Amended in Senate April 1, 2013

Senate Bill No. 538

Introduced by Senator Hill

February 22, 2013

begin delete An act to amend Sections 31101, 31107, 31109.1, 31114 and 31119 of the Corporations Code, relating to franchises. end delete begin insert An act to amend Sections 25102.1, 25165, 25252, 25254, 25401, 25530, 25532, 25608, 25608.1, 29542, and 29545 of the Corporations Code, relating to securities. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 538, as amended, Hill. begin delete Franchises. end delete begin insert The Corporate Securities Law of 1968. end insert

begin insert

(1) The Corporate Securities Law of 1968 provides for the regulation of the issuance of corporate securities. The law requires an offer or sale of a security that is exempt from registration under the federal Securities Act of 1933 to meet specified requirements, including filing a notice with the Commissioner of Corporations. Commencing on July 1, 2013, various duties of the Commission of Corporations under this law are transferred to the Commissioner of Business Oversight.

end insert begin insert

This bill would modify references to that federal law.

end insert begin insert

(2) The Corporate Securities Law of 1968 authorizes the commissioner, after appropriate notice and opportunity for hearing, to levy administrative penalties, as specified.

end insert begin insert

This bill would authorize, after exhaustion of administrative remedies, the commissioner to apply to the appropriate superior court for a civil judgment of the imposed penalties.

end insert begin insert

(3) Existing law makes it unlawful for a person to offer or sell a security by means of making an untrue statement of a material fact or omitting to state a material fact necessary to make the statements not misleading, as specified.

end insert begin insert

This bill would recast this provision and expand the basis for unlawful activity, as specified. By expanding the scope of a crime, this bill would impose a state-mandated program.

end insert begin insert

(4) The Corporate Securities Law of 1968 authorizes the commission to order a person to refrain from violating certain of its provisions, and provides a person so ordered one year to seek an administrative hearing.

end insert begin insert

This bill would reduce the period in which an individual may seek a hearing to 30 days, and authorize the commissioner to order a person to refrain from violating a rule or order adopted under the Corporate Securities Law of 1968, and to seek ancillary relief, including, but not limited to a claim for restitution before an administrative law judge. This bill would also allow the commission to file an order for relief with the superior court to enforce a final order from an administrative proceeding that would have the same effect as a judgment of the superior court.

end insert begin insert

(5) Existing law prohibits a person from, on behalf of a licensed broker-dealer or on behalf of an issuer, to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security unless the broker-dealer and agent have complied with rules of the commissioner for the qualification and employment of those agents. Existing law prohibits a person from, on behalf of a certified investment adviser, offering or negotiating for the sale of investment advisory services of the investment adviser unless the investment adviser and person have complied with rules of the commissioner for the qualification and employment of those persons. Existing law requires the commissioner to impose a fee of $25 for the filing of a notice or report required by these rules.

end insert begin insert

This bill would authorize the commissioner to impose a fee of $35 to keep a notice or report required under these provisions in effect for the following year.

end insert begin insert

(6) This bill would also make Legislature findings and declarations.

end insert begin insert

(7) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

The Franchise Investment Law generally provides for the regulation of the offer and sale of franchises. The law requires specific written disclosures, including, but not limited to, an offering circular, and authorizes the sale of a franchise to be exempt from specified requirements if the franchisor meets certain disclosure and notice requirements.

end delete begin delete

This bill, for that exemption to apply, would modify the requirement that certain written disclosures be made by a franchisor at least 10 business days prior to the sale or material modification of a franchise and instead require those disclosures to be made at least 14 days prior to the sale or modification. The bill also would replace the term for a written document called an “offering circular” with the term “franchise disclosure document.”

