Synopsis:
This bill, named the “Delaware Investor Protection Act,” re-organizes the provisions of the Delaware Securities Act (6 Del. C., Ch. 73) into seven subchapters and makes the following substantive amendments to the Act:
(1) The definition of the word “security” is amended to make clear that a viatical settlement contract is a security under the Act.
(2) The definition of the word “security” is amended to make clear that an annuity contract is a security under the Act.
(3) The definition of the word “security” is amended to make clear that an advance fee agreement is a security under the Act.
(4) A definition of the term “viatical settlement contract” is added to the Act.
(5) The anti-fraud provision under the Act is amended to make clear that (a) where scienter is an element of the offense, reckless conduct will satisfy the scienter requirement; and (b) in a government enforcement action brought under the anti-fraud provision, the government need not prove loss, proximate cause, or reliance in order to establish a violation of any part of the provision, nor scienter to establish that a violation has occurred through the making of a materially false statement or omission.
(6) The permissible range for filing fees payable for securities registrations and notice filings is amended to establish a minimum payment of $500.00 and a maximum payment of $1,500.00.
(7) The statutory registration exemption for any investment contract issued in connection with an employee’s stock purchase, savings, pension, profit-sharing or similar benefit plan is amended to eliminate the requirement that the Commissioner be notified in writing of the offering of any such security.
(8) A securities registration exemption for viatical settlement contracts is added to the Act.
(9) The Act is amended to make it unlawful for persons registered under the Act (or persons who are required to be registered under the Act) to make false or misleading filings with the Commissioner, to engage in any dishonest or unethical conduct, or to fail reasonably to supervise persons for whom he or she has supervisory responsibilities.
(10) The Act is amended to strike a provision that provides for automatic registration of the partners, officers, and directors of a broker-dealer or investment adviser.
(11) The Act is amended to increase the registration fees for broker-dealers, broker-dealer agents, investment advisers, investment adviser representatives, and issuer agents.
(12) The Act is amended to increase the notice filing fee for federal covered advisers.
(13) The Act is amended to clarify that the Attorney General may delegate to an administrative hearing officer the authority to preside in any administrative proceeding under the Act.
(14) The statute of limitations in the Act is amended to provide an extension of the existing 5-year statute of limitations for two additional years in the event of fraudulent concealment, but in no event will the applicable statute of limitations be extended for more than 3 years beyond the 5-year period.
(15) The Act is amended to increase the fine that may be imposed for a failure reasonably to supervise an agent or employee.
(16) The Act is amended to increase the fine that may be imposed for a violation of the Act involving a continuous course of conduct.
(17) The Act is amended to create enhanced criminal penalties for persons who commit violations of the Act that injure elderly, infirm or disabled persons.
(18) The Act is amended to create a right to rescind a viatical settlement contract for a limited period of time following the occurrence of the viatical settlement contract transaction. This right of rescission does not apply to institutional buyers or accredited investors.
(19) The Act is amended to create a mechanism by which an administrative order of the Commissioner can be filed with and given the full force and effect of a judgment of the Superior Court for the State of Delaware.
(20) The Act is amended to enhance funding for the Investor Protection Fund.
(21) The Act is amended to make aiding and abetting conduct a violation of the Act.
(22) The Act is amended to update statutory references and make minor technical corrections.
(1) The definition of the word “security” is amended to make clear that a viatical settlement contract is a security under the Act.
(2) The definition of the word “security” is amended to make clear that an annuity contract is a security under the Act.
(3) The definition of the word “security” is amended to make clear that an advance fee agreement is a security under the Act.
(4) A definition of the term “viatical settlement contract” is added to the Act.
(5) The anti-fraud provision under the Act is amended to make clear that (a) where scienter is an element of the offense, reckless conduct will satisfy the scienter requirement; and (b) in a government enforcement action brought under the anti-fraud provision, the government need not prove loss, proximate cause, or reliance in order to establish a violation of any part of the provision, nor scienter to establish that a violation has occurred through the making of a materially false statement or omission.
(6) The permissible range for filing fees payable for securities registrations and notice filings is amended to establish a minimum payment of $500.00 and a maximum payment of $1,500.00.
(7) The statutory registration exemption for any investment contract issued in connection with an employee’s stock purchase, savings, pension, profit-sharing or similar benefit plan is amended to eliminate the requirement that the Commissioner be notified in writing of the offering of any such security.
(8) A securities registration exemption for viatical settlement contracts is added to the Act.
(9) The Act is amended to make it unlawful for persons registered under the Act (or persons who are required to be registered under the Act) to make false or misleading filings with the Commissioner, to engage in any dishonest or unethical conduct, or to fail reasonably to supervise persons for whom he or she has supervisory responsibilities.
(10) The Act is amended to strike a provision that provides for automatic registration of the partners, officers, and directors of a broker-dealer or investment adviser.
(11) The Act is amended to increase the registration fees for broker-dealers, broker-dealer agents, investment advisers, investment adviser representatives, and issuer agents.
(12) The Act is amended to increase the notice filing fee for federal covered advisers.
(13) The Act is amended to clarify that the Attorney General may delegate to an administrative hearing officer the authority to preside in any administrative proceeding under the Act.
(14) The statute of limitations in the Act is amended to provide an extension of the existing 5-year statute of limitations for two additional years in the event of fraudulent concealment, but in no event will the applicable statute of limitations be extended for more than 3 years beyond the 5-year period.
(15) The Act is amended to increase the fine that may be imposed for a failure reasonably to supervise an agent or employee.
(16) The Act is amended to increase the fine that may be imposed for a violation of the Act involving a continuous course of conduct.
(17) The Act is amended to create enhanced criminal penalties for persons who commit violations of the Act that injure elderly, infirm or disabled persons.
(18) The Act is amended to create a right to rescind a viatical settlement contract for a limited period of time following the occurrence of the viatical settlement contract transaction. This right of rescission does not apply to institutional buyers or accredited investors.
(19) The Act is amended to create a mechanism by which an administrative order of the Commissioner can be filed with and given the full force and effect of a judgment of the Superior Court for the State of Delaware.
(20) The Act is amended to enhance funding for the Investor Protection Fund.
(21) The Act is amended to make aiding and abetting conduct a violation of the Act.
(22) The Act is amended to update statutory references and make minor technical corrections.
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