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92_SB0575eng
SB575 Engrossed LRB9206482ARgc
1 AN ACT concerning business transactions.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Securities Law of 1953 is
5 amended by changing Sections 2.1, 8, 11, and 14 as follows:
6 (815 ILCS 5/2.1) (from Ch. 121 1/2, par. 137.2-1)
7 Sec. 2.1. Security. "Security" means any note, stock,
8 treasury stock, bond, debenture, evidence of indebtedness,
9 certificate of interest or participation in any
10 profit-sharing agreement, collateral-trust certificate,
11 preorganization certificate or subscription, transferable
12 share, investment contract, investment fund share,
13 face-amount certificate, voting-trust certificate,
14 certificate of deposit, certificate of deposit for a
15 security, fractional undivided interest in oil, gas or other
16 mineral lease, right or royalty, any put, call, straddle,
17 option, or privilege on any security, certificate of deposit,
18 or group or index of securities (including any interest
19 therein or based on the value thereof), or any put, call,
20 straddle, option, or privilege entered into, on a national
21 securities exchange relating to foreign currency, or, in
22 general, any interest or instrument commonly known as a
23 "security", or any certificate of interest or participation
24 in, temporary or interim certificate for, receipt for,
25 guarantee of, or warrant or right to subscribe to or
26 purchase, any of the foregoing. "Security" does not mean a
27 mineral investment contract or a mineral deferred delivery
28 contract; provided, however, the Department shall have the
29 authority to regulate these contracts as hereinafter
30 provided.
31 (Source: P.A. 87-463.)
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1 (815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)
2 Sec. 8. Registration of dealers, limited Canadian
3 dealers, salespersons, investment advisers, and investment
4 adviser representatives.
5 A. Except as otherwise provided in this subsection A,
6 every dealer, limited Canadian dealer, salesperson,
7 investment adviser, and investment adviser representative
8 shall be registered as such with the Secretary of State. No
9 dealer or salesperson need be registered as such when
10 offering or selling securities in transactions believed in
11 good faith to be exempted by subsection A, B, C, D, E, G, H,
12 I, J, K, M, O, P, Q, R or S of Section 4 of this Act,
13 provided that such dealer or salesperson is not regularly
14 engaged in the business of offering or selling securities in
15 reliance upon the exemption set forth in subsection G or M of
16 Section 4 of this Act. No dealer, issuer or controlling
17 person shall employ a salesperson unless such salesperson is
18 registered as such with the Secretary of State or is employed
19 for the purpose of offering or selling securities solely in
20 transactions believed in good faith to be exempted by
21 subsection A, B, C, D, E, G, H, I, J, K, L, M, O, P, Q, R or
22 S of Section 4 of this Act; provided that such salesperson
23 need not be registered when effecting transactions in this
24 State limited to those transactions described in Section
25 15(h)(2) of the Federal 1934 Act or engaging in the offer or
26 sale of securities in respect of which he or she has
27 beneficial ownership and is a controlling person. The
28 Secretary of State may, by rule, regulation or order and
29 subject to such terms, conditions, and as fees as may be
30 prescribed in such rule, regulation or order, exempt from the
31 registration requirements of this Section 8 any investment
32 adviser, if the Secretary of State shall find that such
33 registration is not necessary in the public interest by
34 reason of the small number of clients or otherwise limited
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1 character of operation of such investment adviser.
2 B. An application for registration as a dealer or
3 limited Canadian dealer, executed, verified, or authenticated
4 by or on behalf of the applicant, shall be filed with the
5 Secretary of State, in such form as the Secretary of State
6 may by rule, regulation or order prescribe, setting forth or
7 accompanied by:
8 (1) The name and address of the applicant, the
9 location of its principal business office and all branch
10 offices, if any, and the date of its organization;
11 (2) A statement of any other Federal or state
12 licenses or registrations which have been granted the
13 applicant and whether any such licenses or registrations
14 have ever been refused, cancelled, suspended, revoked or
15 withdrawn;
16 (3) The assets and all liabilities, including
17 contingent liabilities of the applicant, as of a date not
18 more than 60 days prior to the filing of the application;
19 (4) (a) A brief description of any civil or
20 criminal proceeding of which fraud is an essential
21 element pending against the applicant and whether the
22 applicant has ever been convicted of a felony, or of any
23 misdemeanor of which fraud is an essential element;
24 (b) A list setting forth the name, residence and
25 business address and a 10 year occupational statement of
26 each principal of the applicant and a statement
27 describing briefly any civil or criminal proceedings of
28 which fraud is an essential element pending against any
29 such principal and the facts concerning any conviction of
30 any such principal of a felony, or of any misdemeanor of
31 which fraud is an essential element;
32 (5) If the applicant is a corporation: a list of
33 its officers and directors setting forth the residence
34 and business address of each; a 10-year occupational
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1 statement of each such officer or director; and a
2 statement describing briefly any civil or criminal
3 proceedings of which fraud is an essential element
4 pending against each such officer or director and the
5 facts concerning any conviction of any officer or
6 director of a felony, or of any misdemeanor of which
7 fraud is an essential element;
8 (6) If the applicant is a sole proprietorship, a
9 partnership, limited liability company, an unincorporated
10 association or any similar form of business organization:
11 the name, residence and business address of the
12 proprietor or of each partner, member, officer, director,
13 trustee or manager; the limitations, if any, of the
14 liability of each such individual; a 10-year occupational
15 statement of each such individual; a statement describing
16 briefly any civil or criminal proceedings of which fraud
17 is an essential element pending against each such
18 individual and the facts concerning any conviction of any
19 such individual of a felony, or of any misdemeanor of
20 which fraud is an essential element;
21 (7) Such additional information as the Secretary of
22 State may by rule or regulation prescribe as necessary to
23 determine the applicant's financial responsibility,
24 business repute and qualification to act as a dealer.
25 (8) (a) No applicant shall be registered or
26 re-registered as a dealer or limited Canadian dealer
27 under this Section unless and until each principal of the
28 dealer has passed an examination conducted by the
29 Secretary of State or a self-regulatory organization of
30 securities dealers or similar person, which examination
31 has been designated by the Secretary of State by rule,
32 regulation or order to be satisfactory for purposes of
33 determining whether the applicant has sufficient
34 knowledge of the securities business and laws relating
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1 thereto to act as a registered dealer. Any dealer who was
2 registered on September 30, 1963, and has continued to be
3 so registered; and any principal of any registered
4 dealer, who was acting in such capacity on and
5 continuously since September 30, 1963; and any individual
6 who has previously passed a securities dealer examination
7 administered by the Secretary of State or any examination
8 designated by the Secretary of State to be satisfactory
9 for purposes of determining whether the applicant has
10 sufficient knowledge of the securities business and laws
11 relating thereto to act as a registered dealer by rule,
12 regulation or order, shall not be required to pass an
13 examination in order to continue to act in such capacity.
14 The Secretary of State may by order waive the examination
15 requirement for any principal of an applicant for
16 registration under this subsection B who has had such
17 experience or education relating to the securities
18 business as may be determined by the Secretary of State
19 to be the equivalent of such examination. Any request
20 for such a waiver shall be filed with the Secretary of
21 State in such form as may be prescribed by rule or
22 regulation.
23 (b) Unless an applicant is a member of the body
24 corporate known as the Securities Investor Protection
25 Corporation established pursuant to the Act of Congress
26 of the United States known as the Securities Investor
27 Protection Act of 1970, as amended, a member of an
28 association of dealers registered as a national
29 securities association pursuant to Section 15A of the
30 Federal 1934 Act, or a member of a self-regulatory
31 organization or stock exchange in Canada which the
32 Secretary of State has designated by rule or order, an
33 applicant shall not be registered or re-registered unless
34 and until there is filed with the Secretary of State
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1 evidence that such applicant has in effect insurance or
2 other equivalent protection for each client's cash or
3 securities held by such applicant, and an undertaking
4 that such applicant will continually maintain such
5 insurance or other protection during the period of
6 registration or re-registration. Such insurance or other
7 protection shall be in a form and amount reasonably
8 prescribed by the Secretary of State by rule or
9 regulation.
10 (9) The application for the registration of a
11 dealer or limited Canadian dealer shall be accompanied
12 by a filing fee and a fee for each branch office in this
13 State, in each case in the amount established pursuant to
14 Section 11a of this Act, which fees shall not be
15 returnable in any event.
16 (10) The Secretary of State shall notify the dealer
17 or limited Canadian dealer by written notice (which may
18 be by electronic or facsimile transmission) of the
19 effectiveness of the registration as a dealer in this
20 State.
21 (11) Any change which renders no longer accurate
22 any information contained in any application for
23 registration or re-registration of a dealer or limited
24 Canadian dealer shall be reported to the Secretary of
25 State within 10 business days after the occurrence of
26 such change; but in respect to assets and liabilities
27 only materially adverse changes need be reported.
28 C. Any registered dealer, limited Canadian dealer,
29 issuer, or controlling person desiring to register a
30 salesperson shall file an application with the Secretary of
31 State, in such form as the Secretary of State may by rule or
32 regulation prescribe, which the salesperson is required by
33 this Section to provide to the dealer, issuer, or controlling
34 person, executed, verified, or authenticated by the
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1 salesperson setting forth or accompanied by:
2 (1) the name, residence and business address of the
3 salesperson;
4 (2) whether any federal or State license or
5 registration as dealer, limited Canadian dealer, or
6 salesperson has ever been refused the salesperson or
7 cancelled, suspended, revoked, or withdrawn, barred,
8 limited, or otherwise adversely affected in a similar
9 manner or whether the salesperson has ever been censured
10 or expelled;
11 (3) the nature of employment with, and names and
12 addresses of, employers of the salesperson for the 10
13 years immediately preceding the date of application;
14 (4) a brief description of any civil or criminal
15 proceedings of which fraud is an essential element
16 pending against the salesperson, and whether the
17 salesperson has ever been convicted of a felony, or of
18 any misdemeanor of which fraud is an essential element;
19 (5) such additional information as the Secretary of
20 State may by rule, regulation or order prescribe as
21 necessary to determine the salesperson's business repute
22 and qualification to act as a salesperson; and
23 (6) no individual shall be registered or
24 re-registered as a salesperson under this Section unless
25 and until such individual has passed an examination
26 conducted by the Secretary of State or a self-regulatory
27 organization of securities dealers or similar person,
28 which examination has been designated by the Secretary of
29 State by rule, regulation or order to be satisfactory for
30 purposes of determining whether the applicant has
31 sufficient knowledge of the securities business and laws
32 relating thereto to act as a registered salesperson.
33 Any salesperson who was registered prior to
34 September 30, 1963, and has continued to be so
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1 registered, and any individual who has passed a
2 securities salesperson examination administered by the
3 Secretary of State or an examination designated by the
4 Secretary of State by rule, regulation or order to be
5 satisfactory for purposes of determining whether the
6 applicant has sufficient knowledge of the securities
7 business and laws relating thereto to act as a registered
8 salesperson, shall not be required to pass an examination
9 in order to continue to act as a salesperson. The
10 Secretary of State may by order waive the examination
11 requirement for any applicant for registration under this
12 subsection C who has had such experience or education
13 relating to the securities business as may be determined
14 by the Secretary of State to be the equivalent of such
15 examination. Any request for such a waiver shall be
16 filed with the Secretary of State in such form as may be
17 prescribed by rule, regulation or order.
18 (7) The application for registration of a
19 salesperson shall be accompanied by a filing fee and a
20 Securities Audit and Enforcement Fund fee, each in the
21 amount established pursuant to Section 11a of this Act,
22 which shall not be returnable in any event.
23 (8) Any change which renders no longer accurate any
24 information contained in any application for registration
25 or re-registration as a salesperson shall be reported to
26 the Secretary of State within 10 business days after the
27 occurrence of such change. If the activities are
28 terminated which rendered an individual a salesperson for
29 the dealer, issuer or controlling person, the dealer,
30 issuer or controlling person, as the case may be, shall
31 notify the Secretary of State, in writing, within 30 days
32 of the salesperson's cessation of activities, using the
33 appropriate termination notice form.
34 (9) A registered salesperson may transfer his or
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1 her registration under this Section 8 for the unexpired
2 term thereof from one registered dealer or limited
3 Canadian dealer to another by the giving of notice of the
4 transfer by the new registered dealer or limited Canadian
5 dealer to the Secretary of State in such form and subject
6 to such conditions as the Secretary of State shall by
7 rule or regulation prescribe. The new registered dealer
8 or limited Canadian dealer shall promptly file an
9 application for registration of such salesperson as
10 provided in this subsection C, accompanied by the filing
11 fee prescribed by paragraph (7) of this subsection C.
12 C-5. Except with respect to federal covered investment
13 advisers whose only clients are investment companies as
14 defined in the Federal 1940 Act, other investment advisers,
15 federal covered investment advisers, or any similar person
16 which the Secretary of State may prescribe by rule or order,
17 a federal covered investment adviser shall file with the
18 Secretary of State, prior to acting as a federal covered
19 investment adviser in this State, such documents as have been
20 filed with the Securities and Exchange Commission as the
21 Secretary of State by rule or order may prescribe. The
22 notification of a federal covered investment adviser shall be
23 accompanied by a notification filing fee established pursuant
24 to Section 11a of this Act, which shall not be returnable in
25 any event. Every person acting as a federal covered
26 investment adviser in this State shall file a notification
27 filing and pay an annual notification filing fee established
28 pursuant to Section 11a of this Act, which is not returnable
29 in any event. The failure to file any such notification
30 shall constitute a violation of subsection D of Section 12 of
31 this Act, subject to the penalties enumerated in Section 14
32 of this Act. Until October 10, 1999 or other date as may be
33 legally permissible, a federal covered investment adviser who
34 fails to file the notification or refuses to pay the fees as
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1 required by this subsection shall register as an investment
2 adviser with the Secretary of State under Section 8 of this
3 Act. The civil remedies provided for in subsection A of
4 Section 13 of this Act and the civil remedies of rescission
5 and appointment of receiver, conservator, ancillary receiver,
6 or ancillary conservator provided for in subsection F of
7 Section 13 of this Act shall not be available against any
8 person by reason of the failure to file any such notification
9 or to pay the notification fee or on account of the contents
10 of any such notification.
