Rep. Emanuel Chris Welch

Filed: 5/16/2019

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1 AMENDMENT TO SENATE BILL 1758

2 AMENDMENT NO. ______. Amend Senate Bill 1758 by replacing

3 everything after the enacting clause with the following:

4 "Section 5. The Consumer Installment Loan Act is amended by

5 changing Section 15 as follows:

6 (205 ILCS 670/15) (from Ch. 17, par. 5415)

7 Sec. 15. Charges permitted.

8 (a) Every licensee may lend a principal amount not

9 exceeding $40,000 and, except as to small consumer loans as

10 defined in this Section, may charge, contract for and receive

11 thereon interest at an annual percentage rate of no more than

12 36%, subject to the provisions of this Act; provided, however,

13 that the limitation on the annual percentage rate contained in

14 this subsection (a) does not apply to title-secured loans,

15 which are loans upon which interest is charged at an annual

16 percentage rate exceeding 36%, in which, at commencement, an

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1 obligor provides to the licensee, as security for the loan,

2 physical possession of the obligor's title to a motor vehicle,

3 and upon which a licensee may charge, contract for, and receive

4 thereon interest at the rate agreed upon by the licensee and

5 borrower. For purposes of this Section, the annual percentage

6 rate shall be calculated in accordance with the federal Truth

7 in Lending Act.

8 (b) For purpose of this Section, the following terms shall

9 have the meanings ascribed herein.

10 "Applicable interest" for a precomputed loan contract

11 means the amount of interest attributable to each monthly

12 installment period. It is computed as if each installment

13 period were one month and any interest charged for extending

14 the first installment period beyond one month is ignored. The

15 applicable interest for any monthly installment period is, for

16 loans other than small consumer loans as defined in this

17 Section, that portion of the precomputed interest that bears

18 the same ratio to the total precomputed interest as the

19 balances scheduled to be outstanding during that month bear to

20 the sum of all scheduled monthly outstanding balances in the

21 original contract. With respect to a small consumer loan, the

22 applicable interest for any installment period is that portion

23 of the precomputed monthly installment account handling charge

24 attributable to the installment period calculated based on a

25 method at least as favorable to the consumer as the actuarial

26 method, as defined by the federal Truth in Lending Act.

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1 "Interest-bearing loan" means a loan in which the debt is

2 expressed as a principal amount plus interest charged on actual

3 unpaid principal balances for the time actually outstanding.

4 "Precomputed loan" means a loan in which the debt is

5 expressed as the sum of the original principal amount plus

6 interest computed actuarially in advance, assuming all

7 payments will be made when scheduled.

8 "Small consumer loan" means a loan upon which interest is

9 charged at an annual percentage rate exceeding 36% and with an

10 amount financed of $4,000 or less. "Small consumer loan" does

11 not include a title-secured loan as defined by subsection (a)

12 of this Section or a payday loan as defined by the Payday Loan

13 Reform Act.

14 "Substantially equal installment" includes a last

15 regularly scheduled payment that may be less than, but not more

16 than 5% larger than, the previous scheduled payment according

17 to a disclosed payment schedule agreed to by the parties.

18 (c) Loans may be interest-bearing or precomputed.

19 (d) To compute time for either interest-bearing or

20 precomputed loans for the calculation of interest and other

21 purposes, a month shall be a calendar month and a day shall be

22 considered 1/30th of a month when calculation is made for a

23 fraction of a month. A month shall be 1/12th of a year. A

24 calendar month is that period from a given date in one month to

25 the same numbered date in the following month, and if there is

26 no same numbered date, to the last day of the following month.

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1 When a period of time includes a month and a fraction of a

2 month, the fraction of the month is considered to follow the

3 whole month. In the alternative, for interest-bearing loans,

4 the licensee may charge interest at the rate of 1/365th of the

5 agreed annual rate for each day actually elapsed.

6 (d-5) No licensee or other person may condition an

7 extension of credit to a consumer on the consumer's repayment

8 by preauthorized electronic fund transfers. Payment options,

9 including, but not limited to, electronic fund transfers and

10 Automatic Clearing House (ACH) transactions may be offered to

11 consumers as a choice and method of payment chosen by the

12 consumer.