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert The Legislature finds and declares all of the
following: end insert

begin insert

(a) Regular, periodic regulatory examinations of broker-dealers
and investment advisers is critical to the protection of consumers,
many of whom rely on broker-dealers and investment advisers for
help in managing investments and in making sound financial
decisions.

end insert begin insert

(b) The Department of Corporations lacks license fee revenue
sufficient to perform regular, periodic regulatory examinations of
broker-dealers and investment advisers at a frequency that would
ensure high levels of consumer protection.

end insert begin insert

(c) It is the intent of the Legislature that revenue raised through
amendments made by this bill to Corporations Code Sections
25608 and 25608.1 be used to perform regular, periodic regulatory
examinations of broker-dealer agency and investment adviser
representatives at least once every four years, or more often, if
deemed necessary for the protection of the public by the
Commissioner of Corporations.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 25102.1 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25102.1.  

The following transactions are not subject to Sections
25110, 25120, and 25130:

(a) Any offer or sale of a security to a “qualified purchaser” as
that term is defined by rule of the Securities and Exchange
Commission pursuant to Section 18(b)(3) of the Securities Act of
1933 (15 U.S.C. 77r), if all of the following requirements are met:

(1) A notice is filed with the commissioner prior to an offer in
this state, along with any documents filed with the Securities and
Exchange Commission in annual or periodic reports that the
commissioner by rule or order deems appropriate.

(2) A consent to service of process under Section 25165 is filed
with the notice required by paragraph (1).

(3) Payment of a notice filing fee provided for in subdivision
(b) of Section 25608.1.

(b) Any offer and sale of a security with respect to a transaction
that is exempt from registration under Section 4(4) of the Securities
Act of 1933 pursuant to Section 18 (b) (4) (B) of that act.

(c) Any offer or sale of a security with respect to a transaction
that is exempt from registration under the Securities Act of 1933
pursuant to Section 18(b)(4)(C) of that act.

(d) Any offer or sale of a security with respect to a transaction
that is exempt from registration under the Securities Act of 1933
pursuant to begin delete Section 18(b)(4)(D) end delete begin insert Section 18(b)(4)(E) end insert of that act, if
all of the following requirements are met:

(1) A notice in the form of a copy of the completed Form D (17
C.F.R. 239.500) filed with the Securities and Exchange
Commission is filed with the commissioner within 15 days of the
first sale in this state, along with documents filed with the
Securities and Exchange Commission in annual or periodic reports
that the commissioner by rule or order deems appropriate. The
commissioner may allow for a notice in the form of the electronic
transmission of the information in Form D.

(2) A consent to service of process under Section 25165 is filed
with the notice as required by paragraph (1).

(3) Payment of the notice filing fee provided for in subdivision
(c) of Section 25608.1 is made.

(e) Notwithstanding the language of subdivisions (a), (b), (c),
and (d) of this section, an issuer may file an application for
qualification pursuant to Section 25111, 25112, 25113, 25121,
25131, or 25142.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 25165 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25165.  

Every applicant for qualification of the sale of securities
under this law or every person filing an application or a notice
under Sections 25100.1, 25101.1, 25102.1, and 25230.1 or a request
for or notice of an exemption from qualification (other than a
California begin delete corporation end delete begin insert corporation, California limited partnership,
California limited liability company, end insert or a person licensed as a
broker-dealer in this state) shall file with the commissioner, in
such form as prescribed by rule, an irrevocable consent appointing
the commissioner or his or her successor in office to be the
applicant’s or person’s attorney to receive service of any lawful
process in any noncriminal suit, action or proceeding against the
applicant or person or the successor, executor or administrator
thereof, which arises under this law or any rule or order hereunder
after the consent has been filed, with the same force and validity
as if served personally on the person filing the consent. A person
who has filed such a consent in connection with a previous
qualification under this law (or application for a permit under any
prior law if the application under this law states that such consent
is still effective), or in connection with a notice filing under Section
25100.1, 25101.1, 25102.1, and 25230.1, need not file another.
Service may be made by leaving a copy of the process in the office
of the commissioner but it is not effective unless (1) the plaintiff,
who may be the commissioner in a suit, action or proceeding
instituted by him or her, forthwith sends notice of the service and
a copy of the process by registered or certified mail to the defendant
or respondent at the last address on file with the commissioner,
and (2) the plaintiff’s affidavit of compliance with this section is
filed in the case on or before the return day of the process, if any,
or within such further time as the court allows.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 25252 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25252.  

