N.M. Code R. § 12.11.1.7

Current through Register Vol. 35, No. 11, June 11, 2024

Section 12.11.1.7 - DEFINITIONS

The definitions in this section apply throughout the New Mexico Uniform Securities Act and the rules in Title 12 Chapter 11 NMAC unless the context otherwise requires.

A. "Affiliate" means a person who directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another person.

B. "Bank" as defined in Section 58-13C-102 B(3) is limited to institutions whose deposits or share accounts are insured to the maximum amount authorized by statute by the federal deposit insurance corporation, the national credit union share insurance fund or a successor authorized by federal law.

C. "Branch office" means any location where one or more agents or investment adviser representatives regularly conducts the business of effecting or attempting to effect transactions in any security, or transacting investment advisory business, or is held out as such, excluding:

(1) any location that is established solely for customer service and/or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office;

(2) any location that is the agent's or investment adviser's primary residence, provided that:

(a) only one agent or investment adviser representative, or multiple such agents or representatives who reside at that location and are members of the same immediate family, conduct business at the location;

(b) the location is not held out to the public as an office and the associated person does not meet with customers at the location;

(c) neither customer funds nor securities are handled at that location;

(d) the agent or investment adviser representative is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements and other communications to the public by such agent or investment adviser representative;

(e) the agent's or investment adviser's correspondence and communications with the public are subject to the firm's supervision;

(f) electronic communications (e.g., e-mail) are made through the firm's electronic system;

(g) all orders are entered through the designated branch office or an electronic system established by the firm that is reviewable at the branch office;

(h) written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the firm; and

(i) a list of the residence locations is maintained by the firm;

(3) any location, other than a primary residence, that is used for securities business for less than 30 business days in any one calendar year, provided that such location complies with the provisions of Subparagraphs (a) through (h) of Paragraph (2) of this subsection;

(4) any office of convenience, where agents or investment adviser representatives occasionally and exclusively by appointment meet with customers, which is not held out to the public as an office; and

(5) a temporary location established in response to the implementation of a business continuity plan;

(6) notwithstanding the exclusions provided in Paragraphs (1) through (5) of this subsection, any location that is responsible for supervising the activities of persons associated with the member at one or more non-branch locations of the member is considered to be a branch office.

D. "Broker-dealer" as defined in Section 58-13C-102 C does not include:

(1) a pension or profit sharing trust, when effecting transactions for its own account; or

(2) an investment adviser registered under the New Mexico Uniform Securities Act or registered under the Investment Advisers Act of 1940 when placing orders for the accounts of its clients in accordance with rules prescribed by the director, provided that no commission or other remuneration is received by the investment adviser for placing orders.

E. "Control person" means an officer, director, managing partner or trustee, manager of a limited liability company or person of similar status or function or any security holder who owns beneficially or of record ten percent or more of any class of securities of an issuer.

F. "CRD" means the internet-based central registration depository that is the central licensing and registration system for broker-dealers, agents and regulators in the United States.

G. "FDIC" means the federal deposit insurance corporation of the United States.

H. "FINRA" means the financial industry self-regulatory organization created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York stock exchange. As the successor to NASD, FINRA is the entity designated as the filing depository by the SEC for purposes of the Investment Advisers Act of 1940, 15 U.S.C section 80b-1 et seq.

I. "Institutional investor" as defined Section 58-13C-102 L includes but is not limited to:

(1) an entity, other than a natural person, which is directly engaged in the business of, and derives at least eighty percent of its annual gross income from, investing, purchasing, selling or trading in securities of more than one issuer and not of its own issue, and that has gross assets in excess of $10,000,000 at the end of its latest fiscal year;

(2) a state, a political subdivision of a state or an agency or corporate or other instrumentality of a state or a political subdivision of a state; or

(3) a federally recognized Indian tribe or pueblo that has total assets in excess of $10,000,000 and that has obtained certification from the division that it is an institutional investor.

J. "IARD" means the internet-electronic filing system for registration and disclosures by investment advisers and their associated persons developed and operated by FINRA according to the requirements of the system's sponsors, the SEC and NASAA.

K. "Investment contract" as used in Section 58-13C-102 DD includes any investment by which an offeree furnishes initial value to an offeror, and a portion of this initial value is subjected to the risks of the enterprise, and the furnishing of the initial value is induced by the offeror's promises or representations which give rise to a reasonable understanding that a valuable benefit of some kind over and above the initial value will accrue to the offeree as a result of the operation of the enterprise, and the offeree does not receive the right to exercise practical and actual control over the managerial decisions of the enterprise.

L. "NASAA" means the North American securities administrators association, www.nasaa.org. whose membership is comprised of securities administrators in the 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, Canada, and Mexico, and whose activities include among others development of model rules and uniform forms for use by state regulatory agencies.

M. "NASD" was a self-regulatory organization commonly known as the national association of securities dealers responsible for the operation and regulation of the Nasdaq stock market and over-the-counter markets and consolidated into FINRA in July 2007.

N. An "offer" is made within the meaning of Subsection O of Section 58-13C-202, so far as the securities holders of an issuer are concerned, if there is submitted to the vote of the securities holders a proposal, plan or agreement for:

(1) a reclassification of securities of such issuer which involves the substitution or exchange of a security for another security;

(2) a statutory merger or consolidation in which securities of the issuer will become or be exchanged for securities of another issuer;

(3) a transfer of assets of the issuer to another person in consideration of the issuance of securities of the other person or any of its affiliates; or

(4) a sale of securities of the issuer to another person in consideration of the issuance or transfer to such issuer of securities of the other person or any of its affiliates.

O. "Pledgee" within the meaning of Section 58-13C-202 G of the New Mexico Uniform Securities Act includes a "secured party" as that term is defined in Section 55-9-102(a)(71) NMSA 1978.

P. "SEC" means the securities and exchange commission of the United States.

N.M. Code R. § 12.11.1.7

12.11.1.7 NMAC - Rp, 12.11.1.7 NMAC, 1-1-2010