13 (e) With respect to interest-bearing loans:

14 (1) Interest shall be computed on unpaid principal

15 balances outstanding from time to time, for the time

16 outstanding, until fully paid. Each payment shall be

17 applied first to the accumulated interest and the remainder

18 of the payment applied to the unpaid principal balance;

19 provided however, that if the amount of the payment is

20 insufficient to pay the accumulated interest, the unpaid

21 interest continues to accumulate to be paid from the

22 proceeds of subsequent payments and is not added to the

23 principal balance.

24 (2) Interest shall not be payable in advance or

25 compounded. However, if part or all of the consideration

26 for a new loan contract is the unpaid principal balance of

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1 a prior loan, then the principal amount payable under the

2 new loan contract may include any unpaid interest which has

3 accrued. The unpaid principal balance of a precomputed loan

4 is the balance due after refund or credit of unearned

5 interest as provided in paragraph (f), clause (3). The

6 resulting loan contract shall be deemed a new and separate

7 loan transaction for all purposes.

8 (3) Loans must be fully amortizing and be repayable in

9 substantially equal and consecutive weekly, biweekly,

10 semimonthly, or monthly installments. Notwithstanding this

11 requirement, rates may vary according to an index that is

12 independently verifiable and beyond the control of the

13 licensee.

14 (4) The lender or creditor may, if the contract

15 provides, collect a delinquency or collection charge on

16 each installment in default for a period of not less than

17 10 days in an amount not exceeding 5% of the installment on

18 installments in excess of $200, or $10 on installments of

19 $200 or less, but only one delinquency and collection

20 charge may be collected on any installment regardless of

21 the period during which it remains in default.

22 (f) With respect to precomputed loans:

23 (1) Loans shall be repayable in substantially equal and

24 consecutive weekly, biweekly, semimonthly, or monthly

25 installments of principal and interest combined, except

26 that the first installment period may be longer than one

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1 month by not more than 15 days, and the first installment

2 payment amount may be larger than the remaining payments by

3 the amount of interest charged for the extra days; and

4 provided further that monthly installment payment dates

5 may be omitted to accommodate borrowers with seasonal

6 income.

7 (2) Payments may be applied to the combined total of

8 principal and precomputed interest until the loan is fully

9 paid. Payments shall be applied in the order in which they

10 become due, except that any insurance proceeds received as

11 a result of any claim made on any insurance, unless

12 sufficient to prepay the contract in full, may be applied

13 to the unpaid installments of the total of payments in

14 inverse order.

15 (3) When any loan contract is paid in full by cash,

16 renewal or refinancing, or a new loan, one month or more

17 before the final installment due date, a licensee shall

18 refund or credit the obligor with the total of the

19 applicable interest for all fully unexpired installment

20 periods, as originally scheduled or as deferred, which

21 follow the day of prepayment; provided, if the prepayment

22 occurs prior to the first installment due date, the

23 licensee may retain 1/30 of the applicable interest for a

24 first installment period of one month for each day from the

25 date of the loan to the date of prepayment, and shall

26 refund or credit the obligor with the balance of the total

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1 interest contracted for. If the maturity of the loan is

2 accelerated for any reason and judgment is entered, the

3 licensee shall credit the borrower with the same refund as

4 if prepayment in full had been made on the date the

5 judgement is entered.

6 (4) The lender or creditor may, if the contract

7 provides, collect a delinquency or collection charge on

8 each installment in default for a period of not less than

9 10 days in an amount not exceeding 5% of the installment on

10 installments in excess of $200, or $10 on installments of

11 $200 or less, but only one delinquency or collection charge

12 may be collected on any installment regardless of the

13 period during which it remains in default.

14 (5) If the parties agree in writing, either in the loan

15 contract or in a subsequent agreement, to a deferment of

16 wholly unpaid installments, a licensee may grant a

17 deferment and may collect a deferment charge as provided in

18 this Section. A deferment postpones the scheduled due date

19 of the earliest unpaid installment and all subsequent

20 installments as originally scheduled, or as previously

21 deferred, for a period equal to the deferment period. The

22 deferment period is that period during which no installment

23 is scheduled to be paid by reason of the deferment. The

24 deferment charge for a one month period may not exceed the

25 applicable interest for the installment period immediately

26 following the due date of the last undeferred payment. A

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1 proportionate charge may be made for deferment for periods

2 of more or less than one month. A deferment charge is

3 earned pro rata during the deferment period and is fully

4 earned on the last day of the deferment period. Should a

5 loan be prepaid in full during a deferment period, the

6 licensee shall credit to the obligor a refund of the

7 unearned deferment charge in addition to any other refund

8 or credit made for prepayment of the loan in full.

