Ariz. Admin. Code § 14-4-136

Current through Register Vol. 30, No. 25, June 21, 2024

Section R14-4-136 - Exempt Offerings Pursuant to Compensatory Arrangements

A. Offers and sales of securities that satisfy the requirements and provisions of rule 701 promulgated under the Securities Act of 1933, 17 CFR 230.701(1999), ("rule 701") and this Section shall be added to the class of transactions exempt under the provisions of A.R.S. § 44-1844. Rule 701 is incorporated by reference and on file with the Office of the Secretary of State. The incorporated material contains no later editions or amendments. Copies of rule 701 are available from the Commission and from the Superintendent of Document, Government Printing Office, Washington, D.C. 20402.

B. Except as provided in subsection (C), an exemption pursuant to this Section is not available for the securities of an issuer if the issuer or any of its predecessors, affiliates, directors, officers, general partners, or beneficial owners of 10% or more of any class of its equity securities:

1. Has been convicted of a misdemeanor or felony involving racketeering or a transaction in securities or of which fraud is an essential element.

2. Has been convicted within the 10 years before any issuance of securities under this Section, or at any time thereafter, of a misdemeanor involving racketeering or a transaction in securities or of which fraud or dishonesty is an essential element.

3. Is subject to an order, judgment, or decree of a court of competent jurisdiction entered within 10 years of the date of any issuance of securities under this Section enjoining or restraining it from engaging in or continuing any conduct or practice in connection with the sale or purchase of securities or involving fraud, deceit, racketeering, or consumer protection laws.

4. Has been subject to any state or federal administrative order or judgment in connection with the purchase or sale of securities entered within five years before any issuance of securities under this Section or at any time thereafter.

5. Is subject to an order of an administrative tribunal, self-regulatory organization, or the Securities and Exchange Commission denying, suspending, or revoking membership or registration as a broker or dealer in securities or as an investment adviser or investment adviser representative for a period of six months or more.

C. A disqualification under subsection (B) ceases to exist if any one of the following occurs.

1. The basis for the disqualification has been removed by the jurisdiction creating it.

2. The jurisdiction in which the disqualifying event occurred issues a written waiver of the disqualification.

3. The jurisdiction in which the disqualifying event occurred declines in writing to enforce the disqualification.

D. This Section provides an exemption from the registration requirements of the Arizona Securities Act for securities issued in compensatory circumstances. The Section is not available to any issuer for any transaction that, while in technical compliance with this Section, is part of a plan or scheme to circumvent this purpose.

Ariz. Admin. Code § R14-4-136

Adopted effective November 21, 1991 (Supp. 91-4). Amended effective June 27, 1994, under an exemption from the Attorney General certification requirements of the Arizona Administrative Procedure Act (Supp. 94-2). Section repealed; new Section adopted by final rulemaking at 6 A.A.R. 4665, effective November 22, 2000 (Supp. 00-4).