§702.  Definitions and rules of construction


As used in this Part, the term:

(1)  "Affiliate" or "person affiliated with" means, when used with reference to a specified person, a person who directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with the person specified.  Any beneficial owner of twenty percent or more of the combined voting power of all classes of voting securities of a person or any executive officer, director, trustee, or general partner of a person is an affiliate of such person unless the shareholder, executive officer, director, trustee, or general partner shall prove that he in fact does not control, is not controlled by, and is not under common control with such person.

(2)  "Beneficial owner" means, with regard to any securities, any person who owns such securities or who enjoys benefits substantially equivalent to ownership.  A person's beneficial ownership of securities shall be deemed to include, but shall not be limited to, any securities owned by:

(a)  His spouse.

(b)  His minor children.

(c)  Any revocable trust of which he is a settlor.

(d)  Any trust of which he, his spouse, and his minor children have an aggregate vested beneficial interest of twenty percent or more in the income or the corpus.

(e)  Any partnership in which he is a general partner.

(f)  Any corporation of which he is the beneficial owner of twenty percent or more of the outstanding voting securities or of which he is an executive officer if the corporation has no substantial business other than investment in securities.

(g)  Any ancestor, sibling, or lineal descendant of his who resides in his home.

(3)  "Commissioner" means the commissioner of financial institutions who is also the commissioner of securities.

(4)  "Control", including "controlling", "controlled by", and "under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(5)(a)  "Dealer" means every person, other than a salesman registered under this Part, who engages, either for all or part of his time, directly or indirectly, as agent, broker, or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person but does not include:

(i)  A bank chartered and issued a certificate of authority by the state of Louisiana and under the supervision of the commissioner of financial institutions, a national bank chartered by the government of the United States and under the supervision of the Comptroller of the Currency of the United States, a bank holding company organized under the laws of the state of Louisiana and under the supervision of the Board of Governors of the Federal Reserve, or the employees of such banks or bank holding companies acting in their official capacity.

(ii)  Any person insofar as such person buys or sells securities for his own account, either individually or in some fiduciary capacity, other than as a part of a regular business.

(iii)  Any general partner, managing member, or executive officer of any general partner or managing member, of an issuer or executive officer of an issuer offering or selling securities of such issuer unless he is paid a commission directly related to the sale of such securities.

(b)  The commissioner may, by rule or regulation, for purposes not inconsistent with the protection of investors, limit, condition, or expand the group of persons associated with an "issuer" for purposes of the provisions of this Paragraph.

(6)  "Executive officer" means the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

(6.1)  "Federal covered adviser" means a person who is registered under Section 203 of the Investment Advisers Act of 1940.

(6.2)  "Federal covered security" means any security that is a covered security under Section 18(b) of the Securities Act of 1933 or rules promulgated thereunder.

(7)  "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities.  "Investment adviser" does not include:

(a)  A bank, savings institution, or trust company.

(b)  A lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his or her profession.

(c)  A broker whose performance of these services is solely incidental to the conduct of his or her business as a broker and who receives no special compensation for them.

(d)  A publisher of any bona fide newspaper, news magazine, or business or financial publication of general, regular, and paid circulation.

(e)  A person whose advice, analyses, or reports relate only to securities exempted by R.S. 51:708(1).

(f)  A person whose only clients in this state are other investment advisers, dealers, banks, savings institutions, trust companies, insurance companies, investment companies, pension or profit sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees, or who, during any period of twelve consecutive months, has had fewer than fifteen clients in this state and who does not hold himself or herself out generally to the public as an investment adviser.

(g)  Such other persons not within the intent of this Paragraph as the commissioner may by rule or order designate.

(7.1)  "Investment adviser representative" means any partner, officer, director, or a person occupying a similar status or performing similar functions, or other individual, except clerical or ministerial personnel, who is employed by or associated with an investment adviser that is registered or required to be registered under this Part, and who does any of the following:

(a)  Makes any recommendations or otherwise renders advice regarding securities.

(b)  Manages accounts or portfolios of clients.

(c)  Determines which recommendation or advice regarding securities should be given.

(d)  Solicits, offers or negotiates for the sale or sells investment advisory services.

(e)  Supervises employees who perform any of the foregoing.

(8)  "Issuer" means every person who issues or proposes to issue any security, except that with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or in an unincorporated investment trust of the fixed, restricted management, or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued, except that:

(a)  In the case of an unincorporated association which provides by its articles for limited liability of any or all of its members or in the case of a trust, committee, or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity.

(b)  With respect to equipment-trust certificates or like securities, the term "issuer" means the person by whom the equipment or property is or is to be used.

(c)  With respect to fractional undivided interests in oil, gas, or other mineral rights, the term "issuer" means the owner of any such right or of any interest in such right, whether whole or fractional, who creates fractional interests therein for the purpose of public offering.

(9)  "Majority owned subsidiary" means a subsidiary more than fifty percent of whose outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors is owned by the subsidiary's parent, by one or more of the parent's other majority owned subsidiaries, or by the subsidiary's parent and one or more of the parent's other majority-owned subsidiaries.

(10)  "Parent", when used with reference to a specified person, means an affiliate controlling such person directly, or indirectly through one or more intermediaries.

(11)  "Person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interest of the beneficiaries is evidenced by a security, or any unincorporated organization.

