under the authority of the Commodity
7Futures Trading Commission.

8(t) "Security" means any note; stock; treasury stock; bond;
9debenture; evidence of indebtedness; share of beneficial
10interest in a business trust; certificate of interest or
11participation in any profit-sharing agreement; collateral trust
12certificate; preorganization certificate or subscription;
13transferable share; investment contract; voting trust
14certificate; certificate of deposit for a security; limited
15partnership interest; [certificate of interest or participation
16in an oil, gas or mining title or lease or in payments out of
17production under such a title or lease;] fractional undivided 
18interest in oil, gas or other mineral rights; put, call, 
19straddle, option or privilege on a security, certificate of 
20deposit of a security or group or index of securities including 
21any interest in the securities or based upon the value of the 
22securities, or any put, call, straddle, option or privilege 
23entered into on a national securities exchange relating to 
24foreign currency; membership interest in a limited liability
25company of any class or series, including any fractional or
26other interest in such interest, unless excluded by clause (v);
27or, in general, any interest or instrument commonly known as [or
28having the incidents of] a "security"; or any certificate of
29interest or participation in, temporary or interim certificate
30for, receipt for, guarantee of, or warrant or right to subscribe

1to or purchase, any of the foregoing. All of the foregoing are
2securities whether or not evidenced by written document.
3"Security" does not include:

4(i) Any beneficial interest in any voluntary inter vivos
5trust which is not created for the purpose of carrying on any
6business; or

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

8(iii) Any insurance or endowment policy or annuity contract
9under which an insurance company admitted in this State promises
10to pay a sum of money (whether or not based upon the investment
11performance of a segregated fund) either in a lump sum or
12periodically for life or some other specified period; or

13(iv) Any certificate issued under section 809 of The
14Insurance Company Law of 1921, act of May 17, 1921 (P.L.682), as
15amended; or

16(v) A membership interest in a limited liability company
17where all of the following conditions are satisfied:

18(A) The membership interest is in a company that is not
19managed by managers;

20(B) The purchaser of the membership interest enters into a
21written commitment to be engaged actively and directly in the
22management of the company; and

23(C) The purchaser of the membership interest, in fact, does
24participate actively and directly in the management of the
25company.

26* * *

27Section 2. Section 202 of the act, amended or added December
287, 1994 (P.L.869, No.126), November 24, 1998 (P.L.829, No.109)
29and July 4, 2002 (P.L.721, No.108), is amended to read:

30Section 202. Exempt Securities.--The following securities

1are exempted from sections 201 and 211:

2(a) Any security issued or guaranteed by the United States,
3any state or Canadian Province, any political subdivision of a
4state or Canadian Province, foreign government with which the
5United States currently maintains diplomatic relations, or any
6agency or corporate or other instrumentality of any of the
7foregoing, or any certificate of deposit for any of the
8foregoing, provided that if the issuer or guarantor is a foreign
9government other than Canada or an instrumentality of a foreign
10government other than Canada, such security or certificate of
11deposit therefor is recognized as a valid obligation by the
12issuer or guarantor thereof or its or their successors.

13(b) Any security issued or guaranteed by any bank [or
14savings association and any security the offer, sale, issuance
15or guarantee of which (i) is subject to regulation by the
16Interstate Commerce Commission, or (ii) is registered under the
17Public Utility Holding Company Act of 1935 or the act of May 28,
181937 (P.L.1053), known as the "Public Utility Law," or (iii) the
19issuer of which is regulated as to the issuance or guarantee of
20such security by a governmental authority of the United States].

21(b.1) Any security issued or guaranteed by a railroad, other
22common carrier, <-public utility or public utility holding company
23that is: (i) regulated in respect to its rates and charges by
24the United States or any state; (ii) regulated in respect to the
25issuance or guarantee of the security to be issued in reliance
26on this section by the United States, any state, Canada or any
27Canadian province or territory; or (iii) a public utility
28holding company registered under the Public Utility Holding
29Company Act of 2005 or a subsidiary of such a registered holding
30company within the meaning of that statute.

1(c) Any commercial paper which arises out of a current
2transaction or the proceeds of which have been or are to be used
3for current transactions, and which evidences an obligation to
4pay cash within nine months of the date after issuance,
5exclusive of days of grace, or any renewal of such paper which
6is likewise limited, or any guarantee of such paper or of any
7such renewal, except where such paper is proposed to be sold or
8offered to the public in units of less than five thousand
9dollars ($5,000) to any single person.

10(d) Any security issued or guaranteed by any Federal credit
11union or any credit union, industrial loan association or other
12similar association organized and supervised under the laws of
13this State.

14(e) Any security (except evidences of indebtedness, whether
15interest bearing or not) of an issuer (i) organized exclusively
16for educational, benevolent, fraternal, religious, charitable,
17social, athletic or reformatory purposes and not for pecuniary
18profit, if no part of the net earnings of the issuer inures to
19the benefit of any private shareholder or individual, or (ii)
20organized as a chamber of commerce or trade or professional
21association. The fact that amounts received from memberships, or
22dues, or both will or may be used to construct or otherwise
23acquire facilities for use by members of the nonprofit
24organization does not disqualify the organization from this
25exemption. This exemption shall not apply to the securities of
26any nonprofit organization if any promoter thereof expects or
27intends to make a profit directly or indirectly from any
28business or activity associated with the organization or
29operation of such nonprofit organization.

30(f) Any security listed, or approved for listing upon notice

1of issuance, [on the New York, American, or Philadelphia stock
2exchange or quoted on the National Market System of the Nasdaq
3Stock Market] <-on a national securities exchange described in 
4section 18(b)(1) of the Securities Act of 1933 (48 Stat. 74, 15 
5U.S.C. § 77r(b)(1); any other security of the same issuer which
6is of senior or substantially equal rank; any security called
7for by subscription rights or warrants so listed[,] or approved
8[or quoted]; and any warrant or right to purchase or subscribe
9to any of the foregoing.

10(g) Any security issued in connection with an employe's
11stock option, purchase, savings, pension, profit-sharing or
12similar benefit plan.

13(h) Any security of a registered broker-dealer issued to its
14officers, partners or employes, subject to such regulations as
15the [commission] department may establish.

16(i) Any security as to which the [commission] department by
17regulation or order finds that registration is not necessary or
18appropriate for the protection of investors.

19(j) Any membership interest in a limited liability company
20that renders one or more professional services. As used in this
21subsection, the term "professional services" shall have the
22meaning set forth in 15 Pa.C.S. § 2902 (relating to
23definitions).

24Section 3. Section 203 of the act, amended May 4, 1993
25(P.L.4, No.4), December 7, 1994 (P.L.869, No.126), November 24,
261998 (P.L.829, No.109), July 4, 2002 (P.L.721, No.108) and
27November 23, 2004 (P.L.918, No.126), is amended to read:

28Section 203. Exempt Transactions.--The following
29transactions are exempted from sections 201 and 211:

30(a) Any non-issuer transaction except where directly or

1indirectly for the benefit of an affiliate of the issuer.

2(b) Any non-issuer transaction directly or indirectly for
3the benefit of an affiliate of the issuer which is exempted from
4section 5 of the Securities Act of 1933, other than those
5transactions exempted pursuant to section 3(a)(11) or 3(b) of
6the Securities Act of 1933, and the rules and regulations now or
7hereafter adopted thereunder.

8(c) Any offer or sale to an institutional investor or to a
9broker-dealer, whether the buyer is acting for itself or in some
10fiduciary capacity.

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

1exemption. A notice in the form prescribed by the [commission]
2department, signed by an officer of the issuer and stating the
3name, principal business address of the issuer, proposed use of
4the proceeds from the sale and such facts as are necessary to
5establish this exemption shall be filed, together with a copy of
6any offering literature used in connection with such offer or
7sale, with the [commission] department not later than the day on
8which the issuer receives from any person an executed
9subscription agreement or other contract to purchase the
10securities being offered or the issuer receives consideration
11from any person therefor, whichever is earlier.

12(e) Any offer to not more than fifty persons in this State
13during a period of twelve consecutive months (i) if no sales
14result from such offer or if sales resulting from such offer are
15exempt by reason of subsection (d) or (f) hereof and (ii) no
16general solicitation through public media advertising, mass
17mailing, Internet or other means is used in connection with
18making the offer. This subsection shall not be applicable to
19offers made pursuant to any other subsection of this section,
20except subsections (d) and (f).

21(f) Any offer or sale of a preorganization subscription or
22securities of a newly-formed person as part of its initial
23capitalization to not more than five persons, if no general 
24solicitation through public media advertising, mass mailing, 
25Internet or other means is used in connection with soliciting 
26the sales.

27(g) Any transaction between the issuer or other person on
28whose behalf the offering is made and an underwriter, or among
29underwriters.

30(h) Any offer, but not a sale, of a security for which a

1registration statement has been filed under the Securities Act
2of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.) or a notification
3of exemption from registration pursuant to Regulation A
4promulgated under section 3(b) of such act (15 U.S.C. § 77c(b))
5if (i) no stop order or refusal order is in effect and no public
6proceeding or examination looking toward such an order is
7pending under the Securities Act of 1933 or this act; and (ii)
8no such offer is made until after such registration statement,
9including a prospectus, has been filed with the [commission]
10department.

11(i.1) Any sale of an equity security, [except securities of
12an open-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.),] if: (i) the securities are
16proposed to be registered under section 5 of the Securities Act
17of 1933 (15 U.S.C. § 77e) and, in fact, become registered under
18section 5 of the Securities Act of 1933 (15 U.S.C. § 77e); (iv)
19the issuer of the security is a reporting company as defined in
20section 102(q); (v) no stop order or refusal order is in effect
21and no public proceeding or investigation looking toward such an
22order is pending under the Securities Act of 1933 or this act;
23(vi) the equity security is [listed on a national securities
24exchange registered under the Securities Exchange Act of 1934
25(48 Stat. 881, 15 U.S.C. § 78a et seq.) or quoted on the
26National Market System or Small Cap Market of the Nasdaq Stock
27Market] quoted on the OTC Bulletin <-Board; (vii) the issuer, at
28the time the registration statement becomes effective under
29section 5 of the Securities Act of 1933, has not received an
30auditor's report for the immediately preceding fiscal year

1expressing substantial doubt about the issuer's ability to
2continue as a going concern unless the securities being sold in
3reliance upon this subsection are the subject of an offering
4that is being underwritten on a firm commitment basis by a
5broker-dealer registered under section 301. An exemption under
6this section shall terminate upon the termination of the
7effective period of the registration statement under section 5
8of the Securities Act of 1933. For purposes of this subsection,
9the [commission] department, by regulation, may define the term
10"equity security."

11(j) Any transaction in a bond or other evidence of
12indebtedness secured by a real or chattel mortgage or deed of
13trust, or by an agreement for the sale of real estate or
14chattels if: (i) the entire mortgage, deed of trust, or
15agreement, together with all the bonds or other evidences of
16indebtedness secured thereby, is offered and sold as a unit;
17(ii) no public media advertisement is used, mass mailing made or
18other form of general solicitation is utilized in connection
19with soliciting the transaction; and (iii) no compensation is
20paid or given directly or indirectly for soliciting any person
21in this State in connection with the transaction.

22(k) Any judicial sale or any transaction by an executor,
23administrator, sheriff, marshal, receiver, trustee in
24bankruptcy, guardian or conservator.

25(l) Any transaction now or hereafter exempted from section 5
26of the Securities Act of 1933 by virtue of sections 3(a)(9) or
273(a)(10) thereof.

28(m) Any transaction executed by a bona fide pledgee without
29any purpose of evading this act.

30(n) Any transaction pursuant to an offer of securities to

1existing equity security holders of (i) the issuer; (ii) a
2corporation which prior to the commencement of the offer owned
3substantially all of the voting stock of the issuer; or (iii) a
4corporation which organized the issuer for the purpose of the
5offer, if no compensation, other than a standby commission, is
6paid or given directly or indirectly for soliciting any equity
7security holder in this State. "Equity security holders" include
8persons who at the time of the transaction are holders of
9convertible securities, nontransferable warrants, or
10transferable warrants exercisable within not more than ninety
11days of their issuance.

12(o) Any transaction incident to a vote by security holders, 
13or written consent of some or all security holders in lieu of 
14such vote, pursuant to the articles of incorporation or the 
15applicable corporation statute or other statute governing such 
16person, or pursuant to a partnership agreement, a declaration of 
17trust, trust indenture or any agreement among security holders 
18on a merger, consolidation, sale of assets in consideration, in 
19whole or in part, of the issuance of securities of another 
20person, reclassification of securities, or reorganization 
21involving the exchange of securities, in whole or in part, for 
22the securities of any other person if, in the case of any 
23proposed transaction where no proxy materials are required or 
24permitted to be filed with the Securities and Exchange 
25Commission by either party to the transaction and where more 
26than twenty-five per cent of the security holders of either 
27party to the transaction are residents of this State, materials 
28specified by regulation of the [commission] department are 
29prepared in connection with the proposed transaction and, after 
30filing with and review by the [commission] department,
 

1distributed to the security holders of each party to the 
2transaction prior to the vote or solicitation of written consent 
3and the filing fee specified in section 602(b.1) is paid.

4(o.1) Any transaction incident to a vote by security 
5holders, or written consent of some or all security holders in 
6lieu of the vote, pursuant to the articles of incorporation or 
7the applicable corporation statute or other statute governing 
8the person, or pursuant to a partnership agreement, a 
9declaration of trust, trust indenture or an agreement among 
10security holders on a merger, consolidation, sale of assets in 
11consideration, in whole or in part, of the issuance of 
12securities of another person, reclassification of securities or 
13reorganization involving the exchange of securities, in whole or 
14in part, for the securities of another person if each of the 
15parties to a transaction described in this section is a bank 
16holding company registered under the Bank Holding Company Act of 
171956 (70 Stat. 133, 12 U.S.C. § 1841) and subject to the 
18supervision of the Board of Governors of the Federal Reserve 
19System.

20(p) Any offer or sale of an evidence of indebtedness of an
21issuer either: organized exclusively for educational,
22benevolent, fraternal, religious, charitable, social, athletic
23or reformatory purposes and not for pecuniary profit, if no part
24of the net earnings of the issuer inures to the benefit of any
25private shareholder or individual; or organized as a chamber of
26commerce or trade or professional association if all the
27following are met:

28(1) The issuer files a notice with the [commission]
29department in the form prescribed by the [commission] department
30not later than five business days before the issuer receives

1from any person an executed subscription agreement or other
2contract to purchase the securities being offered or the issuer
3receives consideration from any person therefor, whichever is
4earlier. The notice filed with the [commission] department shall
5be accompanied by a copy of a disclosure document and any
6offering literature to be used in connection with an offer or
7sale of securities under this section.

8(2) The filing fee prescribed in section 602(b.1)(x) has
9been paid.

10(3) Each person who accepts an offer to purchase securities
11under this subsection has received a written notice of a right
12to withdraw an acceptance as provided in section 207(m)(2).

13(4) The issuer and any predecessor of the issuer have not
14defaulted within the current fiscal year and the three preceding
15fiscal years with respect to any debt security previously sold
16by the issuer or its predecessor.

17(5) The total amount of securities proposed to be offered
18under this subsection are secured by a mortgage or deed of trust
19upon the existing land and buildings owned by the issuer which
20mortgage or deed of trust is or will become a first lien at or
21prior to the issuance of the securities or there exists a
22provision satisfactory to the [commission] department for
23escrowing of the proceeds from the sale of the securities until
24such first lien is established.

25(6) The total amount of securities proposed to be offered
26under this subsection does not exceed as of the time the form
27required by this subsection is filed with the [commission]
28department seventy-five per cent of the fair market value of the
29land and buildings to be included in the mortgage or deed of
30trust.

1(7) No promoter of the issuer expects or intends to make a
2profit directly or indirectly from any business activity
3associated with the organization or operation of the issuer.

4(8) The issuer complies with regulations of the [commission]
5department with respect to trust indentures and the use of an
6offering document.

7(q) Any bona fide distribution in partial or total
8liquidation of a person, whether or not the assets being
9distributed include securities of any other person and whether
10or not wholly or partially in exchange for the securities of the
11person making the distribution, and any stock split and any
12stock dividend, where the corporation distributing the dividend
13is not the issuer, if nothing of value is given by stockholders
14for the dividend other than the surrender of a right to a cash
15or property dividend in lieu of the stock and if the dividend is
16issued pro rata by class.

17(r) Any transaction or class of transactions as to which the
18[commission] department by regulation or order finds that
19registration is not necessary or appropriate for the protection
20of investors. As a condition of the availability of an exemption
21granted or established under this section, the [commission]
22department may require compliance with the provisions of section
23207(m)(2) and the rules and regulations promulgated thereunder.

24(s) Any offer or sale of a security which is exempt from
25registration under section 5 of the Securities Act of 1933 (48 
26Stat. 74, 15 U.S.C. § 77e) pursuant to Rule 505 of Regulation D
27promulgated under section 3(b) of the Securities Act of 1933 (15 
28U.S.C. § 77c(b)) if:

29(i) The issuer files a notice in the form prescribed by rule
30of the [commission] department, together with a copy of any

1offering document or literature proposed to be used in
2connection with such offer and sale, with the [commission]
3department not later than the day on which the issuer receives
4from any person an executed subscription agreement or other
5contract to purchase the securities being offered or the issuer
6receives consideration from any person therefor, whichever is
7earlier;

8(ii) The issuer pays the filing fee specified in section
9602(b.1);

10(iii) No mass mailing is used, public media advertising made
11or other form of general solicitation is utilized in connection
12with offers and sales under this subsection;

13(iv) No compensation is given or paid, directly or
14indirectly, to any person in connection with a sale under this
15subsection unless the compensation is given or paid in
16connection with a sale made by a broker-dealer who is registered
17under section 301; and

18(v) Neither the issuer nor a predecessor of the issuer;
19affiliated issuer; officer, director or general partner of the
20issuer; promoter of the issuer presently connected with the
21issuer in any capacity; beneficial owner of ten per cent or more
22of any class of equity securities of the issuer; underwriter of
23the securities to be offered under this subsection or any
24partner, director or officer of such underwriter has within five
25years of filing a notice pursuant to subparagraph (i):

26(A) Filed a registration statement which is the subject of a
27currently effective registration stop order entered by any state
28securities administrator or the Securities and Exchange
29Commission;

30(B) Been convicted of any criminal offense in connection

1with the offer, purchase or sale of a security or involving
2fraud or deceit;

3(C) Been subject to a state administrative enforcement order
4or judgment finding fraud or deceit in connection with the
5purchase, offer or sale of any security;

6(D) Been subject to a state administrative enforcement order
7or judgment which prohibits, denies or revokes the use of an
8exemption from registration in connection with the purchase,
9offer or sale of a security; or

10(E) Been subject to an order, judgment or decree of any
11court of competent jurisdiction temporarily, preliminarily or
12permanently restraining or enjoining such party from engaging in
13or continuing to engage in any conduct or practice involving
14fraud or deceit in connection with the purchase, offer or sale
15of any security.