11 D. An application for registration as an investment
12 adviser, executed, verified, or authenticated by or on behalf
13 of the applicant, shall be filed with the Secretary of State,
14 in such form as the Secretary of State may by rule or
15 regulation prescribe, setting forth or accompanied by:
16 (1) The name and form of organization under which
17 the investment adviser engages or intends to engage in
18 business; the state or country and date of its
19 organization; the location of the adviser's principal
20 business office and branch offices, if any; the names and
21 addresses of the adviser's principal, partners, officers,
22 directors, and persons performing similar functions or,
23 if the investment adviser is an individual, of the
24 individual; and the number of the adviser's employees who
25 perform investment advisory functions;
26 (2) The education, the business affiliations for
27 the past 10 years, and the present business affiliations
28 of the investment adviser and of the adviser's principal,
29 partners, officers, directors, and persons performing
30 similar functions and of any person controlling the
31 investment adviser;
32 (3) The nature of the business of the investment
33 adviser, including the manner of giving advice and
34 rendering analyses or reports;
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1 (4) The nature and scope of the authority of the
2 investment adviser with respect to clients' funds and
3 accounts;
4 (5) The basis or bases upon which the investment
5 adviser is compensated;
6 (6) Whether the investment adviser or any
7 principal, partner, officer, director, person performing
8 similar functions or person controlling the investment
9 adviser (i) within 10 years of the filing of the
10 application has been convicted of a felony, or of any
11 misdemeanor of which fraud is an essential element, or
12 (ii) is permanently or temporarily enjoined by order or
13 judgment from acting as an investment adviser,
14 underwriter, dealer, principal or salesperson, or from
15 engaging in or continuing any conduct or practice in
16 connection with any such activity or in connection with
17 the purchase or sale of any security, and in each case
18 the facts relating to the conviction, order or judgment;
19 (7) (a) A statement as to whether the investment
20 adviser is engaged or is to engage primarily in the
21 business of rendering investment supervisory services;
22 and
23 (b) A statement that the investment adviser will
24 furnish his, her, or its clients with such information as
25 the Secretary of State deems necessary in the form
26 prescribed by the Secretary of State by rule or
27 regulation;
28 (8) Such additional information as the Secretary of
29 State may, by rule, regulation or order prescribe as
30 necessary to determine the applicant's financial
31 responsibility, business repute and qualification to act
32 as an investment adviser.
33 (9) No applicant shall be registered or
34 re-registered as an investment adviser under this Section
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1 unless and until each principal of the applicant who is
2 actively engaged in the conduct and management of the
3 applicant's advisory business in this State has passed an
4 examination or completed an educational program conducted
5 by the Secretary of State or an association of investment
6 advisers or similar person, which examination or
7 educational program has been designated by the Secretary
8 of State by rule, regulation or order to be satisfactory
9 for purposes of determining whether the applicant has
10 sufficient knowledge of the securities business and laws
11 relating thereto to conduct the business of a registered
12 investment adviser.
13 Any person who was a registered investment adviser
14 prior to September 30, 1963, and has continued to be so
15 registered, and any individual who has passed an
16 investment adviser examination administered by the
17 Secretary of State, or passed an examination or completed
18 an educational program designated by the Secretary of
19 State by rule, regulation or order to be satisfactory for
20 purposes of determining whether the applicant has
21 sufficient knowledge of the securities business and laws
22 relating thereto to conduct the business of a registered
23 investment adviser, shall not be required to pass an
24 examination or complete an educational program in order
25 to continue to act as an investment adviser. The
26 Secretary of State may by order waive the examination or
27 educational program requirement for any applicant for
28 registration under this subsection D if the principal of
29 the applicant who is actively engaged in the conduct and
30 management of the applicant's advisory business in this
31 State has had such experience or education relating to
32 the securities business as may be determined by the
33 Secretary of State to be the equivalent of the
34 examination or educational program. Any request for a
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1 waiver shall be filed with the Secretary of State in such
2 form as may be prescribed by rule or regulation.
3 (10) No applicant shall be registered or
4 re-registered as an investment adviser under this Section
5 8 unless the application for registration or
6 re-registration is accompanied by an application for
7 registration or re-registration for each person acting as
8 an investment adviser representative on behalf of the
9 adviser and a Securities Audit and Enforcement Fund fee
10 that shall not be returnable in any event is paid with
11 respect to each investment adviser representative.
12 (11) The application for registration of an
13 investment adviser shall be accompanied by a filing fee
14 and a fee for each branch office in this State, in each
15 case in the amount established pursuant to Section 11a of
16 this Act, which fees shall not be returnable in any
17 event.
18 (12) The Secretary of State shall notify the
19 investment adviser by written notice (which may be by
20 electronic or facsimile transmission) of the
21 effectiveness of the registration as an investment
22 adviser in this State.
23 (13) Any change which renders no longer accurate
24 any information contained in any application for
25 registration or re-registration of an investment adviser
26 shall be reported to the Secretary of State within 10
27 business days after the occurrence of the change. In
28 respect to assets and liabilities of an investment
29 adviser that retains custody of clients' cash or
30 securities or accepts pre-payment of fees in excess of
31 $500 per client and 6 or more months in advance only
32 materially adverse changes need be reported by written
33 notice (which may be by electronic or facsimile
34 transmission) no later than the close of business on the
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1 second business day following the discovery thereof.
2 (14) Each application for registration as an
3 investment adviser shall become effective automatically
4 on the 45th day following the filing of the application,
5 required documents or information, and payment of the
6 required fee unless (i) the Secretary of State has
7 registered the investment adviser prior to that date or
8 (ii) an action with respect to the applicant is pending
9 under Section 11 of this Act.
10 D-5. A registered investment adviser or federal covered
11 investment adviser desiring to register an investment
12 adviser representative shall file an application with the
13 Secretary of State, in the form as the Secretary of State may
14 by rule or order prescribe, which the investment adviser
15 representative is required by this Section to provide to the
16 investment adviser, executed, verified, or authenticated by
17 the investment adviser representative and setting forth or
18 accompanied by:
19 (1) The name, residence, and business address of
20 the investment adviser representative;
21 (2) A statement whether any federal or state
22 license or registration as a dealer, salesperson,
23 investment adviser, or investment adviser representative
24 has ever been refused, canceled, suspended, revoked or
25 withdrawn;
26 (3) The nature of employment with, and names and
27 addresses of, employers of the investment adviser
28 representative for the 10 years immediately preceding the
29 date of application;
30 (4) A brief description of any civil or criminal
31 proceedings, of which fraud is an essential element,
32 pending against the investment adviser representative and
33 whether the investment adviser representative has ever
34 been convicted of a felony or of any misdemeanor of which
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1 fraud is an essential element;
2 (5) Such additional information as the Secretary of
3 State may by rule or order prescribe as necessary to
4 determine the investment adviser representative's
5 business repute or qualification to act as an investment
6 adviser representative;
7 (6) Documentation that the individual has passed an
8 examination conducted by the Secretary of State, an
9 organization of investment advisers, or similar person,
10 which examination has been designated by the Secretary of
11 State by rule or order to be satisfactory for purposes of
12 determining whether the applicant has sufficient
13 knowledge of the investment advisory or securities
14 business and laws relating to that business to act as a
15 registered investment adviser representative; and
16 (7) A Securities Audit and Enforcement Fund fee
17 established under Section 11a of this Act, which shall
18 not be returnable in any event.
19 The Secretary of State may by order waive the examination
20 requirement for an applicant for registration under this
21 subsection D-5 who has had the experience or education
22 relating to the investment advisory or securities business as
23 may be determined by the Secretary of State to be the
24 equivalent of the examination. A request for a waiver shall
25 be filed with the Secretary of State in the form as may be
26 prescribed by rule or order.
27 A change that renders no longer accurate any information
28 contained in any application for registration or
29 re-registration as an investment adviser representative must
30 be reported to the Secretary of State within 10 business days
31 after the occurrence of the change. If the activities that
32 rendered an individual an investment adviser representative
33 for the investment adviser are terminated, the investment
34 adviser shall notify the Secretary of State in writing (which
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1 may be by electronic or facsimile transmission), within 30
2 days of the investment adviser representative's termination,
3 using the appropriate termination notice form as the
4 Secretary of State may prescribe by rule or order.
5 A registered investment adviser representative may
6 transfer his or her registration under this Section 8 for the
7 unexpired term of the registration from one registered
8 investment adviser to another by the giving of notice of the
9 transfer by the new investment adviser to the Secretary of
10 State in the form and subject to the conditions as the
11 Secretary of State shall prescribe. The new registered
12 investment adviser shall promptly file an application for
13 registration of the investment adviser representative as
14 provided in this subsection, accompanied by the Securities
15 Audit and Enforcement Fund fee prescribed by paragraph (7) of
16 this subsection D-5.
17 E. (1) Subject to the provisions of subsection F of
18 Section 11 of this Act, the registration of a dealer, limited
19 Canadian dealer, salesperson, investment adviser, or
20 investment adviser representative may be denied, suspended or
21 revoked if the Secretary of State finds that the dealer,
22 limited Canadian dealer, salesperson, investment adviser, or
23 investment adviser representative or any principal officer,
24 director, partner, member, trustee, manager or any person who
25 performs a similar function of the dealer, limited Canadian
26 dealer, or investment adviser:
27 (a) has been convicted of any felony during the 10
28 year period preceding the date of filing of any
29 application for registration or at any time thereafter,
30 or of any misdemeanor of which fraud is an essential
31 element;
32 (b) has engaged in any unethical practice in the
33 offer or sale of securities or in any fraudulent business
34 practice;
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1 (c) has failed to account for any money or
2 property, or has failed to deliver any security, to any
3 person entitled thereto when due or within a reasonable
4 time thereafter;
5 (d) in the case of a dealer, limited Canadian
6 dealer, or investment adviser, is insolvent;
7 (e) in the case of a dealer, limited Canadian
8 dealer, salesperson, or registered principal of a dealer
9 or limited Canadian dealer (i) has failed reasonably to
10 supervise the securities activities of any of its
11 salespersons and the failure has permitted or facilitated
12 a violation of Section 12 of this Act or (ii) is offering
13 or selling or has offered or sold securities in this
14 State through a salesperson other than a registered
15 salesperson, or, in the case of a salesperson, is selling
16 or has sold securities in this State for a dealer,
17 limited Canadian dealer, issuer or controlling person
18 with knowledge that the dealer, limited Canadian dealer,
19 issuer or controlling person has not complied with the
20 provisions of this Act or (iii) has failed reasonably to
21 supervise the implementation of compliance measures
22 following notice by the Secretary of State of
23 noncompliance with the Act or with the regulations
24 promulgated thereunder or both or (iv) has failed to
25 maintain and enforce written procedures to supervise the
26 types of business in which it engages and to supervise
27 the activities of its salespersons that are reasonably
28 designed to achieve compliance with applicable securities
29 laws and regulations;
30 (f) in the case of an investment adviser, has
31 failed reasonably to supervise the advisory activities of
32 any of its investment adviser representatives or
33 employees and the failure has permitted or facilitated a
34 violation of Section 12 of this Act;
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1 (g) has violated any of the provisions of this Act;
2 (h) has made any material misrepresentation to the
3 Secretary of State in connection with any information
4 deemed necessary by the Secretary of State to determine a
5 dealer's, limited Canadian dealer's, or investment
6 adviser's financial responsibility or a dealer's, limited
7 Canadian dealer's, investment adviser's, salesperson's,
8 or investment adviser representative's business repute or
9 qualifications, or has refused to furnish any such
10 information requested by the Secretary of State;
11 (i) has had a license or registration under any
12 Federal or State law regulating the offer or sale of
13 securities or commodity futures contracts, refused,
14 cancelled, suspended, or withdrawn, revoked, or otherwise
15 adversely affected in a similar manner;
16 (j) has been suspended or expelled from or refused
17 had membership in or association with or limited in any
18 capacity by any self-regulatory organization registered
19 under the Federal 1934 Act or the Federal 1974 Act
20 suspended, revoked, refused, expelled, cancelled, barred,
21 limited in any capacity, or otherwise adversely affected
22 in a similar manner arising from any fraudulent or
23 deceptive act or a practice in violation of any rule,
24 regulation or standard duly promulgated by the
25 self-regulatory organization;
26 (k) has had any order entered against it after
27 notice and opportunity for hearing by a securities agency
28 of any state, any foreign government or agency thereof,
29 the Securities and Exchange Commission, or the Federal
30 Commodities Futures Trading Commission arising from any
31 fraudulent or deceptive act or a practice in violation of
32 any statute, rule or regulation administered or
33 promulgated by the agency or commission;
34 (l) in the case of a dealer or limited Canadian
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1 dealer, fails to maintain a minimum net capital in an
2 amount which the Secretary of State may by rule or
3 regulation require;
4 (m) has conducted a continuing course of dealing of
5 such nature as to demonstrate an inability to properly
6 conduct the business of the dealer, limited Canadian
7 dealer, salesperson, investment adviser, or investment
8 adviser representative;
9 (n) has had, after notice and opportunity for
10 hearing, any injunction or order entered against it or
11 license or registration refused, cancelled, suspended,
12 revoked, withdrawn, or limited, or otherwise adversely
13 affected in a similar manner by any state or federal
14 body, agency or commission regulating banking, insurance,
15 finance or small loan companies, real estate or mortgage
16 brokers or companies, if the action resulted from any act
17 found by the body, agency or commission to be a
18 fraudulent or deceptive act or practice in violation of
19 any statute, rule or regulation administered or
20 promulgated by the body, agency or commission;
21 (o) has failed to file a return, or to pay the tax,
22 penalty or interest shown in a filed return, or to pay
23 any final assessment of tax, penalty or interest, as
24 required by any tax Act administered by the Illinois
25 Department of Revenue, until such time as the
26 requirements of that tax Act are satisfied;
27 (p) in the case of a natural person who is a
28 dealer, limited Canadian dealer, salesperson, investment
29 adviser, or investment adviser representative, has
30 defaulted on an educational loan guaranteed by the
31 Illinois Student Assistance Commission, until the natural
32 person has established a satisfactory repayment record as
33 determined by the Illinois Student Assistance Commission;
34 (q) has failed to maintain the books and records
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1 required under this Act or rules or regulations
2 promulgated under this Act within a reasonable time after
3 receiving notice of any deficiency;
4 (r) has refused to allow or otherwise impeded
5 designees of the Secretary of State from conducting an
6 audit, examination, inspection, or investigation provided
7 for under Section 8 or 11 of this Act;
8 (s) has failed to maintain any minimum net capital
9 or bond requirement set forth in this Act or any rule or
10 regulation promulgated under this Act;
11 (t) has refused the Secretary of State or his or
12 her designee access to any office or location within an
13 office to conduct an investigation, audit, examination,
14 or inspection;
15 (u) has advised or caused a public pension fund or
16 retirement system established under the Illinois Pension
17 Code to make an investment or engage in a transaction not
18 authorized by that Code;.
19 (v) if a corporation, limited liability company, or
20 limited liability partnership has been suspended,
21 canceled, revoked, or has failed to register as a foreign
22 corporation, limited liability company, or limited
23 liability partnership with the Secretary of State;
24 (w) is permanently or temporarily enjoined by any
25 court of competent jurisdiction, including any state,
26 federal, or foreign government, from engaging in or
27 continuing any conduct or practice involving any aspect
28 of the securities or commodities business or in any other
29 business where the conduct or practice enjoined involved
30 investments, franchises, insurance, banking, or finance;
31 (2) If the Secretary of State finds that any registrant
32 or applicant for registration is no longer in existence or
33 has ceased to do business as a dealer, limited Canadian
34 dealer, salesperson, investment adviser, or investment
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1 adviser representative, or is subject to an adjudication as a
2 person under legal disability or to the control of a
3 guardian, or cannot be located after reasonable search, or
4 has failed after written notice to pay to the Secretary of
5 State any additional fee prescribed by this Section or
6 specified by rule or regulation, or if a natural person, has
7 defaulted on an educational loan guaranteed by the Illinois
8 Student Assistance Commission, the Secretary of State may by
9 order cancel the registration or application.