9 (6) If two or more installments are delinquent one full

10 month or more on any due date, and if the contract so

11 provides, the licensee may reduce the unpaid balance by the

12 refund credit which would be required for prepayment in

13 full on the due date of the most recent maturing

14 installment in default. Thereafter, and in lieu of any

15 other default or deferment charges, the agreed rate of

16 interest or, in the case of small consumer loans, interest

17 at the rate of 18% per annum, may be charged on the unpaid

18 balance until fully paid.

19 (7) Fifteen days after the final installment as

20 originally scheduled or deferred, the licensee, for any

21 loan contract which has not previously been converted to

22 interest-bearing under paragraph (f), clause (6), may

23 compute and charge interest on any balance remaining

24 unpaid, including unpaid default or deferment charges, at

25 the agreed rate of interest or, in the case of small

26 consumer loans, interest at the rate of 18% per annum,

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1 until fully paid. At the time of payment of said final

2 installment, the licensee shall give notice to the obligor

3 stating any amounts unpaid.

4 (Source: P.A. 96-936, eff. 3-21-11.)

5 Section 10. The Illinois Securities Law of 1953 is amended

6 by changing Sections 2.11, 2.12b, 8, and 12 and by adding

7 Section 3.5 as follows:

8 (815 ILCS 5/2.11) (from Ch. 121 1/2, par. 137.2-11)

9 Sec. 2.11. Investment adviser. "Investment adviser" means

10 any person who, for compensation, engages in this State in the

11 business of advising others, either directly or through

12 publications or writings, as to the value of securities or as

13 to the advisability of investing in, purchasing, or selling

14 securities or who, in this State for direct or indirect

15 compensation and as part of a regular advisory business, issues

16 or promulgates analyses or reports concerning securities or any

17 financial planner or other person who, as an integral component

18 of other financially related services, provides~~the foregoing~~

19 investment advisory services to others for compensation and as

20 part of a business,or who holds himself or herself out as

21 providing ~~the foregoing~~investment advisory services to others

22 for compensation; but "investment adviser" does not include:

23 (1) a bank or trust company, or the regular employees of a

24 bank or trust company;

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1 (2) any lawyer, accountant, engineer, geologist or teacher

2 (i) whose performance of such services is solely incidental to

3 the practice of his or her profession or (ii) who:

4 (A) does not exercise investment discretion with

5 respect to the assets of clients or maintain custody of the

6 assets of clients for the purpose of investing those

7 assets, except when the person is acting as a bona fide

8 fiduciary in a capacity such as an executor, trustee,

9 personal representative, estate or trust agent, guardian,

10 conservator, or person serving in a similar fiduciary

11 capacity;

12 (B) does not accept or receive, directly or indirectly,

13 any commission, fee, or other remuneration contingent upon

14 the purchase or sale of any specific security by a client

15 of such person; and

16 (C) does not advise on the purchase or sale of specific

17 securities, except that this clause (C) shall not apply

18 when the advice about specific securities is based on

19 financial statement analyses or tax considerations that

20 are reasonably related to and in connection with the

21 person's profession;

22 (3) any registered dealer or partner, officer, director or

23 regular employee of a registered dealer, or registered

24 salesperson, whose performance of these services, in each case,

25 is solely incidental to the conduct of the business of the

26 registered dealer or registered salesperson, as the case may

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1 be, and who receives no special compensation, directly or

2 indirectly, for such services;

3 (4) any publisher or regular employee of such publisher of

4 a bona fide newspaper, news magazine or business or financial

5 publication of regular and established paid circulation;

6 (5) any person whose advice, analyses or reports relate

7 only to securities which are direct obligations of, or

8 obligations guaranteed as to principal or interest by, the

9 United States, any state or any political subdivision of any

10 state, or any public agency or public instrumentality of any

11 one or more of the foregoing;

12 (5.5) any person who is a federal covered investment

13 adviser; or

14 (6) any other persons who are not within the intent of this

15 Section as the Secretary of State may designate by rules and

16 regulations or order.