16The provisions of this subparagraph shall not apply if the party
17subject to a disqualification described in clause (A), (B), (C),
18(D) or (E) is licensed or registered to conduct securities-
19related business in the state in which the order, judgment or
20decree creating the disqualification was entered against such
21party; the state securities administrator or the court or
22regulatory authority that entered the order judgment or decree
23waives the disqualification prior to the first offer being made
24in this State under this subsection; or the issuer establishes
25that it did not know and, in the exercise of reasonable care
26based on a factual inquiry, could not have known that a
27disqualification existed under this subparagraph.

28(t) Any offer and any sale resulting from such offer where
29the securities being offered, whether in or outside of this
30State, will be sold only to accredited investors as that term is

1defined in the rules and regulations of the Securities and
2Exchange Commission if:

3(i) The securities are sold in good faith reliance that the
4offering would qualify for an exemption from registration under
5section 5 of the Securities Act of 1933 (15 U.S.C. § 77e),
6pursuant to section 3(a)(11) of the Securities Act of 1933 (15 
7U.S.C. § 77c(a)(11)) or the regulations adopted by the
8Securities and Exchange Commission under section 3(b) of the
9Securities Act of 1933 (15 U.S.C. § 77c(b)), except an offering
10under Rule 505 of Regulation D promulgated by the Securities and
11Exchange Commission under section 3(b) of the Securities Act of
121933 (15 U.S.C. § 77c(b));

13(ii) The issuer files a notice in the form prescribed by
14rule of the [commission] department, together with a copy of any
15offering document or literature proposed to be used in
16connection with such offer and sale, with the [commission]
17department not later than the day on which the issuer receives
18from any person an executed subscription agreement or other
19contract to purchase the securities being offered or the issuer
20receives consideration from any person therefor, whichever is
21earlier;

22(iii) The issuer pays the filing fee specified in section
23602(b.1);

24(iv) No compensation is given or paid, directly or
25indirectly, to any person in connection with a sale under this
26subsection unless the compensation is given or paid in
27connection with a sale made by a broker-dealer who is registered
28under section 301;

29(v) Neither the issuer nor a predecessor of the issuer;
30affiliated issuer; officer, director or general partner of the

1issuer; promoter of the issuer presently connected with the
2issuer in any capacity; beneficial owner of ten per cent or more
3of any class of equity securities of the issuer; underwriter of
4the securities to be offered under this subsection or any
5partner, director or officer of such underwriter has within five
6years of filing a notice pursuant to subparagraph (i):

7(A) Filed a registration statement which is the subject of a
8currently effective registration stop order entered by any state
9securities administrator or the Securities and Exchange
10Commission;

11(B) Been convicted of any criminal offense in connection
12with the offer, purchase or sale of a security or involving
13fraud or deceit;

14(C) Been subject to a state administrative enforcement order
15or judgment finding fraud or deceit in connection with the
16purchase, offer or sale of any security;

17(D) Been subject to a state administrative enforcement order
18or judgment which prohibits, denies or revokes the use of an
19exemption from registration in connection with the purchase,
20offer or sale of a security; or

21(E) Been subject to an order, judgment or decree of any
22court of competent jurisdiction temporarily, preliminarily or
23permanently restraining or enjoining such party from engaging in
24or continuing to engage in any conduct or practice involving
25fraud or deceit in connection with the purchase, offer or sale
26of any security.

27The provisions of this subparagraph shall not apply if the party
28subject to a disqualification described in clause (A), (B), (C),
29(D) or (E) is licensed or registered to conduct securities-
30related business in the state in which the order, judgment or

1decree creating the disqualification was entered against such
2party; the state securities administrator or the court of
3regulatory authority that entered the order judgment or decree
4waives the disqualification prior to the first offer being made
5in this State under this subsection; or the issuer establishes
6that it did not know and, in the exercise of reasonable care
7based on a factual inquiry, could not have known that a
8disqualification existed under this subparagraph;

9(vi) The issuer specifies in any advertisement,
10communication, sales literature or other information which is
11publicly disseminated in connection with the offering of
12securities, including by means of electronic transmission or
13broadcast media, that the securities will be sold only to
14accredited investors. For purposes of this paragraph, "publicly
15disseminated" means communicated to 100 or more persons or
16otherwise communicated, used or circulated in a public manner;

17(vii) The issuer does not engage in any solicitation of
18prospective purchasers by telephone until the issuer has
19reasonable grounds to believe that the person to be solicited is
20an accredited investor;

21(viii) The issuer places a legend on the cover page of any
22disclosure document proposed to be used in connection with the
23offering or on the cover page of the subscription agreement
24advising that the securities described in the disclosure
25document or the subscription agreement will be sold only to
26accredited investors and that any resales of the securities made 
27within 12 months from the original date of purchase shall only 
28be made pursuant to an effective registration or to accredited 
29investors;

30(ix) The issuer is not an investment company as defined in

1the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.);
2[and]

3(x) The issuer is not a development stage company with no
4specific business plan or purpose or a development stage company
5that has indicated that its business plan is to engage in a
6merger or acquisition with an unidentified company or companies
7or other entity or person[.]; and

8(xi) The issuer reasonably believes that all purchasers are 
9purchasing for investment and not with the view to distribute, 
10or for sale in connection with a distribution of, the security. 
11A resale of a security sold in reliance on this exemption within 
1212 months from the original date of purchase shall be presumed 
13to be with a view to distribution and not for investment, except 
14resales pursuant to a registration statement effective under 
15section 205 or 206, or <-to accredited investors pursuant to an 
16exemption available under this act.

17(u) Any offer or sale of a security in an offering which is 
18exempt from registration under section 5 of the Securities Act 
19of 1933 (48 Stat. 74, 15 U.S.C. §77e) in good faith reliance on 
20section 3(b)(2) <-or 77c(b)(2) of the Securities Act of 1933 and 
21rules and regulation adopted thereunder, provided that the 
22issuer of the securities files with the department all documents 
23that are required by rules of the Securities and Exchange 
24Commission to be filed with the Securities and Exchange 
25Commission at the same time that those documents are filed with 
26the Securities and Exchange Commission.

27Section 4. Section 204 of the act, amended July 4, 2002
28(P.L.721, No.108), is amended to read:

29Section 204. Exemption Proceedings.--(a) The [commission]
30department may by regulation as to any type of security or
 

1transaction, or by order in a particular case, as to any 
2security or transaction increase the number of purchasers or 
3offerees permitted, or waive the conditions in either of 
4sections 202 or 203.

5(b) The [commission] department may by order deny or revoke
6any exemption specified in section 202 or 203 with respect to a
7specific security or transaction. The order shall be issued
8summarily without notice or hearing. Upon issuance of a summary
9order, the [commission] department shall promptly provide the
10order to the person against whom it is issued. The order shall
11contain findings of fact and conclusions of law and include a
12notice affording the person an opportunity for a hearing under
13section 607(a). No order under this section shall operate
14retroactively. No person shall be considered to have violated
15section 201 by reason of any offer or sale effected after the
16entry of an order under this section if he sustains the burden
17of proof that he did not know, and in the exercise of reasonable
18care could not have known, of the order.

19Section 5. Section 205 of the act, amended November 24, 1998
20(P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is amended
21to read:

22Section 205. Registration by Coordination.--(a)
23Registration by coordination may be used for any offering for
24which a registration statement has been filed under the
25Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.) or
26for any proposed sale pursuant to Regulation A promulgated under
27the exemption contained in section 3(b) of such act (15 U.S.C. § 
2877c(b)) provided, except in the case of open-end or closed-end
29investment company, face amount certificate company or unit
30investment trust, as such persons are classified in the

1Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1
2et seq.), such registration statement or notification of
3proposed sale has not become effective.

4(b) A registration statement under this section shall
5contain the following information and be accompanied by the
6following documents in addition to the information specified in
7section 207(b):

8(i) Two copies of the preliminary prospectus or offering
9circular filed under the Securities Act of 1933;

10(ii) If the [commission] department by regulation requires,
11a copy of the articles of incorporation and bylaws or their
12substantial equivalents currently in effect, a copy of any
13agreements with or among underwriters, a copy of any indenture
14or other instrument governing the issuance of the security to be
15registered, and a specimen or copy of the security;

16(iii) If the [commission] department by regulation or order
17requires, any other information, or copies of any documents,
18filed under the Securities Act of 1933; and

19(iv) An undertaking to forward to the [commission]
20department all future amendments to the Federal prospectus or
21offering circular, other than an amendment which merely delays
22the effective date of the registration statement, not later than
23the first business day after they are forwarded to or filed with
24the Securities and Exchange Commission, or such longer period as
25the [commission] department permits.

26(c) A registration statement or notification of any proposed
27sale filed under this section automatically [become] becomes
28effective at the moment the Federal registration statement or
29notification becomes effective if (i) no stop order is in effect
30in this State and no proceeding is pending under section 208;

1and (ii) the registration statement or notification has been on
2file with the [commission] department for at least ten days.

3(d) The registrant shall notify the [commission] department
4promptly [by telephone or telegram], in a manner determined by 
5the department, of the date and time when the Federal
6registration statement became effective and the content of the
7price amendment, if any, and shall file a post-effective
8amendment promptly containing the information and documents in
9the price amendment. "Price amendment" means the final Federal
10amendment which includes a statement of the offering price,
11underwriting and selling discounts or commissions, amount of
12proceeds, conversion rates, call prices and other matters
13dependent upon the offering price. Upon failure to receive the
14required notification and post-effective amendment with respect
15to the price amendment, the [commission] department may enter a
16stop order, without notice or hearing, retroactively denying
17effectiveness to the registration statement or suspending its
18effectiveness until compliance with this subsection is effected,
19if it promptly notifies the registrant by telephone or telegram
20of the issuance of such order. If the registrant proves
21compliance with the requirements of this subsection as to notice
22and post-effective amendment, the stop order shall be vacated as
23of the time of its entry. The [commission] department may by
24regulation or order waive any of the conditions specified in
25subsection (b) or (c).

26(e) If the Federal registration statement becomes effective
27before all the conditions in this section are satisfied and they
28are not waived, the registration statement automatically becomes
29effective as soon as all the conditions are satisfied. If the
30registrant advises the [commission] department of the date when

1the Federal registration statement is expected to become
2effective, the [commission] department shall promptly advise the
3registrant [by telephone or telegram, at the registrant's
4expense] in a manner determined by the department, whether all
5the conditions are satisfied and whether it then contemplates
6the institution of a proceeding under section 208; but this
7advice by the [commission] department does not preclude the
8institution of such a proceeding at any time.

9Section 6. Section 206(b)(16) and (17), (c), and (d) of the
10act, amended March 25, 1981 (P.L.1, No.1), are amended to read:

11Section 206. Registration by Qualification.--* * *

12(b) A registration statement under this section shall
13contain the information specified in section 207(b), and shall
14contain the following information and be accompanied by the
15following documents:

16* * *

17(16) [a balance sheet of the issuer as of a date within four
18months prior to the filing of the registration statement; a
19profit and loss statement and analysis of surplus for each of
20the three fiscal years preceding the date of the balance sheet
21and for any period between the close of the last fiscal year and
22the date of the balance sheet, or for the period of the issuer's
23and any predecessors' existence if less than three years; and,
24if any part of the proceeds of the offering is to be applied to
25the purchase of any business, the same financial statements
26which would be required if that business were the registrant, or
27such other] the financial statements as may be required pursuant
28to section 609(c) and regulations adopted under that section;
29and

30(17) such additional information as the [commission]

1department requires by regulation or order.

2For purposes of this section 206(b) the [commission]
3department may classify issuers and types of securities.

4(c) Registration under this section becomes effective when
5the [commission] department so orders. If a registration
6statement has been on file for at least thirty days and all
7information required by the [commission] department has been
8furnished, the person filing the statement may at any time file
9a written request that the [commission] department take action
10within ten days following the filing of such request. If a
11request is filed and the [commission] department takes no action
12within the period, the registration becomes effective at the end
13of the ten-day period.

14(d) The [commission] department may by regulation or order
15require as a condition of registration under this section that a
16prospectus containing any designated part of the information
17contained in the registration statement or filed with it be sent
18or given to each person to whom an offer is made before or
19concurrently with: the first written offer made to him,
20otherwise than by means of a public advertisement, by or for the
21account of the issuer or any other person on whose behalf the
22offering is made, or by any underwriter or broker-dealer who is
23offering part of an unsold allotment or subscription taken by
24him as a participant in the distribution; or the confirmation of
25any sale made by or for the account of any person; or the
26payment pursuant to any sale; or the delivery of the security
27pursuant to any sale; whichever first occurs.

28Section 7. Section 207 of the act, amended December 7, 1994
29(P.L.869, No.126), November 24, 1998 (P.L.829, No.109), and July
304, 2002 (P.L.721, No.108), is amended to read:

1Section 207. General Registration Provisions.--(a) A
2registration statement may be filed by the issuer, any other
3person on whose behalf the offering is to be made or a licensed
4broker-dealer.

5(b) Every registration statement shall specify: (i) the
6amount of securities to be offered in this State; (ii) the
7states in which a registration statement or application in
8connection with the offering has been or is to be filed; (iii)
9any adverse order, judgment or decree entered in connection with
10the offering by the regulatory authorities in any state or by
11any court or the Securities and Exchange Commission, or any
12withdrawal with prejudice of a registration statement or
13application relating to the offering; and (iv) the names of all
14underwriters and broker-dealers selling or offering the
15securities in this State. Where the names of all underwriters or
16broker-dealers are not known at the time of filing of the
17registration statement, such list may be supplemented from time
18to time prior to or after effectiveness, provided that no delay
19of effectiveness or suspension shall be caused by the filing of
20any such supplement.

21(c) Any document filed under this act or a predecessor law
22within five years preceding the filing of a registration
23statement may be incorporated by reference in the registration
24statement.

25(d) The [commission] department may by regulation or
26otherwise permit the omission of any item of information or
27document from any registration statement.

28(e) The [commission] department may by regulation or order
29require as a condition of registration by qualification or as a
30condition of registration by coordination (if more than sixty-

1six and two-thirds per cent of the issue of securities part or
2all of which is to be registered by coordination is to be sold
3in Pennsylvania) that a report by an accountant, engineer,
4appraiser or other professional person be filed. The
5[commission] department may also designate one of its employes
6to make an examination of the business and records of an issuer
7of securities for which a registration statement has been filed
8by qualification.

9(f) In the case of a non-issuer distribution, information
10may not be required under section 206(b) or section 207(k)
11unless it is known to the person filing the registration
12statement or to the persons on whose behalf the distribution is
13to be made, or can be furnished by them without unreasonable
14effort or expense.

15(g) The [commission] department may by regulation or order
16require as a condition of registration that any security issued
17within the past five years or to be issued to a promoter for a
18consideration substantially different from the public offering
19price, or to any person for a consideration other than cash, be
20deposited in escrow; or that the proceeds from the sale of the
21registered security in this State be escrowed until the issuer
22receives a specified amount from the sale of the security either
23in this State or elsewhere; or that the proceeds from the sale
24of the registered security in this State be escrowed for a
25specific use as set forth in the prospectus; or it may impose
26any or all of these requirements. With respect to securities
27registered by coordination, no escrow of promotional shares
28hereunder shall be required to extend beyond four years. The
29[commission] department may by regulation or order determine the
30conditions of any escrow required hereunder, but may not reject

1a depository solely because of location in another state.

2(h) The [commission] department may by regulation require
3that debt securities of designated classes to be registered by
4qualification shall be issued under a trust indenture containing
5such provisions as it determines, but such provisions shall not
6be in addition to or inconsistent with the terms required or
7permitted by the Trust Indenture Act of 1939.

8(i) The [commission] department may by regulation require
9(i) with respect to registration by coordination that a copy of
10each form of subscription or sale contract used or proposed to
11be used in this State be filed with the [commission] department
12prior to its use in this State; and (ii) with respect to
13registration by qualification that, as a condition of
14registration, any security registered be sold only on a
15specified form of subscription or sale contract; and (iii) that
16a signed or conformed copy of each such contract be preserved
17for any period up to three years.

18(j.1) A registration by coordination is effective for one
19year from its effective date. The effectiveness of a
20registration by coordination may be extended beyond the initial
21one-year effectiveness period in increments of one-year periods
22up to a maximum of three years from the initial effectiveness
23date, provided that the security is being offered or distributed
24in a nonexempted transaction by or for the account of the issuer
25or other person on whose behalf the offering is being made, or
26by any underwriter or broker-dealer who is still offering part
27of an unsold allotment or subscription taken by him as a
28participant in the distribution and the [commission] department
29has been notified of such continued offering and the period
30thereof. [A registration by qualification is effective for one

1year from its effective date. The fact that a registration
2statement has been effective in this State with respect to any
3security does not permit sales of securities of the same class
4by the issuer or an affiliate of the issuer if such person did
5not file the registration statement, unless a separate
6registration statement is filed and declared effective with
7respect thereto, or an exemption from registration is available.
8A registration statement may not be withdrawn after its
9effective date if any of the securities registered have been
10sold in this State, unless permitted by regulation or order of
11the commission. No registration statement is effective during
12the time a stop order is in effect under section 208.]

