SB0018

SENATE BILL 18

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Timothy M. Keller

FOR THE INVESTMENTS OVERSIGHT COMMITTEE

AN ACT

RELATING TO SECURITIES; AMENDING THE NEW MEXICO UNIFORM SECURITIES ACT TO ALLOW FOR ENFORCEMENT BY THE ATTORNEY GENERAL AND TO INCREASE THE STATUTE OF LIMITATIONS; EXPANDING THE DEFINITION OF "FRAUD".

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 58-13C-101 NMSA 1978 (being Laws 2009, Chapter 82, Section 101) is amended to read:

"58-13C-101. SHORT TITLE.--[Sections 101 through 701 of this act] Chapter 58, Article 13C NMSA 1978 may be cited as the "New Mexico Uniform Securities Act"."

SECTION 2. Section 58-13C-102 NMSA 1978 (being Laws 2009, Chapter 82, Section 102) is amended to read:

"58-13C-102. DEFINITIONS.--As used in the New Mexico Uniform Securities Act, unless the context otherwise requires:

A. "agent" means an individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities or represents an issuer in effecting or attempting to effect purchases or sales of the issuer's securities, but a partner, officer or director of a broker-dealer or issuer, or an individual having a similar status or performing similar functions, is an agent only if the individual otherwise comes within the term. "Agent" does not include an individual excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

B. "bank" means:

(1) a banking institution organized pursuant to the laws of the United States;

(2) a member bank of the federal reserve system;

(3) any other banking institution, whether incorporated or not, doing business pursuant to the laws of a state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to be exercised by national banks pursuant to the authority of the comptroller of the currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a) and that is supervised and examined by a state or federal agency having supervision over banks and that is not operated for the purpose of evading the New Mexico Uniform Securities Act; and

(4) a receiver, conservator or other liquidating agent of any institution or firm included in Paragraph (1), (2) or (3) of this subsection;

C. "broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account.

"Broker-dealer" does not include:

(1) an agent;

(2) an issuer;

(3) a bank or savings institution described in Paragraph (2) of Subsection D of this section if its activities as a broker-dealer are limited to those specified in Subsections 3(a)(4)(B)(i) through (vi), (viii) through (x) and (xi), if limited to unsolicited transactions; 3(a)(5)(B); and 3(a)(5)(C) of the federal Securities Exchange Act of 1934 (15 U.S.C. Sections 78c(a)(4) and (5)) or a bank that satisfies the conditions described in Subsection 3(a)(4)(E) of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(4));

(4) an international banking institution; or

(5) a person excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

D. "depository institution" means:

(1) a bank; or

(2) a savings institution, trust company, credit union or similar institution that is organized or chartered pursuant to the laws of a state or of the United States, authorized to receive deposits and supervised and examined by an official or agency of a state or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the federal deposit insurance corporation, the national credit union share insurance fund or a successor authorized by federal law, or a receiver, conservator or other liquidating agent of such institutions or entities. "Depository institution" does not include:

(a) an insurance company or other organization primarily engaged in the business of insurance;

(b) a Morris plan bank; or

(c) an industrial loan company that is not an "insured depository institution" as defined in Section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2), or any successor federal statute;

E. "director" means the director of the securities division of the regulation and licensing department;

F. "division" means the securities division of the regulation and licensing department, which for purposes of administering the provisions of the New Mexico Uniform Securities Act and conducting investigations of violations of that act shall be considered a law enforcement agency;

G. "federal covered investment adviser" means a person registered pursuant to the federal Investment Advisers Act of 1940;

H. "federal covered security" means a security that is, or upon completion of a transaction will be, a covered security pursuant to Section 18(b) of the federal Securities Act of 1933 (15 U.S.C. Section 77r(b)) or rules or regulations adopted pursuant to that section;

I. "filing" means the receipt pursuant to the New Mexico Uniform Securities Act of a record by the director, or a designee of the director, in a form and format designated by the director;