The commissioner may, after appropriate notice and
opportunity for hearing, by orders, levy administrative penalties
as follows:

(a) Any person subject to this division, other than a broker-dealer
or investment adviser, who willfully violates any provision of this
division, or who willfully violates any rule or order adopted or
issued pursuant to this division, is liable for administrative penalties
of not more than one thousand dollars ($1,000) for the first
violation, and not more than two thousand five hundred dollars
($2,500) for each subsequent violation.

(b) Any broker-dealer or investment adviser that willfully
violates any provision of this division to which it is subject, or that
willfully violates any rule or order adopted or issued pursuant to
this division and to which it is subject, is liable for administrative
penalties of not more than five thousand dollars ($5,000) for the
first violation, not more than ten thousand dollars ($10,000) for
the second violation, and not more than fifteen thousand dollars
($15,000) for each subsequent violation.

(c) The administrative penalties shall be collected by the
commissioner and paid into the State Corporations Fund.

(d) The administrative penalties available to the commissioner
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies deemed advisable by the commissioner
to enforce the provisions of this division.

begin insert

(e) After the exhaustion of the review procedures provided in
accordance with the provisions of the Administrative Procedure
Act, Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, the commissioner
may apply to the appropriate superior court for a judgment in the
amount of the administrative penalty and costs awarded in a final
decision and order compelling the respondent, or the named or
cited person, to comply with the final decision of the commissioner
brought under this division. The application shall include a
certified copy of the final decision of the commissioner and shall
constitute a sufficient showing to warrant the issuance of the
judgment and order from superior court.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 25254 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25254.  

(a) If the commissioner determines it is in the public
interest, the commissioner may include in any administrative action
brought under this part a claim for ancillary relief, including, but
not limited to, a claim for restitution or disgorgement or damages
on behalf of the persons injured by the act or practice constituting
the subject matter of the action, and the administrative law judge
shall have jurisdiction to award additional relief.

(b) In an administrative action brought under this part, the
commissioner is entitled to recover costs, which in the discretion
of the administrative law judge may include an amount representing
reasonable attorney’s fees and investigative expenses for the
services rendered, for deposit into the State Corporations Fund for
the use of the Department of Corporations.

begin insert

(c) After the exhaustion of the review procedures provided in
accordance with the provisions of the Administrative Procedure
Act, Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, the commissioner
may apply to the appropriate superior court for a judgment in the
amount of the administrative penalty and costs awarded in a final
decision and order compelling the respondent, or the named or
cited person, to comply with the final decision of the commissioner
brought under this division. The application shall include a
certified copy of the final decision of the commission and shall
constitute a sufficient showing to warrant the issuance of the
judgment and order from superior court.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 25401 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25401.  

begin insert

It is unlawful for any person, in connection with the
offer, sale, or purchase of a security, directly or indirectly, to do
any of the following:

end insert begin insert

(a) Employ a devise, scheme, or artifice to defraud.

end insert begin delete

It

end delete

begin insert (b) end insert begin insert   end insert begin delete is unlawful for any person to offer or sell a security in this
state or buy or offer to buy a security in this state by means of any
written or oral communication which includes end delete begin insert Make end insert an untrue
statement of begin delete a end delete material fact or begin delete omits end delete begin insert omit end insert to state a material fact
necessary begin delete in order end delete to make the statements made, in begin delete the end delete light of the
circumstances under which they were made, not misleading.

begin insert

(c) Engage in an act, practice, or course of business that
operates or would operate as a fraud or deceit upon another
person.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 25530 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25530.  

(a) Whenever it appears to the commissioner that any
person has begin delete engaged end delete begin insert engaged, is engaging, end insert or is about to engage
in any act or practice constituting a violation of any provision of
this division or any rule or order hereunder, the commissioner may
in the commissioner’s discretion bring an action in the name of
the people of the State of California in the superior court to enjoin
the acts or practices or to enforce compliance with this law or any
rule or order hereunder. Upon a proper showing, a permanent or
preliminary injunction, restraining order, or writ of mandate shall
be granted and a receiver, monitor, conservator, or other designated
fiduciary or officer of the court may be appointed for the defendant
or the defendant’s assets, or any other ancillary relief may be
granted as appropriate.