17 (Source: P.A. 90-70, eff. 7-8-97.)

18 (815 ILCS 5/2.12b) (from Ch. 121 1/2, par. 137.2-12b)

19 Sec. 2.12b. Investment adviser representative. "Investment

20 adviser representative" means, with respect to an investment

21 adviser who is required to register under this Act, any

22 partner, officer, director of (or a person occupying a similar

23 status or performing similar functions), or other natural

24 person employed by or associated with an investment adviser,

25 except clerical or ministerial personnel, who in this State:

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1 (1) makes any recommendations or otherwise renders

2 advice regarding securitiesor investment products;

3 (2) manages accounts or portfolios of clients;

4 (3) determines what recommendation or advice regarding

5 securities or investmentsshould be given;

6 (4) supervises any employee who performs any of the

7 foregoing; or

8 (5) solicits, refers, offers, or negotiates for the

9 sale of, or sells, investment advisory services.

10 With respect to a federal covered investment adviser,

11 "investment adviser representative" means any person who is an

12 investment adviser representative with a place of business in

13 this State as such terms are defined by the Securities and

14 Exchange Commission under Section 203A of the Federal 1940

15 Investment Advisers Act.

16 (Source: P.A. 90-70, eff. 7-8-97; 90-667, eff. 7-30-98; 91-809,

17 eff. 1-1-01.)

18 (815 ILCS 5/3.5 new)

19 Sec. 3.5. Authority of Secretary of State. Notwithstanding

20 any other law, the Secretary of State has the authority to

21 enforce this Act as it pertains to the offer, sale, or

22 investment advice concerning a covered security as defined by

23 Section 2.29.

24 (815 ILCS 5/8) (from Ch. 121 1/2, par. 137.8)

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1 Sec. 8. Registration of dealers, limited Canadian dealers,

2 Internet portals, salespersons, investment advisers, and

3 investment adviser representatives.

4 A. Except as otherwise provided in this subsection A, every

5 dealer, limited Canadian dealer, salesperson, investment

6 adviser, and investment adviser representative shall be

7 registered as such with the Secretary of State. No dealer or

8 salesperson need be registered as such when offering or selling

9 securities in transactions exempted by subsection A, B, C, D,

10 E, G, H, I, J, K, M, O, P, Q, R or S of Section 4 of this Act,

11 provided that such dealer or salesperson is not regularly

12 engaged in the business of offering or selling securities in

13 reliance upon the exemption set forth in subsection G or M of

14 Section 4 of this Act. No dealer, issuer or controlling person

15 shall employ a salesperson unless such salesperson is

16 registered as such with the Secretary of State or is employed

17 for the purpose of offering or selling securities solely in

18 transactions exempted by subsection A, B, C, D, E, G, H, I, J,

19 K, L, M, O, P, Q, R or S of Section 4 of this Act; provided that

20 such salesperson need not be registered when effecting

21 transactions in this State limited to those transactions

22 described in Section 15(h)(2) of the Federal 1934 Act or

23 engaging in the offer or sale of securities in respect of which

24 he or she has beneficial ownership and is a controlling person.

25 The Secretary of State may, by rule, regulation or order and

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1 subject to such terms, conditions, and fees as may be

2 prescribed in such rule, regulation or order, exempt from the

3 registration requirements of this Section 8 any investment

4 adviser, if the Secretary of State shall find that such

5 registration is not necessary in the public interest by reason

6 of the small number of clients or otherwise limited character

7 of operation of such investment adviser.

8 B. An application for registration as a dealer or limited

9 Canadian dealer, executed, verified, or authenticated by or on

10 behalf of the applicant, shall be filed with the Secretary of

11 State, in such form as the Secretary of State may by rule,

12 regulation or order prescribe, setting forth or accompanied by:

13 (1) The name and address of the applicant, the location

14 of its principal business office and all branch offices, if

15 any, and the date of its organization;

16 (2) A statement of any other Federal or state licenses

17 or registrations which have been granted the applicant and

18 whether any such licenses or registrations have ever been

19 refused, cancelled, suspended, revoked or withdrawn;