J. "fraud", "deceit" and "defraud" are not limited to common law deceit and need not include scienter or intent to defraud as elements;

K. "guaranteed" means guaranteed as to payment of all principal and all interest;

L. "institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity:

(1) a depository institution or international banking institution;

(2) an insurance company;

(3) a separate account of an insurance company;

(4) an investment company as defined in the federal Investment Company Act of 1940;

(5) a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934;

(6) an employee pension, profit-sharing or benefit plan if the plan has total assets in excess of ten million dollars ($10,000,000) or its investment decisions are made by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration pursuant to the federal Investment Advisers Act of 1940, an investment adviser registered pursuant to the New Mexico Uniform Securities Act, a depository institution or an insurance company;

(7) a plan established and maintained by a state, a political subdivision of a state or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees, if the plan has total assets in excess of ten million dollars ($10,000,000) or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the federal Employee Retirement Income Security Act of 1974, that is a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934, an investment adviser registered or exempt from registration pursuant to the federal Investment Advisers Act of 1940, an investment adviser registered pursuant to the New Mexico Uniform Securities Act, a depository institution or an insurance company;

(8) a trust, if it has total assets in excess of ten million dollars ($10,000,000), its trustee is a depository institution and its participants are exclusively plans of the types identified in Paragraph (6) or (7) of this subsection, regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

(9) an organization described in Section 501(c)(3) of the federal Internal Revenue Code of 1986

(26 U.S.C. Section 501(c)(3)), corporation, Massachusetts trust or similar business trust, limited liability company or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of ten million dollars ($10,000,000);

(10) a small business investment company licensed by the small business administration pursuant to Section 301(c) of the federal Small Business Investment Act of 1958 (15 U.S.C. Section 681(c)) with total assets in excess of ten million dollars ($10,000,000);

(11) a private business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(22)) with total assets in excess of ten million dollars ($10,000,000);

(12) a federal covered investment adviser acting for its own account;

(13) a "qualified institutional buyer", as defined in Rule 144A(a)(i)(1), other than Rule 144A(a)(1)(H), adopted pursuant to the federal Securities Act of 1933

(17 C.F.R. 230.144A);

(14) a "major U.S. institutional investor" as defined in Rule 15a-6(b)(4)(i)(17 C.F.R. 240.15a-6) adopted pursuant to the federal Securities Exchange Act of 1934;

(15) any other person, other than an individual, of institutional character with total assets in excess of ten million dollars ($10,000,000) not organized for the specific purpose of evading the New Mexico Uniform Securities Act; or

(16) any other person specified by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

M. "insurance company" means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and that is subject to supervision by the insurance commissioner or a similar official or agency of a state;

N. "insured" means insured as to payment of all principal and all interest;

O. "international banking institution" means an international financial institution of which the United States is a member and whose securities are exempt from registration pursuant to the federal Securities Act of 1933;

P. "investment adviser" means a person that, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing or selling securities or that, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" includes a financial planner or other person that, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or that holds itself out as providing investment advice to others for compensation. "Investment adviser" does not include:

(1) an investment adviser representative;

(2) a lawyer, accountant, engineer or teacher whose performance of investment advice is solely incidental to the practice of the person's profession;

(3) a broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and that does not receive special compensation for the investment advice;

(4) a publisher, employee or columnist of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation or an owner operator, producer or employee of a cable, radio or television network, station or production facility, if, in either case:

(a) the financial or business news or advice is contained in a publication or broadcast disseminated to the general public; and

(b) the content does not consist of rendering advice on the basis of the specific investment situation of each client;

(5) a federal covered investment adviser;

(6) a bank or a savings institution described in Paragraph (2) of Subsection D of this section; or

(7) any other person excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

Q. "investment adviser representative" means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer or negotiate for the sale of or for selling investment advice or supervises employees who perform any of the foregoing. "Investment adviser representative" does not include an individual who:

(1) performs only clerical or ministerial acts;

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

(3) is employed by or associated with a federal covered investment adviser, unless the individual has a place of business in New Mexico, as "place of business" is defined by rule adopted pursuant to Section 203A of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a) and is:

(a) an investment adviser representative, as "investment adviser representative" is defined by rule adopted pursuant to Section 203A of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a); or

(b) not a supervised person as "supervised person" is defined in Section 202(a)(25) of the federal Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(25)); or

(4) is excluded by rule adopted or order issued pursuant to the New Mexico Uniform Securities Act;

R. "issuer" means a person that issues or proposes to issue a security, subject to the following:

(1) the issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued;

(2) the issuer of an equipment trust certificate or similar security serving the same purpose is the person by which the property is or will be used or to which the property or equipment is or will be leased or conditionally sold or that is otherwise contractually responsible for assuring payment of the certificate; and

(3) the issuer of a fractional undivided interest in an oil, gas or other mineral lease or in payments out of production pursuant to a lease, right or royalty is the owner of an interest in the lease or in payments out of production pursuant to a lease, right or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale;

S. "legal rate of interest" means the rate of interest set by Subsection A of Section 56-8-4 NMSA 1978 or its successor statutes;

T. "nonissuer transaction" or "nonissuer distribution" means a transaction or distribution not directly or indirectly for the benefit of the issuer;

U. "offer to purchase" includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value. "Offer to purchase" does not include a tender offer that is subject to Section 14(d) of the federal Securities Exchange Act of 1934 (15 U.S.C. 78n(d));

V. "person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity;

W. "place of business" of a broker-dealer, an investment adviser or a federal covered investment adviser means:

(1) an office at which the broker-dealer, investment adviser or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients; or

(2) a location that is held out to the general public as a location at which the broker-dealer, investment adviser or federal covered investment adviser provides brokerage or investment advice or solicits, meets with or otherwise communicates with customers or clients;

X. "predecessor act" means the New Mexico Securities Act of 1986;

Y. "price amendment" means the amendment to a registration statement filed pursuant to the federal Securities Act of 1933 or, if an amendment is not filed, the prospectus or prospectus supplement filed pursuant to that act that includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices and other matters dependent upon the offering price;

Z. "principal place of business" of a broker-

dealer, investment adviser or federal covered investment adviser means the executive office of the broker-dealer, investment adviser or federal covered investment adviser from which the officers, partners or managers of the broker-dealer, investment adviser or federal covered investment adviser direct, control and coordinate the activities of the broker-

dealer, investment adviser or federal covered investment adviser;

AA. "record", except in the phrases "of record", "official record" and "public record", means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

BB. "sale" includes every contract of sale, contract to sell or disposition of a security or interest in a security for value, and "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. Both terms include:

(1) a security given or delivered with, or as a bonus on account of, a purchase of securities or any other thing constituting part of the subject of the purchase and having been offered and sold for value;

(2) a gift of assessable stock involving an offer and sale; and

(3) a sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and a sale or offer of a security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, including an offer of the other security;

CC. "securities and exchange commission" means the United States securities and exchange commission;

DD. "security" means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas or other mineral rights; put, call, straddle, option or privilege on a security, certificate of deposit or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of or warrant or right to subscribe to or purchase any of the foregoing. "Security":

(1) includes both a certificated and an uncertificated security;

(2) does not include an insurance or endowment policy or annuity contract pursuant to which an insurance company promises to pay a fixed or variable sum of money either in a lump sum or periodically for life or other specified period;

(3) does not include an interest in a contributory or noncontributory pension or welfare plan subject to the federal Employee Retirement Income Security Act of 1974;

(4) does not include landowner royalties in the production of oil, gas or other minerals created through the execution of a lease of the lessor's mineral interest;

(5) includes an investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor. As used in this paragraph, "common enterprise" means an enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a third party or other investors;

(6) includes any interest in a limited partnership or a limited liability company; and