10 (3) Withdrawal of an application for registration or
11 withdrawal from registration as a dealer, limited Canadian
12 dealer, salesperson, investment adviser, or investment
13 adviser representative becomes effective 30 days after
14 receipt of an application to withdraw or within such shorter
15 period of time as the Secretary of State may determine,
16 unless any proceeding is pending under Section 11 of this Act
17 when the application is filed or a proceeding is instituted
18 within 30 days after the application is filed. If a
19 proceeding is pending or instituted, withdrawal becomes
20 effective at such time and upon such conditions as the
21 Secretary of State by order determines. If no proceeding is
22 pending or instituted and withdrawal automatically becomes
23 effective, the Secretary of State may nevertheless institute
24 a revocation or suspension proceeding within 2 years after
25 withdrawal became effective and enter a revocation or
26 suspension order as of the last date on which registration
27 was effective.
28 F. The Secretary of State shall make available upon
29 request the date that each dealer, investment adviser,
30 salesperson, or investment adviser representative was granted
31 registration, together with the name and address of the
32 dealer, limited Canadian dealer, or issuer on whose behalf
33 the salesperson is registered, and all orders of the
34 Secretary of State denying or abandoning an application, or
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1 suspending or revoking registration, or censuring the
2 persons. The Secretary of State may designate by rule,
3 regulation or order the statements, information or reports
4 submitted to or filed with him or her pursuant to this
5 Section 8 which the Secretary of State determines are of a
6 sensitive nature and therefore should be exempt from public
7 disclosure. Any such statement, information or report shall
8 be deemed confidential and shall not be disclosed to the
9 public except upon the consent of the person filing or
10 submitting the statement, information or report or by order
11 of court or in court proceedings.
12 G. The registration or re-registration of a dealer or
13 limited Canadian dealer and of all salespersons registered
14 upon application of the dealer or limited Canadian dealer
15 shall expire on the next succeeding anniversary date of the
16 registration or re-registration of the dealer; and the
17 registration or re-registration of an investment adviser and
18 of all investment adviser representatives registered upon
19 application of the investment adviser shall expire on the
20 next succeeding anniversary date of the registration of the
21 investment adviser; provided, that the Secretary of State may
22 by rule or regulation prescribe an alternate date which any
23 dealer registered under the Federal 1934 Act or a member of
24 any self-regulatory association approved pursuant thereto, a
25 member of a self-regulatory organization or stock exchange in
26 Canada, or any investment adviser may elect as the expiration
27 date of its dealer or limited Canadian dealer and salesperson
28 registrations, or the expiration date of its investment
29 adviser registration, as the case may be. A registration of
30 a salesperson registered upon application of an issuer or
31 controlling person shall expire on the next succeeding
32 anniversary date of the registration, or upon termination or
33 expiration of the registration of the securities, if any,
34 designated in the application for his or her registration or
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1 the alternative date as the Secretary may prescribe by rule
2 or regulation. Subject to paragraph (9) of subsection C of
3 this Section 8, a salesperson's registration also shall
4 terminate upon cessation of his or her employment, or
5 termination of his or her appointment or authorization, in
6 each case by the person who applied for the salesperson's
7 registration, provided that the Secretary of State may by
8 rule or regulation prescribe an alternate date for the
9 expiration of the registration.
10 H. Applications for re-registration of dealers, limited
11 Canadian dealers, salespersons, investment advisers, and
12 investment adviser representatives shall be filed with the
13 Secretary of State prior to the expiration of the then
14 current registration and shall contain such information as
15 may be required by the Secretary of State upon initial
16 application with such omission therefrom or addition thereto
17 as the Secretary of State may authorize or prescribe. Each
18 application for re-registration of a dealer, limited Canadian
19 dealer, or investment adviser shall be accompanied by a
20 filing fee, each application for re-registration as a
21 salesperson shall be accompanied by a filing fee and a
22 Securities Audit and Enforcement Fund fee established
23 pursuant to Section 11a of this Act, and each application for
24 re-registration as an investment adviser representative shall
25 be accompanied by a Securities Audit and Enforcement Fund fee
26 established under Section 11a of this Act, which shall not be
27 returnable in any event. Notwithstanding the foregoing,
28 applications for re-registration of dealers, limited Canadian
29 dealers, and investment advisers may be filed within 30 days
30 following the expiration of the registration provided that
31 the applicant pays the annual registration fee together with
32 an additional amount equal to the annual registration fee and
33 files any other information or documents that the Secretary
34 of State may prescribe by rule or regulation or order. Any
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1 application filed within 30 days following the expiration of
2 the registration shall be automatically effective as of the
3 time of the earlier expiration provided that the proper fee
4 has been paid to the Secretary of State.
5 Each registered dealer, limited Canadian dealer, or
6 investment adviser shall continue to be registered if the
7 registrant changes his, her, or its form of organization
8 provided that the dealer or investment adviser files an
9 amendment to his, her, or its application not later than 30
10 days following the occurrence of the change and pays the
11 Secretary of State a fee in the amount established under
12 Section 11a of this Act.
13 I. (1) Every registered dealer, limited Canadian dealer,
14 and investment adviser shall make and keep for such periods,
15 such accounts, correspondence, memoranda, papers, books and
16 records as the Secretary of State may by rule or regulation
17 prescribe. All records so required shall be preserved for 3
18 years unless the Secretary of State by rule, regulation or
19 order prescribes otherwise for particular types of records.
20 (2) Every registered dealer, limited Canadian dealer,
21 and investment adviser shall file such financial reports as
22 the Secretary of State may by rule or regulation prescribe.
23 (3) All the books and records referred to in paragraph
24 (1) of this subsection I are subject at any time or from time
25 to time to such reasonable periodic, special or other audits,
26 examinations, or inspections by representatives of the
27 Secretary of State, within or without this State, as the
28 Secretary of State deems necessary or appropriate in the
29 public interest or for the protection of investors.
30 (4) At the time of an audit, examination, or inspection,
31 the Secretary of State, by his or her designees, may conduct
32 an interview of any person employed or appointed by or
33 affiliated with a registered dealer, limited Canadian dealer,
34 or investment advisor, provided that the dealer, limited
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1 Canadian dealer, or investment advisor shall be given
2 reasonable notice of the time and place for the interview.
3 At the option of the dealer, limited Canadian dealer, or
4 investment advisor, a representative of the dealer or
5 investment advisor with supervisory responsibility over the
6 individual being interviewed may be present at the interview.
7 J. The Secretary of State may require by rule or
8 regulation the payment of an additional fee for the filing of
9 information or documents required to be filed by this Section
10 which have not been filed in a timely manner. The Secretary
11 of State may also require by rule or regulation the payment
12 of an examination fee for administering any examination which
13 it may conduct pursuant to subsection B, C, D, or D-5 of this
14 Section 8.
15 K. The Secretary of State may declare any application
16 for registration or limited registration under this Section 8
17 abandoned by order if the applicant fails to pay any fee or
18 file any information or document required under this Section
19 8 or by rule or regulation for more than 30 days after the
20 required payment or filing date. The applicant may petition
21 the Secretary of State for a hearing within 15 days after the
22 applicant's receipt of the order of abandonment, provided
23 that the petition sets forth the grounds upon which the
24 applicant seeks a hearing.
25 L. Any document being filed pursuant to this Section 8
26 shall be deemed filed, and any fee being paid pursuant to
27 this Section 8 shall be deemed paid, upon the date of actual
28 receipt thereof by the Secretary of State or his or her
29 designee.
30 M. The Secretary of State shall provide to the Illinois
31 Student Assistance Commission annually or at mutually agreed
32 periodic intervals the names and social security numbers of
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1 natural persons registered under subsections B, C, D, and D-5
2 of this Section. The Illinois Student Assistance Commission
3 shall determine if any student loan defaulter is registered
4 as a dealer, limited Canadian dealer, salesperson, or
5 investment adviser under this Act and report its
6 determination to the Secretary of State or his or her
7 designee.
8 (Source: P.A. 90-70, eff. 7-8-97; 90-507, eff. 8-22-97;
9 90-655, eff. 7-30-98; 91-809, eff. 1-1-01.)
10 (815 ILCS 5/11) (from Ch. 121 1/2, par. 137.11)
11 Sec. 11. Duties and powers of the Secretary of State.
12 A. (1) The administration of this Act is vested in the
13 Secretary of State, who may from time to time make, amend and
14 rescind such rules and regulations as may be necessary to
15 carry out this Act, including rules and regulations governing
16 procedures of registration, statements, applications and
17 reports for various classes of securities, persons and
18 matters within his or her jurisdiction and defining any
19 terms, whether or not used in this Act, insofar as the
20 definitions are not inconsistent with this Act. The rules
21 and regulations adopted by the Secretary of State under this
22 Act shall be effective in the manner provided for in the
23 Illinois Administrative Procedure Act.
24 (2) Among other things, the Secretary of State shall
25 have authority, for the purposes of this Act, to prescribe
26 the form or forms in which required information shall be set
27 forth, accounting practices, the items or details to be shown
28 in balance sheets and earning statements, and the methods to
29 be followed in the preparation of accounts, in the appraisal
30 or valuation of assets and liabilities, in the determination
31 of depreciation and depletion, in the differentiation of
32 recurring and non-recurring income, in the differentiation of
33 investment and operating income, and in the preparation of
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1 consolidated balance sheets or income accounts of any person,
2 directly or indirectly, controlling or controlled by the
3 issuer, or any person under direct or indirect common control
4 with the issuer.
5 (3) No provision of this Act imposing any liability
6 shall apply to any act done or omitted in good faith in
7 conformity with any rule or regulation of the Secretary of
8 State under this Act, notwithstanding that the rule or
9 regulation may, after the act or omission, be amended or
10 rescinded or be determined by judicial or other authority to
11 be invalid for any reason.
12 (4) The Securities Department of the Office of the
13 Secretary of State shall be deemed a criminal justice agency
14 for purposes of all federal and state laws and regulations
15 and, in that capacity, shall be entitled to access to any
16 information available to criminal justice agencies.
17 (5) The Secretary of State, by rule, may conditionally
18 or unconditionally exempt any person, security, or
19 transaction, or any class or classes of persons, securities,
20 or transactions from any provision of Section 5, 6, 7, 8, 8a,
21 or 9 of this Act or of any rule promulgated under these
22 Sections, to the extent that such exemption is necessary or
23 appropriate in the public interest, and is consistent with
24 the protection of investors.
25 B. The Secretary of State may, anything in this Act to
26 the contrary notwithstanding, require financial statements
27 and reports of the issuer, dealer, salesperson, or investment
28 adviser as often as circumstances may warrant. In addition,
29 the Secretary of State may secure information or books and
30 records from or through others and may make or cause to be
31 made investigations respecting the business, affairs, and
32 property of the issuer of securities, any person involved in
33 the sale or offer for sale, purchase or offer to purchase of
34 any mineral investment contract, mineral deferred delivery
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1 contract, or security and of dealers, salespersons, and
2 investment advisers that are registered or are the subject of
3 an application for registration under this Act. The costs of
4 an investigation shall be borne by the registrant or the
5 applicant, provided that the registrant or applicant shall
6 not be obligated to pay the costs without his, her or its
7 consent in advance.
8 C. Whenever it shall appear to the Secretary of State,
9 either upon complaint or otherwise, that this Act, or any
10 rule or regulation prescribed under authority thereof, has
11 been or is about to be violated, he or she may, in his or her
12 discretion, do one or both of the following:
13 (1) require or permit the person to file with the
14 Secretary of State a statement in writing under oath, or
15 otherwise, as to all the facts and circumstances
16 concerning the subject matter which the Secretary of
17 State believes to be in the public interest to
18 investigate, audit, examine, or inspect; and
19 (2) conduct an investigation, audit, examination,
20 or inspection as necessary or advisable for the
21 protection of the interests of the public.
22 D. (1) For the purpose of all investigations, audits,
23 examinations, or inspections which in the opinion of the
24 Secretary of State are necessary and proper for the
25 enforcement of this Act, the Secretary of State or a person
26 designated by him or her is empowered to administer oaths and
27 affirmations, subpoena witnesses, take evidence, and require,
28 by subpoena or other lawful means provided by this Act or the
29 rules adopted by the Secretary of State, the production of
30 any books and records, papers, or other documents which the
31 Secretary of State or a person designated by him or her deems
32 relevant or material to the inquiry.
33 (2) The Secretary of State or a person designated by him
34 or her is further empowered to administer oaths and
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1 affirmations, subpoena witnesses, take evidence, and require
2 the production of any books and records, papers, or other
3 documents in this State at the request of a securities agency
4 of another state, if the activities constituting the alleged
5 violation for which the information is sought would be in
6 violation of Section 12 of this Act if the activities had
7 occurred in this State.
8 (3) The Circuit Court of any County of this State, upon
9 application of the Secretary of State or a person designated
10 by him or her may order the attendance of witnesses, the
11 production of books and records, papers, accounts and
12 documents and the giving of testimony before the Secretary of
13 State or a person designated by him or her; and any failure
14 to obey the order may be punished by the Circuit Court as a
15 contempt thereof.
16 (4) The fees of subpoenaed witnesses under this Act for
17 attendance and travel shall be the same as fees of witnesses
18 before the Circuit Courts of this State, to be paid when the
19 witness is excused from further attendance, provided, the
20 witness is subpoenaed at the instance of the Secretary of
21 State; and payment of the fees shall be made and audited in
22 the same manner as other expenses of the Secretary of State.
23 (5) Whenever a subpoena is issued at the request of a
24 complainant or respondent as the case may be, the Secretary
25 of State may require that the cost of service and the fee of
26 the witness shall be borne by the party at whose instance the
27 witness is summoned.
28 (6) The Secretary of State shall have power at his or
29 her discretion, to require a deposit to cover the cost of the
30 service and witness fees and the payment of the legal witness
31 fee and mileage to the witness served with subpoena.
32 (7) A subpoena issued under this Act shall be served in
33 the same manner as a subpoena issued out of a circuit court.
34 (8) The Secretary of State may in any investigation,
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1 audits, examinations, or inspections cause the taking of
2 depositions of persons residing within or without this State
3 in the manner provided in civil actions under the laws of
4 this State.
5 E. Anything in this Act to the contrary notwithstanding:
6 (1) If the Secretary of State shall find that the
7 offer or sale or proposed offer or sale or method of
8 offer or sale of any securities by any person, whether
9 exempt or not, in this State, is fraudulent, or would
10 work or tend to work a fraud or deceit, or is being
11 offered or sold in violation of Section 12, or there has
12 been a failure or refusal to submit any notification
13 filing or fee required under this Act, the Secretary of
14 State may by written order prohibit or suspend the offer
15 or sale of securities by that person or deny or revoke
16 the registration of the securities or the exemption from
17 registration for the securities.
18 (2) If the Secretary of State shall find that any
19 person has violated subsection C, D, E, F, G, H, I, J, or
20 K of Section 12 of this Act, the Secretary of State may
21 by written order temporarily or permanently prohibit or
22 suspend the person from offering or selling any
23 securities, any mineral investment contract, or any
24 mineral deferred delivery contract in this State,
25 provided that any person who is the subject of an order
26 of permanent prohibition may petition the Secretary of
27 State for a hearing to present evidence of rehabilitation
28 or change in circumstances justifying the amendment or
29 termination of the order of permanent prohibition.