13(j.2) A registration by qualification is effective for one 
14year from its effective date. The fact that a registration 
15statement has been effective in this State with respect to a 
16security does not permit sales of securities of the same class 
17by the issuer or an affiliate of the issuer if that person did 
18not file the registration statement, unless a separate 
19registration statement is filed and declared effective with 
20respect to the security, or an exemption from registration is 
21available. A registration statement may not be withdrawn after 
22its effective date if any of the securities registered have been 
23sold in this State, unless permitted by regulation or order of 
24the department. No registration statement is effective during 
25the time a stop order is in effect under section 208.

26(k) During the effective period of a registration statement,
27the [commission] department may by regulation require the person
28who filed the registration statement to file reports with the
29[commission] department, not more often than quarterly, to keep
30reasonably current the information contained in the registration

1statement and to disclose the progress of the offering;
2provided, however, that no person need comply with any such
3regulation of the [commission] department if such person files
4with the [commission] department copies of all reports such
5person is required to file with the Securities and Exchange
6Commission and if such reports are filed in a timely manner. If
7any of the securities registered have been sold in the State,
8the [commission] department may by regulation extend the period
9for filing the reports for an additional term not exceeding two
10years from the date the registration became effective or the
11date of its last amendment or extension.

12(l) A registration statement relating to any offering of
13securities may be amended after its effective date so as to
14increase the specified amount of securities proposed to be
15offered in this State. The amendment becomes effective upon the
16payment of the required filing fee, if any, and when the
17[commission] department so orders.

18(m) (1) Except where such securities are registered under
19section 5 of the Securities Act of 1933, each person who accepts
20an offer to purchase securities registered by qualification
21directly from an issuer or an affiliate of an issuer shall have
22the right to withdraw his acceptance without incurring any
23liability to the seller, underwriter (if any) or any other
24person, within two business days after he receives a prospectus
25relating to the offering (which is not materially different from
26the final prospectus relating to such offering) and a notice
27explaining the provisions of this subsection. As used herein,
28the term "final prospectus" shall mean the document prepared in
29accordance with such regulations as the [commission] department
30may provide, to be used by the seller in connection with an

1offering of securities in this State after the registration of
2such securities has become effective under this act.

3(2) Each person who accepts an offer to purchase securities
4exempted from registration by section 203(d) and (p) directly
5from an issuer or affiliate of an issuer shall receive a written
6notice in such form as the [commission] department, by rule, may
7prescribe informing such person of his right under this
8subsection to withdraw his acceptance without incurring any
9liability to the seller, underwriter (if any) or any other
10person, within two business days from the date of receipt by the
11issuer of his written binding contract of purchase or, in the
12case of a transaction in which there is no written binding
13contract of purchase, within two business days after he makes
14the initial payment for the securities being offered.

15(n) For purposes of coordinating the provisions of this act 
16with uniform procedures to facilitate electronic filings of 
17registration statements and notice filings, including, without 
18limitation, by a securities registration depository, the 
19[commission] department, by regulation, may adopt appropriate 
20procedures or forms or waive or modify any provision of section 
21205 or 206 or this section. The [commission] department, by 
22regulation, also may prescribe methods for accepting electronic 
23or digital signatures on forms to be filed electronically with 
24the [commission] department.

25Section 8. Section 208 of the act, amended November 24, 1998
26(P.L.829, No.109), July 4, 2002 (P.L.721, No.108) and November
2723, 2004 (P.L.928, No.131), is amended to read:

28Section 208. Denial, Suspension, and Revocation of
29Registrations.--(a) The [commission] department may issue a
30stop order denying effectiveness to, or suspending or revoking

1the effectiveness of, any registration statement if it finds
2that the order is in the public interest and that:

3(i) The registration statement as of its effective date or
4as of any earlier date in the case of an order denying
5effectiveness, or any amendment filed under section 207(l) as of
6its effective date, or any report under section 207(k) is
7incomplete in any material respect or contains any statement
8which was, in the light of the circumstances under which it was
9made, false or misleading with respect to any material fact, or
10omitted to state a material fact necessary in order to make the
11statements made, in the light of the circumstances under which
12they are made, not misleading;

13(ii) Any provision of this act or any regulation, order or
14condition lawfully imposed under this act has been wilfully
15violated, in connection with the offering by: (A) the person
16filing the registration statement, (B) the issuer, (C) any
17partner, officer or director of the issuer, (D) any person
18occupying a similar status or performing similar functions, (E)
19any affiliate of the issuer, but only if the person filing the
20registration statement is an affiliate of the issuer, or (F) any
21broker-dealer;

22(iii) The securities are the subject of an administrative
23stop order or similar order or a permanent or temporary
24injunction of any court of competent jurisdiction entered under
25any other Federal or State act applicable to the offering, but
26the [commission] department may not institute a proceeding
27against an effective registration statement under this section
28more than one year from the date of the order or injunction
29relied on, and it may not enter an order under this section on
30the basis of an order or injunction entered under any other

1state act unless that order or injunction was based on facts
2which would currently constitute a ground for a stop order under
3this act;

4(iv) The issuer's enterprise or method of business includes
5or would include activities which are illegal where performed;

6(v) The offering has been or would be made with unreasonable
7amounts of underwriters' and sellers' discounts, commissions or
8other compensation, or promoters' profits or participation, or
9unreasonable amounts or kinds of options, or has worked or
10tended to work a fraud upon purchasers or would so operate,
11provided that any underwriting compensation approved by a
12national securities association registered under the Securities
13Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a et seq.)
14with respect to the underwriting activities of its members shall
15not be deemed unreasonable under this section;

16(vi) The applicant or registrant has failed to pay the
17proper filing fee but the [commission] department shall vacate
18any such order when the deficiency has been corrected;

19(vii) Advertising prohibited by section 606 has been used in
20connection with the sale or offering of the securities;

21(viii) In the case of an offering of debt securities, the
22offering involves an excessive debt-to-equity ratio or the
23issuer, at the time it filed an application under section 205 or
24206, had received an auditor's report for the immediately
25preceding fiscal year expressing substantial doubt about the
26issuer's ability to continue as a going concern;

27(ix) The offering is being made by a development stage
28company which has no specific business plan or purpose or has
29indicated that its business plan is to engage in a merger or
30acquisition with an unidentified company or companies or other

1entity or person; or

2(x) The issuer has loaned money to an officer, director or
3general partner of the issuer or a person who legally or
4beneficially owns five per cent or more of a class of equity
5securities of the issuer or any affiliate of such person which
6moneys have not been repaid to the issuer prior to effectiveness
7of the registration statement under this act, except that this
8provision shall not apply to loans described in section 13(k)(2)
9or (3) of the Securities Exchange Act of 1934 (48 Stat. 881, 15 
10U.S.C. § 78(m)(2) or(3).

11(b) The [commission] department may not institute a stop
12order proceeding against an effective registration statement on
13the basis of a fact or transaction known to it when the
14registration statement became effective unless the proceeding is
15instituted within thirty days after effectiveness.

16(c) The [commission] department may by order deny, postpone,
17suspend or revoke the effectiveness of a registration statement.
18The order may be issued summarily without notice or hearing.
19Upon issuance of a summary order, the [commission] department
20shall promptly provide the order to the applicant or registrant.
21The order shall contain findings of fact and conclusions of law
22and include a notice affording the applicant or registrant an
23opportunity for a hearing under section 607(a). No order shall
24operate retroactively. No person shall be considered to have
25violated section 201 solely by reason of an order entered under
26this section for any offer or sale effected after the entry of
27an order under this section if the person sustains the burden of
28proof that the person did not know and in the exercise of
29reasonable care could not have known of the order.

30Section 9. Sections 209 and 210 of the act, amended November

124, 1998 (P.L.829, No.109), are amended to read:

2Section 209. Books, Records and Accounts.--(a) Every issuer
3registering securities for sale in this State or who has sold
4securities in this State pursuant to an exemption contained in
5section 202(e), 203(d), 203(p) or 203(r) shall at all times keep
6and maintain a complete set of books, records, and accounts of
7such sales and the disposition of the proceeds thereof for a
8period of three years following the last sale of securities in
9this State or one year after the disposition of all proceeds,
10whichever is longer, and shall thereafter, at such times as are
11required by the [commission] department, make and file in the
12office of the [commission] department, a report, setting forth
13the securities sold by it under such registration or exemption,
14the proceeds derived therefrom and the disposition thereof.

15(b) Subject to the limitations of section 18 of the
16Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r), every
17open-end or closed-end investment company, face amount
18certificate company or unit investment trust, as such persons
19are classified in the Investment Company Act of 1940 (54 Stat. 
20789, 15 U.S.C. § 80a-1 et seq.), making a filing under section
21205, 206 or 211 shall file reports with the [commission]
22department at such times and in such manner as the [commission]
23department, by rule, may prescribe which, at a minimum, set
24forth the total amount of securities offered and sold in this
25State during the effective period of the registration statement
26or notice filing.

27(c) Except open-end and closed-end investment companies,
28face amount certificate companies and unit investment trusts, as
29such persons are classified in the Investment Company Act of
301940, every issuer registering securities for sale in this State

1under section 206 shall file an annual report with the
2[commission] department, no earlier than three hundred sixty-
3five days and no later than four hundred twenty days from the
4effective date of the registration, setting forth the total
5amount of securities sold in this State during the effective
6period of the registration statement.

7Section 210. Retroactive Registration or Amendment of Notice
8of Filing for Certain Securities.--The [commission] department,
9by regulation, may establish procedures whereby an issuer that 
10has an effective registration pursuant to section 205 or 206 
11where an effective registration statement is on file with the 
12Securities and Exchange Commission regarding the same securities 
13or an open-end or closed-end investment company, face amount
14certificate company or unit investment trust, as such persons
15are classified in the Investment Company Act of 1940 (54 Stat. 
16789, 15 U.S.C. § 80a-1 et seq.), which, during the effective
17period of registration under section 205 or 206 or the effective
18period of a notice filing, sold securities in this State in
19excess of the aggregate amount of securities registered for sale
20in this State under section 205 or 206 or covered by the notice
21filing may apply to the [commission] department to register such
22securities retroactive to the date of the initial registration
23or to amend the notice filing retroactive to the date of the
24initial notice filing. An application for retroactive
25registration or amendment of a notice filing for such securities
26shall not be granted if, at the time the application is filed, a
27civil, criminal or administrative proceeding is pending alleging
28violations of section 201 for the sale of such securities in
29this State, or such securities were sold more than twenty-four
30months prior to the date the application was filed with the

1[commission] department. An application under this section shall
2not be granted unless the applicable oversale assessment
3prescribed by section 602.1(d) has been paid.

4Section 10. Section 211 of the act, added or amended
5November 24, 1998 (P.L.829, No.109) and July 4, 2002 (P.L.721,
6No.108), is amended to read:

7Section 211. Federally Covered Securities.--(a) With
8respect to any security that is a covered security under section
918(b)(2) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 
1077r(b)(2)), the following shall apply:

11(1) An open-end or closed-end investment company, unit
12investment trust or face amount certificate company, as such
13persons are classified in the Investment Company Act of 1940 (54 
14Stat. 789, 15 U.S.C. § 80a-1 et seq.), annually shall notify the
15[commission] department of its intent to offer such federally
16covered securities for sale in this State by paying the filing
17fee specified in section 602(b.1) and, if applicable, the
18assessment specified in section 602.1(a)(5) and filing any or
19all of the following documents which the [commission]
20department, by rule or order, may require:

21(i) Prior to the initial offer of such federally covered
22security in this State, all documents that are part of a Federal
23registration statement filed with the Securities and Exchange
24Commission under the Securities Act of 1933 (15 U.S.C. § 77a et
25seq.) or, as an alternative thereto, a notice form adopted by
26the [commission] department.

27(ii) After the initial offer of such federally covered
28security in this State, all documents that are part of an
29amendment to a Federal registration statement filed with the
30Securities and Exchange Commission under the Securities Act of

11933 or, as an alternative thereto, a notice form adopted by the
2[commission] department, which shall be filed concurrently with
3the [commission] department.

4(iii) Any other documents that are part of a Federal
5registration statement filed with the Securities and Exchange
6Commission under the Securities Act of 1933, which shall be
7filed concurrently with the [commission] department.

8(2) An initial notice filing by a unit investment trust
9shall be effective for the period beginning with its effective
10date in this State and ending one year after the date the
11registration statement for the same securities became effective
12with the Securities and Exchange Commission. A renewal notice
13filing by a unit investment trust shall be effective for a
14period of one year. An initial or renewal notice filing by a
15unit investment trust becomes effective upon receipt by the
16[commission] department of a properly completed filing,
17including documents required by paragraph (1), and a correct fee
18and, if applicable, the correct assessment unless another date
19is requested in writing by the issuer in the notice filing made
20with the [commission] department.

21(3) A notice filing by an open-end or closed-end investment
22company or face amount certificate company, as such terms are
23classified in the Investment Company Act of 1940, shall be
24effective for the period beginning with its effective date in
25this State and ending sixty days after the filer's fiscal year
26end for the year in which the notice filing was made. A notice
27filing by an open-end or closed-end investment company or face
28amount certificate company becomes effective upon receipt by the
29[commission] department of a properly completed filing,
30including documents required by paragraph (1), and a correct fee

1and, if applicable, the correct assessment unless another date
2is requested in writing by the issuer in the notice filing made
3with the [commission] department.

4(b) With respect to any security that is a covered security
5under section [18(b)(4)(D)] 18(b)(4)(E) of the Securities Act of
61933 (48 Stat. 74, 15 U.S.C. [§ 77r(b)(4)(D)] § 77r(b)(4)(E)),
7an issuer shall file a notice with the [commission] department
8on Form D promulgated by the Securities and Exchange Commission
9[and effective as of September 1, 1996,] not later than fifteen
10calendar days after the first sale of such federally covered
11security occurs in this State, together with the filing fee
12specified in section 602(b.1).

<-13(b.1) With respect to any security that is a covered
14security under section 18(b)(4)(C) of the Securities Act of 1933
15where: (i) the principal place of business (as that term is
16defined in the rules and regulations of the Securities and
17Exchange Commission) is in this State; or (ii) purchasers of 50%
18or more of the securities sold by the issuer pursuant to an
19offering made in reliance on section 18(b)(4)(C) of the
20Securities Act of 1933 are residents of this State, the issuer
21shall file with the department a copy of the document filed with
22the Securities and Exchange Commission pursuant to section 4A(b)
23of the Securities Act of 1933 when it files such document with
24the Securities and Exchange Commission and within 15 days of
25when it becomes aware of the facts set forth in this subsection.
26There shall be no fee for making such filing with the
27department.

<-28(b.1) (1) With respect to any security that is a covered
29security under section 18(b)(4)(C) of the Securities Act of
301933, the issuer shall file with the department a copy of the

1document filed with the Securities and Exchange Commission
2pursuant to section 4A(b) of the Securities Act of 1933 where:

3(i) the principal place of business, as that term is defined
4in the rules and regulations of the Securities and Exchange
5Commission, is in this State; or

6(ii) purchasers of 50% or more of the securities sold by the
7issuer pursuant to an offering made in reliance on section 18(b)
8(4)(C) of the Securities Act of 1933 are residents of this
9State.

10(2) The document required under paragraph (1) shall be filed
11when the issuer files the document with the Securities and
12Exchange Commission with respect to paragraph (1)(i) and within
1315 days of when it becomes aware of the facts under paragraph
14(1)(ii).

15(3) There shall be no fee for making the filing with the 
16department.

17(c) (1) The [commission] department may issue a stop order
18suspending the offer or sale of a security described in
19[subsection (a) or (b)] subsection (a), (b) or (b.1) upon
20finding that:

21(i) The order is necessary or appropriate in the public
22interest for protection of investors; and

23(ii) There is a failure to comply with any condition
24established under this section.

25(2) A stop order under this section may be issued summarily
26without notice or hearing. Upon issuance of a summary order, the
27[commission] department shall promptly provide the order to the
28person against whom it is issued. The order shall contain
29findings of fact and conclusions of law and include a notice
30affording the person an opportunity for a hearing under section

1607(a). No person shall be considered to have violated section
2201 solely by reason of an order entered under this section for
3an offer or sale effected after the entry of an order under this
4section if the person sustains the burden of proof that the
5person did not know and in the exercise of reasonable care could
6not have known of the order.

7(e) A failure to file or timely file documents with the 
8department or a failure to pay or timely pay a filing fee as 
9required by this section may not create any cause of action for 
10civil liability on the part of any person under section 502 or 
11503.

12Section 11. Section 301 of the act, amended November 24,
131998 (P.L.829, No.109), is amended to read:

14Section 301. Registration Requirement.--Unless exempted
15under section 302 hereof:

16(a) It is unlawful for any person to transact business in
17this State as a broker-dealer or agent unless he is registered
18under this act.

19(b) It is unlawful for any broker-dealer or issuer to employ
20an agent to represent him in this State unless the agent is
21registered under this act. The registration of an agent is not
22effective during any period when he is not associated with a
23specified broker-dealer registered under this act or a specified
24issuer. No agent shall at any time represent more than one
25broker-dealer or issuer, except that where affiliated
26organizations are registered broker-dealers, an agent may
27represent one or more of such organizations. When an agent
28begins or terminates [a connection] an affiliation with a
29broker-dealer or issuer, or [begins or terminates those] engages 
30in activities which make him an agent, the agent as well as the

1broker-dealer or issuer shall promptly notify the [commission]
2department. The [commission] department may adopt a temporary
3registration procedure to permit agents to change employers
4without suspension of their registrations hereunder.

5(c) It is unlawful for any person to transact business in
6this State as an investment adviser unless he is so registered
7or registered as a broker-dealer under this act or unless he is
8exempted from registration. It is unlawful for any person to
9transact business in this State as an investment adviser
10representative unless he is so registered or exempted from
11registration.

12(c.1) The following apply:

13(1) It is unlawful for any:

14(i) Person required to be registered as an investment
15adviser under this act to employ an investment adviser
16representative unless the investment adviser representative is
17registered under this act or exempted from registration,
18provided that the registration of an investment adviser
19representative is not effective during any period when he is not
20employed by an investment adviser registered under this act; or

21(ii) Federally covered adviser to employ, supervise or
22associate with an investment adviser representative having a
23place of business in this Commonwealth unless such investment
24adviser representative is registered under this act or exempted
25from registration.