20 (3) The assets and all liabilities, including

21 contingent liabilities of the applicant, as of a date not

22 more than 60 days prior to the filing of the application;

23 (4) (a) A brief description of any civil or criminal

24 proceeding of which fraud is an essential element pending

25 against the applicant and whether the applicant has ever

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1 been convicted of a felony, or of any misdemeanor of which

2 fraud is an essential element;

3 (b) A list setting forth the name, residence and

4 business address and a 10 year occupational statement of

5 each principal of the applicant and a statement describing

6 briefly any civil or criminal proceedings of which fraud is

7 an essential element pending against any such principal and

8 the facts concerning any conviction of any such principal

9 of a felony, or of any misdemeanor of which fraud is an

10 essential element;

11 (5) If the applicant is a corporation: a list of its

12 officers and directors setting forth the residence and

13 business address of each; a 10-year occupational statement

14 of each such officer or director; and a statement

15 describing briefly any civil or criminal proceedings of

16 which fraud is an essential element pending against each

17 such officer or director and the facts concerning any

18 conviction of any officer or director of a felony, or of

19 any misdemeanor of which fraud is an essential element;

20 (6) If the applicant is a sole proprietorship, a

21 partnership, limited liability company, an unincorporated

22 association or any similar form of business organization:

23 the name, residence and business address of the proprietor

24 or of each partner, member, officer, director, trustee or

25 manager; the limitations, if any, of the liability of each

26 such individual; a 10-year occupational statement of each

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1 such individual; a statement describing briefly any civil

2 or criminal proceedings of which fraud is an essential

3 element pending against each such individual and the facts

4 concerning any conviction of any such individual of a

5 felony, or of any misdemeanor of which fraud is an

6 essential element;

7 (7) Such additional information as the Secretary of

8 State may by rule or regulation prescribe as necessary to

9 determine the applicant's financial responsibility,

10 business repute and qualification to act as a dealer.

11 (8) (a) No applicant shall be registered or

12 re-registered as a dealer or limited Canadian dealer under

13 this Section unless and until each principal of the dealer

14 has passed an examination conducted by the Secretary of

15 State or a self-regulatory organization of securities

16 dealers or similar person, which examination has been

17 designated by the Secretary of State by rule, regulation or

18 order to be satisfactory for purposes of determining

19 whether the applicant has sufficient knowledge of the

20 securities business and laws relating thereto to act as a

21 registered dealer. Any dealer who was registered on

22 September 30, 1963, and has continued to be so registered;

23 and any principal of any registered dealer, who was acting

24 in such capacity on and continuously since September 30,

25 1963; and any individual who has previously passed a

26 securities dealer examination administered by the

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1 Secretary of State or any examination designated by the

2 Secretary of State to be satisfactory for purposes of

3 determining whether the applicant has sufficient knowledge

4 of the securities business and laws relating thereto to act

5 as a registered dealer by rule, regulation or order, shall

6 not be required to pass an examination in order to continue

7 to act in such capacity. The Secretary of State may by

8 order waive the examination requirement for any principal

9 of an applicant for registration under this subsection B

10 who has had such experience or education relating to the

11 securities business as may be determined by the Secretary

12 of State to be the equivalent of such examination. Any

13 request for such a waiver shall be filed with the Secretary

14 of State in such form as may be prescribed by rule or

15 regulation.

16 (b) Unless an applicant is a member of the body

17 corporate known as the Securities Investor Protection

18 Corporation established pursuant to the Act of Congress of

19 the United States known as the Securities Investor

20 Protection Act of 1970, as amended, a member of an

21 association of dealers registered as a national securities

22 association pursuant to Section 15A of the Federal 1934

23 Act, or a member of a self-regulatory organization or stock

24 exchange in Canada which the Secretary of State has

25 designated by rule or order, an applicant shall not be

26 registered or re-registered unless and until there is filed

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1 with the Secretary of State evidence that such applicant

2 has in effect insurance or other equivalent protection for

3 each client's cash or securities held by such applicant,

4 and an undertaking that such applicant will continually

5 maintain such insurance or other protection during the

6 period of registration or re-registration. Such insurance

7 or other protection shall be in a form and amount

8 reasonably prescribed by the Secretary of State by rule or

9 regulation.