30 (3) If the Secretary of State shall find that any
31 person is engaging or has engaged in the business of
32 selling or offering for sale securities as a dealer or
33 salesperson or is acting or has acted as an investment
34 adviser, investment adviser representative, or federal
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1 covered investment adviser, without prior thereto and at
2 the time thereof having complied with the registration or
3 notice filing requirements of this Act, the Secretary of
4 State may by written order prohibit or suspend the person
5 from engaging in the business of selling or offering for
6 sale securities, or acting as an investment adviser,
7 investment adviser representative, or federal covered
8 investment adviser, in this State.
9 (4) In addition to any other sanction or remedy
10 contained in this subsection E, the Secretary of State,
11 after finding that any provision of this Act has been
12 violated, may impose a fine as provided by rule,
13 regulation or order not to exceed $10,000 for each
14 violation of this Act, and may issue an order of public
15 censure against the violator, and may charge as costs of
16 investigation all reasonable expenses, including
17 attorney's fees and witness fees.
18 F. (1) The Secretary of State shall not deny, suspend or
19 revoke the registration of securities, suspend or revoke the
20 registration of a dealer, salesperson or investment adviser,
21 prohibit or suspend the offer or sale of any securities,
22 prohibit or suspend any person from offering or selling any
23 securities in this State, prohibit or suspend a dealer or
24 salesperson from engaging in the business of selling or
25 offering for sale securities, prohibit or suspend a person
26 from acting as an investment adviser or federal covered
27 investment adviser, impose any fine for violation of this
28 Act, issue an order of public censure, or enter into an
29 agreed settlement except after an opportunity for hearing
30 upon not less than 10 days notice given by personal service
31 or registered mail or certified mail, return receipt
32 requested, to the person or persons concerned. Such notice
33 shall state the date and time and place of the hearing and
34 shall contain a brief statement of the proposed action of the
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1 Secretary of State and the grounds for the proposed action.
2 A failure to appear at the hearing or otherwise respond to
3 the allegations set forth in the notice of hearing shall
4 constitute an admission of any facts alleged therein and
5 shall constitute sufficient basis to enter an order.
6 (2) Anything herein contained to the contrary
7 notwithstanding, the Secretary of State may temporarily
8 prohibit or suspend, for a maximum period of 90 days, by an
9 order effective immediately, the offer or sale or
10 registration of securities, the registration of a dealer,
11 salesperson, investment adviser, or investment adviser
12 representative, or the offer or sale of securities by any
13 person, or the business of rendering investment advice,
14 without the notice and prior hearing in this subsection
15 prescribed, if the Secretary of State shall in his or her
16 opinion, based on credible evidence, deem it necessary to
17 prevent an imminent violation of this Act or to prevent
18 losses to investors which the Secretary of State reasonably
19 believes will occur as a result of a prior violation of this
20 Act. Immediately after taking action without such notice and
21 hearing, the Secretary of State shall deliver a copy of the
22 temporary order to the respondent named therein by personal
23 service or registered mail or certified mail, return receipt
24 requested. The temporary order shall set forth the grounds
25 for the action and shall advise that the respondent may
26 request a hearing as soon as reasonably practicable, that the
27 request for a hearing will not stop the effectiveness of the
28 temporary order and that respondent's failure to request a
29 hearing within 30 days after the date of the entry of the
30 temporary order shall constitute an admission of any facts
31 alleged therein and shall constitute sufficient basis to make
32 the temporary order final. Any provision of this paragraph
33 (2) to the contrary notwithstanding, the Secretary of State
34 may not pursuant to the provisions of this paragraph (2)
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1 suspend the registration of a dealer, limited Canadian
2 dealer, salesperson, investment adviser, or investment
3 adviser representative based upon sub-paragraph (n) of
4 paragraph (l) of subsection E of Section 8 of this Act or
5 revoke the registration of securities or revoke the
6 registration of any dealer, salesperson, investment adviser
7 representative, or investment adviser.
8 (3) The Secretary of State may issue a temporary order
9 suspending or delaying the effectiveness of any registration
10 of securities under subsection A or B of Section 5, 6 or 7 of
11 this Act subsequent to and upon the basis of the issuance of
12 any stop, suspension or similar order by the Securities and
13 Exchange Commission with respect to the securities which are
14 the subject of the registration under subsection A or B of
15 Section 5, 6 or 7 of this Act, and the order shall become
16 effective as of the date and time of effectiveness of the
17 Securities and Exchange Commission order and shall be vacated
18 automatically at such time as the order of the Securities and
19 Exchange Commission is no longer in effect.
20 (4) When the Secretary of State finds that an
21 application for registration as a dealer, salesperson or
22 investment adviser should be denied, the Secretary of State
23 may enter an order denying the registration. Immediately
24 after taking such action, the Secretary of State shall
25 deliver a copy of the order to the respondent named therein
26 by personal service or registered mail or certified mail,
27 return receipt requested. The order shall state the grounds
28 for the action and that the matter will be set for hearing
29 upon written request filed with the Secretary of State within
30 30 days after the receipt of the request by the respondent.
31 The respondent's failure to request a hearing within 30 days
32 after receipt of the order shall constitute an admission of
33 any facts alleged therein and shall make the order final. If
34 a hearing is held, the Secretary of State shall affirm,
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1 vacate, or modify the order.
2 (5) The findings and decision of the Secretary of State
3 upon the conclusion of each final hearing held pursuant to
4 this subsection shall be set forth in a written order signed
5 on behalf of the Secretary of State by his or her designee
6 and shall be filed as a public record. All hearings shall be
7 held before a person designated by the Secretary of State,
8 and appropriate records thereof shall be kept.
9 (6) Notwithstanding the foregoing, the Secretary of
10 State, after notice and opportunity for hearing, may at his
11 or her discretion enter into an agreed settlement,
12 stipulation or consent order with a respondent in accordance
13 with the provisions of the Illinois Administrative Procedure
14 Act. The provisions of the agreed settlement, stipulation or
15 consent order shall have the full force and effect of an
16 order issued by the Secretary of State.
17 (7) Anything in this Act to the contrary
18 notwithstanding, whenever the Secretary of State finds that a
19 person is currently expelled from, refused membership in or
20 association with, or limited in any material capacity by a
21 self-regulatory organization registered under the Federal
22 1934 Act or the Federal 1974 Act because of a fraudulent or
23 deceptive act or a practice in violation of a rule,
24 regulation, or standard duly promulgated by the
25 self-regulatory organization, the Secretary of State may, at
26 his or her discretion, enter a Summary Order of Prohibition,
27 which shall prohibit the offer or sale of any securities,
28 mineral investment contract, or mineral deferred delivery
29 contract by the person in this State. The order shall take
30 effect immediately upon its entry. Immediately after taking
31 the action the Secretary of State shall deliver a copy of the
32 order to the named Respondent by personal service or
33 registered mail or certified mail, return receipt requested.
34 A person who is the subject of an Order of Prohibition may
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1 petition the Secretary of State for a hearing to present
2 evidence of rehabilitation or change in circumstances
3 justifying the amendment or termination of the Order of
4 Prohibition.
5 G. No administrative action shall be brought by the
6 Secretary of State for relief under this Act or upon or
7 because of any of the matters for which relief is granted by
8 this Act after the earlier to occur of (i) 3 years from the
9 date upon which the Secretary of State had notice of facts
10 which in the exercise of reasonable diligence would lead to
11 actual knowledge of the alleged violation of the Act, or (ii)
12 5 years from the date on which the alleged violation
13 occurred.
14 H. The action of the Secretary of State in denying,
15 suspending, or revoking the registration of a dealer, limited
16 Canadian dealer, salesperson, investment adviser, or
17 investment adviser representative, in prohibiting any person
18 from engaging in the business of offering or selling
19 securities as a dealer, limited Canadian dealer, or
20 salesperson, in prohibiting or suspending the offer or sale
21 of securities by any person, in prohibiting a person from
22 acting as an investment adviser, federal covered investment
23 adviser, or investment adviser representative, in denying,
24 suspending, or revoking the registration of securities, in
25 prohibiting or suspending the offer or sale or proposed offer
26 or sale of securities, in imposing any fine for violation of
27 this Act, or in issuing any order shall be subject to
28 judicial review in the Circuit Courts Court of Cook or
29 Sangamon any Counties county in this State. The
30 Administrative Review Law shall apply to and govern every
31 action for the judicial review of final actions or decisions
32 of the Secretary of State under this Act.
33 I. Notwithstanding any other provisions of this Act to
34 the contrary, whenever it shall appear to the Secretary of
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1 State that any person is engaged or about to engage in any
2 acts or practices which constitute or will constitute a
3 violation of this Act or of any rule or regulation prescribed
4 under authority of this Act, the Secretary of State may at
5 his or her discretion, through the Attorney General:
6 (1) file a complaint and apply for a temporary
7 restraining order without notice, and upon a proper
8 showing the court may enter a temporary restraining order
9 without bond, to enforce this Act; and
10 (2) file a complaint and apply for a preliminary or
11 permanent injunction, and, after notice and a hearing and
12 upon a proper showing, the court may grant a preliminary
13 or permanent injunction and may order the defendant to
14 make an offer of rescission with respect to any sales or
15 purchases of securities, mineral investment contracts, or
16 mineral deferred delivery contracts determined by the
17 court to be unlawful under this Act.
18 The court shall further have jurisdiction and authority,
19 in addition to the penalties and other remedies in this Act
20 provided, to enter an order for the appointment of the court
21 or a person as a receiver, conservator, ancillary receiver or
22 ancillary conservator for the defendant or the defendant's
23 assets located in this State, or to require restitution,
24 damages or disgorgement of profits on behalf of the person or
25 persons injured by the act or practice constituting the
26 subject matter of the action, and may assess costs against
27 the defendant for the use of the State; provided, however,
28 that the civil remedies of rescission and appointment of a
29 receiver, conservator, ancillary receiver or ancillary
30 conservator shall not be available against any person by
31 reason of the failure to file with the Secretary of State, or
32 on account of the contents of, any report of sale provided
33 for in subsection G or P of Section 4, paragraph (2) of
34 subsection D of Sections 5 and 6, or paragraph (2) of
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1 subsection F of Section 7 of this Act. Appeals may be taken
2 as in other civil cases.
3 J. In no case shall the Secretary of State, or any of
4 his or her employees or agents, in the administration of this
5 Act, incur any official or personal liability by instituting
6 an injunction or other proceeding or by denying, suspending
7 or revoking the registration of a dealer or salesperson, or
8 by denying, suspending or revoking the registration of
9 securities or prohibiting the offer or sale of securities, or
10 by suspending or prohibiting any person from acting as a
11 dealer, limited Canadian dealer, salesperson, investment
12 adviser, or investment adviser representative or from
13 offering or selling securities.
14 K. No provision of this Act shall be construed to
15 require or to authorize the Secretary of State to require any
16 investment adviser or federal covered investment adviser
17 engaged in rendering investment supervisory services to
18 disclose the identity, investments, or affairs of any client
19 of the investment adviser or federal covered investment
20 adviser, except insofar as the disclosure may be necessary or
21 appropriate in a particular proceeding or investigation
22 having as its object the enforcement of this Act.
23 L. Whenever, after an examination, investigation or
24 hearing, the Secretary of State deems it of public interest
25 or advantage, he or she may certify a record to the State's
26 Attorney of the county in which the act complained of,
27 examined or investigated occurred. The State's Attorney of
28 that county within 90 days after receipt of the record shall
29 file a written statement at the Office of the Secretary of
30 State, which statement shall set forth the action taken upon
31 the record, or if no action has been taken upon the record
32 that fact, together with the reasons therefor, shall be
33 stated.
34 M. The Secretary of State may initiate, take, pursue, or
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1 prosecute any action authorized or permitted under Section 6d
2 of the Federal 1974 Act.
3 N. (1) Notwithstanding any provision of this Act to the
4 contrary, to encourage uniform interpretation,
5 administration, and enforcement of the provisions of this
6 Act, the Secretary of State may cooperate with the securities
7 agencies or administrators of one or more states, Canadian
8 provinces or territories, or another country, the Securities
9 and Exchange Commission, the Commodity Futures Trading
10 Commission, the Securities Investor Protection Corporation,
11 any self-regulatory organization, and any governmental law
12 enforcement or regulatory agency.
13 (2) The cooperation authorized by paragraph (1) of this
14 subsection includes, but is not limited to, the following:
15 (a) establishing or participating in a central
16 depository or depositories for registration under this
17 Act and for documents or records required under this Act;
18 (b) making a joint audit, inspection, examination,
19 or investigation;
20 (c) holding a joint administrative hearing;
21 (d) filing and prosecuting a joint civil or
22 criminal proceeding;
23 (e) sharing and exchanging personnel;
24 (f) sharing and exchanging information and
25 documents; or
26 (g) issuing any joint statement or policy.
27 (Source: P.A. 90-70, eff. 7-8-97; 91-809, eff. 1-1-01.)
28 (815 ILCS 5/14) (from Ch. 121 1/2, par. 137.14)
29 Sec. 14. Sentence.
30 A. Any person who violates any of the provisions of
31 subsection A, B, C, or D of Section 12 or paragraph (3) of
32 subsection K of Section 12 of this Act shall be guilty of a
33 Class 4 felony. A misdemeanor; provided that if such person
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1 commits such offense with knowledge of the existence, meaning
2 or application of the respective subsection as provided in
3 Section 4-3(c) of the Criminal Code of 1961, or, in the case
4 of a failure to comply with the terms of any order of the
5 Secretary of State as provided under subsection D of Section
6 12 of this Act, with knowledge of the existence of such
7 order, such person shall be guilty of a Class 4 felony.
8 B. Any person who violates any of the provisions of
9 subsection E, F, G, H, I, or J, or paragraph (1) or (2) of
10 subsection K of Section 12 of this Act shall be guilty of a
11 Class 3 felony.
12 B-5. A person who violates a provision of subsection E,
13 F, G, H, I, or J or paragraph (1) or (2) of subsection K of
14 Section 12 of this Act by use of a plan, program, or campaign
15 that is conducted using one or more telephones for the
16 purpose of inducing the purchase or sale of securities is
17 guilty of a Class 2 felony.
18 B-10. A person who in the course of violating a
19 provision of subsection E, F, G, H, I, or J or paragraph (1)
20 or (2) of subsection K of Section 12 of this Act induces a
21 person 60 years of age or older to purchase or sell
22 securities is guilty of a Class 2 felony.
23 C. No prosecution for violation of any provision of this
24 Act shall bar or be barred by any prosecution for the
25 violation of any other provision of this Act or of any other
26 statute; but all prosecutions under this Act or based upon
27 any provision of this Act must be commenced within 3 years
28 after the violation upon which such prosecution is based;
29 provided however, that if the accused has intentionally
30 concealed evidence of a violation of subsection E, F, G, H,
31 I, J, or K of Section 12 of this Act, the period of
32 limitation prescribed herein shall be extended up to an
33 additional 2 years after the proper prosecuting officer
34 becomes aware of the offense but in no such event shall the
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1 period of limitation so extended be more than 2 years beyond
2 the expiration of the period otherwise applicable.