26(2) If a registered investment adviser representative begins
27or terminates employment with an investment adviser or a
28federally covered adviser, the investment adviser in the case
29under paragraph (1)(i) or the investment adviser representative
30in the case of paragraph (1)(ii) shall promptly notify the

1[commission] department.

2(3) The [commission] department may adopt a temporary
3registration procedure to permit investment adviser
4representatives to change employers without suspension of their
5registrations under this act.

6(d) It is unlawful for any licensed broker-dealer, agent
7[or], investment adviser or investment adviser representative to
8effect a transaction in securities, directly or indirectly, in
9this State if the registrant is in violation of this act, or any
10regulation or order promulgated under this act of which he has
11notice, if such violation (i) is a material violation; (ii)
12relates to transactions effected in this State; and (iii) has
13been committed by such registrant, or if the information
14contained in his application for registration, as of the date of
15such transaction, is incomplete in any material respect or is
16false or misleading with respect to any material fact.

17(e) Every registration or notice filing expires on December
1831 of each year unless renewed. No registration or notice filing
19is effective after its expiration, unless a renewal application
20has been timely filed, and expiration of a registration for
21which no renewal application has been filed is deemed an
22application for withdrawal under section 305(f).

23(f) It is unlawful for any federally covered adviser to
24conduct advisory business in this State unless such person
25complies with the provisions of section 303(a)(iii).

26Section 12. Sections 302 and 303 of the act, amended
27November 24, 1998 (P.L.829, No.109) and July 4, 2002 (P.L.721,
28No.108), are amended to read:

29Section 302. Exemptions.--The following persons shall be
30exempted from the registration provisions of section 301:

1(a) A broker-dealer registered under the Securities Exchange
2Act of 1934, who has not previously had any [certificate]
3registration denied or revoked under this act or any predecessor
4statute, if he has no place of business in this State and,
5during [any period of twelve consecutive] the preceding 12 
6months, he does not direct offers to sell or buy into this State
7in any manner to persons other than broker-dealers,
8institutional investors or governmental agencies and other
9instrumentalities designated by regulation of the [commission]
10department, or to more than five other customers in this State,
11whether or not the offeror or any of the offerees is then
12present in this State.

13(b) An agent in so far as he effects transactions on behalf
14of a broker-dealer who is exempted by the provisions of
15subsection (a).

16(c) A person who represents an issuer in effecting
17transactions in securities registered under section 205 or 206
18who:

19(1) Is a bona fide officer, director, partner or employe of
20the issuer or an individual occupying similar status or
21performing similar functions; and

22(2) Does not receive any compensation, directly or
23indirectly, for effecting the transactions.

24(d) An investment adviser who does not have a place of
25business in this State that is registered or exempt from 
26registration under the securities act of the state in which the 
27person has his principal place of business and during the
28preceding twelve-month period has had not more than five clients
29who are residents of this State exclusive of other investment
30advisers, federally covered advisers, broker-dealers or

1institutional investors.

2(d.1) An investment adviser representative who is employed
3by or associated with an investment adviser insofar as he
4transacts business in this State on behalf of an investment
5adviser who is exempted by the provisions of subsection (d).

6(d.2) An investment adviser representative who has a place
7of business in this State and is employed by or associated with
8a federally covered adviser and the federally covered adviser
9meets any of the criteria described in section 303(a)(iii)(A),
10(B) or (C).

11(e) Any person who represents an issuer in effecting
12transactions in:

13(1) Securities that are exempted by section 202(e), (f) or
14(g);

15(2) Securities involved in a transaction exempted by section
16203(c), (g), (k), (l) or (m); or

17(3) Securities which are covered securities under section
1818(b)(1) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 
1977r(b)(1)).

20(e.2) A person that comes within the exclusion described in
21section 4(b)(1) and (2) of the Securities Act of 1933 (48 Stat.
2274, 15 U.S.C. § 77d(b)).

23(e.3) A funding portal, as that term is defined in § 3(a)
24(80) of the Securities Exchange Act of 1934 (48 Stat. 881, 15
25U.S.C. § 78c(a)(80)), that is registered as a funding portal
26with the Securities and Exchange Commission and has its
27principal place of business <-(as, as such term is defined by
28rules of the Securities and Exchange Commission<-), in this
29State. <-Such The funding portal, however, shall be subject to the
30provisions of Sections sections 304(d) and 510(f) <-of the act.

1(f) The [commission] department may by such regulations as
2it deems necessary or appropriate in the public interest or for
3the protection of investors, either unconditionally or upon
4specified terms and conditions or for specified periods, exempt
5from the provisions of section 301 any class of persons
6specified in such regulations.

7Section 303. Registration and Notice Filing Procedure.--(a)
8(i) Except as provided by clause (iii), any broker-dealer,
9agent, investment adviser or investment adviser representative
10may obtain an initial or renewal license by filing an
11application with the [commission] department. The application
12shall contain such information, and in such detail, as the
13[commission] department by rule requires concerning the
14applicant's form and place of organization, proposed method of
15doing business, and financial condition, the qualifications and
16experience of the applicant, including, in the case of a broker-
17dealer or investment adviser, the qualifications and experience
18of any partner, officer, director, or affiliate, or a person
19occupying a similar status or performing similar functions any
20injunction or administrative order or conviction referred to in
21section 305(a)(ii), information about affiliates or predecessors
22of the applicant, and any other matters which the [commission]
23department determines are relevant to the application. If a
24broker-dealer, agent, investment adviser or investment adviser
25representative seeks to obtain an initial or renewal license
26and, in connection therewith, requests a waiver of any
27requirement imposed under this section or section 304 or any
28regulation promulgated thereunder, the [commission] department
29in granting the waiver may impose conditions on or limit the
30scope of the initial or renewal license.

1(ii) If no denial order is in effect and no proceeding is
2pending under section 305, the registration becomes effective on
3the forty-fifth day after the filing of the application therefor
4or any material amendment thereto, or on such earlier date as
5the [commission] department may order. The [commission]
6department is directed to cooperate with other securities
7administrators and regulatory authorities to simplify and
8coordinate registration, application and renewal procedures.

9(iii) A federally covered adviser shall file with the
10[commission] department, prior to acting as a federally covered
11adviser in this State, a copy of such documents as have been
12filed with the Securities and Exchange Commission which the
13[commission] department by regulation may require, together with
14the fee specified in section 602(d.1). This requirement shall
15not apply to a federally covered adviser that:

16(A) Has a place of business in this State and whose only
17clients in this State are investment advisers, federally covered
18advisers, broker-dealers or institutional investors;

19(B) Does not have a place of business in this State and
20during the preceding twelve-month period has had not more than
21five clients who are residents of this State, exclusive of other
22investment advisers, federally covered advisers, broker-dealers
23or institutional investors; or

24(C) Meets the definition of any person described in section
25102(j)(i) through (viii), (x) or (xi), except a federally
26covered adviser that is also a broker-dealer registered under
27section 301, that has an individual employed by or associated
28with such person who meets the definition of investment adviser
29representative in section 102(j.1)(ii).

30(b) A registered broker-dealer or investment adviser may

1file an application for registration of a successor, whether or
2not the successor is then in existence, for the unexpired
3portion of the registrant's term. A federally covered adviser
4may file a notice filing for a successor, whether or not the
5successor is then in existence, for the unexpired portion of the
6notice period. There shall be no filing fee.

7(c) The [commission] department may by regulation prescribe
8standards of qualification with respect to training, experience
9and knowledge of the securities business and provide for an
10examination, which may be written or oral or both, to be taken
11by any class of or all applicants, as well as persons who
12represent or will represent a broker-dealer or an investment
13adviser, and the [commission] department may by order require an
14examination of a licensed broker-dealer, agent [or], investment
15adviser or investment adviser representative for due cause.

16(d) The [commission] department may by regulation require a
17minimum capital for registered broker-dealers subject to the
18limitations of section 15 of the Securities Exchange Act of 1934
19(48 Stat. 881, 15 U.S.C. § 78o) and establish minimum financial
20requirements for investment advisers subject to the limitations
21of section 222 of the Investment Advisers Act of 1940 (54 Stat. 
22847, 15 U.S.C. § 80b-18a). The [commission] department may
23classify broker-dealers for purposes of such requirements and
24may establish different requirements for those investment
25advisers who maintain custody of clients' funds or securities or
26who have discretionary authority over same and those investment
27advisers who do not.

28(e) The [commission] department may by regulation require
29surety bonds to be posted by any broker-dealer, investment
30adviser, and any issuer who employs agents subject to

1registration under section 301 in connection with effecting
2transactions in any security not exempted by section 202(e), (f)
3or (g) or effecting securities transactions not exempted by
4section 203(c), (g), (k), (l) or (m) in any amount the
5[commission] department may prescribe, subject to the
6limitations of section 15 of the Securities Exchange Act of 1934
7(48 Stat. 881, 15 U.S.C. § 78o) for broker-dealers and section
8222 of the Investment Advisers Act of 1940 for investment
9advisers and may determine their conditions. All bonds required
10shall provide for suit thereon by injured customers, clients or
11purchasers, but no bond may be required of any registered
12broker-dealer or investment adviser whose net capital or minimum
13financial requirements exceeds the amount prescribed by
14regulation for this purpose. Such bond, unless cancelled as
15provided herein, shall be in effect during the entire period
16that a registration is in effect. Every bond shall contain a
17provision that such bond is not cancellable, except on thirty-
18days prior written notice to the person by whom the bond was
19posted and the [commission] department, provided that such
20cancellation shall not affect any liability incurred or accrued
21prior to the effective date of such cancellation.

22Section 13. Section 304 of the act, amended November 24,
231998 (P.L.829, No.109), is amended to read:

24Section 304. Post-registration Provisions.--(a) Every
25registered broker-dealer and investment adviser shall make and
26keep all accounts, correspondence, memoranda, papers, books and
27other records which the [commission] department by regulation
28prescribes, except as provided by section 15 of the Securities
29Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78o) in the case
30of a broker-dealer and section 222 of the Investment Advisers

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

16(b) Every registered broker-dealer and investment adviser
17shall file such financial reports as the [commission] department
18by regulation prescribes, except as provided by section 15 of
19the Securities Exchange Act of 1934 in the case of a broker-
20dealer and section 222 of the Investment Advisers Act of 1940 in
21the case of an investment adviser.

22(c) If the information contained in any document filed with
23the [commission] department is or becomes inaccurate or
24incomplete in any material respect, the registrant or federally
25covered adviser shall promptly file a correcting amendment if
26the document is filed with respect to a registrant or when such
27amendment is required to be filed with the Securities and
28Exchange Commission if the document is filed with respect to a
29federally covered adviser.

30(d) The [commission] department shall make periodic

1examinations, within or without this State, of each broker-
2dealer and investment adviser at reasonable times and in
3reasonable scope. These examinations may be made without prior
4notice to the broker-dealer or investment adviser. For the
5purpose of avoiding unnecessary duplication of examinations, the
6[commission] department, in so far as it deems it practicable in
7administering this subsection, shall cooperate with securities
8administrators of other states, the Securities and Exchange
9Commission, and any national securities exchange or national
10securities association registered under the Securities Exchange
11Act of 1934 (15 U.S.C. § 78a et seq.) or any other department or
12agency of this State. The department shall have examination 
13authority under this subsection with respect to a funding 
14portal, as that term is defined in section 3(a)(80) of the 
15Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 
16§ 78c(a)(80)), that is registered as a funding portal with the 
17Securities and Exchange Commission and has its principal place 
18of business (as defined by rules of the Securities and Exchange 
19Commission) in this State, provided that the department shall 
20not apply any provision of this act or any rule or regulation 
21adopted under this act or take an administrative action that is 
22in addition to, or different from, the requirements for 
23registered funding portals established by the Securities and 
24Exchange Commission.

25(e) The [commission] department may by regulation prohibit
26unreasonable charges, commissions or other compensation of
27broker-dealers and investment advisers, provided that any
28charges, commissions, or other compensation consistent with
29rates set by a national securities exchange, when applied to
30transactions on that exchange, or by the Securities and Exchange

1Commission or national securities association registered under
2the Securities Exchange Act of 1934, shall not be deemed
3unreasonable under this section. Any underwriting compensation
4permitted by a national securities association registered under
5the Securities Exchange Act of 1934 with respect to the
6underwriting activities of its members shall not be deemed
7unreasonable under this section.

8(f) The [commission] department may prescribe [rules]
9regulations and statements of policy which it finds appropriate
10in the public interest and for the protection of investors for
11the conduct of business by broker-dealers and investment
12advisers who are not members of [the National Association of
13Securities Dealers, Inc. or any other national securities
14association registered under the Securities Exchange Act of
151934] a self-regulatory organization, which association has
16adopted rules of conduct. The department may adopt a regulation 
17or order requiring an agent or investment adviser representative 
18to participate in a continuing education program approved by the 
19Securities and Exchange Commission and administered by a self-
20regulatory organization or, in the absence of such a program, a 
21regulation or order issued under this act may require continuing 
22education for an individual registered as an agent or investment 
23adviser representative.

24[(g) All broker-dealers and investment advisers registered
25hereunder shall display copies of their currently effective
26licenses, bearing the seal of the commission, prominently in
27each place of business within this State. Each such certificate
28shall contain the names of such persons as the commission shall
29by rule provide.]

30Section 14. Section 305 of the act, amended or added June

125, 1986 (P.L.256, No.68), December 18, 1990 (P.L.755, No.190),
2November 24, 1998 (P.L.829, No.109), July 4, 2002 (P.L.721,
3No.108) and November 23, 2004 (P.L.930, No.132), is amended to
4read:

5Section 305. Denial, Suspension, Revocation and Conditioning
6of Registration.

7(a) The [commission] department may, by order, deny,
8suspend, revoke or condition any registration or may censure any
9registrant if it finds that such order is in the public interest
10and that such registrant or applicant, or in the case of any
11broker-dealer or investment adviser, any affiliate thereof,
12whether prior or subsequent to becoming associated with such
13person:

14(i) Has filed an application for registration or a document
15in connection with an application for registration which as of
16its effective date or as of a date after filing in the case of
17an order denying effectiveness, was incomplete in a material
18respect or contained a statement which was, in light of the
19circumstances under which it was made, false or misleading with
20respect to a material fact; or

21(ii) Has been: (A) convicted within ten years of the date of
22the [commission's] department's action of any felony or
23misdemeanor, or of any substantially equivalent crime by a
24foreign court of competent jurisdiction, or held liable in a
25civil action by final judgment of a court and the [commission]
26department finds that such felony, misdemeanor or civil action:
27(I) involved the purchase or sale of any security, the taking of
28a false oath, the making of a false report, bribery, perjury,
29burglary and any substantially equivalent activity however
30denominated by the laws of a relevant foreign government or

1conspiracy to commit any such offense; (II) arose out of the
2conduct of the business of an issuer, broker-dealer, municipal
3securities dealer, government securities broker, government
4securities dealer, investment adviser, bank, insurance company,
5fiduciary, transfer agent, foreign person performing a function
6substantially equivalent to any of the foregoing or any entity
7or person required to be registered under the Commodity Exchange
8Act (42 Stat. 988, 7 U.S.C. § 1 et seq.) or any substantially
9equivalent foreign statute or regulation; (III) involved the
10larceny, theft, robbery, extortion, forgery, counterfeiting,
11fraudulent concealment, embezzlement, fraudulent conversion or
12misappropriation of funds or securities or any substantially
13equivalent activity however denominated by the laws of a
14relevant foreign government; or (IV) involved the violation of
1518 U.S.C. § 152 (relating to concealment of assets; false oaths
16and claims; bribery), 1341 (relating to frauds and swindles),
171342 (relating to fictitious name or address) or 1343 (relating
18to fraud by wire, radio, or television) or Ch. 25 (relating to
19counterfeiting and forgery) or 47 (relating to fraud and false
20statements) or a violation of any substantially equivalent
21foreign statute; or (B) convicted of any other felony; or

22(iii) Is permanently or temporarily enjoined by any court of
23competent jurisdiction from engaging in or continuing any
24conduct or practice involving any aspect of the securities or
25commodities future contract business or involving fraudulent
26conduct in the banking or insurance business; or

27(iv) Is subject to (A) any currently effective order or
28order entered within the past five years of the Securities and
29Exchange Commission, the Commodity Futures Trading Commission or
30the securities administrator of any other state denying

1registration to or revoking or suspending the registration of
2such person as a broker-dealer, agent, investment adviser,
3investment adviser representative, futures commission merchant,
4commodity pool operator, commodity trading [advisor] adviser or
5a person associated with a futures commission merchant,
6commodity pool operator or commodity trading adviser, or (B) any
7currently effective order of any [national securities
8association, national securities exchange (as defined in the
9Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 78a et
10seq.)) or self-regulatory organization operating under the
11authority of the Commodity Futures Trading Commission] self-
12regulatory organization suspending or expelling such person from
13membership in such [association, exchange or] self-regulatory
14organization, or (C) any currently effective cease and desist
15order or a cease and desist order entered within the past five
16years by the Securities and Exchange Commission, the Commodity
17Futures Trading Commission or the securities administrator of
18any other state and where, in the case of a cease and desist
19order entered by a state, the cease and desist order contained a
20finding of a wilful violation of that state's securities law, or
21(D) a currently effective United States Postal Service fraud
22order; but the [commission] department may not institute a
23revocation or suspension proceeding under this subsection on the
24basis of an order under another state law more than one year
25after termination of the effectiveness of the order relied on
26and unless the order was based on facts which would currently
27constitute grounds for an order under this section; or

28(v) Has wilfully violated any provision of the Securities
29Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.), the
30Securities Exchange Act of 1934, the Trust Indenture Act of 1939

1(53 Stat. 1149, 15 U.S.C. § 77aaa et seq.), the Investment
2Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80b-1 et seq.),
3the Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 
480a-1 et seq.), the Commodity Exchange Act, any law of a foreign
5country governing or regulating any aspect of the business of
6securities, commodities futures or banking or this act, or of
7any rule, regulation or order under any of such statutes within 
8the previous ten years; or