(7) includes as an investment contract an investment in a viatical settlement or similar agreement;

EE. "self-regulatory organization" means a national securities exchange registered pursuant to the federal Securities Exchange Act of 1934, a national securities association of broker-dealers registered pursuant to that act, a clearing agency registered pursuant to that act or the municipal securities rulemaking board established pursuant to that act;

FF. "sign" means, with present intent to authenticate or adopt a record:

(1) to execute or adopt a tangible symbol; or

(2) to attach or logically associate with the record an electronic symbol, sound or process;

GG. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States; and

HH. "underwriter" means any person who has purchased from an issuer with the intent to offer or sell a security or to distribute any security; who participates or has a direct or indirect participation in any undertaking; or who participates or has a participation in the direct or indirect underwriting of any undertaking. "Underwriter" does not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. As used in this subsection, "issuer" includes any person directly or indirectly controlling or controlled by the issuer; or any person under direct or indirect common control with the issuer."

SECTION 3. Section 58-13C-508 NMSA 1978 (being Laws 2009, Chapter 82, Section 508) is amended to read:

"58-13C-508. CRIMINAL PENALTIES.--

A. A person who willfully violates Section [501 or 502 of the New Mexico Uniform Securities Act] 58-13C-501 or 58-13C-502 NMSA 1978 is guilty of a third degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than three years, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is three years.

B. A person who willfully violates Section [505 of the New Mexico Uniform Securities Act] 58-13C-505 NMSA 1978 knowing the statement made to be false or misleading in a material respect is guilty of a third degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than three years, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is three years.

C. No criminal penalties apply to violations of Section [504 of the New Mexico Uniform Securities Act]

58-13C-504 NMSA 1978 or the notice filing requirements of Section [302 or 405 of that act] 58-13C-302 or 58-13C-405 NMSA 1978.

D. Except as provided in Subsections A through C of this section, a person who willfully violates any provision of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act is guilty of a fourth degree felony and, upon conviction, shall be fined not more than five thousand dollars ($5,000) or imprisoned not more than eighteen months, or both, for each violation. For purposes of Subsection B of Section 31-18-13 NMSA 1978, the minimum term prescribed by this subsection is eighteen months.

E. An individual convicted of violating a rule or order pursuant to the New Mexico Uniform Securities Act may be fined, but shall not be imprisoned, if the individual did not have knowledge of the rule or order.

F. For the purposes of this section, "willfully" means purposely or intentionally committing the act or making the omission and does not require an intent to violate the law or knowledge that the act or omission is unlawful.

G. Each offense shall constitute a separate offense, and a prosecution for any one of such offenses shall not bar prosecution or conviction for any other offenses.

H. All persons convicted of criminal violations of the New Mexico Uniform Securities Act shall be sentenced in accordance with the Criminal Sentencing Act or its successor statute.

I. No indictment or information may be brought pursuant to this section more than five years after the alleged violation.

J. The attorney general, acting without a letter of declination from a district attorney or the proper district attorney, with or without a referral from the director, may institute criminal proceedings pursuant to the New Mexico Uniform Securities Act. The attorney general or district attorney may request assistance from the director or employees of the division. When so requested by the director, the attorney general shall commission as a special assistant attorney general any attorney employed by the director or contracted with by the director and approved by the attorney general to assist the director in carrying out the director's duties, including providing legal advice and prosecuting offenders.

K. The New Mexico Uniform Securities Act does not limit the power of New Mexico to punish a person for conduct that constitutes a crime pursuant to other laws of New Mexico."

SECTION 4. Section 58-13C-509 NMSA 1978 (being Laws 2009, Chapter 82, Section 509) is amended to read:

"58-13C-509. CIVIL LIABILITY.--

A. Enforcement of civil liability pursuant to this section is subject to the federal Securities Litigation Uniform Standards Act of 1998 (P.L. 105-353, 112 Stat. 3227, et seq.).