3 D. For the purposes of this Act all persons who shall
4 sell or offer for sale, or who shall purchase or offer to
5 purchase, securities in violation of the provisions of this
6 Act, or who shall in any manner knowingly authorize, aid or
7 assist in any unlawful sale or offering for sale or unlawful
8 purchase or offer to purchase shall be deemed equally guilty,
9 and may be tried and punished in the county in which said
10 unlawful sale or offering for sale or unlawful purchase or
11 offer to purchase was made, or in the county in which the
12 securities so sold or offered for sale or so purchased or
13 offered to be purchased were delivered or proposed to be
14 delivered to the purchaser thereof or by the seller thereof,
15 as the case may be.
16 E. Any person who shall be convicted of a second or any
17 subsequent offense specified in subsection A, B, C, D, or
18 paragraph (3) of subsection K of Section 12 of this Act shall
19 be guilty of a Class 3 felony, and any person who shall be
20 convicted of a second or any subsequent offense specified in
21 subsection E, F, G, H, I, J, or paragraph (1) or (2) of
22 subsection K of Section 12 of this Act shall be guilty of a
23 Class 2 felony.
24 F. If any person referred to in this Section is not a
25 natural person, it may upon conviction of a first offense be
26 fined up to $25,000, and if convicted of a second and
27 subsequent offense, may be fined up to $50,000, in addition
28 to any other sentence authorized by law.
29 G. This Act shall not be construed to repeal or affect
30 any law now in force relating to the organization of
31 corporations in this State or the admission of any foreign
32 corporation to do business in this State.
33 H. For the purposes of this Act, all persons who sell or
34 offer for sale, or who purchase or offer to purchase any
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1 mineral investment contract or mineral deferred delivery
2 contract in violation of the provisions of this Act or who,
3 in any manner, knowingly authorize, aid, or assist in any
4 unlawful sale or offer for sale or unlawful purchase or offer
5 to purchase any mineral investment contract or mineral
6 deferred delivery contract shall be deemed equally guilty and
7 may be tried and punished in the county in which the unlawful
8 sale or offer for sale or unlawful purchase or offer to
9 purchase any mineral investment contract or mineral deferred
10 delivery contract was made or in the county in which the
11 mineral investment contract or mineral deferred delivery
12 contract so sold or offered for sale or so purchased or
13 offered to be purchased was delivered or proposed to be
14 delivered to the purchaser thereof or by the seller thereof,
15 as the case may be, or in Sangamon County.
16 (Source: P.A. 90-667, eff. 7-30-98.)
17 Section 10. The Illinois Loan Brokers Act of 1995 is
18 amended by changing Sections 15-5.15, 15-5.20, 15-20, 15-25,
19 15-45, 15-50, 15-85 and by adding Section 15-95 as follows:
20 (815 ILCS 175/15-5.15)
21 Sec. 15-5.15. Loan broker.
22 (a) "Loan Broker" means any person who, in return for a
23 fee, commission, or other compensation from any person,
24 promises to procure a loan for any person or assist any
25 person in procuring a loan from any third party, or who
26 promises to consider whether or not to make a loan to any
27 person.
28 (b) Loan broker does not include any of the following:
29 (1) Any bank, savings bank, trust company, savings
30 and loan association, credit union or any other financial
31 institution regulated by any agency of the United States
32 or authorized to do business in this State.
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1 (2) Any person authorized to sell and service loans
2 for the federal National Mortgage Association or the
3 federal Home Loan Mortgage Corporation, issue securities
4 backed by the Government National Mortgage Association,
5 make loans insured by the federal Department of Housing
6 and Urban Development, make loans guaranteed by the
7 federal Veterans Administration, or act as a
8 correspondent of loans insured by the federal Department
9 of Housing and Urban Development or guaranteed by the
10 federal Veterans Administration.
11 (3) Any insurance producer or company authorized to
12 do business in this State.
13 (4) Any person arranging financing for the sale of
14 the person's product.
15 (5) Any person authorized to conduct business under
16 the Residential Mortgage License Act of 1987.
17 (6) Any person authorized to do business in this
18 State and regulated by the Department of Financial
19 Institutions or the Office of Banks and Real Estate.
20 (Source: P.A. 89-209, eff. 1-1-96; 89-508, eff. 7-3-96.)
21 (815 ILCS 175/15-5.20)
22 Sec. 15-5.20. Person. "Person" means an individual, a
23 corporation, trust, limited liability company, partnership, a
24 joint stock company, limited liability partnership,
25 incorporated or unincorporated association, or any other
26 entity.
27 (Source: P.A. 89-209, eff. 1-1-96.)
28 (815 ILCS 175/15-20)
29 Sec. 15-20. Renewal of registration.
30 (a) A loan broker may not continue engaging in the
31 business of loan brokering unless the broker's registration
32 is renewed annually. A loan broker shall renew the
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1 registration by filing with the Secretary of State, at least
2 30 days before the expiration of the registration, an
3 application containing any information the Secretary of State
4 may require by rule or regulation or order to indicate any
5 material change from the information contained in the
6 applicant's original application or any previous application.
7 (b) An application for renewal must be accompanied by a
8 filing fee in the amount specified in subsection (a) of
9 Section 15-25 of this Act. The application and fee is not
10 returnable in any event.
11 (c) Notwithstanding the foregoing, applications for
12 renewal of registration of loan brokers may be filed within
13 30 days following the expiration of the registration
14 provided that the applicant pays the annual registration fee
15 together with an additional amount equal to the annual
16 registration fee and files any other information or
17 documents that the Secretary of State may prescribe by
18 rule or order. Any application filed within 30 days
19 following the expiration of the registration shall be
20 automatically effective as of the time of the earlier
21 expiration provided that the proper fee has been paid to the
22 Secretary of State.
23 (Source: P.A. 89-209, eff. 1-1-96.)
24 (815 ILCS 175/15-25)
25 Sec. 15-25. Fees and funds; accounting and deposit in
26 Securities Audit and Enforcement Fund.
27 (a) the Secretary of State shall by rule or regulation
28 impose and shall collect fees necessary for the
29 administration of this Act including, but not limited to,
30 fees for the following purposes:
31 (1) filing an application pursuant to Section 15-15
32 of this Act;
33 (2) examining an application pursuant to Section
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1 15-15 or Section 15-20 of this Act;
2 (3) registering a loan broker pursuant to Section
3 15-15 of this Act;
4 (4) renewing registration of a loan broker pursuant
5 to Section 15-20 of this Act; or
6 (5) failure to file or file timely any document or
7 information required under this Act;.
8 (6) acceptance of service of process pursuant to
9 Section 15-95;
10 (7) issuance of certification pursuant to Section
11 15-50; or
12 (8) late registration fee pursuant to Section
13 15-20(c).
14 (b) The Secretary of State may, by rule or regulation,
15 raise or lower any fee imposed by this Act, and which he or
16 she is authorized by law to collect under this Act.
17 (c) All fees and funds accruing for the administration
18 of this Act shall be accounted for by the Secretary of State
19 and shall be deposited with the State Treasurer who shall
20 deposit them in the Securities Audit and Enforcement Fund.
21 (Source: P.A. 89-209, eff. 1-1-96.)
22 (815 ILCS 175/15-45)
23 Sec. 15-45. Powers of Secretary of State; privilege
24 against self-incrimination; admissibility into evidence.
25 (a) The Secretary of State may do the following:
26 (1) Adopt rules and regulations to implement this
27 Act.
28 (2) Make investigations and examinations:
29 (A) in connection with any application for
30 registration of any loan broker or any registration
31 already granted; or
32 (B) whenever it appears to the Secretary of
33 State, upon the basis of a complaint or information,
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1 that reasonable grounds exist for the belief that an
2 investigation or examination is necessary or
3 advisable for the more complete protection of the
4 interests of the public.
5 (3) Charge as costs of investigation or examination
6 all reasonable expenses, including a per diem prorated
7 upon the salary of any employee and actual traveling and
8 hotel expenses. All reasonable expenses are to be paid
9 by the party or parties under investigation or
10 examination.
11 (4) Issue notices and orders, including cease and
12 desist notices and orders, after making an investigation
13 or examination under item (2) of subsection (a) of this
14 Section. The Secretary of State may also bring an action
15 to prohibit a person from violating this Act. The
16 Secretary of State shall notify the person that an order
17 or notice has been issued, the reasons for it and that a
18 hearing will be set in accordance with the provisions of
19 the Illinois Administrative Procedure Act after the
20 Secretary of State receives a written request from the
21 person requesting a hearing.
22 (5) Sign all orders, official certifications,
23 documents or papers issued under this Act or delegate the
24 authority to sign any of those items to his or her
25 designee.
26 (6) Hold and conduct hearings.
27 (7) Hear evidence.
28 (8) Conduct inquiries with or without hearings.
29 Inquiries shall include oral and written requests for
30 information. A failure to respond to a written request
31 for information may be deemed a violation of this Act
32 and the Secretary of State may issue notices and orders,
33 including cease and desist notices and orders, against
34 the violators.
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1 (9) Receive reports of investigators or other
2 officers or employees of the State of Illinois or any
3 municipal corporation or governmental subdivision within
4 the State.
5 (10) (Blank). Administer oaths or cause them to be
6 administered.
7 (11) (Blank). Subpoena witnesses and compel them to
8 attend and testify.
9 (12) (Blank). Compel the production of books,
10 records and other documents.
11 (13) Order depositions to be taken of any witness
12 residing within or without the State. The depositions
13 shall be taken in the manner prescribed by law for
14 depositions in civil actions and made returnable to the
15 Secretary of State.
16 (14) For the purpose of all investigations, audits,
17 examinations, or inspections that, in the opinion of the
18 Secretary of State are necessary and proper for the
19 enforcement of this Act, the Secretary of State or a
20 person designated by him or her is empowered to
21 administer oaths and affirmations, subpoena witnesses,
22 take evidence, and require by subpoena or other lawful
23 means provided by this Act or the rules adopted by the
24 Secretary of State the production of any books and
25 records, papers, or other documents that the Secretary
26 of State or a person designated by him or her deems
27 relevant or material to the inquiry.
28 (b) If any person refuses to obey a subpoena issued
29 under this Act, the Secretary of State may make application
30 to any court of competent jurisdiction to order the person to
31 appear before the Secretary of State and produce documentary
32 evidence or give evidence as directed in the subpoena. The
33 failure to obey the order of the court shall be subject to
34 punishment by the court as contempt of court.
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1 (c) No person shall be excused from complying with a
2 subpoena on the ground that the testimony or evidence
3 required may tend to incriminate the person or subject the
4 person to a penalty or forfeiture. No individual may be
5 prosecuted or subject to any penalty or forfeiture for or on
6 account of any transaction, matter or thing which the
7 individual is compelled to testify or produce evidence, after
8 claiming the privilege against self-incrimination. However,
9 the individual so testifying shall not be exempt from
10 prosecution and punishment for perjury committed in so
11 testifying.
12 (d) In any prosecution, action, suit or proceeding based
13 upon or arising out of this Act, the Secretary of State may
14 sign a certificate showing compliance or non-compliance with
15 this Act by any loan broker. This shall constitute prima
16 facie evidence of compliance or non-compliance with this Act
17 and shall be admissible in evidence in any court.
18 (e) Whenever it shall appear to the Secretary of State
19 that any person is engaged or about to engage in any acts or
20 practices which constitute or will constitute a violation of
21 this Act, or of any rule or regulation prescribed under
22 authority of this Act, the Secretary of State may at his or
23 her discretion, through the Attorney General:
24 (1) File a complaint and apply for a temporary
25 restraining order without notice, and upon a proper
26 showing the court may enter a temporary restraining order
27 without a bond, to enforce this Act.
28 (2) File a complaint and apply for a preliminary or
29 permanent injunction, and, after notice and hearing and
30 upon a proper showing, the court may grant a preliminary
31 or permanent injunction and may order the defendant to
32 make an offer of rescission with respect to any contract
33 for loan brokerage services determined by the court to be
34 unlawful under this Act.
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1 (f) The court shall further have jurisdiction and
2 authority, in addition to the penalties and other remedies in
3 this Act provided, to enter an order for the appointment of
4 the court or a person as a receiver, conservator, ancillary
5 receiver or ancillary conservator for the defendant or the
6 defendant's assets located in this State, or to require
7 restitution, damages or disgorgement of profits on behalf of
8 the person or persons injured by the act or practice
9 constituting the subject matter of the action, and may assess
10 costs and attorneys fees against the defendant for the use of
11 the State.
12 (Source: P.A. 90-70, eff. 7-8-97; 91-357, eff. 7-29-99.)
13 (815 ILCS 175/15-50)
14 Sec. 15-50. Evidentiary matters.
15 (a) Certified copies of documents or records admissible
16 in actions or proceedings under this Act. Copies of any
17 statement or document filed with the Secretary of State, and
18 copies of any records of the Secretary of State, certified to
19 by the Secretary of State are admissible in any prosecution,
20 action, suit or proceeding based upon, or arising out of or
21 under, the provisions of this Act to the same effect as the
22 original of the statement, document or record would be if
23 actually produced.
24 (b) In any action, administrative, civil, or criminal, a
25 certificate under the seal of the State of Illinois, signed
26 by the Secretary of State, attesting to the filing of
27 or the absence of the filing of any document or record with
28 the Secretary of State under this Act, shall constitute
29 prima facie evidence of the filing or of the absence of the
30 filing, and shall be admissible in evidence in any
31 administrative, criminal, or civil action.
32 (c) Any certificate pursuant to subsection (a) or (b) of
33 this Section shall be furnished by the Secretary of State
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1 upon application therefor in the form and in the manner
2 prescribed by the Secretary of State by rule, and shall be
3 accompanied by payment of a non-refundable certification
4 fee in the amount specified by rule or order of the
5 Secretary of State.
6 (Source: P.A. 89-209, eff. 1-1-96.)
7 (815 ILCS 175/15-85)
8 Sec. 15-85. Fraudulent and prohibited acts.
9 (a) A loan broker shall not, in connection with a
10 contract for the services of a loan broker, either directly
11 or indirectly, do any of the following:
12 (1) (a) Employ any device, scheme or article to
13 defraud.
14 (2) (b) Make any untrue statements of a material
15 fact or omit to state a material fact necessary in order
16 to make the statements made, in the light of
17 circumstances under which they are made, not misleading.
18 (3) (c) Engage in any act, practice or course of
19 business that operates or would operate as a fraud or
20 deceit upon any person.
21 (b) A loan broker shall not either directly or
22 indirectly do any of the following:
23 (1) act as a loan broker without registration under
24 this Act unless exempt under the Act;
25 (2) fail to file with the Secretary of State any
26 application, report, document, or answer required to be
27 filed under the provisions of this Act or any rule made
28 by the Secretary of State pursuant to this Act, or fail
29 to comply with the terms of any order issued pursuant to
30 this Act or any rules made by the Secretary of State;
31 (3) fail to keep or maintain any records as required
32 under the provisions of this Act or any rule made by the
33 Secretary of State pursuant to this Act.
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1 (Source: P.A. 89-209, eff. 1-1-96.)