9(vi) Has wilfully aided, abetted, counseled, commanded,
10induced, or procured the violation by any other person of any of
11the statutes, rules, regulations or orders referred to in
12subsection (v) within the previous ten years; or

13(vii) Has failed reasonably to supervise his agents or
14employes, if he is a broker-dealer, or his investment adviser
15representatives or employes, if he is an investment adviser
16within the previous ten years; or

17(viii) Is the subject of a currently effective order of the
18[commission] department denying, suspending or revoking his
19registration in any other capacity under this act; or

20(ix) Has engaged in dishonest or unethical practices in the
21securities business or has taken unfair advantage of a customer
22within the previous ten years; or

23(x) Is insolvent, either in the sense that his liabilities
24exceed his assets or in the sense that he cannot meet his
25obligations as they mature, or is in such financial condition
26that he cannot continue in business with safety to his
27customers, or has not sufficient financial responsibility to
28carry out the obligations incident to his operations provided
29that the [commission] department has made a specific finding of
30insolvency, absence of safety or insufficient financial

1responsibility; or

2(xi) Is not qualified on the basis of such factors as
3training, experience and knowledge of the securities business;
4except as otherwise provided in subsection (b); or

5(xii) Is selling or has sold, or is offering or has offered
6for sale, in this State securities through any unregistered
7agent required to be registered under this act or for any
8broker-dealer or issuer with knowledge that such broker-dealer
9or issuer had not or has not complied with this act; or

10(xiii) Has made any material misrepresentation to or
11withheld or concealed from or omitted to state to the
12[commission] department or any of its representatives any
13material fact necessary in order to make the statements made, in
14the light of the circumstances under which they are made, not
15misleading, or has refused to furnish information reasonably
16requested by the [commission] department within the previous ten 
17years; or

18(xiv) Is subject to any currently effective order or orders
19entered within the past five years by any regulator of another
20country:

21(A) denying registration to or revoking or suspending the
22registration of such person as a broker-dealer, agent,
23investment adviser, investment adviser representative, futures
24commission merchant, commodity pool operator, commodity trading
25adviser or a person associated with a futures commission
26merchant, commodity pool operator or commodity trading adviser;
27or

28(B) denying, revoking or suspending the person's legal
29authorization to engage in the business of banking or insurance;
30or

1(xv) Is subject to any currently effective order of any
2securities exchange or self-regulatory organization operating
3under the authority of the securities regulator of another
4country suspending or expelling such person from membership in
5such exchange or self-regulatory association; or

6(xvi) Is subject to a currently effective order or orders
7entered within the past five years by a state insurance
8regulator or Federal or state banking regulator denying
9registration, articles of incorporation or association,
10certificate of organization or authorization to do business,
11charter or license, or revoking or suspending the registration,
12articles of incorporation or association, certificate of
13organization or authorization to do business, charter or license
14of such person to engage in the insurance, banking or other
15financial services industry, or finding that such person has
16engaged in fraudulent, unethical, dishonest or abusive practices
17in connection with any aspect of the business of insurance,
18banking or other financial services.

19(a.1) The [commission] department, by order, may deny the
20application of:

21(i) an agent or investment adviser representative if the
22individual is obligated pursuant to an award of an arbitration
23panel to pay compensation to purchasers of securities or 
24investment advice and, as of the date the application is filed
25with the [commission] department, has not paid the awarded
26compensation to the purchasers in full and within the time
27period specified by the arbitration panel; or

28(ii) a broker-dealer or investment adviser if a promoter,
29director, chief executive officer, chief financial officer,
30chief operations officer, chief legal officer, chief compliance

1officer or general partner (or person occupying a similar status
2or performing similar functions) of the applicant held a similar
3position with another broker-dealer, investment adviser or
4federally covered adviser which entity pursuant to an award of
5an arbitration panel is obligated to pay compensation to
6purchasers of securities and, as of the date the application is
7filed with the [commission] department, has not paid the awarded
8compensation to the purchasers in full within the time period
9specified by the arbitration panel.

10The [commission] department may issue an order prospectively
11rescinding a denial order issued under this subsection if the
12person whose application has been denied under this subsection
13provides credible evidence that the compensation awarded by the
14arbitration panel which was the basis for denial of the
15application under this subsection has been paid in full and in
16cash.

17(a.2) The [commission] department, by order, may suspend the
18registration of a broker-dealer, investment adviser, agent or
19investment adviser representative if such person is obligated,
20pursuant to an award of an arbitration panel, to pay
21compensation to purchasers of securities in this Commonwealth
22and has not paid the awarded compensation in full and in cash.
23The [commission] department shall rescind the suspension order
24prospectively if the person provides credible evidence to the
25[commission] department that the compensation awarded by the
26arbitration panel has been paid in full and in cash to
27purchasers of securities in this Commonwealth. Rescission of a
28suspension order issued under this section shall reinstate the
29person as a registrant in the same category held at the time the
30suspension order was issued but only if:

1(i) the person otherwise currently meets all requirements
2for registration in that category set forth in this act and
3regulations promulgated thereunder;

4(ii) there is no basis for the [commission] department to
5act pursuant to subsection (a) or (a.1); and

6(iii) applicable fees and compliance assessments set forth
7in sections 602 and 602.1 have been paid as if the person had
8been registered during the period of suspension.

9(b) The following provisions govern the application of
10section 305(a)(xi):

11(i) The [commission] department may not enter an order
12against a broker-dealer on the basis of the lack of
13qualification of any person other than (A) the broker-dealer
14himself if he is an individual, or (B) an agent of the broker-
15dealer.

16(ii) The [commission] department may not enter an order
17against an investment adviser on the basis of the lack of
18qualification of any person other than (A) the investment
19adviser himself if he is an individual, (B) any other person who
20represents the investment adviser in doing any of the acts which
21make him an investment adviser or (C) an investment adviser
22representative.

23(iii) The [commission] department may not enter an order
24solely on the basis of lack of experience if the applicant or
25registrant is qualified by training or knowledge or both.

26(iv) The [commission] department shall consider that an
27agent who will work under the supervision of a registered
28broker-dealer need not have the same qualifications as a broker-
29dealer.

30(v) The [commission] department shall consider that an

1investment adviser is not necessarily qualified solely on the
2basis of experience as a broker-dealer or agent. When it finds
3that an applicant for initial or renewal registration as a
4broker-dealer is not qualified as an investment adviser, it may
5by order condition the applicant's registration as a broker-
6dealer upon his not transacting business in this State as an
7investment adviser.

8(vi) The [commission] department may by rule provide for an
9examination, which may be written or oral or both, to be taken
10by any class of or all applicants, as well as persons who
11represent or will represent an investment adviser in doing any
12of the acts which make him an investment adviser.

13(c) The [commission] department may not institute a
14suspension or revocation proceeding solely on the basis of a
15final judicial or administrative order made known to it by the
16applicant prior to the effective date of the registration unless
17the proceeding is instituted within the next ninety days
18following registration. This provision shall not apply to
19renewals of registrations.

20(d) The [commission] department may by order summarily deny,
21postpone or suspend an application or registration pending final
22determination of any proceeding under this section. The order
23may be issued summarily without notice or hearing. Upon issuance
24of a summary order, the [commission] department shall promptly
25provide the order to the applicant or registrant and the
26employer or prospective employer if the applicant or registrant
27is an agent or investment adviser representative. The order
28shall contain findings of fact and conclusions of law and
29include a notice affording the applicant or registrant an
30opportunity for a hearing in accordance with section 607(a).

1(e) If the [commission] department finds that any registrant
2or applicant is no longer in existence or has ceased to do
3business as a broker-dealer, agent [or], investment adviser or 
4investment adviser representative, or is subject to an
5adjudication of mental incompetence or to the control of a
6committee, conservator or guardian, or cannot be located after
7reasonable search, the [commission] department may by order
8revoke the registration or deny the application.

9(f) Withdrawal from the status of a registered broker-
10dealer, agent, investment adviser or investment adviser
11representative becomes effective on the thirtieth day after
12receipt of an application to withdraw, or within such shorter
13period as the [commission] department determines, unless a
14revocation or suspension proceeding is pending before the
15[commission] department when the application is filed or a
16proceeding to revoke or suspend or to impose conditions upon the
17withdrawal is instituted before the [commission] department
18within thirty days after the withdrawal application is filed. If
19a proceeding is so pending or instituted, withdrawal becomes
20effective at such time and upon such conditions as the
21[commission] department by order determines. If no proceeding is
22so pending or instituted and withdrawal automatically becomes
23effective, the commission may institute a revocation or
24suspension proceeding under subsections (a)(i), (v), (vi),
25(vii), (viii), (ix), (xii) and (xiii) within one year after
26withdrawal became effective and enter a revocation or suspension
27order as of the last date on which the registration was in
28effect.

29(g) No order may be entered under this section except under
30subsection (d) without appropriate prior notice to the applicant

1or registrant as well as the employer or prospective employer if
2the applicant or registrant is an agent or associated person,
3opportunity for hearing and written findings of fact and
4conclusions of law. In cases of denial orders, such findings and
5conclusions shall be provided only if requested by the
6applicant.

7(h) A person that controls, directly or indirectly, a person 
8who is subject to an action of the department under subsection 
9(a) may be subjected to the same discipline by the department 
10and to the same extent as the controlled person unless the 
11controlling person did not know, and in the exercise of 
12reasonable care could not have known, of the existence of 
13conduct that is the basis for the action by the department 
14against the controlled person.

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

16Section 306. Prohibited Employment.--(a) It is unlawful for
17any person, as to whom an order suspending or revoking his
18registration is in effect, wilfully to become or to be employed
19in any capacity by any broker-dealer or investment adviser or in
20the position of agent for an issuer without the consent of the
21[commission] department; and it is unlawful for any broker-
22dealer, investment adviser or issuer to permit such a person to
23become or to remain a person employed by him without the consent
24of the [commission] department if such broker-dealer, investment
25adviser or issuer knew, or in the exercise of reasonable care
26should have known, of such order.

27(b) No issuer (except for a broker-dealer registered
28hereunder) shall employ any person as an agent hereunder if such
29issuer knew, or in the exercise of reasonable care should have
30known, that such person has at any time within the twelve

1previous months participated in this State as an agent, officer
2or director of another issuer in the sale of securities of that
3issuer, which securities were registered under section 205 or
4206.

5Section 16. Section 404 of the act, amended November 24,
61998 (P.L.829, No.109) and November 23, 2004 (P.L.924, No.128),
7is amended to read:

8Section 404. Prohibited Advisory Activities.--(a) It is
9unlawful for any person who receives, directly or indirectly, 
10any consideration from another person for advising the other 
11person as to the value of securities or their purchase or sale, 
12whether through the issuance of analyses or reports or 
13otherwise, in this State:

14(1) To employ any device, scheme, or artifice to defraud the
15other person.

16(2) To engage in any transaction, act, practice, or course
17of business which operates as a fraud or deceit upon any other
18person.

19(3) Acting as principal for his own account, knowingly to
20sell any security to or purchase any security from a client, or,
21acting as broker for a person other than such client, knowingly
22to effect any sale or purchase of any security for the account
23of such client, without disclosing to such client in writing
24before the completion of the transaction the capacity in which
25he is acting and obtaining the consent of the client to such
26transaction. The prohibitions of this paragraph shall not apply
27to any transaction with a customer of a broker-dealer if such
28broker-dealer is not acting as an investment adviser in relation
29to such transaction.

30(4) To engage in any act, practice, or course of business

1which is fraudulent, deceptive, or manipulative.

2(5) To fail to disclose to the board of school directors of
3a public school district or to a municipal pension plan or
4system in this Commonwealth the compensation that such person
5will give, directly or indirectly, to another person in
6connection with either obtaining the board of school directors
7or municipal pension plan or system as an advisory client or
8advising the board of school directors or municipal pension plan
9or system as to any transaction involving the purchase or sale
10of a security with respect to an investment of public school
11district funds pursuant to section 440.1 of the act of March 10, 
121949 (P.L.30, No.14), known as the "Public School Code of 1949,"
13and 53 Pa.C.S. Pt. VII Subpt. B (relating to indebtedness and
14borrowing) or investment of funds of the municipal pension plan
15or system. ((5) amended Nov. 23, 2004, P.L.924, No.128)

16(6) To represent that he is an investment counsel or to use
17the name "investment counsel" as descriptive of his business
18unless a substantial part of his business consists of rendering
19investment advisory services on the basis of the individual
20needs of his clients.

21(7) Unless the person is registered as a broker-dealer under
22this act, to take and have custody of any securities or funds of
23any client if he fails to meet such requirements therefor as may
24be prescribed by the [commission] department by regulation.

25(b) In the solicitation of advisory clients, it is unlawful
26for any person to make any untrue statement of material fact or
27omit to state a material fact necessary in order to make the
28statements made, in light of the circumstances under which they
29are made, not misleading.

30(c) The prohibitions of this section shall apply to

1federally covered advisers and other persons excluded from the
2definition of investment adviser under section 102(j)(i) through
3(viii), (x) and (xi) only to the extent that the prohibited
4conduct involves fraud or deceit.

5Section 17. Section 407 of the act, amended November 24, 
61998 (P.L.829, No.109), is amended to read:

7Section 407. Misleading Filings; Misrepresentations of
8[Commission] Department Approval.--(a) It is unlawful for any
9person to make or cause to be made, in any document filed with
10the [commission] department or in any proceeding under this act,
11any statement which is, at the time and in the light of the
12circumstances under which it is made, false or misleading in any
13material respect or, in connection with such statement, to omit
14to state a material fact necessary in order to make the
15statements made, in the light of the circumstances under which
16they are made, not misleading. Where any person has failed to
17make reasonable inquiry as to the accuracy of the information
18being filed with the [commission] department, such person may
19not rely upon that failure as a defense to a violation of this
20section.

21(b) It is unlawful for any person registered as a broker-
22dealer, agent [or], investment adviser or investment adviser 
23representative under this act to represent or imply in any
24manner whatsoever that such person has been sponsored,
25recommended, or approved or that his abilities or qualifications
26have in any respect been passed upon by the [commission]
27department. Nothing in this section prohibits a statement (other
28than in a paid advertisement) that a person is registered under
29this act, if such statement is true in fact and if the effect of
30such registration is not misrepresented.

1(c) (i) Neither the fact that an application for
2registration of securities or a notice filing under this act has
3been filed nor the fact that such application or notice filing
4becomes effective constitutes a finding by the [commission]
5department that any document filed under this act is true,
6complete or not misleading. Neither any such fact nor the fact
7that an exemption is available for a security or a transaction
8means that the [commission] department has passed upon the
9merits or qualifications of, or recommended or given approval to
10any person, security or transaction.

11(ii) It is unlawful to make, or cause to be made, to any
12prospective purchaser or any other person, any representation
13inconsistent with clause (i) of this subsection.

14Section 18. Section 504 of the act, amended July 4, 2002
15(P.L.721, No.108) and November 23, 2004 (P.L.927, No.130), is
16amended to read:

17Section 504. Time Limitations on Rights of Action.--(a) No
18action shall be maintained to enforce any liability created
19under section 501 (or section 503 in so far as it relates to
20that section) unless brought before the expiration of five years
21after the act or transaction constituting the violation or the
22expiration of one year after the plaintiff receives actual
23notice or upon the exercise of reasonable diligence should have
24known of the facts constituting the violation, whichever shall
25first expire.

26(b) No action shall be maintained to enforce any liability
27created under section 502 (or section 503 in so far as it
28relates to that section) unless brought before the expiration of
29two years after the violation upon which it is based or the
30expiration of one year after the plaintiff receives actual

1notice or upon the exercise of reasonable diligence should have
2known of the facts constituting such violation, whichever shall
3first expire.

4(c) No action shall be maintained to enforce any right of
5indemnification or contribution created by section 503 unless
6brought before the expiration of one year after final judgment
7based upon the liability for which the right of indemnification
8or contribution exists.

9(d) No purchaser may commence an action under section 501,
10502 or 503 if, before suit is commenced, the purchaser has
11received a written offer: (i) stating the respect in which
12liability under such section may have arisen and fairly advising
13the purchaser of his rights; offering to repurchase the security
14for cash, payable on delivery of the security, equal to the
15consideration paid, together with interest at the legal rate
16from the date of payment, less the amount of any income or
17distributions, in cash or in kind, received thereon or, if the
18purchaser no longer owns the security, offering to pay the
19purchaser upon acceptance of the offer an amount in cash equal
20to the damages computed in accordance with section 501(a); and
21(ii) stating that the offer may be accepted by the purchaser at
22any time within a specified period of not less than thirty days
23after the date of receipt thereof, or such shorter period as the
24[commission] department may by rule prescribe; and the purchaser
25has failed to accept such offer in writing within the specified
26period. The limitations on a purchaser commencing an action
27under this subsection shall not apply if the purchaser has
28accepted an offer to repurchase made under this subsection
29within the time period specified under this subsection and has
30complied with all the terms of this subsection but has not

1received the cash payment specified by this subsection within
2ninety days of the date of acceptance of the offer to
3repurchase. For purposes of this subsection, the term "cash" 
4shall mean legal tender of the United States, a certified or 
5cashier's check drawn upon a bank as that term is defined in 
6section 102(d), a United States Postal Service money order or a 
7money order issued by a person licensed by the department to 
8conduct such business.

9(e) No seller may commence an action under section 501, 502
10or 503 if, before suit is commenced, the seller has received a
11written offer: (i) stating the respect in which liability under
12such section may have arisen and fairly advising the seller of
13his rights; (ii) offering to return the security plus the amount
14of any income or distributions, in cash or in kind, received
15thereon upon payment of the consideration received, or, if the
16purchaser no longer owns the security, offering to pay the
17seller upon acceptance of the offer an amount in cash equal to
18the damages computed in accordance with section 501(b); and
19(iii) providing that the offer may be accepted by the seller at
20any time within a specified period of not less than thirty days
21after the date of receipt thereof, or such shorter period as the
22[commission] department may by regulation prescribe; and the
23seller has failed to accept the offer in writing within the
24specified period.

