ORDER AMENDING AND RESTATING ORDER EXEMPTING CERTAIN OFFERS AND SALES OF SECURITIES SOLELY TO ACCREDITED INVESTORS
WHEREAS, the Banking Commissioner ("Commissioner") is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act ("Act") and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act;
WHEREAS, Section 36b-21(b)(17) of the Act provides that "[t]he following transactions are exempted from sections 36b-16 and 36b-22: . . . any other transaction that the commissioner may exempt, conditionally or unconditionally, on a finding that registration is not necessary or appropriate in the public interest or for the protection of investors";
WHEREAS, Section 36b-31(a) of the Act provides, in pertinent part, that "[t]he commissioner may from time to time make, amend and rescind such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive, including . . . orders . . . defining any terms, whether or not used in said sections, insofar as the definitions are not inconsistent with the provisions of said sections. For the purpose of . . . orders, the commissioner may classify securities, persons and matters within his jurisdiction, and prescribe different requirements for different classes";
WHEREAS, on April 14, 1998, the Commissioner issued an Order Exempting Certain Offers and Sales of Securities Solely to Accredited Investors ("Accredited Investor Exemption Order");
WHEREAS, the Commissioner finds that the issuance of this Order Amending and Restating the Accredited Investor Exemption Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
THE COMMISSIONER THEREFORE ORDERS THAT:
| 1. |
Pursuant to Section 36b-21(b)(17) of the Act, offers and sales of securities by an issuer in a transaction that meets the requirements of this Amended and Restated Order, including, without limitation, offers and sales made over the Angel Capital Electronic Network ("ACE-Net") shall be exempt from Sections 36b-16 and 36b-22 of the Act if the following conditions are met:
| (A) |
Sales of such securities shall be made only to persons who are, or the issuer reasonably believes are, accredited investors within the meaning of Rule 501(a) of Regulation D, 17 C.F.R. § 230.501(a), promulgated under the Securities Act of 1933; |
| (B) |
The exemption hereunder shall not be available to a development stage issuer that either has no specific business purpose or has indicated that its business plan is to engage in a merger or acquisition with a "blank check company", "shell company" or "dormant company" as those terms are defined in Sections 36b-3(3) and 36b-3(18) of the Act; |
| (C) |
The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sale shall be presumed to be with a view to distribution and not for investment, except for a resale made pursuant to a registration statement effective under Section 36b-17 or 36b-18 of the Act or to an accredited investor pursuant to an exemption under Section 36b-21 of the Act; |
| (D) |
| (1) |
The exemption hereunder shall not be available to an issuer if the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of ten percent (10%) or more of any class of the issuer's equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director, or officer of such underwriter:
| (a) |
Within the last five years, has filed a registration statement which is the subject of a currently effective registration stop order entered by any state securities administrator or the Securities and Exchange Commission; |
| (b) |
Within the last five years, has been convicted of any criminal offense in connection with the offer, purchase or sale of any security, or involving fraud or deceit; |
| (c) |
Is currently subject to any state or federal administrative enforcement order or judgment, entered within the last five years, finding fraud or deceit in connection with the purchase or sale of any security; or |
| (d) |
Is currently subject to any order, judgment or decree of any court of competent jurisdiction, entered within the last five years, temporarily, preliminarily or permanently restraining or enjoining such party from engaging in or continuing to engage in any conduct or practice involving fraud or deceit in connection with the purchase or sale of any security. |
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| (2) |
Subparagraph (D)(1) above, shall not apply if:
| (a) |
The party subject to the disqualification is licensed or registered to conduct securities related business in the state in which the order, judgment or decree creating the disqualification was entered against such party; |
| (b) |
Before the first offer under this exemption, the state securities administrator, or the court or regulatory authority that entered the order, judgment or decree, waives the disqualification; or |
| (c) |
The issuer establishes that it did not know and in the exercise of reasonable care, based on a factual inquiry, could not have known that a disqualification existed under this paragraph. |
| (d) |
The Commissioner exempts a person, security or transaction from the provisions of such subparagraph, upon a finding that such exemption is in the public interest. |
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| (E) |
| (1) |
A general announcement of the proposed offering may be made by any means; |
| (2) |
The general announcement shall include only the following information, unless additional information is specifically permitted by the Commissioner:
| (a) |
The name, address and telephone number of the issuer of the securities; |
| (b) |
The name, a brief description and price (if known) of any security to be issued; |
| (c) |
A brief description of the business of the issuer in 25 words or less; |
| (d) |
The type, number and aggregate amount of securities being offered; |
| (e) |
The name, address, and telephone number of the person to contact for additional information; and |
| (f) |
A statement that: (i) sales will only be made to accredited investors; (ii) no money or other consideration is being solicited or will be accepted by way of this general announcement; and (iii) the securities have not been registered or approved by any state securities agency or the U.S. Securities and Exchange Commission and are being offered and sold pursuant to an exemption from registration. |
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| (F) |
The issuer, in connection with an offer, may provide information in addition to the general announcement under paragraph (E) above if such information:
| (1) |
Is delivered through an electronic database that is restricted to persons who have been pre-qualified as accredited investors; or |
| (2) |
Is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor. |
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| (G) |
No telephone solicitation shall be permitted unless prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor; |
| (H) |
Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not, in and of itself, disqualify the issuer from claiming the exemption under this Amended and Restated Order; and |
| (I) |
The issuer shall file with the Commissioner a Model Accredited Investor Exemption Uniform Notice of Transaction, a consent to service of process and a copy of the general announcement within fifteen days after the first sale in this state. |
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| 2. |
Nothing in this Amended and Restated Order shall be construed to limit the Commissioner's authority to enforce the antifraud provisions in Section 36b-4 of the Act with respect to any person; and |
| 3. |
This Amended and Restated Order shall remain in effect until modified, superseded or vacated by the Commissioner or other lawful authority. |
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So ordered at Hartford, Connecticut
this 29th day of March 2004. |
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________ /s/________
John P. Burke
Banking Commissioner |
Securities Registration, Exemptions and Notice Filings