A receiver, monitor, conservator, or other designated fiduciary
or officer of the court appointed by the superior court pursuant to
this section may, with the approval of the court, exercise any or
all of the powers of the defendant’s officers, directors, partners,
trustees or persons who exercise similar powers and perform
similar duties, including the filing of a petition for bankruptcy. No
action at law or in equity may be maintained by any party against
the commissioner, or a receiver, monitor, conservator, or other
designated fiduciary or officer of the court, by reason of their
exercising these powers or performing these duties pursuant to the
order of, or with the approval of, the superior court.

(b) If the commissioner determines it is in the public interest,
the commissioner may include in any action authorized by
subdivision (a) a claim for ancillary relief, including but not limited
to, a claim for restitution or disgorgement or damages on behalf
of the persons injured by the act or practice constituting the subject
matter of the action, and the court shall have jurisdiction to award
additional relief.

(c) In any case in which a defendant is ordered by the court to
pay restitution to a victim, the court may in its order require the
payment as a money judgment, which shall be enforceable by a
victim as if the restitution order were a separate civil judgment,
and enforceable in the same manner as is provided for the
enforcement of any other money judgment. Any order issued under
this subdivision shall contain provisions that are designed to
achieve a fair and orderly satisfaction of the judgment.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 25532 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25532.  

(a) If, in the opinion of the commissioner, (1) the sale
of a security is subject to qualification under this law and it is being
or has been offered or sold without first being qualified, the
commissioner may order the issuer or offeror of the security to
desist and refrain from the further offer or sale of the security until
qualification has been made under this law or (2) the sale of a
security is subject to the requirements of Section 25100.1, 25101.1,
or 25102.1 and the security is being or has been offered or sold
without first meeting the requirements of those sections, the
commissioner may order the issuer or offeror of that security to
desist and refrain from the further offer or sale of the security until
those requirements have been met.

(b) If, in the opinion of the commissioner, a person has been or
is acting as a broker-dealer or investment adviser, or has been or
is engaging in broker-dealer or investment adviser activities, in
violation of Section 25210, 25230, or 25230.1, the commissioner
may order that person to desist and refrain from the activity until
the person has been appropriately licensed or the required filing
has been made under this law.

(c) If, in the opinion of the commissioner, a person has violated
or is violating Section 25401, the commissioner may order that
person to desist and refrain from the violation.

begin insert

(d) If the commissioner determines that a person has engaged,
is engaging, or is about to engage in an act, practice, or course
of business constituting a violation of this division or a rule
adopted or order issued under this division, the commissioner may
issue an order directing the person to desist and refrain from
engaging in the act, practice, or course of business, or take other
action necessary or appropriate to comply with this division.

end insert begin insert

(e) If the commissioner determines it is in the public interest,
the commissioner may include in any administrative action brought
under this division a claim for ancillary relief, including, but not
limited to, a claim for restitution or disgorgement or damages on
behalf of the persons injured by the act or practice constituting
the subject matter of the action, and the administrative law judge
shall have jurisdiction to award additional relief.

end insert begin delete

(d)

end delete

begin insert (f) end insert  If, after an order has been served under subdivision (a), (b),
or (c), a request for hearing is filed in writing within 30 days of
the date of service of the order by the person to whom the order
was directed, a hearing shall be held in accordance with provisions
of the Administrative Procedure Act, Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code, and the commissioner shall have all of the powers granted
under that chapter. Unless the hearing is commenced within 15
business days after the request is filed (or the person affected
consents to a later date), the order is rescinded.