25(f) Offers under subsection (d) or (e) of this section 504
26shall be in the form and contain the information the
27[commission] department by rule prescribes. Every offer under
28this subsection shall be delivered to the offeree personally or
29sent by certified mail addressed to him at his last known
30address. If an offer is not performed in accordance with its

1terms, suit by the offeree under section 501, 502 or 503, shall
2be permitted without regard to subsections (d) and (e) of this
3section 504.

4Section 19. Section 509 of the act, amended or added
5November 24, 1998 (P.L.829, No.109), July 4, 2002 (P.L.721,
6No.108) and November 23, 2004 (P.L.926, No.129), is amended to
7read:

8Section 509. Right of [Commission] Department to Bring
9Actions for Injunction and Equitable Relief; Class Actions;
10Contempt of [Commission] Department Orders.--(a) Whenever it
11appears to the [commission] department that any person has
12engaged or is about to engage in any act or practice
13constituting a violation of any provision of this act or any
14rule or order hereunder, it may in its discretion bring an
15action in the name of the people of the Commonwealth of
16Pennsylvania in the Commonwealth Court or in any of the several
17courts of common pleas to enjoin, through a preliminary or
18permanent injunction, temporary restraining order or writ of
19mandamus, the acts or practices or to enforce compliance with
20this act or any rule or order hereunder. The [commission]
21department also may seek and the court upon proper showing shall
22grant such other ancillary and equitable relief as the facts
23warrant, including, without limitation, appointment of a
24receiver, temporary receiver or conservator of the defendant's
25assets, a freeze of the defendant's assets, obtaining of an
26accounting, orders of rescission, orders of restitution, orders
27of disgorgement or other relief as may be appropriate in the
28public interest. The court shall not require the [commission]
29department to meet the criteria for an equitable injunction in
30order for the court to grant an injunction, restraining order or

1writ of mandamus. The court shall not require the [commission]
2department to post a bond.

3(b) The [commission] department may, with the approval of
4the Attorney General, include in any action authorized by
5subsection (a) a claim for damages under section 501, 502 or 503
6on behalf of the persons injured by the act or practice
7constituting the subject matter of the action, and the court
8shall have jurisdiction to award appropriate relief to such
9persons, if the court finds that enforcement of the rights of
10such persons by private civil action, whether by class action or
11otherwise, would be so burdensome or expensive as to be
12impractical.

13(c) Any person violating any (i) stop order issued under
14section 208, (ii) cease advertising order issued under section
15606(c), (iii) cease and desist order issued under section
16606(c.1), (iv) order of the [commission] department requiring a
17rescission pursuant to section 513, (v) order of the
18[commission] department imposing any bar described in section
19512, (vi) order of the [commission] department requiring return
20of sales compensation under section 514(a) or (vii) any order of
21the [commission] department imposing an administrative
22assessment under section 602.1(b) or (c) from which no appeal of
23such an order has been taken pursuant to section 607(d) of the
24act or which has been sustained on appeal, or which has been
25appealed but where no supersedeas has been granted for the
26period during which the order has been violated, shall be deemed
27to be in contempt of such order. Upon petition and certification
28of such order by the [commission] department, the Commonwealth
29Court or any of the courts of common pleas if it finds after
30hearing or otherwise that the person is not in compliance with

1the order shall adjudge the person in contempt of the order and
2shall assess such civil penalties of an amount not less than
3five thousand dollars ($5,000) nor greater than fifteen thousand
4dollars ($15,000) per violation and grant such equitable relief
5as it may deem appropriate.

6(d) If the [commission] department provides work product or
7services to a receiver, trustee or conservator appointed by a
8court pursuant to subsection (a), the court, upon petition by
9the [commission] department for reimbursement of costs for
10providing such work product or services, may award the
11[commission] department reimbursement of all direct costs
12incurred in providing the work product or services to the
13receiver, trustee or conservator as well as a pro rata portion
14of salaries of [commission] department staff who were involved
15in providing the work product or services. This award may be
16made from funds recovered by and under the control of the
17receiver, trustee or conservator who holds the funds for the
18benefit of investors, provided that the award may not exceed ten
19per cent of the funds held. Reimbursements received by the
20[commission] department under this subsection shall be treated
21as moneys received under section 602.1.

22Section 20. Section 510 of the act, amended November 24,
231998 (P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is
24amended to read:

25Section 510. Investigations and Subpoenas.--(a) The
26[commission] department in its discretion:

27(i) May make such public or private investigations within or
28without this State as it deems necessary to determine whether
29any person has violated or is about to violate this act or any
30rule or order hereunder, or to aid in the enforcement of this

1act or in the prescribing of rules and forms hereunder;

2(ii) May, for a reasonable time not exceeding thirty days,
3take possession of the books, papers, accounts and other
4records, however created, produced or stored, pertaining to the
5business of any broker-dealer or investment adviser or
6pertaining to the activities of any issuer in connection with
7any transaction in a security, whether or not exempted under
8section 202 or 203 and the use of any proceeds obtained
9therefrom, and place a keeper in exclusive charge of them in the
10place where they are usually kept. During such possession no
11person shall remove or attempt to remove any of the books,
12records, accounts, or other papers except pursuant to a court
13order or with the consent of the [commission] department; but
14the directors, officers, partners, and employes of the broker-
15dealer, investment adviser or issuer may examine them, and
16employes shall be permitted to make entries therein reflecting
17current transactions;

18(iii) May require or permit any person to file a statement
19in writing, under oath or otherwise as the [commission]
20department determines, as to all the facts and circumstances
21concerning the matter being investigated;

22(iv) May publish information concerning any violation of
23this act or any rule or order hereunder or concerning
24securities, or practices in the sale thereof, which appear or
25tend to be unfair, inequitable or fraudulent, but only where it
26deems such publication to be in the public interest and for the
27protection of investors; [and]

28(v) May hold hearings, upon reasonable notice, in respect of
29any matters arising out of the administration of this act[.]; 
30and

1(vi) May record presentations made at meetings, seminars or
2other assemblies conducted in a public forum which may involve
3the offer or sale of securities in this State in any manner that
4the [commission] department determines appropriate.

5(b) For the purpose of any investigation, hearing or
6proceeding under this act, the [commission] department or any
7officer designated by it may administer oaths and affirmations,
8subpoena witnesses, compel their attendance, take evidence and
9require the production of any books, papers, correspondence,
10memoranda, agreements or other documents or records which the
11[commission] department deems relevant or material to the
12inquiry.

13(c) In case of contumacy by, or refusal to obey a subpoena
14issued to, any person, the Commonwealth Court or any of the
15several courts of common pleas of Pennsylvania, upon application
16by the [commission] department, may issue to the person an order
17requiring him to appear before the [commission] department, or
18the officer designated by it, there to produce documentary
19evidence, if so ordered, or to give evidence touching the matter
20under investigation or in question. Failure to obey the order of
21the court may be punished by the court as a contempt.

22(d) (i) If, in a proceeding before the [commission]
23department, any person shall refuse to testify or to produce
24evidence of any other kind on the ground that his testimony or
25evidence may tend to incriminate him, that person may be ordered
26to give such testimony. The order to testify shall not be given
27except upon an order of court after a hearing in which the
28Attorney General has established a need for the grant of
29immunity, as hereinafter provided;

30(ii) The Attorney General may petition the Commonwealth

1Court or the court of common pleas of the county in which such
2person resides (if he is a resident of this State) for an order
3requiring any person to testify or produce evidence, which
4petition may be joined in by the district attorney of such
5county. Such petition shall set forth the nature of the
6investigation and the need for the immunization of the witness;

7(iii) No such witness shall be prosecuted or subjected to
8any penalty or forfeiture, nor shall there be any liability on
9the part of and no cause of action of any nature shall arise
10against, any such witness for or on account of any transaction,
11matter or thing concerning which he is compelled, after having
12claimed his privilege against self-incrimination, to testify or
13produce evidence, nor shall testimony so compelled be used as
14evidence in any criminal proceeding against him in any court;

15(iv) No person so ordered to testify or to produce evidence,
16shall be exempt from any punishment or forfeiture for perjury
17committed by him while so testifying. Such testimony shall be
18admissible against him in any criminal action or other
19proceeding concerning such perjury;

20(v) Any person who shall refuse or decline to testify or
21produce evidence of any other kind after being granted immunity
22and ordered by the court shall be guilty of criminal contempt
23and, upon conviction thereof, shall be sentenced to pay a fine
24of not exceeding one thousand dollars ($1,000), or to undergo
25imprisonment for a period not exceeding one year, or both.

26(e) At the request of the securities regulatory authority of
27another jurisdiction, the [commission] department may provide
28assistance if the requesting authority states that it is
29conducting an investigation which it deems necessary to
30determine whether a person has violated, is violating or is

1about to violate laws or rules relating to securities matters
2that the requesting authority administers or enforces. The
3[commission] department may, in its sole discretion, conduct
4such investigation and use the powers conferred under this
5section as the [commission] department deems necessary to
6collect information and evidence pertinent to the request for
7assistance. The assistance may be provided without regard to
8whether the facts stated in the request would constitute a
9violation of this act or the laws of this Commonwealth. In
10deciding whether to provide such assistance, the [commission]
11department shall consider whether:

12(i) the requesting authority is permitted and has agreed to
13provide reciprocal assistance in securities matters to the
14[commission] department; and

15(ii) compliance with the request would prejudice the public
16interest.

17(f) Nothing in this act may prohibit the department from 
18investigating and bringing an administrative proceeding with 
19respect to fraud, deceit or unlawful conduct by a funding portal 
20as that term is defined in section 3(a)(80) of the Securities 
21Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78c(a)(80)), 
22provided that the department may not apply any provision of this 
23act or any rule or regulation adopted under this act or take an 
24administrative action that is in addition to, or different from, 
25the requirements for registered funding portals established by 
26the Securities and Exchange Commission.

27Section 21. Section 511 of the act, amended November 23,
282004 (P.L.930, No.132), is amended to read:

29Section 511. Criminal Penalties.--(a) Except as provided in
30this section, a person who wilfully violates any material

1provision of this act, except section 407(a), or any rule under
2this act, or any order of which he has notice, or who violates
3section 407(a) knowing that the statement made was false or
4misleading in any material respect, commits a felony of the
5third degree and may be fined not more than two hundred fifty
6thousand dollars ($250,000) or imprisoned for not more than
7seven years, or both, if the amount of money paid by the
8purchaser for the securities involved in the violation is less
9than two hundred fifty thousand dollars ($250,000), and not more
10than five hundred thousand dollars ($500,000) or imprisoned for
11not more than seven years, or both, if the amount of money or
12securities involved in the violation is two hundred fifty
13thousand dollars ($250,000) or more. In addition to fine or
14imprisonment, or both, a person may be sentenced to make
15restitution.

16(b) A person who wilfully violates section 401, 408 or 409
17commits a felony of the second degree and may be fined not more
18than one million dollars ($1,000,000) or imprisoned for not more
19than ten years, or both. In addition to fine or imprisonment, or
20both, the person may be sentenced to make restitution.

21(c) (1) A person who wilfully violates section 401, 408 or
22409 commits a felony of the first degree and may be fined not
23more than five million dollars ($5,000,000) or imprisoned for
24not more than twenty years, or both, if one of the conditions
25specified in paragraph (2) or (3) is met, and not more than ten
26million dollars ($10,000,000) or imprisoned for not more than
27twenty years, or both, if both of the conditions specified in
28paragraphs (2) and (3) are met. In addition to a fine or
29imprisonment, or both, the person may be sentenced to make
30restitution.

1(2) Within ten years of being convicted under this
2subsection for wilful violation of section 401, 408 or 409, the
3person was the subject of:

4(i) a criminal felony conviction;

5(ii) an injunction issued by any court of competent
6jurisdiction; or

7(iii) an order of the Securities and Exchange Commission,
8the Commodity Futures Trading Commission, the securities,
9banking or insurance regulator of another state, a Federal
10banking regulator or the securities, banking or insurance
11regulatory authority of another country which found that the
12person wilfully violated any provision of the Federal or State
13securities, banking, insurance or commodities laws or the
14securities, commodities, insurance or banking laws of that
15country.

16(3) One or more of the victims of the unlawful conduct is
17sixty years of age or older.

18(d) A person who knowingly alters, destroys, shreds,
19mutilates, conceals, covers up, falsifies or makes a false entry
20in any record, document or tangible object with the intent to
21impede, obstruct or influence an investigation by the
22[commission] department under section 510 or an examination
23under section 304(d) commits a felony of the second degree and
24may be fined not more than five hundred thousand dollars
25($500,000) or imprisoned for not more than ten years, or both.

26(e) A person who knowingly alters, destroys, shreds,
27mutilates or conceals a record, document or other object or
28attempts to do so with the intent to impair its integrity or
29availability for use in a proceeding before the [commission]
30department or in a proceeding brought by the [commission]

1department or otherwise obstructs, influences or impedes such
2proceedings or attempts to do so commits a felony of the second
3degree and may be fined not more than five hundred thousand
4dollars ($500,000) or imprisoned for not more than ten years, or
5both.

6(f) A person who knowingly, with the intent to retaliate,
7takes any action harmful to another person, including
8interference with the lawful employment or livelihood of another
9person, for providing the [commission] department with any
10truthful information relating to a violation of this act commits
11a felony of the second degree and may be fined not more than
12five hundred thousand dollars ($500,000) or imprisoned for not
13more than ten years, or both.

14(g) (1) Each of the acts specified in subsections (a)
15through (f) shall constitute a separate offense, and a
16prosecution or conviction for any such offense shall not bar
17prosecution or conviction for any other offense. No indictment
18or information may be returned under this act more than five
19years after the alleged violation.

20(2) This section shall be construed to provide additional
21and cumulative remedies, and nothing contained in this act shall
22be construed to affect the ability of the Commonwealth to bring
23an information or indictment under common law or other criminal
24statutory provisions for the same conduct.

25(h) The following persons have jurisdiction to investigate
26violations of this section and institute criminal proceedings
27for any violation of this section:

28(1) The district attorney of a county.

29(2) The Attorney General, in addition to the authority
30conferred upon the Attorney General by the act of October 15,

11980 (P.L.950, No.164), known as the "Commonwealth Attorneys
2Act." This paragraph includes authority over a series of
3violations involving more than one county of this Commonwealth
4or involving any county of this Commonwealth and another state.
5No person charged with a violation of this section by the
6Attorney General shall have standing to challenge the authority
7of the Attorney General to investigate or prosecute the case,
8and, if any such challenge is made, the challenge shall be
9dismissed and no relief shall be available in the courts of this
10Commonwealth to the person making the challenge.

11(i) No person charged with a violation of this section by
12the Attorney General shall have standing to challenge the
13authority of the Attorney General to investigate or prosecute
14the case, and, if any such challenge is made, the challenge
15shall be dismissed and no relief shall be available in the
16courts of this Commonwealth to the person making the challenge.

17Section 22. Sections 512 and 513 of the act, added November
1824, 1998 (P.L.829, No.109), are amended to read:

19Section 512. Statutory Bars.--(a) After giving notice and
20opportunity for a hearing, the [commission] department, where it
21has determined that a person wilfully violated this act or any
22rule or order thereunder or knowingly aided in the act or
23transaction constituting such violation, may issue an order
24accompanied by written findings of fact and conclusions of law
25which bars, conditionally or unconditionally and either
26permanently or for such period of time as the [commission]
27department shall determine, such person from:

28(1) Representing an issuer offering or selling securities in
29this State;

30(2) Acting as promoter, officer, director or partner of an

1issuer (or an individual occupying a similar status or
2performing similar functions) offering or selling securities in
3this State or of a person who controls or is controlled by such
4issuer;

5(3) Being registered as a broker-dealer, agent, investment
6adviser or investment adviser representative under section 301;

7(4) Being an affiliate of any person registered under
8section 301; or

9(5) Relying upon an exemption from registration contained in
10section 202, 203 or 302.

11(b) The [commission] department shall not issue an order
12under this section with respect to any public proceeding which
13was instituted prior to the date of enactment.

14(c) It shall be unlawful for any broker-dealer or investment
15adviser to permit a person as to whom an order is in effect
16under this section, without the consent of the [commission]
17department, to become or remain associated with a broker-dealer
18or investment adviser in contravention of such order if the
19broker-dealer or investment adviser knew or in the exercise of
20reasonable care should have known of such order.

21(d) It shall be unlawful for any issuer to permit, without
22the consent of the [commission] department, a person as to whom
23an order is in effect under this section to participate in the
24offer or sale of the issuer's securities in this State in
25contravention of such order if the issuer knew or in the
26exercise of reasonable care should have known of such order.

27Section 513. [Commission] Department Orders of Rescission.--
28After giving notice and opportunity for a hearing, the
29[commission] department, where it has determined that an issuer
30wilfully violated section 201 or 401, may issue an order

1accompanied by written findings of fact and conclusions of law
2which requires the issuer or any control person of the issuer
3who knowingly aided in the act or transaction constituting such
4violation to effect a rescission offer in a manner which the
5[commission] department by rule or order may prescribe to
6persons who purchased securities of the issuer in this State
7involved in the violation. The [commission] department shall not
8issue an order under this section with respect to any public
9proceeding which was instituted prior to the date of enactment.

10Section 23. Section 514 of the act, added July 4, 2002
11(P.L.721, No.108), is amended to read:

12Section 514. Return of Sales Compensation.--(a) After
13giving notice and opportunity for hearing, the [commission]
14department, where it has determined that a person who
15represented an issuer in effecting transactions in securities in
16this Commonwealth while in willful violation of section 301(a)
17and received compensation in connection with these transactions,
18may issue an order, accompanied by written findings of fact and
19conclusions of law, which requires the person to return to
20purchasers of securities in this Commonwealth, in cash, the
21amount of compensation received for effecting those securities
22transactions.

23(b) No order shall be issued under this section if the
24transactions in securities meet any of the following criteria:

25(1) The transactions involved securities which were the
26subject of an effective registration statement filed with the
27United States Securities and Exchange Commission under section 5
28of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et
29seq.).