2 (815 ILCS 175/15-95 new)
3 Sec. 15-95. Service of process.
4 (a) A person acting as a loan broker, unless exempt from
5 registration under this Act, shall constitute an appointment
6 of the Secretary of State, or his or her successors in
7 Office, by the person to be the true and lawful attorney for
8 the person upon whom may be served all lawful process in any
9 action or proceeding against the person, arising out of his
10 or her activities as a loan broker.
11 (b) Service of process under this Section shall be made
12 by serving a copy upon the Secretary of State or any employee
13 in his or her Office designated by the Secretary of State to
14 accept such service for him or her, provided notice and a
15 copy of the process are, within 10 days of receipt, sent by
16 registered mail or certified mail, return receipt requested,
17 by the plaintiff to the defendant, at the last known address
18 of the defendant. The filing fee for service of process
19 under this Section is non-refundable and is the amount
20 established in Section 15-25 of this Act. The Secretary of
21 State shall keep a record of all such processes that shall
22 show the day of the service.
23 Section 15. The Illinois Business Brokers Act of 1995 is
24 amended by changing Sections 10-5.20, 10-20, 10-25, 10-40,
25 10-45, 10-50, 10-55, 10-85 and by adding Section 10-125 as
26 follows:
27 (815 ILCS 307/10-5.20)
28 Sec. 10-5.20. Person. "Person" means an individual, a
29 corporation, a partnership, an association, a joint stock
30 company, a limited liability company, a limited liability
31 partnership, a trust, or any unincorporated organization, or
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1 any other entity.
2 (Source: P.A. 89-209, eff. 1-1-96.)
3 (815 ILCS 307/10-20)
4 Sec. 10-20. Renewal of registration.
5 (a) A business broker may not continue engaging in the
6 business of business brokering unless the broker's
7 registration is renewed annually. A business broker shall
8 renew the registration by filing with the Secretary of State,
9 at least 30 days before the expiration of the registration,
10 an application containing any information the Secretary of
11 State may require to indicate any material change from the
12 information contained in the applicant's original application
13 or any previous application.
14 (b) An application for renewal must be accompanied by a
15 filing fee in the amount specified in subsection (a) of
16 Section 10-25 of this Act, and shall not be returnable in any
17 event.
18 (c) Notwithstanding the foregoing, applications for
19 renewal of registration of business brokers may be filed
20 within 30 days following the expiration of the
21 registration provided that the applicant pays the annual
22 registration fee together with an additional amount equal to
23 the annual registration fee and files any other
24 information or documents that the Secretary of State may
25 prescribe by rule or order. Any application filed within
26 30 days following the expiration of the registration shall
27 be automatically effective as of the time of the earlier
28 expiration provided that the proper fee has been paid to the
29 Secretary of State.
30 (Source: P.A. 89-209, eff. 1-1-96.)
31 (815 ILCS 307/10-25)
32 Sec. 10-25. Fees and funds. All fees and funds accruing
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1 for the administration of this Act shall be accounted for by
2 the Secretary of State and shall be deposited with the State
3 Treasurer who shall deposit them in the Securities Audit and
4 Enforcement Fund.
5 (a) The Secretary of State shall, by rule or regulation,
6 impose and collect fees necessary for the administration of
7 this Act, including but not limited to, fees for the
8 following purposes:
9 (1) filing an application pursuant to Section 10-10
10 of this Act;
11 (2) examining an application pursuant to Sections
12 10-10 and 10-20 of this Act;
13 (3) registering a business broker under Section
14 10-10 of this Act;
15 (4) renewing registration of a business broker
16 pursuant to Section 10-20 of this Act;
17 (5) failure to file or file timely any document or
18 information required under this Act;
19 (6) (Blank);.
20 (7) acceptance of service of process pursuant to
21 Section 10-125;
22 (8) issuance of certification pursuant to Section
23 10-50; and
24 (9) late registration fee pursuant to Section
25 10-20(c).
26 (b) The Secretary of State may, by rule or regulation,
27 raise or lower any fee imposed by, and which he or she is
28 authorized by law to collect under, this Act.
29 (Source: P.A. 90-70, eff. 7-8-97; 91-194, eff. 7-20-99;
30 91-534, eff. 1-1-00; 91-809, eff. 1-1-01.)
31 (815 ILCS 307/10-40)
32 Sec. 10-40. Denial, suspension or revocation of
33 registration; orders and hearing.
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1 (a) The Secretary of State may deny, suspend or revoke
2 the registration of a business broker if the business broker:
3 (1) Is insolvent.
4 (2) Has violated any provision of this Act.
5 (3) Has filed with the Secretary of State any
6 document or statement containing any false representation
7 of a material fact or omitting to state a material fact.
8 (4) Has been convicted, within 10 years before the
9 date of the application, renewal or review, of any crime
10 involving fraud or deceit.
11 (5) Has been found by any court or agency, within
12 10 years before the date of the application, renewal, or
13 review, to have engaged in any activity involving fraud
14 or deceit.
15 (b) The Secretary of State may not enter a final order
16 denying, suspending, or revoking the registration of a
17 business broker without prior notice to all interested
18 parties, opportunity for a hearing and written findings of
19 fact and conclusions of law. The Secretary of State may by
20 summary order deny, suspend, or revoke a registration pending
21 final determination of any proceeding under this Section.
22 Upon the entry of a summary order, the Secretary of State
23 shall promptly notify all interested parties that it has been
24 entered, of the reasons for the summary order and, that upon
25 receipt by the Secretary of State of a written request from a
26 party, the matter will be set for hearing which shall be
27 conducted in accordance with the provisions of the Illinois
28 Administrative Procedure Act. If no hearing is requested
29 within 30 days of the date of entry of the order and none is
30 ordered by the Secretary of State, the respondent's failure
31 to request a hearing shall constitute an admission of any
32 facts alleged therein and shall constitute a sufficient basis
33 to make the order final and it shall remain remains in effect
34 until it is modified or vacated by the Secretary of State.
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1 If a hearing is requested or ordered, the Secretary of State,
2 after notice of the hearing has been given to all interested
3 persons and the hearing has been held, may modify or vacate
4 the order or extend it until final determination.
5 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
6 (815 ILCS 307/10-45)
7 Sec. 10-45. Powers of Secretary of State; privilege
8 against self-incrimination; admissibility into evidence.
9 (a) The Secretary of State may do the following:
10 (1) Adopt rules and regulations to implement this
11 Act.
12 (2) Conduct investigations and examinations:
13 (A) In connection with any application for
14 registration of any business broker or any
15 registration already granted; or
16 (B) Whenever it appears to the Secretary of
17 State, upon the basis of a complaint or information,
18 that reasonable grounds exist for the belief that an
19 investigation or examination is necessary or
20 advisable for the more complete protection of the
21 interests of the public.
22 (3) Charge as costs of investigation or examination
23 all reasonable expenses, including a per diem prorated
24 upon the salary of any employee and actual traveling and
25 hotel expenses. All reasonable expenses are to be paid
26 by the party or parties under investigation or
27 examination.
28 (4) Issue notices and orders, including cease and
29 desist notices and orders, after making an investigation
30 or examination under paragraph (2) of subsection (a) of
31 this Section. The Secretary of State may also bring an
32 action to prohibit a person from violating this Act. The
33 Secretary of State shall notify the person that an order
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1 or notice has been issued, the reasons for it and that a
2 hearing will be set in accordance with the provisions of
3 the Illinois Administrative Procedure Act after the
4 Secretary of State receives a written request from the
5 person requesting a hearing.
6 (5) Sign all orders, official certifications,
7 documents or papers issued under this Act or delegate the
8 authority to sign any of those items to his or her
9 designee.
10 (6) Hold and conduct hearings.
11 (7) Hear evidence.
12 (8) Conduct inquiries with or without hearings.
13 (9) Receive reports of investigators or other
14 officers or employees of the State of Illinois or any
15 municipal corporation or governmental subdivision within
16 the State.
17 (10) (Blank). Administer oaths or cause them to be
18 administered.
19 (11) (Blank). Subpoena witnesses and compel them to
20 attend and testify.
21 (12) (Blank). Compel the production of books,
22 records and other documents.
23 (13) Order depositions to be taken of any witness
24 residing within or without the State. The depositions
25 shall be taken in the manner prescribed by law for
26 depositions in civil actions and made returnable to the
27 Secretary of State.
28 (14) For the purposes of all investigations,
29 audits, examinations, or inspections which in the opinion
30 of the Secretary of State are necessary and proper for
31 the enforcement of this Act, the Secretary of State or a
32 person designated by him or her is empowered to
33 administer oaths and affirmations, subpoena witnesses,
34 take evidence, and require by subpoena or other lawful
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1 means provided by this law or such rules and regulations
2 adopted by the Secretary of State the production of any
3 books and records, papers, or other documents that the
4 Secretary of State or a person designated by him or her
5 deems relevant or material to the injury.
6 (b) If any person refuses to obey a subpoena issued
7 under this Act, the Secretary of State may make application
8 to any court of competent jurisdiction to order the person to
9 appear before the Secretary of State and produce documentary
10 evidence or give evidence as directed in the subpoena. The
11 failure to obey the order of the court shall be subject to
12 punishment by the court as contempt of court.
13 (c) No person shall be excused from complying with a
14 subpoena on the ground that the testimony or evidence
15 required may tend to incriminate the person or subject the
16 person to a penalty or forfeiture. No individual may be
17 prosecuted or subject to any penalty or forfeiture for or on
18 account of any transaction, matter or thing which the
19 individual is compelled to testify or produce evidence, after
20 claiming the privilege against self-incrimination. However,
21 the individual so testifying shall not be exempt from
22 prosecution and punishment for perjury committed in so
23 testifying.
24 (d) In any prosecution, action, suit or proceeding based
25 upon or arising out of this Act, the Secretary of State may
26 sign a certificate showing compliance or non-compliance with
27 this Act by any business broker. This shall constitute prima
28 facie evidence of compliance or non-compliance with this Act
29 and shall be admissible in evidence in any court to enforce
30 this Act.
31 (e) Whenever it shall appear to the Secretary of State
32 that any person is engaged or about to engage in any acts or
33 practices which constitute or will constitute a violation of
34 this Act, or of any rule or regulation prescribed under
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1 authority of this Act, the Secretary of State may at his or
2 her discretion, through the Attorney General:
3 (1) File a complaint and apply for a temporary
4 restraining order without notice, and upon a proper
5 showing the court may enter a temporary restraining order
6 without a bond, to enforce this Act.
7 (2) File a complaint and apply for a preliminary or
8 permanent injunction, and, after notice and hearing and
9 upon a proper showing, the court may grant a preliminary
10 or permanent injunction and may order the defendant to
11 make an offer of rescission with respect to any contract
12 for business brokerage services determined by the court
13 to be unlawful under this Act.
14 (f) The court shall further have jurisdiction and
15 authority, in addition to the penalties and other remedies in
16 this Act provided, to enter an order for the appointment of
17 the court or a person as a receiver, conservator, ancillary
18 receiver or ancillary conservator for the defendant or the
19 defendant's assets located in this State, or to require
20 restitution or damages on behalf of the person or persons
21 injured by the act or practice constituting the subject
22 matter of the action, and may assess costs against the
23 defendant for the use of the State.
24 (g) No provision of this Act imposing liability shall
25 apply to any act done or omitted in good faith in conformity
26 with any rule of the Secretary of State under this Act,
27 notwithstanding that such rule may, after such act or
28 omission, be amended or rescinded or be determined by
29 judicial or other authority to be invalid for any reason.
30 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
31 (815 ILCS 307/10-50)
32 Sec. 10-50. Certified copies of documents or records
33 admissible in actions or proceedings under this Act.
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1 (a) Copies of any statement or document filed with the
2 Secretary of State, and copies of any records of the
3 Secretary of State, certified to by the Secretary of State
4 are admissible in any prosecution, action, suit or proceeding
5 based upon, or arising out of or under, the provisions of
6 this Act to the same effect as the original of the statement,
7 document or record would be if actually produced.
8 (b) In any action, administrative, civil, or criminal, a
9 certificate under the seal of the State of Illinois, signed
10 by the Secretary of State, attesting to the filing of or the
11 absence of any filing of any document or record with the
12 Secretary of State under this Act, shall constitute prima
13 facie evidence of such filing or of the absence of the
14 filing, and shall be admissible in evidence in any
15 administrative, criminal, or civil action.
16 (c) Any certificate pursuant to subsection (a) or (b) of
17 this Section shall be furnished by the Secretary of State
18 upon an application therefor in the form and manner
19 prescribed by the Secretary of State by rule, and shall be
20 accompanied by payment of a non-refundable certification fee
21 in the amount specified by rule or by order of the Secretary
22 of State.
23 (Source: P.A. 89-209, eff. 1-1-96.)
24 (815 ILCS 307/10-55)
25 Sec. 10-55. Violations; administrative fines;
26 enforcement.
27 (a) If the Secretary of State determines, after notice
28 and opportunity for a hearing, that a person has violated
29 this Act, the Secretary of State may in addition to all other
30 remedies, impose an administrative fine upon the person in an
31 amount not to exceed $10,000 for each violation.
32 (b) The Secretary of State may bring an action in the
33 circuit court of Sangamon or Cook county to enforce payment
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1 of fines imposed under this Section.
2 (c) If the Secretary of State shall find that any person
3 has violated any provision of this Act, the Secretary of
4 State may, by written order temporarily or permanently
5 prohibit or suspend such person from acting as a business
6 broker.
7 (d) If the Secretary of State shall find, after notice
8 and opportunity for hearing, that any person is acting or has
9 acted as a business broker as defined in Section 10-5.10 of
10 this Act, without prior thereto or at the time thereof having
11 complied with the registration requirements of this Act, the
12 Secretary of State may by written order prohibit or suspend
13 such person from acting as a business broker in this State.
14 (e) Anything herein contained to the contrary
15 notwithstanding, the Secretary of State may temporarily
16 prohibit or suspend, for a maximum period of 90 days, by an
17 order effective immediately, the registration of a business
18 broker or the business of providing business brokerage
19 services, without notice and prior hearing, if the Secretary
20 of State shall in his or her opinion, based upon credible
21 evidence, deem it necessary to prevent an imminent violation
22 of this Act or to prevent losses to clients which the
23 Secretary of State reasonably believes will occur as a result
24 of a prior violation of this Act. Immediately after taking
25 action without such notice and hearing, the Secretary of
26 State shall deliver a copy of the temporary order to the
27 respondent named therein by personal service or registered
28 mail or certified mail, return receipt requested. The
29 temporary order shall set forth the grounds for the action
30 and shall advise that the respondent may request a hearing as
31 soon as reasonably practicable, that the request for a
32 hearing will not stop the effectiveness of the temporary
33 order and that respondent's failure to request a hearing
34 within 30 days after the date of the entry of the temporary
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1 order, shall constitute an admission of any facts alleged
2 therein and shall make the temporary order final. A business
3 broker whose registration has been suspended pursuant to this
4 Section may request the Secretary of State permission to
5 continue to receive payment for any executory contracts at
6 the time of any suspension and to continue to perform its
7 obligation thereunder. The decision to grant or deny
8 permission to receive payment for any executory contracts or
9 perform any obligation thereunder shall be at the sole
10 discretion of the Secretary of State and shall not be subject
11 to review under the Administrative Review Law.