If that person fails to file a written request for a hearing within
30 days from the date of service of the order, the order shall be
deemed a final order of the commissioner and is not subject to
review by any court or agency, notwithstanding Section 25609.

begin insert

The commissioner may file a certified copy of the final order
with the clerk of the superior court or any court of competent
jurisdiction. The order so filed has the same effect as a judgment
of the court and may be recorded, enforced, or satisfied in the
same manner as a judgment of the court.

end insert begin insert

If a person does not comply with an order under this section,
the commissioner may petition the superior court or any court of
competent jurisdiction to enforce the order. The court may not
require the commissioner to post a bond in an action or proceeding
under this section. If the court finds, after service and opportunity
for hearing, that the person was not in compliance with the order,
the court may adjudge the person in civil contempt of the order.
The court may impose a further civil penalty against the person
for contempt and may grant any other relief the court determines
is just and proper in the circumstances.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 25608 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25608.  

(a) The commissioner shall charge and collect the fees
fixed in this section and Section 25608.1. All fees charged and
collected under this section and Section 25608.1 shall be
transmitted to the Treasurer at least weekly, accompanied by a
detailed statement thereof and shall be credited to the State
Corporations Fund.

(b) The fee for filing an application for a negotiating permit
under subdivision (c) of Section 25102 is fifty dollars ($50).

(c) The fee for filing a notice pursuant to paragraph (5) of
subdivision (h) of Section 25102 and the fee for filing a notice
pursuant to paragraph (4) of subdivision (f) of Section 25102, in
addition to the fee prescribed in those paragraphs, if applicable,
shall be determined based on the value of the securities proposed
to be sold in the transaction for which the notice is filed and in
accordance with subdivision (g), and shall be as follows:

 

Value of Securities Proposed to be Sold	Filing Fee
$25,000 or less	$ 25
$25,001 to $100,000	$ 35
$100,001 to $500,000	$ 50
$500,001 to $1,000,000	$150
Over $1,000,000	$300

 

(d) The fee for filing an application for designation of an issuer
pursuant to subdivision (k) of Section 25100 is fifty dollars ($50).

(e) The fee for filing an application for qualification of the sale
of securities by notification under Section 25112 or by permit
under paragraph (1) of subdivision (b) of Section 25113 (except
applications for qualification by permit of the sale of any guarantee
of any security, the fees for which applications are fixed in
subdivision (k)) is two hundred dollars ($200) plus one-fifth of 1
percent of the aggregate value of the securities sought to be sold
in this state up to a maximum aggregate fee of two thousand five
hundred dollars ($2,500).

The fee for filing a small company application for qualification
of the sale of securities by permit under paragraph (2) of
subdivision (b) of Section 25113 is two thousand five hundred
dollars ($2,500). In the case where the costs of processing a small
company application exceed the filing fee, an additional fee shall
be charged, not to exceed one thousand dollars ($1,000), over and
above the filing fee based on the costs of the salary or other
compensation paid to persons processing the application plus
overhead costs reasonably incurred in the performance of the work.
In determining the costs, the commissioner may use the estimated
average hourly cost for all persons processing applications for the
fiscal year.

(f) The fee for filing an application for qualification of the sale
of securities by coordination under Section 25111 or a notice of
intention to sell under subdivision (t) of Section 25100 is two
hundred dollars ($200) plus one-fifth of 1 percent of the aggregate
value of the securities sought to be sold in this state up to a
maximum aggregate fee of two thousand five hundred dollars
($2,500).

(g) For the purpose of determining the fees fixed in subdivisions
(e) and (f):

(1) The value of the securities shall be the price at which the
company proposes to sell the securities, or the value, as alleged in
the application, or the actual value, as determined by the
commissioner, of the consideration (if other than money) to be
received in exchange therefor, or of the securities when sold,
whichever is greater.

(2) Interim or voting trust certificates shall have a value equal
to the aggregate value of the securities to be represented by the
interim or voting trust certificates.

(3) The value of a warrant or right to purchase or subscribe to
another security of the same or another issuer shall be an amount
equal to the consideration to be paid for that warrant or right plus
an amount equal to the consideration to be paid upon purchase of
the additional securities, provided that if the latter amount is not
determinable at the time of qualification, that amount shall then
be the value of the additional securities as determined by the
commissioner.