30(2) The transactions involved securities which are exempted

1securities under section 3(a) of the Securities Act of 1933
2except section 3(a)(4) and (11).

3(3) The transactions are exempt from registration under
4section 5 of the Securities Act of 1933 pursuant to section 4
5thereof except a transaction for which the issuer is relying on
6any rule or regulation promulgated by the United States
7Securities and Exchange Commission under section 4(2) of the
8Securities Act of 1933.

9(c) The [commission] department may issue more than one
10order under this section against the same person involving the
11same security.

12(d) An order issued under this section shall not be deemed
13conclusive as to the total number of purchasers in this
14Commonwealth of any particular security or the total dollar
15amount of sales compensation received by a person for
16transactions effected in a particular security with purchasers
17in this Commonwealth for which liability may be imposed under
18subsection (a).

19Section 24. Section 515 of the act, added November 23, 2004
20(P.L.922, No.127), is amended to read:

21Section 515. Temporary Freeze Authority.--(a) Whenever,
22during the course of a lawful investigation involving possible
23violations of this act or rule or order issued thereunder by an
24issuer that is not subject to the reporting requirements of
25section 13 or 15(d) of the Securities Exchange Act of 1934 (48 
26Stat. 881, 15 U.S.C. §§ 78m and 78o(d)) or any of its directors,
27officers, partners, controlling persons, agents or employes, it
28shall appear to the [commission] department that it is likely
29that the issuer will make extraordinary payments, whether
30compensation or otherwise, to any such persons, the [commission]

1department may petition the Commonwealth Court or any court of
2common pleas for a temporary order requiring the issuer to
3escrow, subject to court supervision, those payments in an
4interest-bearing account for forty-five days. A temporary order
5may be issued and entered under this subsection only after
6notice and opportunity for hearing unless the court determines
7that notice and hearing prior to entry of the order would be
8impracticable or contrary to the public interest.

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

10(i) become effective immediately;

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

12(iii) be effective and enforceable for forty-five days
13unless set aside, limited or suspended by a court of competent
14jurisdiction and may be extended by the court upon good cause
15shown for not longer than forty-five additional days, provided
16that the combined period of the order shall not exceed ninety
17days.

18(c) If the issuer or other person described in subsection
19(a) is charged with a violation of this act or rule or order
20issued under this act before the expiration of the effective
21period of a temporary order as set forth in subsection (b),
22including any applicable extension period, the order shall
23remain in effect, subject to court approval, until the
24conclusion of any legal proceedings related thereto, and the
25affected issuer or other person shall have the right to petition
26the court for review of the order.

27(d) If the issuer or other person described in subsection
28(a) is not charged with a violation of this act or rule or order
29issued under this act before the expiration of the effective
30period of a temporary order as set forth in subsection (b),

1including any applicable extension period, the escrow shall
2terminate at the expiration of the forty-five-day effective
3period or the expiration of any extension period, as applicable,
4and the disputed payments with accrued interest shall be
5returned to the issuer or other affected person.

6(e) This section shall not apply to an issuer or director,
7officer, partner, controlling person, agent or employe of an
8issuer that has not more than one hundred equity security
9holders.

10Section 25. Section 601 of the act, amended December 19,
111975 (P.L.601, No.171) and July 4, 2002 (P.L.721, No.108), is
12amended to read:

13Section 601. Administration.--(a) This act shall be
14administered by the [commission, which shall be an independent 
15administrative board subject to the provisions of The 
16Administrative Code of 1929. It shall consist of three 
17commissioners appointed by the Governor with the advice and 
18consent of the Senate. The commissioners shall hold office at 
19the pleasure of the Governor and until their successors are duly 
20appointed and qualified. A quorum of the commission shall be a 
21majority of the commissioners then serving. Any action taken at 
22a meeting at which a quorum of the commission is present shall 
23be the lawful act of the commission for all purposes] 
24department.

25[(b) The commission shall also employ a secretary, who shall
26certify to all actions of the commission and shall make and keep
27all files and records of proceedings before it.]

28(c) It is unlawful for the [commission] department or any of
29its officers or employes to use for personal benefit any
30information which is filed with or obtained by the [commission]

1department and which is not generally available to the public.
2Nothing in this act authorizes the [commission] department or
3any of its officers or employes to disclose such confidential
4information except among themselves or to other securities
5administrators, regulatory authorities or governmental agencies,
6or when necessary or appropriate in a proceeding or
7investigation under this act or any other law of this State.

8(c.1) Except for the privileges created in this subsection,
9no provision of this act either creates or derogates from any
10privilege which exists at common law or otherwise when
11documentary or other evidence is sought under a subpoena
12directed to the [commission] department or any of its officers
13or employes.

14(1) The documents described in clause (2) and any testimony
15sought concerning information in those documents are privileged
16from disclosure under a subpoena directed to the [commission]
17department or any of its officers or employes if the documents
18relate to:

19(i) An investigation authorized under section 510 [which has
20not been closed].

21(ii) An action in which neither the [commission] department
22nor any of its officers or employes is a party.

23(2) The documents which are the subject of the privilege
24created in clause (1) include:

25(i) Documents relating to an investigation conducted under
26section 510, including, but not limited to, statements made or
27taken in accordance with section 510(a) or (b) and documents in
28possession of the [commission] department under section 510(a)
29(ii).

30(ii) Documents received in connection with a subpoena issued

1under section 510.

2(iii) Documents relating to an examination conducted under
3section 304(d).

4(iv) Documents obtained from a securities administrator,
5regulatory authority or law enforcement or governmental agency
6relating to an investigation authorized under section 510 or an
7examination conducted in accordance with section 304(d).

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

10(3) Complaints filed with the [commission] department and
11testimony concerning information in the complaints are
12privileged absolutely from disclosure under a subpoena directed
13to the [commission] department or its officers or employes.

14(4) No privilege is created under clause (1) or (3) if
15document sought under a subpoena directed to the [commission]
16department or its officers or employees is otherwise publicly
17available.

18[(d) The principal office of the commission shall be in
19Harrisburg. It shall establish and maintain offices in such
20other towns or cities throughout the State as it may, from time
21to time, determine.

22(e) The commission shall adopt a seal bearing the
23inscription: "Pennsylvania Securities Commission." The seal
24shall be affixed to or imprinted on all orders or certificates
25issued by it and such other instruments as the commission
26directs. All courts shall take judicial notice of the seal.]

27Section 26. Section 602 of the act, added November 23, 2004
28(P.L.918, No.126), is amended to read:

29Section 602. Fees.--(a) The [commission] department shall
30charge and collect the fees fixed in this section and remit them

1to the General Fund.

2(b) (Reserved).

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

4(i) (Reserved).
5(ii) Registration statement filings under section 6205, except as provided in subclause (iv), based upon 7the maximum aggregate offering price at which such 8securities are to be offered in this State during the 9effective period of the registration statement:
10(A) less than $10,000,000.........................	$750
11(B) $10,000,000 or more...........................	1,000
12(iii) Registration statement filings under section 13206, except as provided in subclause (iv).............	500

14  15  16  17  18  19  20

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.

21(iv) In the case of registration statement filings 22under section 205 or 206 or notice filings under 23section 211 by an open-end or closed-end investment 24company, face amount certificate company or unit 25investment trust, as such persons are classified in 26the Investment Company Act of 1940.

27  28  29  30  20130SB1045PN1510 -94-     1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16

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).

17(v) Exemption filings under section 203(o) shall 18be:...................................................	350
19(vi) When a registration statement or notice of 20filing made under section 211(a) is withdrawn before 21the effective date or a pre-effective stop order is 22entered under section 208, the amount that the 23[commission] department shall retain from the filing 24fee and, if applicable, an assessment imposed under 25section 602.1(a)(5) shall be:
26(A) Under section 205 or a notice filing under 27section 211(a)........................................	400
28(B) Under section 206.............................	250
29(vii) Filing a notice on SEC Form D under section 30211(b)................................................	525
20130SB1045PN1510 -95-
1(viii) Filing an application for exemption from 2registration under section 203(d) or (s):
3(A) Where the maximum aggregate offering price at 4which such securities are offered in this State is 5less than $1,000,000..................................	150
6(B) Where the maximum aggregate offering price at 7which such securities are offered in this State is 8$1,000,000 or more....................................	400
9(ix) Filing an application for exemption from 10registration under section 203(t).....................	500
11(x) Filing an application for exemption from 12registration under section 203(p).....................	100

13(b.2) There shall be no refund of any filing fee specified
14in subsection (b.1)(vii) through (x).

15(c) (Reserved).

16(d) (Reserved).

17(d.1) Every applicant for an initial or renewal license
18under section 301 shall pay a filing fee of three hundred fifty
19dollars ($350) in the case of a broker-dealer, eighty dollars
20($80) in the case of an agent, two hundred seventy-five dollars
21($275) in the case of an investment adviser and eighty dollars
22($80) in the case of an investment adviser representative. The
23term of an agent's or associated person's registration hereunder
24shall be concurrent with that of his employer, if a broker-
25dealer or an investment adviser. When an agent changes
26employers, an eighty dollar ($80) fee shall be paid. When an
27investment adviser representative changes employers, an eighty
28dollar ($80) fee shall be paid. When an application is denied or
29withdrawn or a registration revoked, the filing fee shall be
30retained. A federally covered adviser shall pay an annual notice

1filing fee of three hundred fifty dollars ($350).

2(e) The fee for the [commission's] department's acting as an
3escrow holder for securities under section 207 is one hundred
4dollars ($100).

5(f) The [commission] department may fix by regulation a
6reasonable charge for any publication issued under its
7authority.

8(g) The [commission] department may fix by regulation
9reasonable charges for the cost of administering examinations
10required for registration under this act by section 301.

11Section 27. Section 602.1 of the act, amended or added May
124, 1993 (P.L.4, No.4), December 7, 1994 (P.L.869, No.126),
13November 24, 1998 (P.L.829, No.109) July 4, 2002 (P.L.721,
14No.108) and November 23, 2004 (P.L.915, No.125), is amended to
15read:

16Section 602.1. Assessments.--(a) (1) Each agent and
17investment adviser representative, when applying for an initial 
18license under section 301 or changing employers, shall pay a 
19compliance assessment in accordance with the following schedule: 
20[thirty-two dollars ($32) for the period July 1, 2001, through 
21June 30, 2004, thirty-five dollars ($35) for the period July 1, 
222004, through June 30, 2007, thirty-seven dollars ($37) for the 
23period July 1, 2007, through June 30, 2010, and forty dollars 
24($40) thereafter] forty-five dollars ($45) for the period July 
251, 2013, through June 30, 2016, fifty dollars ($50) for the 
26period July 1, 2016, through June 30, 2019, and fifty-five 
27dollars ($55) thereafter.

28(2) Each agent and investment adviser representative, when
29applying for a renewal license under section 301, shall pay a
30compliance assessment in accordance with the following schedule:

1[seventeen dollars ($17) for the period July 1, 2001, through
2June 30, 2004, twenty ($20) for the period July 1, 2004, through
3June 30, 2007, twenty-two dollars ($22) for the period July 1,
42007, through June 30, 2010, and twenty-five ($25) thereafter]
5thirty dollars ($30) for the period July 1, 2013, through June 
630, 2016, thirty-five dollars ($35) for the period July 1, 2016, 
7through June 30, 2019, and forty dollars ($40) thereafter.

8(3) Each broker-dealer, when applying for an initial or
9renewal license under section 301, shall pay a compliance
10assessment in accordance with the following schedule: [one
11hundred dollars ($100) for the period beginning with the date of
12enactment of this paragraph through June 30, 2001, and one
13hundred fifty dollars ($150) thereafter] one hundred seventy-
14five dollars ($175) for the period July 1, 2013, through June 
1530, 2019, and two hundred dollars ($200) thereafter.

16(4) Each investment adviser, when applying for an initial or
17renewal license under section 301, shall pay a compliance
18assessment in accordance with the following schedule: [fifty
19dollars ($50) for the period beginning with the date of
20enactment of this paragraph through June 30, 2001, and seventy-
21five dollars ($75) thereafter] one hundred dollars ($100) for 
22the period July 1, 2013, through June 30, 2019, and one hundred 
23twenty-five dollars ($125) thereafter.

24(5) The assessment for a notice filing by an open-end or
25closed-end investment company, face amount certificate company
26or unit investment trust, as such persons are classified in the
27Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1
28et seq.), for an indefinite amount of securities to be offered
29in this State during the effective period of the notice filing
30shall be five hundred dollars ($500) beginning with the date of

1enactment of this paragraph.

2(b) A registrant, applicant for registration, issuer or
3other person upon whom the [commission] department has conducted
4an examination, audit, investigation or prosecution and who has
5been determined by the [commission] department to have violated
6this act or rule or order of the [commission] department under
7this act shall pay for all the costs incurred in the conduct of
8such examination, audit, investigation or prosecution. These
9costs shall include, but not be limited to, the salaries and
10other compensation paid to clerical, accounting, administrative,
11investigative, examiner and legal personnel, the actual amount
12of expenses reasonably incurred by such personnel and the
13[commission] department in the conduct of such examination,
14audit, investigation or prosecution, including a pro rata
15portion of the [commission's] department's administrative
16expenses.

17(c) After giving notice and opportunity for a hearing, the
18[commission] department may issue an order accompanied by
19written findings of fact and conclusions of law which imposes an
20administrative assessment in the amounts provided in paragraph
21(1) against a broker-dealer, agent, investment adviser or
22investment adviser representative registered under section 301
23or an affiliate of any broker-dealer or investment adviser where
24the [commission] department determines that the person within 
25the previous ten years willfully has violated this act or a rule
26or order of the [commission] department under this act or has
27engaged in dishonest or unethical practices in the securities
28business; has taken unfair advantage of a customer; or has
29failed reasonably to supervise its agents or employes or against
30any other person if the [commission] department determines that

1the person wilfully violated section 301, 401, 404, 406 through
2409 or 512(d) or a cease and desist order issued by the
3[commission] department under section 606(c.1).

4(1) The [commission] department, in issuing an order under
5this subsection, may impose the administrative assessments set
6forth below. Each act or omission that provides a basis for
7issuing an order under this subsection shall constitute a
8separate violation.

9(i) In issuing an order against any broker-dealer, agent,
10investment adviser or investment adviser representative
11registered under section 301 or an affiliate of any broker-
12dealer or investment adviser, the [commission] department may
13impose a maximum administrative assessment of up to one hundred
14thousand dollars ($100,000) for each act or omission that
15constitutes a violation of the act or rule or order issued under
16this act or that constitutes a dishonest or unethical practice 
17in the securities business, taking unfair advantage of a 
18customer, or failure to reasonably supervise its agents or 
19employes. If any of the victims of the person's [violative<-]
20conduct were individuals aged 60 or more, the [commission]
21department also may impose a special administrative assessment
22in addition to the foregoing amounts of up to fifty thousand
23dollars ($50,000).

24(ii) In issuing an order against a person for wilful
25violation of section 401(a) or (c), 404, 406, 408, 409 or 512(d)
26or for wilful violation of a cease and desist order issued under
27section 606(c.1), the [commission] department may impose a
28maximum administrative assessment of up to one hundred thousand
29dollars ($100,000) for each act or omission that constitutes a
30violation of any of those sections. In addition to the foregoing

1assessment, the [commission] department also may impose a
2special administrative assessment of up to fifty thousand
3dollars ($50,000) for each of the provisions described as
4follows that the [commission] department determines are
5applicable:

6(A) The person, within seven years prior to the [commission]
7department taking action under this subsection, was the subject
8of: a criminal felony conviction; an injunction issued by any
9court of competent jurisdiction; or an order of the Securities
10and Exchange Commission, the Commodity Futures Trading
11Commission, the securities, banking or insurance regulator of
12another state, a Federal banking regulator or the securities,
13banking or insurance regulatory authority of another country
14which found that the person wilfully had violated any provision
15of the Federal or state securities, banking, insurance, or
16commodities laws or the securities, commodities, insurance or
17banking laws of another country.

18(B) The person's [violative<-] conduct involved individuals
19aged 60 or more.

20(C) The person's [violative<-] conduct involved use of the
21Internet or boiler room tactics which included, without
22limitation, use of any high-pressure sales tactics designed to
23create an artificially short time period for which the person
24being solicited is pressured to make an investment decision or
25overcome the person's reluctance to commit to the investment
26being offered, use of scripts designed to allay any objections
27or concerns expressed by the person being solicited or making
28repeated telephone calls or sending multiple e-mail messages to
29the same person pressuring the person to make an immediate
30investment decision.

1(iii) In issuing an order against a person for wilful
2violation of section 401(b) or 407, the [commission] department
3may impose an administrative assessment of up to fifty thousand
4dollars ($50,000) for each of the criteria described in
5subclause (ii)(A) and (C) that the [commission] department
6determines are applicable. No assessment shall be imposed under
7this subclause if the person is subject to an administrative
8assessment imposed under any other provision of this subsection.

9(iv) In issuing an order against a person, other than a
10federally covered adviser, for wilful violation of section 301,
11the [commission] department may impose the following
12administrative assessments which may be in addition to an
13administrative assessment imposed under any other provision of
14this subsection:

15(A) For a person who at the time of the wilful violation was
16not registered under section 301, was not registered as a broker
17or dealer with the United States Securities and Exchange
18Commission under the Securities Exchange Act of 1934 (48 Stat. 
19881, 15 U.S.C. § 78a et seq.) and was not a member of a national
20securities association registered under that act, the
21[commission] department may impose a maximum administrative
22assessment of up to fifty thousand dollars ($50,000) for each
23act or omission which constitutes a violation of section 301.

24(B) For a person (not an individual) that at the time of the
25wilful violation was not registered under section 301 but was
26registered as a broker or dealer with the United States
27Securities and Exchange Commission under the Securities Exchange
28Act of 1934 and was a member of a national securities
29association registered under that act, the [commission]
30department may impose a maximum administrative assessment of up

1to fifty thousand dollars ($50,000) for each act or omission
2which constitutes a violation of section 301. An assessment
3imposed under this subclause shall be in addition to any
4liability a person may have under an order issued under section
5514.

