Question: What are securities? Answer: Securities are instruments or rights that show ownership or a creditor relationship with a firm or other organization. Securities can be equity ownership of a firm evidenced by stock or they can be debt, evidenced by a bond. The Utah Uniform Securities Act defines numerous financial products as securities, such as, notes, stock, bonds, debentures, investment contracts and many others. For the complete definition of "security," see Section 61-1-13(24) of the Utah Code Annotated. There are also numerous Utah and federal cases which further refine and interpret the definition of security. For example, the term "investment contract" has been the subject of much interpretation. There are numerous court cases which provide tests to determine whether a product is considered an investment contract for purposes of the securities laws. Question: How are securities regulated? Answer: The securities laws divide regulation into three major categories: anti-fraud, registration and licensing. Anti-fraud The anti-fraud statute makes it unlawful to defraud another in connection with the offer or sale of securities. The statute prohibits any person from employing a device, scheme, or artifice to defraud. It also makes it unlawful for persons to make untrue statements regarding material facts or to omit material facts in order to make other statements not misleading. Finally, the statute prohibits persons from engaging in a practice or course of business which would operate as a fraud on a person. The Division of Securities investigates anti-fraud violations which may result in administrative or civil action, or even referral for criminal prosecution. The anti-fraud statute is found at Section 61-1-1 of the Utah Code Annotated. Licensing You must become licensed prior to offering or selling securities as a broker-dealer, broker-dealer agent or issuer agent. To become licensed, you may be required to submit an application, have passed a test and be subjected to a background check. Also, to work as an investment advisor or investment advisor representative, you will need to obtain a license. See Licensing for specific licensing requirements. Registration Prior to offering or selling securities, they must either be registered or exempt from registration. An organization may register securities in Utah by one of three ways: qualification, coordination, or notification. Qualification registration is usually done when a company is only registering their securities in the state of Utah. Coordinated registrations occur when an organization is also registering their securities with the federal government and they simply file with the state, copies of the documents filed with the federal government. And notification registration is usually only available for large established companies. Each form of registration has very specific filing requirements. There are numerous exemptions available that may relieve an organization from registering their securities. Some of the common exemptions include offers and sales of securities by the government (ie, municipal bonds), banks and other financial institutions, public utilities, companies listed on approved stock exchanges, blue chip mutual funds, isolated transactions and transactions not involving public offerings, to name just a few. There are 31 different exemptions with varying requirements. Some exempt the securities themselves, while others provide an exemption for transactions. For more details on registering securities or seeking an exemption, see Corporate Finance. Education In addition to enforcement, licensing and registration, the Division of Securities administers a program to educate Utah residents in matters concerning securities laws and investment decisions and registrants and licensees as to the requirements of Utah's securities laws. In pursuing this program, the Division has prepared and makes available to the public such materials as, pamphlets, video tapes, and act & rules booklets. The Division also sponsors worthy educational programs and makes public presentations on a variety of subjects. This Homepage has been prepared as part of the Division's education program. For more details on education, see Investor Education. Question: How do I check the value of old stock certificates? Answer: The Utah Division of Securities cannot check the value of stock certificates. This information is not available to the Utah Division of Securities. We recommend that you contact a licensed broker to determine if there is a market for stock of the company. If the certificate states that the company was incorporated under the laws of the State of Utah, you may check the Utah Division of Corporations and Commercial Code corporate database for information about the company. You may then wish to contact the company directly. If a Utah company is not listed in the database, most likely the company was dissolved more than 20 years ago and has been removed from the system. The Utah Division of Corporations can trace the history of the company for a fee. Question: Does Utah recognize the Modified Series 65 and 66 Exams and model waiver and grandfathering provisions? Answer: Yes, Utah adopted the NASAA Modified Series 65 and 66 Exams Model Rule. It was adopted by order on December 21, 1999. The order was later codified by rule which became effective on March 20, 2000. The amended rule is found at section R164-4-3(C)(3).
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