(4) In the case of a share dividend where the shareholders are
given an option to accept either cash or additional shares of
common stock, the value of the securities to be sold shall be the
maximum amount of cash that would be payable in the event that
all shareholders elected to accept cash.

(h) The fee for filing an application for qualification of the sale
of securities by permit under Section 25121 is:

(1) Two hundred dollars ($200) in connection with any change
(including any stock split or reverse stock split or stock dividend,
except a stock dividend where the shareholders are given an option
to accept either cash or additional shares of common stock) in the
rights, preferences, privileges, or restrictions of or on outstanding
securities.

(2) Two hundred dollars ($200) plus one-fifth of 1 percent of
the value, as alleged in the application, or the actual value, as
determined by the commissioner, of the consideration to be
received in exchange therefor, up to a maximum aggregate fee of
two thousand five hundred dollars ($2,500), in any exchange of
securities by the issuer with its existing security holders
exclusively, or in any exchange in connection with any merger or
consolidation or purchase of corporate assets in consideration of
the issuance of securities, or any entity conversion transaction.

(i) The fee for filing an application for qualification of the sale
of securities by notification under Section 25131 shall be one
hundred dollars ($100).

(j) The fee for an application for the removal of any condition
under Section 25141 is fifty dollars ($50).

(k) The fee for filing any application for a permit to execute or
issue any guarantee of any security is fifty dollars ($50).

(l) The fee for acting as escrowholder for securities under
Section 25149 is fifty dollars ($50). In addition, a fee of two dollars
and fifty cents ($2.50) shall be paid for the deposit with the
commissioner of each new certificate or other document resulting
from a transfer in escrow.

(m) The fee for filing an application for an order (1) consenting
to the transfer in escrow of securities or (2) consenting to the
transfer of securities subject to any condition imposed by the
commissioner requiring the commissioner’s consent to the transfer
is twenty dollars ($20) for each transfer.

(n) The filing fee for an amendment to an application filed after
the effective date of the qualification of the sale of securities is
fifty dollars ($50) plus any additional fee that would have been
required to be paid with the original application for qualification
of the sale of securities under this section if the matters set forth
in the amendment had been included in the original application.

(o) (1) The fee for filing an application for a broker-dealer
certificate under Section 25211 is three hundred dollars ($300).

(2) Each broker-dealer shall pay to the commissioner its pro
rata share of all costs and expenses, reasonably incurred in the
administration of the broker-dealer program under this division,
as estimated by the commissioner for the ensuing year and any
deficit actually incurred or anticipated in the administration of the
program in the year in which the assessment is made. The pro rata
share shall be the proportion that the broker-dealer and the number
of its agents in this state bears to the aggregate number of
broker-dealers and agents in this state as shown by records
maintained by or on behalf of the commissioner. The pro rata share
may include the costs of any examinations, audit, or investigation
provided for in subdivision (r).

(3) Every broker-dealer who has secured from the commissioner
a certificate shall, in order to keep the certificate in effect for an
additional period, pay a minimum assessment of seventy-five
dollars ($75) on or before the 31st of December in each year.

(4) The commissioner may assess and levy against each
broker-dealer any additional amount above the minimum
assessment amount of seventy-five dollars ($75) that is reasonable
and necessary to support the broker-dealer program under this
division. If an additional amount is assessed, the commissioner
shall notify each broker-dealer by mail of any additional amount
assessed and levied against it on or before the 30th day of May in
each year, and that amount shall be paid within 20 days thereafter.
If payment is not made within 20 days, the commissioner shall
assess and collect a penalty in addition to the assessment of 1
percent of the assessment for each month or part of a month that
the payment is delayed or withheld.