10 (9) The application for the registration of a dealer or

11 limited Canadian dealer shall be accompanied by a filing

12 fee and a fee for each branch office in this State, in each

13 case in the amount established pursuant to Section 11a of

14 this Act, which fees shall not be returnable in any event.

15 (10) The Secretary of State shall notify the dealer or

16 limited Canadian dealer by written notice (which may be by

17 electronic or facsimile transmission) of the effectiveness

18 of the registration as a dealer in this State.

19 (11) Any change which renders no longer accurate any

20 information contained in any application for registration

21 or re-registration of a dealer or limited Canadian dealer

22 shall be reported to the Secretary of State within 10

23 business days after the occurrence of such change; but in

24 respect to assets and liabilities only materially adverse

25 changes need be reported.

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1 C. Any registered dealer, limited Canadian dealer, issuer,

2 or controlling person desiring to register a salesperson shall

3 file an application with the Secretary of State, in such form

4 as the Secretary of State may by rule or regulation prescribe,

5 which the salesperson is required by this Section to provide to

6 the dealer, issuer, or controlling person, executed, verified,

7 or authenticated by the salesperson setting forth or

8 accompanied by:

9 (1) the name, residence and business address of the

10 salesperson;

11 (2) whether any federal or State license or

12 registration as dealer, limited Canadian dealer, or

13 salesperson has ever been refused the salesperson or

14 cancelled, suspended, revoked, withdrawn, barred, limited,

15 or otherwise adversely affected in a similar manner or

16 whether the salesperson has ever been censured or expelled;

17 (3) the nature of employment with, and names and

18 addresses of, employers of the salesperson for the 10 years

19 immediately preceding the date of application;

20 (4) a brief description of any civil or criminal

21 proceedings of which fraud is an essential element pending

22 against the salesperson, and whether the salesperson has

23 ever been convicted of a felony, or of any misdemeanor of

24 which fraud is an essential element;

25 (5) such additional information as the Secretary of

26 State may by rule, regulation or order prescribe as

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1 necessary to determine the salesperson's business repute

2 and qualification to act as a salesperson; and

3 (6) no individual shall be registered or re-registered

4 as a salesperson under this Section unless and until such

5 individual has passed an examination conducted by the

6 Secretary of State or a self-regulatory organization of

7 securities dealers or similar person, which examination

8 has been designated by the Secretary of State by rule,

9 regulation or order to be satisfactory for purposes of

10 determining whether the applicant has sufficient knowledge

11 of the securities business and laws relating thereto to act

12 as a registered salesperson.

13 Any salesperson who was registered prior to September

14 30, 1963, and has continued to be so registered, and any

15 individual who has passed a securities salesperson

16 examination administered by the Secretary of State or an

17 examination designated by the Secretary of State by rule,

18 regulation or order to be satisfactory for purposes of

19 determining whether the applicant has sufficient knowledge

20 of the securities business and laws relating thereto to act

21 as a registered salesperson, shall not be required to pass

22 an examination in order to continue to act as a

23 salesperson. The Secretary of State may by order waive the

24 examination requirement for any applicant for registration

25 under this subsection C who has had such experience or

26 education relating to the securities business as may be

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1 determined by the Secretary of State to be the equivalent

2 of such examination. Any request for such a waiver shall be

3 filed with the Secretary of State in such form as may be

4 prescribed by rule, regulation or order.

5 (7) The application for registration of a salesperson

6 shall be accompanied by a filing fee and a Securities Audit

7 and Enforcement Fund fee, each in the amount established

8 pursuant to Section 11a of this Act, which shall not be

9 returnable in any event.

10 (8) Any change which renders no longer accurate any

11 information contained in any application for registration

12 or re-registration as a salesperson shall be reported to

13 the Secretary of State within 10 business days after the

14 occurrence of such change. If the activities are terminated

15 which rendered an individual a salesperson for the dealer,

16 issuer or controlling person, the dealer, issuer or

17 controlling person, as the case may be, shall notify the

18 Secretary of State, in writing, within 30 days of the

19 salesperson's cessation of activities, using the

20 appropriate termination notice form.