6(v) In issuing an order for wilful violation of section
7301(c.1)(1)(ii) against a person that is a federally covered
8adviser, the [commission] department may impose the following
9administrative assessments:

10(A) Up to one hundred thousand dollars ($100,000) if the
11number of investment adviser representatives involved in the
12violation was less than five.

13(B) Up to two hundred thousand dollars ($200,000) if the
14number of investment adviser representatives involved in the
15violation was five or more.

16(vi) In issuing an order for a wilful violation of section
17301(f) against a person that is a federally covered adviser, the
18[commission] department may impose an administrative assessment
19of two thousand dollars ($2,000).

20(2) For purposes of determining the amount of administrative
21assessment to be imposed in an order issued under this
22subsection, the [commission] department shall consider:

23(i) The circumstances, nature, frequency, seriousness,
24magnitude, persistence and willfulness of the conduct
25constituting the violation.

26(ii) The scope of the violation, including the number of
27persons in and out of this Commonwealth affected by the conduct
28constituting the violation.

29(iii) The amount of restitution or compensation that the
30violator has made and the number of persons in this Commonwealth

1to whom the restitution or compensation has been made.

2(iv) Past and concurrent conduct of the violator that has
3given rise to any sanctions or judgment imposed by, or pleas of
4guilty or nolo contendere or settlement with, the [commission]
5department or any securities administrator of any other state or
6other country, any court of competent jurisdiction, the
7Securities and Exchange Commission, the Commodity Futures
8Trading Commission, any other Federal or State agency or any
9national securities association or national securities exchange
10as defined in the Securities Exchange Act of 1934 (48 Stat. 881, 
1115 U.S.C. § 78a et seq.).

12(v) Any other factor that the [commission] department finds
13appropriate in the public interest or for the protection of
14investors and consistent with the purposes fairly intended by
15the policy and provisions of this act.

16(3) An administrative assessment imposed by an order issued
17under this subsection is not mutually exclusive of any other
18remedy available under this act.

19(4) The [commission] department shall not impose an
20administrative assessment with respect to any public proceeding
21which was instituted prior to the date of its enactment.

22(d) Each application filed with the [commission] department
23under section 210 by an issuer that has an effective 
24registration statement on file with the department pursuant to 
25section 205 or 206  or an open-end or closed-end investment
26company, face amount certificate company or unit investment
27trust, as those persons are classified in the Investment Company
28Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 et seq.), to
29register securities sold in this State in excess of the
30aggregate amount of securities registered under section 205 or

1206 and each amendment to a notice filing submitted relating to
2securities sold in the State in excess of those included on an
3earlier notice filing shall include the payment of an oversale
4assessment which shall be three times an amount which equals the
5difference between the registration or notice filing fee that
6would have been payable under section 602(b.1) based upon the
7total amount of securities sold in this State and the total
8registration or notice filing fees previously paid to the
9[commission] department with respect to such registration or
10notice filing, but in no case shall the oversale assessment be
11less than three hundred fifty dollars ($350) or be more than
12three thousand dollars ($3,000).

13(e) Moneys payable for assessments established by this
14section shall be collected by the [commission] department and
15deposited into the General Fund and shall be credited to the
16appropriation of the [commission] department for the fiscal year
17received. These moneys are intended to meet the expenses of the
18[commission] department in administering the provisions of this
19act, including any or all of the following activities:

20(1) expenses, including personnel, operating and fixed
21assets costs, relating to the registration of broker-dealers,
22agents, investment advisers and [associated persons<-] investment 
23adviser representatives under section 301 and the conduct of
24examinations of broker-dealers and investment [advisors]
25advisers registered under section 301 and other compliance-
26related activities of the [commission] department;

27(2) nonpersonnel expenses related to establishing and
28maintaining an entrepreneur education program to educate small
29business persons in this Commonwealth as to the issuance of
30securities as a means of raising capital;

1(3) nonpersonnel expenses related to establishing and
2maintaining a securities fraud awareness program to educate
3public investors in this Commonwealth about fraudulent and
4manipulative securities practices;

5(4) nonpersonnel expenses related to conducting enforcement-
6related activities of the [commission] department; and
7thereafter,

8(5) other expenses of the [commission] department necessary
9to implement the provisions of this act.

10Section 28. Section 603 of the act, amended July 4, 2002
11(P.L.721, No.108), is amended to read:

12Section 603. Administrative Files.--(a) A document is filed
13when it is received by the [commission] department or by any
14other person which the [commission] department by regulation or
15order may designate.

16(b) The [commission] department shall keep a register of all
17registrants, registration statements and notice filings which
18are or have ever been effective under this act and all denial,
19suspension or revocation orders which have been entered under
20this act. The register shall be open for public inspection.

21(c) The information contained in or filed with any
22registration statement, application, notice filing or report
23shall be made available to the public in accordance with
24regulations prescribed by the [commission] department; except
25that the [commission] department may make the following orders
26or regulations:

27(1) Upon proper showing of the registrant or issuer, the
28[commission] department may order certain filings or parts of
29filings nonpublic.

30(2) The [commission] department, by rule or order, may deem

1certain categories of information filed with the [commission]
2department as nonpublic.

3(d) The [commission] department upon request shall furnish
4to any person, at a reasonable charge, a copy of any document
5described in subsection (c) in any medium available to the
6[commission] department. Upon request and payment of a
7reasonable charge, the document may be certified under the seal
8of the [commission] department.

9(e) The [commission] department, by order, may subsequently
10make public information contained in the documents described in
11subsection (c)(1) and (2), and the order may limit the amount of
12information made public or place conditions on its use. Prior to
13issuing an order under this subsection, the [commission]
14department shall notify in writing the person who originally
15requested confidentiality at the person's last known address in
16the [commission's] department's files at least thirty days
17before the [commission] department may issue an order under this
18subsection.

19Section 29. Sections 604 and 605 of the act are amended to
20read:

21Section 604. Interpretive Opinions of [Commission]
22Department.--The [commission] department in its discretion may
23honor requests from interested persons for interpretive opinions
24and may make such opinions available to the public under section
25603(c).

26Section 605. Commissioners and [Commission] Department
27Employes; Relationship with Licensed Persons or Qualified
28Organizations.--(a) Neither the commissioners nor any employe,
29clerk or servant of the [commission] department, during their
30respective terms of employment, shall be interested as a

1director, officer, shareholder, member, partner, agent, or
2employe of any person who, during the period of such official's
3or employe's association with the [commission] department, (i)
4was licensed or applied for license as a broker-dealer, agent
5[or], investment adviser or investment adviser representative
6under this act, or (ii) applied for or secured the registration
7of securities under this act.

8(b) Nothing contained in subsection (a) shall prohibit the
9holding or purchasing of any securities by any employe, clerk,
10or servant in accordance with such regulations as the
11[commission] department shall adopt for the purpose of
12protecting the public interest and avoiding conflicts of
13interest with respect to such employes, clerks and servant.

14(c) Nothing contained in subsection (a) shall prohibit the
15holding or purchasing of any securities by any commissioner if:
16either (i) the commissioner, together with his spouse, minor
17children and parents or other relatives who are members of his
18household, owns less than one-tenth of one per cent of any class
19of outstanding securities of any issuer described in subsection
20(a)(ii); or (ii) such security is held or purchased through a
21management account or trust administered by a bank or trust
22company authorized to do business in this State which has sole
23investment discretion regarding the holding, purchase and sale
24of securities, and (A) the commissioner did not, directly or
25indirectly, advise, counsel, command or suggest the holding,
26purchase or sale of any such security or furnish any information
27relating to any such security to such bank or trust company, and
28(B) such account or trust does not at any time have more than
29ten per cent of its total assets invested in the securities of
30any one issuer or hold more than five per cent of the

1outstanding shares or units of any class of securities of any
2one issuer. Each commissioner shall report to the Governor not
3less often than quarterly all holdings, purchases, and sales of
4securities by him, which reports shall be retained by the
5Governor's office as public documents.

6Section 30. Sections 606 and 607 of the act, amended July 4,
72002 (P.L.721, No.108), are amended to read:

8Section 606. Miscellaneous Powers of [Commission]
9Department.--(a) The [commission] department may, by
10regulation, require any issuer of securities registered under
11this act or exempted from registration under section 203(d) or
12(p), which issuer has not filed reports with the Securities and
13Exchange Commission pursuant to sections 13 or 15(d) of the
14Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. §§ 78m
15or 78o(d)), to distribute financial information to its security
16holders at least annually.

17(b) If, in its opinion, the public interest and the
18protection of investors so require, the [commission] department
19may apply to a court of competent jurisdiction for an order
20suspending all trading in this Commonwealth by broker-dealers
21and agents in any security for any period.

22(c) No person shall publish in this State any advertisement
23concerning any security (other than advertisements relating to
24federally covered securities, tombstone advertisements permitted
25under the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a
26et seq.) and the Investment Company Act of 1940 (54 Stat. 789, 
2715 U.S.C. § 80a-1 et seq.) and the rules and regulations
28promulgated thereunder) except in accordance with such rules as
29the [commission] department may promulgate from time to time. No
30person shall publish any advertisement concerning any security

1in this State after the [commission] department issues a cease
2advertising order in which it finds that the advertisement
3contained an untrue statement of a material fact or omitted to
4state a material fact necessary in order to make the statements
5made, in the light of the circumstances under which they were
6made, not misleading. The order may be issued summarily without
7notice or hearing. Upon issuance of a summary order, the
8[commission] department shall promptly provide the order to the
9person against whom it is issued. The order shall contain
10findings of fact and conclusions of law and include a notice
11affording the person an opportunity for a hearing under section
12607(a).

13(c.1) Whenever the [commission] department finds that any
14person has engaged or is about to engage in any act or practice
15constituting a violation of any provision of this act or any
16rule or order thereunder, the [commission] department may order
17such person to cease and desist from such act or practice. The
18order may be issued summarily without notice or hearing. Upon
19issuance of a summary order, the [commission] department shall
20promptly provide the order to the person against whom it is
21issued. The order shall contain findings of fact and conclusions
22of law and include a notice affording the person an opportunity
23for a hearing under section 607(a).

24[(d) The commission may, by regulation, delegate any powers
25specified in this act to be exercised by the commission to
26members of the commission's staff, except for powers related to
27hearings.]

28(e) Wherever the department is authorized to impose or
29accept payment of funds pursuant to this act, the following
30methods of payment shall apply:

1(1) The department may designate receipt of the payments by 
2any means, including wire transfer, credit card, debit card or 
3other similar device.

4(2) The department may permit the payment to be made using 
5any medium, including telephone, facsimile transmission, wire 
6transmission, electronic mail, Internet site or any other method 
7related to any transmission mechanism, including the Internet.

8(3) The department may enter into any agreement in order to
9implement this section.

10Section 607. Hearings and Judicial Review.--(a) Within
11thirty days after receipt of a summary order issued under
12section 204(b), 208(c), 211(c), 305(d), 606(c) or 606(c.1), the
13person against whom the order was issued and entered may file
14with the commission a written request for a hearing in respect
15to any matters determined by the order. Upon receipt of the
16written request, the matter shall be set down for a hearing to
17commence within thirty days after receipt of the request unless
18the person making the request consents to a later date. If the
19person making the request consents to a later date for the
20hearing but fails, after notification by first class mail to the
21person's last known address in the [commission's] department's
22files, to consent to a hearing date that is within one hundred
23eighty days of the date the written request for a hearing was
24filed with the commission under this subsection, the request for
25hearing shall be deemed abandoned, and the summary order shall
26be deemed a final order. After hearing, the commission may
27determine to [rescind,] modify or vacate the summary order or
28make it a final order. If no hearing is requested or a request
29for a hearing is filed untimely, the summary order shall be
30deemed to be a final order.

1[(b) Within thirty days after receipt of an order issued and
2entered by the commission after a hearing, the person against
3whom the order was issued and entered may apply to the
4commission for a rehearing. The commission, in its sole
5discretion, may grant the application and hold a rehearing.
6Failure of the commission to grant a rehearing within thirty
7days of receipt of an application shall constitute a denial.
8After rehearing, the commission may issue an order affirming,
9vacating or modifying the original order.]

10(c) Hearings and rehearings shall be public.

11(d) Orders of the [commission] department shall be subject
12to judicial review in accordance with law, but orders originally
13entered without a hearing may be reviewed only if the party
14seeking review has filed a request for a hearing within the time
15provided under subsection (a). Filing for judicial review of a
16[commission] department order shall not operate as a stay of the
17[commission's] department's order unless specifically ordered by
18the court.

19(e) All administrative proceedings conducted by the
20department pursuant to this act shall be subject to the
21requirements of 2 Pa.C.S. (relating to administrative law and
22procedure). For purposes of this subsection, the term
23"administrative proceeding" means any proceeding other than a
24judicial proceeding, the outcome of which is required to be
25based on a record or documentation prescribed by law, or in
26which law or regulation is particularized in application to a
27person subject to this act. The provisions of this subsection
28shall supplement and not repeal or limit requirements of 2
29Pa.C.S.

30Section 31. Section 609 of the act, amended November 24,

11998 (P.L.829, No.109) and July 4, 2002 (P.L.721, No.108), is
2amended to read:

3Section 609. Regulations, Forms and Orders.--(a) The
4[commission] department may make, amend and rescind any
5regulations, forms and orders that are necessary to carry out
6this act, including regulations and forms governing registration
7statements, notice filings, applications and reports, and
8defining any terms, whether or not used in this act, insofar as
9the definitions are not inconsistent with this act. All
10regulations of the [commission] department (other than those
11relating solely to its internal administration) shall be of
12general application and future effect and shall be made, amended
13or rescinded in accordance with the act of June 4, 1945 
14(P.L.1388, No.442), known as the "Administrative Agency Law,"
15and the act of July 31, 1968 (P.L.769, No.240), known as the
16"Commonwealth Documents Law." For the purpose of rules and
17forms, the [commission] department may classify securities,
18persons and matters within its jurisdiction, and prescribe
19different requirements for different classes. The [commission]
20department may, in its discretion, waive any requirement of any
21regulation or form in situations where, in its opinion, such
22requirement is not necessary in the public interest or for the
23protection of investors.

24(b) No regulation, form or order may be made, amended or
25rescinded unless the [commission] department finds that the
26action is necessary or appropriate in the public interest and
27for the protection of investors and consistent with the purposes
28fairly intended by the policy and provisions of this act.

29(c) Subject to the limitations of the Securities Act of 1933
30(48 Stat. 74, 15 U.S.C. § 77a et seq.), the Securities Exchange

1Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a et seq.) and the
2Investment Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80a-1
3et seq.), the [commission] department may by regulation or order
4prescribe the kind, form and content of financial statements
5required under this act, the fiscal or other periods and dates
6for such statements, the circumstances under which consolidated
7or other combining financial statements shall be filed, or other
8requirements it deems necessary for financial statement
9presentation purposes, and whether any required financial
10statements shall be certified by independent certified
11accountants in good standing with this State. All financial
12statements shall be prepared reflecting conformity with
13generally accepted accounting principles in the United States
14consistently applied, unless variance therefrom is disclosed in
15an acceptable manner, and shall reflect pertinent disclosures by
16financial notes or other form, where required for that data in
17compliance with pronouncements by recognized authoritative
18accounting bodies or if applicable, by governmental agencies,
19and if otherwise permitted by regulation or order of the
20commission.

21(d) No provision of this act imposing any liability applies
22to any act done or omitted in good faith in conformity with any
23regulation, form or order of the [commission] department,
24notwithstanding that the regulation form or order may later be
25amended or rescinded or be determined to be invalid for any
26reason.

27[(e) The commission may propose and adopt regulations under
28this act prior to its effective date, provided that such
29regulations do not take effect until on or after the effective
30date of this act.]

1(f) (1) An application for registration of securities shall
2be deemed abandoned if the application has been on file with the
3[commission] department for a minimum of twelve consecutive
4months and the applicant has failed to respond to the
5[commission's] department's notice of abandonment sent by first
6class mail to the applicant's last known address in the
7[commission's] department's files within sixty calendar days
8after the date the notification was mailed by the [commission]
9department. There shall be no refund of any fees paid by the
10applicant.

11(2) An application for registration as a broker-dealer,
12agent, investment [advisor] adviser or investment adviser
13representative shall be deemed abandoned if the application has
14been on file with the [commission] department for a minimum of
15six consecutive months and the applicant has failed to respond
16to the [commission's] department's notice of abandonment sent by
17first class mail to the applicant's last known address in the
18[commission's] department's files within sixty calendar days
19after the date the notification was mailed by the [commission]
20department. There shall be no refund of any fees or assessments
21paid by the applicant.

22Section 32. Section 610 of the act is repealed:

23[Section 610. Destruction of Documents and Records.--The
24commission may make such regulations with respect to record
25retention as it may deem appropriate and desirable, consistent
26with law.]

27Section 33. The act is amended by adding a section to read:

28Section 703.1. Securities Regulation Account.--(a) The
29Securities Regulation Account is established as a restricted
30account within the General Fund.

1(b) The Securities Regulation Account shall be funded from
2the following sources:

3(1) For the fiscal year in which the Securities Regulation
4Account is established, the auction rate securities settlement
5funds received by the former Pennsylvania Securities Commission
6shall be deposited into the account.

7(2) For each fiscal year following the fiscal year in which
8the account was established, the amount approved under
9subsection (d) shall be transferred from the General Fund to the
10Securities Regulation Account until it reaches a balance of
11$12.5 million.

12(c) The moneys in the Securities Regulation Account are
13appropriated to the department for the following administrative
14and operating costs:

15(1) Special initiatives or strategic regulatory needs or
16developments.

17(2) Investor and entrepreneurial education and outreach
18programs.

19(3) Unanticipated or adverse industry circumstances that
20require enhanced investor protection activities.

21(d) The department shall annually submit to the Governor,
22for approval or disapproval, an estimate, based on the
23department's assessment of prevailing economic and regulatory
24conditions, of the amount of the assessments, fees and
25administrative penalties generated from section 602.1(b) and (c)
26and deposited in the General Fund to be transferred from the
27General Fund to the Securities Regulation Account.

28Section 34. This act shall take effect in 60 days.