(5) If a broker-dealer fails to pay any assessment on or before
the 30th day of the month following the day upon which payment
is due, the commissioner may by order summarily suspend or
revoke the certificate issued to the broker-dealer. If, after that order
is made, a request for hearing is filed in writing and a hearing is
not held within 60 days thereafter, the order is deemed rescinded
as of its effective date. During any period when its certificate is
revoked or suspended, a broker-dealer shall not conduct business
pursuant to this division except as may be permitted by order of
the commissioner; provided, however, that the revocation,
suspension, or surrender of a certificate shall not affect the powers
of the commissioner as provided under this division.

(6) In determining the amount assessed, the commissioner shall
consider all appropriations from the State Corporations Fund for
the support of the broker-dealer program under this division and
all reimbursements applicable to the administration of the
broker-dealer program under this division.

(p)  begin insert (1) end insert begin insert   end insert The commissioner shall charge a fee of twenty-five
dollars ($25) for the filing of a notice or report required by begin delete rule end delete
begin insert rules end insert adopted pursuant to subdivision (b) of Section 25210 or
subdivision (b) of Section 25230.

begin insert

(2) The commissioner may charge a fee up to thirty-five dollars
($35) to keep in effect for the following year any notice or report
required by rules adopted pursuant to subdivision (b) of Section
25210 or subdivision (b) of Section 25230.

end insert begin insert

(3) No person shall, on behalf of a broker-dealer licensed
pursuant to Section 25211, effect any transaction in, or induce or
attempt to induce the purchase or sale of, any security in this state
unless the broker-dealer pays the annual fee required by paragraph
(2) of this subdivision on or before the day upon which payment
is due.

end insert begin insert

(4) No person may, in this state, on behalf of an investment
adviser licensed pursuant to Section 25231, offer or negotiate for
the sale of investment advisory services of the investment adviser,
determine which recommendations shall be made to, make
recommendations to, or manage the accounts of, clients of the
investment adviser, or determine the reports or analyses
concerning securities to be published by the investment adviser,
unless the investment adviser pays the annual fee required by
paragraph (2) on or before the day upon which payment is due.

end insert begin insert

(5) The commissioner may by order summarily enjoin an
individual from performing any activity under paragraph (3) or
(4) if the annual fee in paragraph (2) is not paid on or before the
day upon which payment is due. An order under this paragraph
may not be made before 10 days after notice by the commissioner
that the fee is due and unpaid.

end insert

(q) (1) Except as provided for in paragraph (2), the fee for filing
an application for an investment adviser under Section 25231 is
one hundred twenty-five dollars ($125), and payment of this
amount shall keep the certificate, if granted, in effect during the
calendar year during which it is granted. Every investment adviser
who has secured from the commissioner a certificate shall, in order
to keep the certificate in effect for an additional period, pay a
renewal fee of one hundred twenty-five dollars ($125) on or before
the 31st day of December.

(2) Paragraph (1) shall not apply to a broker-dealer licensed
under Section 25210.

(r) (1) Except as provided for in paragraph (2), the fee for any
routine or nonroutine regulatory examination, audit, or
investigation is the amount of the salary or other compensation
paid to the persons making the examination, audit, or investigation
plus the amount of expenses including overhead reasonably
incurred in the performance of the work. In determining the costs
associated with an examination, audit, or investigation, the
commissioner may use the estimated average hourly cost for all
persons performing examinations, audits, or investigations for the
fiscal year.

(2) An investment adviser licensed under Section 25230 pursuant
to the Investment Adviser Registration Depository shall not be
subject to paragraph (1) only in regard to the fee for a routine
regulatory examination of its investment advisory services for
which it is licensed under Section 25230.

(s) The fee for any hearing held by the commissioner pursuant
to Section 25142 shall be the sum determined by the commissioner
to cover the actual expense of noticing and holding the hearing.

(t) The commissioner may fix by rule a reasonable charge for
any publications issued under his or her authority. The charges
shall not apply to reports of the commissioner in the ordinary
course of distribution.

(u) The fee for filing an offer under subdivision (b) of Section
25507 shall be the amount of filing fee payable under subdivision
(e), (f), (h), or (i) of this section if an application had been filed to
qualify the transaction in which the securities upon which the offer
is to be made were sold in violation of the qualification provisions
of this law.