B. A person is liable to the purchaser if the person sells a security in violation of Section [301 of the New Mexico Uniform Securities Act] 58-13C-301 NMSA 1978 or, by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action pursuant to this subsection is governed by the following:

(1) the purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court, upon the tender of the security, or for actual damages as provided in Paragraph (3) of this subsection;

(2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified. A purchaser that no longer owns the security may recover actual damages as provided in Paragraph (3) of this subsection; and

(3) actual damages in an action arising pursuant to this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court.

C. A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know, and in the exercise of reasonable care could not have known, of the untruth or omission. An action pursuant to this subsection is governed by the following:

(1) the seller may maintain an action to recover the security, and any income received on the security, costs and reasonable attorney fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in Paragraph (3) of this subsection;

(2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified. If the purchaser no longer owns the security, the seller may recover actual damages as provided in Paragraph (3) of this subsection; and

(3) actual damages in an action arising pursuant to this subsection are the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser's conduct causing liability, and interest at the legal rate of interest from the date of the sale of the security, costs and reasonable attorney fees determined by the court.

D. A person acting as a broker-dealer or agent that sells or buys a security in violation of Subsection A of Section [401 of the New Mexico Uniform Securities Act]

58-13C-401 NMSA 1978, Subsection A of Section [402 of that act]

58-13C-402 NMSA 1978 or Section [506 of that act] 58-13C-506 NMSA 1978 is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in Paragraphs (1) through (3) of Subsection B of this section, or, if a seller, for a remedy as specified in Paragraphs (1) through (3) of Subsection C of this section.

E. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of Subsection A of Section [403 of the New Mexico Uniform Securities Act] 58-13C-403 NMSA 1978, Subsection A of Section [404 of that act] 58-13C-404 NMSA 1978 or Section [506 of that act] 58-13C-506 NMSA 1978 is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate of interest from the date of payment, costs and reasonable attorney fees determined by the court.

F. A person that receives, directly or indirectly, any consideration for providing investment advice to another person and that employs a device, scheme or artifice to defraud the other person or engages in an act, practice or course of business that operates or would operate as a fraud or deceit on the other person, is liable to the other person. An action pursuant to this subsection is governed by the following:

(1) the person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the legal rate of interest from the date of the fraudulent conduct, costs and reasonable attorney fees determined by the court, less the amount of any income received as a result of the fraudulent conduct; and

(2) this subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.

G. The following persons are liable jointly and severally with and to the same extent as persons liable pursuant to Subsections B through F of this section:

(1) a person that directly or indirectly controls a person liable pursuant to Subsections B through F of this section, unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

(2) an individual who is a managing partner, executive officer or director of a person liable pursuant to Subsections B through F of this section, including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

(3) an individual who is an employee of or associated with a person liable pursuant to Subsections B through F of this section and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist; and

(4) a person that is a broker-dealer, agent, investment adviser or investment adviser representative that materially aids the conduct giving rise to the liability pursuant to Subsections B through F of this section, unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.

H. A person liable pursuant to this section has a right of contribution as in cases of contract against any other person liable pursuant to this section for the same conduct.

I. A cause of action pursuant to this section survives the death of an individual who might have been a plaintiff or defendant.

J. A person shall not obtain relief unless the suit is brought:

(1) within [two] four years after discovery of the violation or after discovery should have been made by the exercise of reasonable diligence; and

(2) within [five] ten years after the act or transaction constituting the violation.

K. A person that has made, or has engaged in the performance of, a contract in violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, or that has acquired a purported right pursuant to the contract with knowledge of conduct by reason of which its making or performance was in violation of the New Mexico Uniform Securities Act, may not base an action on the contract.

L. A condition, stipulation or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with the New Mexico Uniform Securities Act, or a rule adopted or order issued pursuant to that act, is void.

M. The rights and remedies provided by the New Mexico Uniform Securities Act are in addition to any other rights or remedies that may exist, but that act does not create a cause of action not specified in this section or Subsection E of Section [411 of that act] 58-13C-411 NMSA 1978."