12 (f) The Secretary of State may issue a temporary order
13 suspending or delaying the effectiveness of any registration
14 of a business broker under this Act subsequent to and upon
15 the basis of the issuance of any stop, suspension or similar
16 order by any agency of the United States regulating business
17 brokers or any state or federal courts with respect to the
18 person who is the subject of the registration under this Act,
19 and such order shall become effective as of the date and time
20 of effectiveness of the agency or court order and shall be
21 vacated automatically at such time as the order of the agency
22 or court order is no longer in effect.
23 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
24 (815 ILCS 307/10-85)
25 Sec. 10-85. Fraudulent and prohibited acts.
26 (a) A business broker shall not, in connection with a
27 contract for the services of a business broker, either
28 directly or indirectly, do any of the following:
29 (1) Employ any device, scheme or article to
30 defraud.
31 (2) Make any untrue statements of a material fact
32 or omit to state a material fact necessary in order to
33 make the statements made, in the light of circumstances
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1 under which they are made, not misleading, unless the
2 statement is made in reasonable reliance on information
3 provided by the client.
4 (3) Engage in any act, practice or course of
5 business that operates or would operate as a fraud or
6 deceit upon any person.
7 (b) A business broker shall not either directly or
8 indirectly do the following:
9 (1) Engage in the business of acting as a business
10 broker without registration under this Act unless exempt
11 under the Act.
12 (2) Fail to file with the Secretary of State any
13 application, report, document, or answer required to be
14 filed under the provisions of this Act or any rule made
15 by the Secretary of State pursuant to this Act or fail to
16 comply with the terms of any order issued pursuant to
17 this Act or rule or made by the Secretary of State.
18 (3) Fail to maintain any records as required under
19 the provisions of this Act or any rule made by Secretary
20 of State pursuant to this Act.
21 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
22 (815 ILCS 307/10-125 new)
23 Sec. 10-125. Service of process.
24 (a) Any person acting as a business broker, unless
25 exempt from registration under this Act, shall constitute an
26 appointment of the Secretary of State, or his or her
27 successors in Office, by the person to be the true and
28 lawful attorney for the person upon whom may be served all
29 lawful process in any action or proceeding against the
30 person, arising out of his or her activities as a business
31 broker.
32 (b) Service of process under this Section shall be made
33 by serving a copy upon the Secretary of State or any employee
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1 in his or her Office designated by the Secretary of State to
2 accept such service for him or her, provided notice of such
3 and a copy of the process are, within 10 days of receipt,
4 sent by registered mail or certified mail, return receipt
5 requested, by the plaintiff to the defendant, at the last
6 known address of the defendant. The filing fee for service
7 of process under this Section is non-refundable and is the
8 amount established in Section 10-25 of this Act. The
9 Secretary of State shall keep a record of all such processes
10 that shall show the day of the service.
11 Section 20. The Business Opportunity Sales Law of 1995
12 is amended by changing Sections 5-5.05, 5-5.10, 5-5.15,
13 5-5.30, 5-20, 5-30, 5-35, 5-60, 5-65, 5-95, and by adding
14 Section 5-145 as follows:
15 (815 ILCS 602/5-5.05)
16 Sec. 5-5.05. Advertising. "Advertising" means any
17 circular, prospectus, advertisement or other material or any
18 electronic communication including, but not limited to, by
19 radio, television, pictures or similar means used in
20 connection with an offer or sale of any business opportunity.
21 (Source: P.A. 89-209, eff. 1-1-96.)
22 (815 ILCS 602/5-5.10)
23 Sec. 5-5.10. Business opportunity.
24 (a) "Business opportunity" means a contract or
25 agreement, between a seller and purchaser, express or
26 implied, orally or in writing, wherein it is agreed that the
27 seller or a person recommended by the seller shall provide to
28 the purchaser any product, equipment, supplies or services
29 enabling the purchaser to start a business when the purchaser
30 is required to make a payment to the seller or a person
31 recommended by the seller and the seller represents directly
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1 or indirectly, orally or in writing, any of the following,
2 that:
3 (1) the seller or a person recommended by the
4 seller will provide or assist the purchaser in finding
5 locations for the use or operation of vending machines,
6 racks, display cases or other similar devices, on
7 premises neither owned nor leased by the purchaser or
8 seller;
9 (2) the seller or a person recommended by the
10 seller will provide or assist the purchaser in finding
11 outlets or accounts for the purchaser's products or
12 services;
13 (3) the seller or a person specified by the seller
14 will purchase any or all products made, produced,
15 fabricated, grown, bred or modified by the purchaser;
16 (4) the seller guarantees that the purchaser will
17 derive income from the business which exceeds the price
18 paid to the seller;
19 (5) the seller will refund all or part of the price
20 paid to the seller, or repurchase any of the products,
21 equipment or supplies provided by the seller or a person
22 recommended by the seller, if the purchaser is
23 dissatisfied with the business; or
24 (6) the seller will provide a marketing plan,
25 provided that this Law shall not apply to the sale of a
26 marketing plan made in conjunction with the licensing of
27 a federally registered trademark or federally registered
28 service mark.
29 (b) "Business opportunity" does not include:
30 (1) any offer or sale of an ongoing business
31 operated by the seller and to be sold in its entirety;
32 (2) any offer or sale of a business opportunity to
33 an ongoing business where the seller will provide
34 products, equipment, supplies or services which are
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1 substantially similar to the products, equipment,
2 supplies or services sold by the purchaser in connection
3 with the purchaser's ongoing business;
4 (3) any offer or sale of a business opportunity
5 which is a franchise as defined by the Franchise
6 Disclosure Act of 1987;
7 (4) any offer or sale of a business opportunity
8 which is registered pursuant to the Illinois Securities
9 Law of 1953;
10 (5) (blank);
11 (6) any offer or sale of a business opportunity by
12 an executor, administrator, sheriff, marshal, receiver,
13 trustee in bankruptcy, guardian or conservator or a
14 judicial offer or sale, of a business opportunity; or
15 (7) cash payments made by a purchaser not exceeding
16 $500 and the payment is made for the not-for-profit sale
17 of sales demonstration equipment, material or samples, or
18 the payment is made for product inventory sold to the
19 purchaser at a bona fide wholesale price.
20 (Source: P.A. 90-70, eff. 7-8-97; 91-357, eff. 7-29-99;
21 91-809, eff. 1-1-01.)
22 (815 ILCS 602/5-5.15)
23 Sec. 5-5.15. Marketing plan. "Marketing plan" means
24 advice or training, provided to the purchaser by the seller
25 or a person recommended by the seller, pertaining
26 specifically to the sale of any enterprise, product,
27 equipment, supplies or services and the advice or training
28 includes, without limitation but is not limited to, preparing
29 or providing:
30 (1) Promotional literature, brochures, pamphlets, or
31 advertising materials;
32 (2) Training, regarding the promotion, operation or
33 management of the business opportunity; or
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1 (3) Operational, managerial, technical or financial
2 guidelines or assistance or continuing technical support.
3 (Source: P.A. 89-209, eff. 1-1-96.)
4 (815 ILCS 602/5-5.30)
5 Sec. 5-5.30. Person. "Person" means an individual,
6 corporation, trust, partnership, a joint stock company,
7 limited liability partnership, limited liability company,
8 incorporated or unincorporated association or any other
9 entity.
10 (Source: P.A. 89-209, eff. 1-1-96.)
11 (815 ILCS 602/5-20)
12 Sec. 5-20. Burden of proof and evidentiary matters.
13 (a) In any administrative, civil, or criminal proceeding
14 related to this Law, the burden of proving an exemption, an
15 exception from a definition or an exclusion from this Law is
16 upon the person claiming it.
17 (b) In any action, administrative, civil, or criminal, a
18 certificate under the seal of the State of Illinois, signed
19 by the Secretary of State, attesting to the filing of or the
20 absence of any filing of any document or record with the
21 Secretary of State under this Act, shall constitute prima
22 facie evidence of such filing or of the absence of the
23 filing, and shall be admissible in evidence in any
24 administrative, criminal, or civil action.
25 (c) In any administrative, civil, or criminal action,
26 the Secretary of State may issue a certificate under the
27 seal of the State of Illinois, signed by the Secretary of
28 State, showing that any document or record is a true and
29 exact copy, photocopy or otherwise, of the record or document
30 on file with the Secretary of State under this Act; and such
31 certified document or record shall be admissible in evidence
32 with the same effect as the original document or record would
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1 have if actually produced.
2 (d) Any certificate pursuant to subsection (b) or (c) of
3 this Section shall be furnished by the Secretary of State
4 upon an application therefor in the form and manner
5 prescribed by the Secretary of State by rule, and shall be
6 accompanied by payment of a non-refundable certification fee
7 in the amount specified by rule or by order of the Secretary
8 of State.
9 (Source: P.A. 89-209, eff. 1-1-96.)
10 (815 ILCS 602/5-30)
11 Sec. 5-30. Registration.
12 (a) In order to register a business opportunity, the
13 seller shall file with the Secretary of State one of the
14 following disclosure documents with the appropriate cover
15 sheet as required by subsection (b) of Section 5-35 of this
16 Law, a consent to service of process as specified in
17 subsection (b) of this Section, and the appropriate fee as
18 required by subsection (c) of this Section which is not
19 returnable in any event:
20 (1) The Franchise Offering Circular which the
21 Secretary of State may prescribe by rule or regulation;
22 or
23 (2) A disclosure document prepared pursuant to the
24 Federal Trade Commission rule entitled Disclosure
25 Requirements and Prohibitions Concerning Franchising and
26 Business Opportunity Venture, 16 C.F.R. Sec. 436 (1979).
27 The Secretary of State may by rule or regulation adopt
28 any amendment to the disclosure document prepared
29 pursuant to 16 C.F.R. Sec. 436 (1979), that has been
30 adopted by the Federal Trade Commission; or
31 (3) A disclosure document prepared pursuant to
32 subsection (b) of Section 5-35 of this Law.
33 (b) Every seller shall file, in the form as the
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1 Secretary of State may prescribe, an irrevocable consent
2 appointing the Secretary of State or the successor in office
3 to be the seller's attorney to receive service of any lawful
4 process in any noncriminal suit, action or proceeding against
5 the seller or the seller's successor, executor or
6 administrator which arises under this Law after the consent
7 has been filed, with the same force and validity as if served
8 personally on the person filing the consent. Service may be
9 made by delivering a copy of the process in the office of the
10 Secretary of State, but is not effective unless the
11 plaintiff or petitioner in a suit, action or proceeding,
12 forthwith sends notice of the service and a copy of the
13 process by registered or certified mail, return receipt
14 requested, to the defendant's or respondent's most current
15 address on file with the Secretary of State, and the
16 plaintiff's affidavit of compliance with this subsection is
17 filed in the case on or before the return date of the
18 process, if any, or within such further time as the court
19 allows.
20 (c)(1) The Secretary of State shall by rule or
21 regulation impose and shall collect fees necessary for
22 the administration of this Law including, but not limited
23 to, fees for the following purposes:
24 (A) filing a disclosure document and renewal
25 fee;
26 (B) interpretive opinion fee;.
27 (C) acceptance of service of process pursuant
28 to subsection (b) of Section 5-145;
29 (D) issuance of certification pursuant to
30 Section 5-20; or
31 (E) late registration fee pursuant to Section
32 5-30(g).
33 (2) The Secretary of State may, by rule or
34 regulation, raise or lower any fee imposed by, and which
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1 he or she is authorized by law to collect under this Law.
2 (d) A registration automatically becomes effective upon
3 the expiration of the 10th full business day after a complete
4 filing, provided that no order has been issued or proceeding
5 pending under Section 5-45 of this Law. The Secretary of
6 State may by order waive or reduce the time period prior to
7 effectiveness, provided that a complete filing has been made.
8 The Secretary of State may by order defer the effective date
9 until the expiration of the 10th full business day after the
10 filing of any amendment.
11 (e) The registration is effective for one year
12 commencing on the date of effectiveness and may be renewed
13 annually upon the filing of a current disclosure document
14 accompanied by any documents or information that the
15 Secretary of State may by rule or regulation or order
16 require. The annual renewal fee shall be in the same amount
17 as the initial registration fee as established under
18 subsection (c) of Section 5-30 of this Law which shall not be
19 returnable in any event. Failure to renew upon the close of
20 the one year period of effectiveness will result in
21 expiration of the registration. The Secretary of State may by
22 rule or regulation or order require the filing of a sales
23 report.
24 (f) The Secretary of State may by rule or regulation or
25 order require the filing of all proposed literature or
26 advertising prior to its use.
27 (g) Notwithstanding the foregoing, applications for
28 renewal of registration of business opportunities may be
29 filed within 30 days following the expiration of the
30 registration provided that the applicant pays the annual
31 registration fee together with an additional amount equal to
32 the annual registration fee and files any other information
33 or documents that the Secretary of State may prescribe by
34 rule or order. Any application filed within 30 days
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1 following the expiration of the registration shall be
2 automatically effective as of the time of the earlier
3 expiration provided that the proper fee has been paid to the
4 Secretary of State.
5 (Source: P.A. 89-209, eff. 1-1-96.)
6 (815 ILCS 602/5-35)
7 Sec. 5-35. Disclosure requirements.
8 (a) It shall be unlawful for any person to offer or,
9 sell any business opportunity required to be registered under
10 this Law unless a written disclosure document as filed under
11 subsection (a) of Section 5-30 of this Law is delivered to
12 each purchaser at least 10 business days prior to the
13 execution by a purchaser of any contract or agreement
14 imposing a binding legal obligation on the purchaser or the
15 payment by a purchaser of any consideration in connection
16 with the offer or sale of the business opportunity.
17 (b) The disclosure document shall have a cover sheet
18 which is entitled, in at least 10-point bold type,
19 "DISCLOSURE REQUIRED BY THE STATE OF ILLINOIS." Under the
20 title shall appear the statement in at least 10-point bold
21 type that "THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES
22 NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE
23 STATE OF ILLINOIS. THE INFORMATION CONTAINED IN THIS
24 DISCLOSURE DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF
25 YOU HAVE ANY QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT,
26 SEEK PROFESSIONAL ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE
27 ANY PAYMENT. YOU ARE TO BE PROVIDED 10 BUSINESS DAYS TO
28 REVIEW THIS DOCUMENT BEFORE SIGNING ANY CONTRACT OR AGREEMENT
29 OR MAKING ANY PAYMENT TO THE SELLER OR THE SELLER'S
30 REPRESENTATIVE". The seller's name and principal business
31 address, along with the date of the disclosure document shall
32 also be provided on the cover sheet. No other information
33 shall appear on the cover sheet. The disclosure document
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1 shall contain the following information unless the seller
2 uses a disclosure document as provided in paragraph (1) or
3 (2) of subsection (a) of Section 5-30 of this Law:
4 (1) The names and residential addresses of those
5 salespersons who will engage in the offer or sale of the
6 business opportunity in this State.
7 (2) The name of the seller, whether the seller is
8 doing business as an individual, partnership or
9 corporation; the names under which the seller has
10 conducted, is conducting or intends to conduct business;
11 and the name of any parent or affiliated company that
12 will engage in business transactions with purchasers or
13 which will take responsibility for statements made by the
14 seller.