(v) The fee for filing an application for exemption pursuant to
subdivision (l) of Section 25100 is two hundred fifty dollars ($250).

(w) The commissioner may by rule require payment of a fee
for filing a notice or report required by a rule adopted pursuant to
Section 25105. The fee required in connection with a transaction
as defined by that rule shall not exceed the fees specified in
subdivision (c) based on the value of the securities sold, but the
commissioner may permit a single notice for more than one
transaction.

(x) The fee for filing the first notice of transaction under
subdivision (n) of Section 25102 is six hundred dollars ($600).

(y) The fee for filing a notice of transaction under subdivision
(o) of Section 25102 shall be the fee for filing an application for
qualification of the sale of securities by permit under paragraph
(1) of subdivision (b) of Section 25113 as set forth in subdivision
(e) of this section.

(z) The fee for filing a notice of transaction under subdivision
(h) of Section 25103 shall be six hundred dollars ($600).

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 25608.1 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

25608.1.  

(a) The fee for an investment company filing a notice
pursuant to subdivision (b) of Section 25100.1 is two hundred
dollars ($200) plus one-fifth of 1 percent of the aggregate value
of the securities sought to be sold in this state up to a maximum
aggregate fee of two thousand five hundred dollars ($2,500).

(b) The fee for an issuer filing a notice pursuant to subdivision
(a) of Section 25102.1 is six hundred dollars ($600).

(c) The fee for an issuer filing a notice pursuant to subdivision
(d) of Section 25102.1 is three hundred dollars ($300).

(d)  begin insert (1) end insert begin insert   end insert The fee for an investment adviser filing a notice
pursuant to subdivision (b) of Section 25230.1 is one hundred
twenty-five dollars ($125) and the fee for filing a notice or report
required by begin delete rule end delete begin insert rules end insert adopted pursuant to subdivision (c) of
Section 25230.1 is twenty-five dollars ($25).

begin insert

(2) The commissioner may charge a fee up to thirty-five dollars
($35) to keep in effect for the following year any notice or report
required by rules adopted pursuant to subdivision (b) of Section
25210 or subdivision (b) of Section 25230.

end insert begin insert

(3) The commissioner may by order summarily enjoin an
individual from performing any activity under subdivision (c) of
Section 25230.1 if the annual fee required by paragraph (2) is not
paid on or before the day upon which payment is due. An order
under this paragraph may not be made before 10 days after notice
by the commissioner that the fee is due and unpaid.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 29542 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

29542.  

(a) If, in the opinion of the commissioner, any person
is engaging in any activity in violation of any provision of this
law, or rule or order under this law, the commissioner may order
the person to desist and refrain from the activity unless and until
the activity will not be in violation of any provision of this law or
any rule or order under this law.

(b) If after an order has been made under subdivision (a), a
request for hearing is filed in writing within one year of the date
of service of the order by the person to whom the order was
directed, a hearing shall be held in accordance with the
Administrative Procedure Act (Chapter 5, (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code), and the commissioner shall have all of the powers granted
under the Administrative Procedure Act. Unless the hearing is
commenced within 15 business days after the request is filed (or
the person affected consents to a later date), the order is rescinded.

If that person fails to file a written request for a hearing within
begin delete one year end delete begin insert 30 days end insert from the date of service of the order, the order
shall be deemed a final order of the commissioner and shall not
be subject to review by any court or agency, notwithstanding
Section 29563.

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 29545 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

29545.  

(a) The commissioner may take actions that are
authorized by Section begin delete 9a end delete begin insert 13a-2 end insert of Title 7 of the United States Code
(Section 6d of the federal Commodity Exchange Act) as amended
before or after the effective date of this section.

(b) Nothing in this section shall be construed as a limitation on
the powers of the commissioner under this act or any other law
administered by the commissioner.

begin insert

begin insert SEC. 13. end insert   

end insert begin insert

No reimbursement is required by this act pursuant
to Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

All matter omitted in this version of the bill appears in the bill as introduced in the Senate, February 22, 2013. (JR11)