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Karen Tyler

Commissioner
ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Issuer-Dealer and Agents

Stock certificate

Issuer-Dealer Registration (Issuers selling their own securities and not registered with FINRA) and Agents associated with the Issuer

  1. Application for Registration as a Dealer (North Dakota Form S-4) completed.
  2. Articles of Incorporation, By-laws, or Partnership Agreement.
  3. Consent to Service of Process (Form U-2).
  4. Corporate Resolution (Form U-2A).
  5. Affidavit of Issuer-Dealer Activity in North Dakota
  6. Not more than two officers or managers of an issuer may be registered as an agent without being required to pass a written examination.  The (Form S-5) is be filed for the registration of each agent..
  7. Fees.  The fee, which must accompany the application, for registration and for each annual renewal is:
    1. For each dealer          $200.00
    2. For each agent           $  60.00
      Checks are to be made payable to the North Dakota Securities Department.
  8. NORTH DAKOTA DOES NOT REQUIRE THE SUBMISSION OF ANNUAL AUDITED FINANCIAL STATEMENTS.
  9. The registration for each dealer and agent will expire on December 31st of each year.  The renewal process consists of submitting Form S-6 (Issuer Dealer Renewal Application) and the fee.

 

Regulatory Notice for Issuers of Securities

Issuer-Dealer Registration Requirements for Issuers Not  Utilizing a Registered Broker-Dealer for the Offer and Sale of its Own Securities and that are not Exempt Transactions under N.D.C.C. § 10-04-06

            Many states have adopted some form of the Uniform Securities Act of 2002 definition of “Broker-dealer” which in Section 102(4)(B) specifically excludes “an issuer” from the definition.  In those states there is no issuer-dealer registration requirement.

            North Dakota is among a number of states that have not adopted this exclusion from the definition of “broker-dealer” or “dealer” in their respective statutes and requires issuers to comply with dealer registration requirements when making sales of its own securities in non-exempt transactions.  N.D.C.C. § 10-04-10(1). 

            Examples of issuer transactions that do not require Issuer-Dealer registration in North Dakota are those exempt transactions set forth in N.D.C.C. § 10-04-06, some of which are self-executing and some of which require a filing with the Department, and issuers utilizing Regulation D, Rule 506 and meeting the requirements of N.D.C.C. § 10-04-08.4(2).  There is not currently a state Issuer-Dealer registration exemption for issuers of securities not utilizing a registered broker-dealer for the offer and sale of its own securities under Tier 2 of Regulation A.

Federal Law Does Not Preempt North Dakota Law Requiring Issuer-Dealer Registration

            Generally speaking, the Securities Act of 1933, 15 U.S.C. § 77a et seq., (the “1933 Act”) deals with the federal registration of securities while the Securities and Exchange Act of 1934, 15 U.S.C. § 78a et seq., (the “1934 Act”) deals with the federal registration of securities firms and industry professionals engaged in the sale of securities.  The National Securities Markets Improvement Act of 1996, 15 U.S.C. § 77r, (NSMIA), amended the 1933 Act and only limits state’s securities registration requirements.  It does not address the registration of securities industry professionals under the 1934 Act and only preempts state law concerning the registration of “federal covered securities,” not the registration of issuers or their agents.  The North Dakota Securities Act, N.D.C.C. Chapter 10-04, was amended after NSMIA’s passage by Congress to reflect that federally covered securities were excluded from N.D.C.C. § 10-04-04 registration requirements.  The general issuer-dealer and issuer-agent registration requirements under N.D.C.C. § 10-04-10 were not eliminated for issuers of federal covered securities although the exemption found at N.D.C.C. § 10-04-10(2)(c) was added, as were the current requirements for the sale of Reg D, Rule 506 securities in North Dakota found at  N.D.C.C. § 10-04-08.4(2), which provides:

 

            “2. Any federal covered security that is subject to section 18(b)(4)(D) of the Securities Act of 1933, as amended, may be offered and sold under the following conditions:

 

a. A notice of intent is filed in writing or electronically on SEC form D or other

prescribed form with a consent to service of process and a nonrefundable filing

fee of one hundred dollars within fifteen calendar days after the first sale in this

state.

 

b. A copy of any document filed with the securities and exchange commission is

provided, as the commissioner may require.

 

c. The notice filing is effective for a period of one year from the date the filing is

received by the commissioner.

 

d. The filing fee shall be two hundred fifty dollars in the event the filing is not made within the time period specified in subdivision a.

 

No security may be offered or sold under this subsection, except through or by a

broker-dealer and agent registered in accordance with section 10-04-10, unless it is

offered and sold through an officer, director, governor, or partner of the issuer and

no commission or other remuneration is paid, either directly or indirectly.”

 

            Unless the issuer and its officer/employee/agent qualify for an exemption from registration, North Dakota law requires registration of such persons as issuer-dealers and agents of the issuer,  (See, Issuer-Dealer Registration Form S-4 (SFN 51526) and Issuer-Agent Registration Form S-5 (SFN 51529)) .  NSMIA does not limit the ability of states to regulate the salespersons through whom securities offerings are made.  The federal government and the states have concurrent jurisdiction in this area.  Registration or licensing requirements for securities salespersons are intended to protect the public from wrongdoing.  It is perfectly appropriate to require the registration of dealers and agents, “even if the securities or underlying transactions are exempt.”  People v. Milne, 690 P.2d 829, 835 (Colo. 1984); State ex rel. Holloway v. First Am. Bank & Trust Co., 186 N.W.2d 573, 580 (N.D. 1971).  “NSMIA regulates the registration of securities and preempts state securities laws that require the registration of “covered securities.” NSMIA does not preempt state laws that require registration of individuals involved in the sale of securities.”  State v. Hager, 2010 ND 217 ¶14, 790 N.W.2d 745.

Related Items

Century Code

N.D.C.C. 10-04 - Securities Act

The North Dakota Securities Department administers and enforces the North Dakota Securities Act, N.D.C.C. Chapter 10-04, by registering securities; reviewing exemptions; issuing no-action letters and interpretive opinions; and licensing broker-dealers and their agents, and investment advisers and their representatives.  The Securities Department investigates complaints alleging violations of the Securities Act and rules and if violations are found, the Securities Commissioner may bring an administrative or civil action or make a referral for criminal prosecution.

Forms