(12)  "Prospectus" means any notice, circular, advertisement, sales literature, letter, offering circular, offering sheet, or communication, written or by radio or television, which offers any security for sale or which is used in connection with any such offer or which confirms the sale of any security, except that:

(a)  A confirmation of the sale of a security which is sent or given after the effective date of the registration statement shall not be deemed a prospectus if it is proved that prior to or at the same time with such confirmation a written prospectus, meeting the requirements of R.S. 51:705(B)(3), (E)(3), or (F)(4) as appropriate to form of registration under this Part, at the time of such confirmation, was sent or given to the person to whom the confirmation was sent or given.

(b)  A notice, circular, advertisement, sales literature, letter, or communication in respect of a security, shall not be deemed to be a prospectus if it states from whom a written prospectus meeting the requirements of R.S. 51:705(B)(3), (E)(3), or (F)(4) may be obtained and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed, and such other information as the commissioner, by rules or regulations, deems necessary or appropriate in the public interest and for the protection of investors, and subject to such terms and conditions as may be prescribed therein, may permit.

(13)  "Sale" or "sell" means and shall include every contract of sale or disposition of a security or interest in a security for value.  The term "offer to sell", "offer for sale", or "offer" shall include every attempt or offer to dispose of or solicitation of an offer to buy a security or interest in a security for value.  The terms defined in this Paragraph shall not include preliminary negotiations or agreements between an issuer or any person on whose behalf an offering is to be made and any underwriter or among underwriters who are or are to be in privity of contract with an issuer or any person on whose behalf an offering is to be made.  Any security given or delivered with or as a bonus on account of any purchase of securities or any other thing shall be conclusively presumed to constitute a part of the subject of such purchase and to have been offered and sold for value.  The issue or transfer of a right or privilege, when originally issued or transferred with a security, giving the holder of such security the right to convert such security into another security of the same issuer or of another person, or giving a right to subscribe to another security of the same issuer or of another person, which right cannot be exercised until some future date, shall not be deemed to be an offer or sale of such other security, but the issue or transfer of such other security upon the exercise of such right of conversion or subscription shall be deemed a sale of such other security.

(14)  "Salesman" means an individual, other than a dealer registered under this Part, employed, appointed, or authorized by a dealer or by an issuer, to sell securities in this state, but does not include any person specified in R.S. 51:702(5)(a)(i) or (a)(iii).

(15)(a)  "Security" means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral-trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting-trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof); or, in general, any interest or instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

(15)(b)  "Security" shall not mean:

(i)  Any insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed number of dollars either in a lump sum or periodically for life or some other specified period nor any variable annuity contract as provided for and regulated under Title 22 of the Louisiana Revised Statutes of 1950 and issued by a life insurance company licensed to do business in the state of Louisiana.

(ii)  Currency, or any note, draft, bill of exchange, loan participation or bankers acceptance, or any other evidence of indebtedness issued by a bank other than the shares of such institutions as defined in R.S. 6:251 et seq. for state banks and the preferred and common stock of national banks as defined in 12 U.S.C.A. Sections 51(a) and 51(c).

(iii)  Any right, interest, or instrument or class or type of right, interest, or instrument which the commissioner, by rule or regulation adopted pursuant to R.S. 51:710(D) of this Part, excludes from the definition set forth in this Paragraph.

(16)  "Securities of the same class" means:

(a)  All common stock of an issuer, regardless of varying series or designations, and all securities convertible into common stock or conferring the right to acquire common stock.

(b)  All preferred stock of an issuer, regardless of varying preferences, series, or designations, and all securities convertible into preferred stock or conferring the right to acquire preferred stock.

(17)  "Significant subsidiary" means a subsidiary meeting any one of the following conditions:

(a)  The assets of the subsidiary or the investments in and advances to the subsidiary by its parent and the parent's other subsidiaries, if any, exceed ten percent of the assets of the parent and its subsidiaries on a consolidated basis.

(b)  The sales and operating revenues of the subsidiary exceed ten percent of the sales and operating revenues of its parent and the parent's subsidiaries on a consolidated basis.

(c)  The subsidiary is the parent of one or more subsidiaries and, together with such subsidiaries, would, if considered in the aggregate, constitute a significant subsidiary.

(18)  "State" means any state (or a designated state), territory, or possession of the United States, the District of Columbia, Puerto Rico and the Virgin Islands.

(19)  "Subsidiary", when used with reference to a specified person, means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.

(20)  "Underwriter" means any person who has purchased from an issuer or an affiliate of an issuer with a view to the distribution or offers or sells for an issuer or an affiliate of an issuer in connection with the distribution of any security or participates or has a direct or indirect participation in any such undertaking or participates or has a participation in the direct or indirect underwriting of any such undertaking, provided that:

(a)  A person shall be presumed not to be an underwriter with respect to any securities which he has owned beneficially for at least one year.

(b)  Such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission.

(c)  In the case of securities acquired on the conversion of another security without payment of additional consideration, the length of time such securities have been beneficially owned by a person shall include the period during which the convertible security was beneficially owned and the period during which the security acquired on conversion has been beneficially owned.

Acts 1985, No. 722, §1; Acts 1988, No. 199, §1; Acts 1989, No. 30, §1, eff. June 15, 1989; Acts 2006, No. 541, §1, eff. June 22, 2006.