Notice Of Proposed Revisions To The Rules And Regulations Pursuant To The Delaware Securities Act
608 Registration Exemption for Certain Canadian Broker - Dealers
In compliance with the State’s Administrative Procedures Act (APA-Title 29, Chapter 101 of the Delaware Code) and section 7325(b) of Title 6 of the Delaware COde, the Division of Securities of the Delaware Department of Justice hereby publishes notice of proposed revisions to the Rules and Regulations Pursuant to the Delaware Securities Act. The Division proposes hereby to amend sections 600, 601, 608, and 700 of the Rules and Regulations Pursuant to the Delaware Securities Act and to add a new section 610.
Persons wishing to comment on the proposed regulations may submit their comments in writing to:
James B. Ropp
Securities Commissioner
Department of Justice
State Office Building, 5th Floor
820 N. French Street
Wilmington, DE 19801
The comment period on the proposed regulations will be held open for a period of thirty days from the date of the publication of this notice in the Delaware Register of Regulations.
SUMMARY OF THE PROPOSED REVISIONS
1. Canadian Broker-Dealer Exemption:
The Securities Division proposes to revise the Canadian broker-dealer registration exemption set forth at section 608 of the Rules and Regulations Pursuant to the Delaware Securities Act to extend to Canadian broker-dealer agents the benefit of the exemption. The proposed revision is consistent with the model regulation as drafted by the North American Securities Administrators Association (“NASAA”). These revisions are being proposed to correct what appears to have been an inadvertent oversight when the exemption was originally promulgated.
2. Registration Requirements for Sole Proprietorships:
The Securities Division proposes to revise the registration requirements for broker-dealers and investment advisors to clarify that a person conducting a brokerage or investment advisory business as a sole proprietor need not register an agent or representative with the Securities Commissioner.
PROPOSED REVISIONS
Part F . Broker-Dealers, Broker-Dealer Agents, and Issuer Agents
608 Registration Exemption for Certain Canadian Broker-Dealers
(a) A Canadian broker-dealer which meets the conditions of this rule as set forth below shall be exempt from the registration requirement of Section 7313 of the Act.
(b) To be eligible for this exemption, the broker-dealer must be resident in Canada, have no office or other physical presence in Delaware, and comply with the following conditions:
(1) Only effects or attempts to effect transactions in securities with, or for, one or more of the following;
(i) A person from Canada who is temporarily present in Delaware, with whom the Canadian broker-dealer had a bona fide business-client relationship before the person entered Delaware;
(ii) A person from Canada who is present in Delaware, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor; or
(iii) A "U.S. institutional investor" or a "major U.S. institutional investor" to the extent permitted by SEC Reg. §240.15a-6 (17 CFR §240.15a-6)As otherwise permitted by the act; and
(2) Is registered in its home province or territory, and a member in good standing of a self-regulatory organization or stock exchange in Canada;
(3) Files with the Securities Commissioner a notice in the form of the current application required by the jurisdiction in which its head office is located;
(4) Files with the Securities Commissioner a consent to service of process in a form which complies with the requirements of Section 7327 of the Act.
(5) Discloses to its clients in Delaware that it is not subject to the full regulatory requirements of the Act; and
(6) Is not in violation of Sections 7303 or 7316 of the Act or any rules promulgated thereunder.
(c) Exempt transactions. Offers or sales of any security effected by a broker-dealer who is exempt from registration under this Regulation are exempt from the registration requirements of Section 7304 of the Act and the filing requirements of Section 7312 of the Act.
(d) Agent exemption: An agent who represents a Canadian broker-dealer who is exempt from registration under this Regulation is also exempt from the registration requirement of Section 7313 of the Act, provided such agent maintains his or her provincial or territorial registration in good standing.
(e) Denial, Suspension or Revocation. The Commissioner may by order deny, suspend, or revoke the exemption of a particular Canadian broker-dealer provided pursuant to Rule 608 if he finds that the order is in the public interest and that the Canadian broker-dealer (or any partner, officer, director, or any person occupying a similar status or performing similar functions, or any person directly or indirectly, controlling the broker-dealker) has done anything prohibited by Section 7316(a)(1) to (8),(12) or (13).