15 (3) The names, addresses and titles of the seller's
16 officers, directors, trustees, general managers,
17 principal executives, agents, and any other persons
18 charged with responsibility for the seller's business
19 activities relating to the sale of the business
20 opportunity.
21 (4) Prior business experience of the seller
22 relating to business opportunities including:
23 (A) The name, address, and a description of
24 any business opportunity previously offered by the
25 seller;
26 (B) The length of time the seller has offered
27 each such business opportunity; and
28 (C) The length of time the seller has
29 conducted the business opportunity currently being
30 offered to the purchaser.
31 (5) With respect to persons identified in item (3)
32 of this subsection:
33 (A) A description of the persons' business
34 experience for the 10 year period preceding the
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1 filing date of this disclosure document. The
2 description of business experience shall list
3 principal occupations and employers; and
4 (B) A listing of the persons' educational and
5 professional backgrounds including, the names of
6 schools attended and degrees received, and any other
7 information that will demonstrate sufficient
8 knowledge and experience to perform the services
9 proposed.
10 (6) Whether the seller or any person identified in
11 item (3) of this subsection:
12 (A) Has been convicted of any felony, or
13 pleaded nolo contendere to a felony charge, or has
14 been the subject of any criminal, civil or
15 administrative proceedings alleging the violation of
16 any business opportunity law, securities law,
17 commodities law, franchise law, fraud or deceit,
18 embezzlement, fraudulent conversion, restraint of
19 trade, unfair or deceptive practices,
20 misappropriation of property or comparable
21 allegations;
22 (B) Has filed in bankruptcy, been adjudged
23 bankrupt, been reorganized due to insolvency, or was
24 an owner, principal officer or general partner or
25 any other person that has so filed or was so
26 adjudged or reorganized during or within the last 7
27 years.
28 (7) The name of the person identified in item (6)
29 of this subsection, nature of and parties to the action
30 or proceeding, court or other forum, date of the
31 institution of the action, docket references to the
32 action, current status of the action or proceeding, terms
33 and conditions or any order or decree, the penalties or
34 damages assessed and terms of settlement.
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1 (8) The initial payment required, or when the exact
2 amount cannot be determined, a detailed estimate of the
3 amount of the initial payment to be made to the seller.
4 (9) A detailed description of the actual services
5 the seller agrees to perform for the purchaser.
6 (10) A detailed description of any training the
7 seller agrees to provide for the purchaser.
8 (11) A detailed description of services the seller
9 agrees to perform in connection with the placement of
10 equipment, products or supplies at a location, as well as
11 any agreement necessary in order to locate or operate
12 equipment, products or supplies on a premises neither
13 owned nor leased by the purchaser or seller.
14 (12) A detailed description of any license or
15 permit that will be necessary in order for the purchaser
16 to engage in or operate the business opportunity.
17 (13) The business opportunity seller that is
18 required to secure a bond under Section 5-50 of this Law,
19 shall state in the disclosure document "As required by
20 the State of Illinois, the seller has secured a bond
21 issued by (insert name and address of surety company), a
22 surety company, authorized to do business in this State.
23 Before signing a contract or agreement to purchase this
24 business opportunity, you should check with the surety
25 company to determine the bond's current status.".
26 (14) Any representations made by the seller to the
27 purchaser concerning sales or earnings that may be made
28 from this business opportunity, including, but not
29 limited to:
30 (A) The bases or assumptions for any actual,
31 average, projected or forecasted sales, profits,
32 income or earnings;
33 (B) The total number of purchasers who, within
34 a period of 3 years of the date of the disclosure
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1 document, purchased a business opportunity involving
2 the product, equipment, supplies or services being
3 offered to the purchaser; and
4 (C) The total number of purchasers who, within
5 3 years of the date of the disclosure document,
6 purchased a business opportunity involving the
7 product, equipment, supplies or services being
8 offered to the purchaser who, to the seller's
9 knowledge, have actually received earnings in the
10 amount or range specified.
11 (15) Any seller who makes a guarantee to a
12 purchaser shall give a detailed description of the
13 elements of the guarantee. Such description shall
14 include, but shall not be limited to, the duration,
15 terms, scope, conditions and limitations of the
16 guarantee.
17 (16) A statement of:
18 (A) The total number of business opportunities
19 that are the same or similar in nature to those that
20 have been sold or organized by the seller;
21 (B) The names and addresses of purchasers who
22 have requested a refund or rescission from the
23 seller within the last 12 months and the number of
24 those who have received the refund or rescission;
25 and
26 (C) The total number of business opportunities
27 the seller intends to sell in this State within the
28 next 12 months.
29 (17) A statement describing any contractual
30 restrictions, prohibitions or limitations on the
31 purchaser's conduct. Attach a copy of all business
32 opportunity and other contracts or agreements proposed
33 for use or in use in this State including, without
34 limitation, all lease agreements, option agreements, and
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1 purchase agreements.
2 (18) The rights and obligations of the seller and
3 the purchaser regarding termination of the business
4 opportunity contract or agreement.
5 (19) A statement accurately describing the grounds
6 upon which the purchaser may initiate legal action to
7 terminate the business opportunity contract or agreement.
8 (20) A copy of the most recent audited financial
9 statement of the seller, prepared within 13 months of the
10 first offer in this State, together with a statement of
11 any material changes in the financial condition of the
12 seller from that date. The Secretary of State may accept
13 the filing of a reviewed financial statement in lieu of
14 an audited financial statement allow the seller to submit
15 a limited review in order to satisfy the requirements of
16 this subsection.
17 (21) A list of the states in which this business
18 opportunity is registered.
19 (22) A list of the states in which this disclosure
20 document is on file.
21 (23) A list of the states which have denied,
22 suspended or revoked the registration of this business
23 opportunity.
24 (24) A section entitled "Risk Factors" containing a
25 series of short concise statements summarizing the
26 principal factors which make this business opportunity a
27 high risk or one of a speculative nature. Each statement
28 shall include a cross-reference to the page on which
29 further information regarding that risk factor can be
30 found in the disclosure document.
31 (25) Any additional information as the Secretary of
32 State may require by rule, regulation, or order.
33 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
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1 (815 ILCS 602/5-60)
2 Sec. 5-60. Investigations and subpoenas.
3 (a) The Secretary of State:
4 (1) may make such public or private investigations
5 within or outside of this State as the Secretary of State
6 deems necessary to determine whether any person has
7 violated or is about to violate any provision of this Law
8 or any rule, regulation, or order under this Law, or to
9 aid in the enforcement of this Law or in the prescribing
10 of rules and forms under this Law;
11 (2) may require or permit any person to file a
12 statement, under oath or otherwise as the Secretary of
13 State determines, as to all the facts and circumstances
14 concerning the matter to be investigated; and
15 (3) may publish information concerning any
16 violation of this Law or any rule, regulation, or order
17 under this Law.
18 (b) For the purpose of any investigation or proceeding
19 under this Law, the Secretary of State or his or her designee
20 may administer oaths and affirmations, subpoena witnesses,
21 compel their attendance, take evidence and require, by
22 subpoena or other lawful means provided by this Act or the
23 rules adopted by the Secretary of State, the production of
24 any books, papers, correspondence, memoranda, agreements, or
25 other documents or records which the Secretary of State deems
26 relevant or material to the inquiry.
27 (c) In case of contumacy by, or refusal to obey a
28 subpoena issued to any person, through the Office of the
29 Attorney General may bring an appropriate action in any
30 circuit court of the State of Illinois for the purpose of
31 enforcing the subpoena.
32 (d) It shall be a violation of the provisions of this
33 Law for any person to fail to file with the Secretary of
34 State any report, document, or statement required to be filed
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1 under the provisions of this Section or to fail to comply
2 with the terms of any order of the Secretary of State issued
3 pursuant to this Law.
4 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
5 (815 ILCS 602/5-65)
6 Sec. 5-65. Remedies. Whenever it appears to the Secretary
7 of State that any person has engaged in or is about to engage
8 in any act or practice constituting a violation of any
9 provision of this Law or any rule, regulation, or order under
10 this Law, the Secretary of State may:
11 (1) Issue an order, anything contained in this Law
12 to the contrary notwithstanding, directing the person to
13 cease and desist from continuing the act or practice. Any
14 person named in a cease and desist order issued by the
15 Secretary of State may, within 30 days after the date of
16 the entry of the order, file a written request for a
17 hearing with the Secretary of State. If the Secretary of
18 State does not receive a written request for a hearing
19 within the time specified, the cease and desist order
20 will be permanent and the person named in the order will
21 be deemed to have waived all rights to a hearing. If a
22 hearing is requested, the order will remain in force
23 until it is modified, vacated, rescinded or expunged by
24 the Secretary of State.
25 (1.5) Prohibit or suspend the offer or sale of any
26 business opportunity, prohibit or suspend any person
27 from offering or selling any business opportunities,
28 impose any fine for violation of this Law, issue an order
29 of public censure, or enter into an agreed settlement or
30 stipulation. No such order may be entered without
31 appropriate prior notice to all interested parties,
32 opportunity for hearing, and written findings of fact and
33 conclusions of law.
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1 (2) Bring an action in the circuit court of any
2 county to enjoin the acts or practices and to enforce
3 compliance with this Law or any rule, regulation, or
4 order under this Law. Upon a proper showing a permanent
5 or temporary injunction, restraining order, or writ of
6 mandamus shall be granted and a receiver or conservator
7 may be appointed for the defendant or the defendant's
8 assets or the court may order rescission, which shall
9 include restitution plus the legal interest rate, for any
10 sales of business opportunities determined to be unlawful
11 under this Law or any rule, regulation, or order under
12 this Law. The court shall not require the Secretary of
13 State to post a bond.
14 (3) The Secretary of State may refer such evidence
15 as may be available concerning violations of this Law or
16 any rule, regulation, or order under this Law to the
17 Attorney General or the appropriate State's Attorney, who
18 may, with or without such a reference, institute the
19 appropriate proceedings under this Section.
20 (4) In addition to any other sanction or remedy
21 contained in this Section, the Secretary of State, after
22 finding that any provision of this Law has been violated,
23 may impose a fine as provided by rule or order against
24 the violator not to exceed $10,000 per violation, and
25 may issue an order of public censure against the
26 violator, and charge as costs of the investigation all
27 reasonable expenses, including attorney's fees and
28 witness fees.
29 (5) Notwithstanding the foregoing, the Secretary of
30 State, after notice and opportunity for hearing, may at
31 his or her discretion enter into an agreed settlement,
32 stipulation, or consent order with a respondent in
33 accordance with the provisions of the Illinois
34 Administrative Procedure Act. The provisions of the
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1 agreed settlement, stipulation, or consent order shall
2 have the full force and effect of an order issued by the
3 Secretary of State.
4 (6) The action of the Secretary of State in
5 denying, suspending, or revoking the registration of a
6 business opportunity, in prohibiting or suspending a
7 person from offering or selling business opportunities,
8 in prohibiting or suspending the offer or sale of
9 business opportunities, in imposing any fine for
10 violation of this Law, or in issuing any order shall be
11 subject to judicial review under the Administrative
12 Review Law which shall apply to and govern every action
13 for the judicial review of final actions or decisions of
14 the Secretary of State under this Law.
15 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
16 (815 ILCS 602/5-95)
17 Sec. 5-95. Fraudulent and prohibited practices.
18 (a) It is unlawful for any person, in connection with
19 the offer or sale of any business opportunity in this State
20 or any offer or sale pursuant to the exemptions granted under
21 subdivisions 5-10(a), (c), (d), or (h), directly or
22 indirectly:
23 (1) To employ any device, scheme or artifice to
24 defraud;
25 (2) To make any untrue statement of a material fact
26 or to omit to state a material fact necessary in order to
27 make the statements made, in the light of the
28 circumstances under which they are made, not misleading;
29 or
30 (3) To engage in any act, practice or course of
31 business which operates or would operate as a fraud or
32 deceit upon any person.
33 (b) No person shall, either directly or indirectly, do
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1 any of the following:
2 (1) offer or sell any business opportunity without
3 registration under this Act unless the person offering or
4 selling the opportunity is exempt under the Act;
5 (2) fail to file with the Secretary of State any
6 application, report, document, or answer required to be
7 filed under the provisions of this Act or any rule made
8 by the Secretary of State pursuant to this Act or fail to
9 comply with the terms of any order issued pursuant to
10 this Act or any rules adopted by the Secretary of State;
11 or
12 (3) fail to keep or maintain any records as is
13 required under the provisions of this Act or any rule
14 adopted by the Secretary of State pursuant to this Act.
15 (Source: P.A. 89-209, eff. 1-1-96; 90-70, eff. 7-8-97.)
16 (815 ILCS 602/5-145 new)
17 Sec. 5-145. Service of process.
18 (a) The offer or sale of business opportunities in this
19 State by any person, unless exempt from registration under
20 this Act, shall constitute an appointment of the Secretary of
21 State, or his or her successors in office, by the person to
22 be the true and lawful attorney for the person upon whom may
23 be served all lawful process in any action or proceeding
24 against the person, arising out of the offer or sale of the
25 securities.
26 (b) Service of process under this Section shall be made
27 by serving a copy upon the Secretary of State or any employee
28 in his or her office designated by the Secretary of State to
29 accept such service for him or her, provided notice and a
30 copy of the process are, within 10 days after receiving the
31 notice and process, sent by registered mail or certified
32 mail, return receipt requested, by the plaintiff to the
33 defendant, at the last known address of the defendant. The
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1 filing fee for service of process under this Section shall be
2 as established pursuant to Section 5-30 of this Act, and
3 shall not be returnable in any event. The Secretary of State
4 shall keep a record of all processes each of which shall show
5 the day of the service.
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1 INDEX
2 Statutes amended in order of appearance
3 815 ILCS 5/2.1 from Ch. 121 1/2, par. 137.2-1
4 815 ILCS 5/8 from Ch. 121 1/2, par. 137.8
5 815 ILCS 5/11 from Ch. 121 1/2, par. 137.11
6 815 ILCS 5/14 from Ch. 121 1/2, par. 137.14
7 815 ILCS 175/15-5.15
8 815 ILCS 175/15-5.20
9 815 ILCS 175/15-20
10 815 ILCS 175/15-25
11 815 ILCS 175/15-45
12 815 ILCS 175/15-50
13 815 ILCS 175/15-85
14 815 ILCS 175/15-95 new
15 815 ILCS 307/10-5.20
16 815 ILCS 307/10-20
17 815 ILCS 307/10-25
18 815 ILCS 307/10-40
19 815 ILCS 307/10-45
20 815 ILCS 307/10-50
21 815 ILCS 307/10-55
22 815 ILCS 307/10-85
23 815 ILCS 307/10-125 new
24 815 ILCS 602/5-5.05
25 815 ILCS 602/5-5.10
26 815 ILCS 602/5-5.15
27 815 ILCS 602/5-5.30
28 815 ILCS 602/5-20
29 815 ILCS 602/5-30
30 815 ILCS 602/5-35
31 815 ILCS 602/5-60
32 815 ILCS 602/5-65
33 815 ILCS 602/5-95
34 815 ILCS 602/5-145 new
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