SECTION 5. Section 58-13C-602 NMSA 1978 (being Laws 2009, Chapter 82, Section 602) is amended to read:

"58-13C-602. INVESTIGATIONS AND SUBPOENAS.--

A. The director or attorney general may:

(1) conduct public or private investigations within or outside of New Mexico that the director or attorney general considers necessary or appropriate to determine whether a person has violated, is violating or is about to violate the New Mexico Uniform Securities Act, or a rule adopted or order issued pursuant to that act, or to aid in the enforcement of the New Mexico Uniform Securities Act or in the adoption of rules and forms pursuant to that act;

(2) require or permit a person to testify, file a statement or produce a record, under oath or otherwise as the director or attorney general determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted; and

(3) publish a record concerning an action, proceeding or an investigation pursuant to or a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act if the director or attorney general determines it is necessary or appropriate in the public interest and for the protection of investors.

B. For the purpose of an investigation pursuant to the New Mexico Uniform Securities Act, the director or the director's designated officer or the attorney general may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements and require the production of any records that the director or attorney general considers relevant or material to the investigation.

C. If a person does not appear or refuses to testify, file a statement, produce records or otherwise does not obey a subpoena as required by the director or attorney general pursuant to the New Mexico Uniform Securities Act, the director or attorney general may apply to the district court of Santa Fe county or other appropriate district court or to a court of another state, a federal court or a court of a foreign jurisdiction, or the director may refer the matter to the attorney general or the proper district attorney to enforce compliance. The court may:

(1) hold the person in contempt;

(2) order the person to appear before the director;

(3) order the person to testify about the matter under investigation or in question;

(4) order the production of records;

(5) grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice;

(6) impose a civil penalty of not more than ten thousand dollars ($10,000) for each violation; and

(7) grant any other necessary or appropriate relief.

D. This section does not preclude a person from applying to the appropriate district court or a court of another state for relief from a request to appear, testify, file a statement, produce records or obey a subpoena.

E. An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence or obeying a subpoena of the director or attorney general pursuant to the New Mexico Uniform Securities Act or in an action or proceeding instituted by the director or attorney general pursuant to that act on the grounds that the required testimony, statement, record or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty or forfeiture. If the individual refuses to testify, file a statement or produce a record or other evidence on the basis of the individual's privilege against self-incrimination, the director or attorney general may apply to the district court of Santa Fe county or other appropriate district court or to a court of another state, a federal court or a court of a foreign jurisdiction to compel the testimony, the filing of the statement, the production of the record or the giving of other evidence. The testimony, record or other evidence compelled pursuant to such an order shall not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order.

F. At the request of the securities regulator of another state or a foreign jurisdiction, the director or attorney general may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating or is about to violate a law or rule of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces. The director or attorney general may provide the assistance by using the authority to investigate and the powers conferred by this section as the director or attorney general determines is necessary or appropriate. The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of the New Mexico Uniform Securities Act or other law of New Mexico if occurring in New Mexico. In deciding whether to provide the assistance, the director or attorney general may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the director or attorney general on securities matters when requested; whether compliance with the request would violate or prejudice the public policy of New Mexico; and the availability of resources and employees of the director or attorney general to carry out the request for assistance."

SECTION 6. Section 58-13C-603 NMSA 1978 (being Laws 2009, Chapter 82, Section 603) is amended to read:

"58-13C-603. CIVIL ENFORCEMENT.--

A. If the director or attorney general believes that a person has engaged, is engaging or is about to engage in an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act or that a person has, is or is about to engage in an act, practice or course of business that materially aids a violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, the director or attorney general may maintain an action to enjoin the act, practice or course of business and to enforce compliance with the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act.

B. In an action pursuant to this section and on a proper showing, the court may:

(1) issue a permanent or temporary injunction, restraining order or declaratory judgment;

(2) order other appropriate or ancillary relief, which may include:

(a) an asset freeze, accounting, writ of attachment, writ of general or specific execution and appointment of a receiver or conservator, that may be the director or attorney general, for the defendant or the defendant's assets;

(b) ordering the director or attorney general to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents and profits; to collect debts; and to acquire and dispose of property;

(d) an order of rescission, restitution or disgorgement directed to a person that has engaged in an act, practice or course of business constituting a violation of the New Mexico Uniform Securities Act or the predecessor act or a rule adopted or order issued pursuant to the New Mexico Uniform Securities Act or the predecessor act;

(e) ordering the payment of prejudgment and postjudgment interest; and

(f) ordering the payment of litigation expenses of the director or attorney general; and

(3) order such other relief as the court considers appropriate.

C. If a person violates a provision of the New Mexico Uniform Securities Act and the violation is directed toward, targets or is committed against a person who, at the time of the violation, is sixty-two years of age or older, the court, in addition to any other civil penalties provided for pursuant to the New Mexico Uniform Securities Act or a rule issued pursuant to that act, may impose an additional civil penalty not to exceed ten thousand dollars ($10,000) for each violation.

D. The director or attorney general shall not be required to post a bond in an action or proceeding pursuant to the New Mexico Uniform Securities Act."

SECTION 7. Section 58-13C-608 NMSA 1978 (being Laws 2009, Chapter 82, Section 608) is amended to read:

"58-13C-608. UNIFORMITY AND COOPERATION WITH OTHER AGENCIES.--

A. The director or attorney general may, in the director's or attorney general's discretion, cooperate, coordinate, consult and, subject to Section [607 of the New Mexico Uniform Securities Act] 58-13C-607 NMSA 1978, share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the securities and exchange commission, the United States department of justice, the commodity futures trading commission, the federal trade commission, the securities investor protection corporation, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator and a governmental law enforcement agency to effectuate greater uniformity in securities matters among the federal government, self-regulatory organizations, states and foreign governments.

B. In cooperating, coordinating, consulting and sharing records and information pursuant to this section and in acting by rule, order or waiver pursuant to the New Mexico Uniform Securities Act, the director or attorney general shall, in the director's or attorney general's discretion, take into consideration in carrying out the public interest the following general policies:

(1) maximizing effectiveness of regulation for the protection of investors;

(2) maximizing uniformity in federal and state regulatory standards; and

(3) minimizing burdens on the business of capital formation, without adversely affecting essentials of investor protection.

C. The cooperation, coordination, consultation and sharing of records and information authorized by this section includes:

(1) establishing or employing one or more designees as a central depository for registration and notice filings pursuant to the New Mexico Uniform Securities Act and for records required or allowed to be maintained pursuant to that act;

(2) developing and maintaining uniform forms;

(3) conducting a joint examination or investigation;

(4) holding a joint administrative hearing;

(5) instituting and prosecuting a joint civil or administrative proceeding;

(6) sharing and exchanging personnel;

(7) coordinating registrations pursuant to Sections [301 and 401 through 404 of the New Mexico Uniform Securities Act] 58-13C-301 and 58-13C-401 through 58-13C-404 NMSA 1978 and exemptions pursuant to Section [203 of that act] 58-13C-203 NMSA 1978;

(8) sharing and exchanging records, subject to Section [607 of the New Mexico Uniform Securities Act] 58-13C-607 NMSA 1978;

(9) formulating rules, statements of policy, guidelines, forms and interpretative opinions and releases;

(10) formulating common systems and procedures;

(11) notifying the public of proposed rules, forms, statements of policy and guidelines;

(12) attending conferences and other meetings among securities regulators, which may include representatives of governmental and private sector organizations involved in capital formation, deemed necessary or appropriate to promote or achieve uniformity; and

(13) developing and maintaining a uniform exemption from registration for small issuers and taking other steps to reduce the burden of raising investment capital by small businesses."

SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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