21 (9) A registered salesperson may transfer his or her

22 registration under this Section 8 for the unexpired term

23 thereof from one registered dealer or limited Canadian

24 dealer to another by the giving of notice of the transfer

25 by the new registered dealer or limited Canadian dealer to

26 the Secretary of State in such form and subject to such

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1 conditions as the Secretary of State shall by rule or

2 regulation prescribe. The new registered dealer or limited

3 Canadian dealer shall promptly file an application for

4 registration of such salesperson as provided in this

5 subsection C, accompanied by the filing fee prescribed by

6 paragraph (7) of this subsection C.

7 C-5. Except with respect to federal covered investment

8 advisers whose only clients are investment companies as defined

9 in the Federal 1940 Act, other investment advisers, federal

10 covered investment advisers, or any similar person which the

11 Secretary of State may prescribe by rule or order, a federal

12 covered investment adviser shall file with the Secretary of

13 State, prior to acting as a federal covered investment adviser

14 in this State, such documents as have been filed with the

15 Securities and Exchange Commission as the Secretary of State by

16 rule or order may prescribe. The notification of a federal

17 covered investment adviser shall be accompanied by a

18 notification filing fee established pursuant to Section 11a of

19 this Act, which shall not be returnable in any event. Every

20 person acting as a federal covered investment adviser in this

21 State shall file a notification filing and pay an annual

22 notification filing fee established pursuant to Section 11a of

23 this Act, which is not returnable in any event. The failure to

24 file any such notification shall constitute a violation of

25 subsection D of Section 12 of this Act, subject to the

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1 penalties enumerated in Section 14 of this Act. Until October

2 10, 1999 or other date as may be legally permissible, a federal

3 covered investment adviser who fails to file the notification

4 or refuses to pay the fees as required by this subsection shall

5 register as an investment adviser with the Secretary of State

6 under Section 8 of this Act. The civil remedies provided for in

7 subsection A of Section 13 of this Act and the civil remedies

8 of rescission and appointment of receiver, conservator,

9 ancillary receiver, or ancillary conservator provided for in

10 subsection F of Section 13 of this Act shall not be available

11 against any person by reason of the failure to file any such

12 notification or to pay the notification fee or on account of

13 the contents of any such notification.

14 D. An application for registration as an investment

15 adviser, executed, verified, or authenticated by or on behalf

16 of the applicant, shall be filed with the Secretary of State,

17 in such form as the Secretary of State may by rule or

18 regulation prescribe, setting forth or accompanied by:

19 (1) The name and form of organization under which the

20 investment adviser engages or intends to engage in

21 business; the state or country and date of its

22 organization; the location of the adviser's principal

23 business office and branch offices, if any; the names and

24 addresses of the adviser's principal, partners, officers,

25 directors, and persons performing similar functions or, if

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1 the investment adviser is an individual, of the individual;

2 and the number of the adviser's employees who perform

3 investment advisory functions;

4 (2) The education, the business affiliations for the

5 past 10 years, and the present business affiliations of the

6 investment adviser and of the adviser's principal,

7 partners, officers, directors, and persons performing

8 similar functions and of any person controlling the

9 investment adviser;

10 (3) The nature of the business of the investment

11 adviser, including the manner of giving advice and

12 rendering analyses or reports;

13 (4) The nature and scope of the authority of the

14 investment adviser with respect to clients' funds and

15 accounts;

16 (5) The basis or bases upon which the investment

17 adviser is compensated;

18 (6) Whether the investment adviser or any principal,

19 partner, officer, director, person performing similar

20 functions or person controlling the investment adviser (i)

21 within 10 years of the filing of the application has been

22 convicted of a felony, or of any misdemeanor of which fraud

23 is an essential element, or (ii) is permanently or

24 temporarily enjoined by order or judgment from acting as an

25 investment adviser, underwriter, dealer, principal or

26 salesperson, or from engaging in or continuing any conduct

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1 or practice in connection with any such activity or in

2 connection with the purchase or sale of any security, and

3 in each case the facts relating to the conviction, order or

4 judgment;

5 (7) (a) A statement as to whether the investment

6 adviser is engaged or is to engage primarily in the

7 business of rendering investment supervisory services; and

8 (b) A statement that the investment adviser will

9 furnish his, her, or its clients with such information as

10 the Secretary of State deems necessary in the form

11 prescribed by the Secretary of State by rule or regulation;

12 (8) Such additional information as the Secretary of

13 State may, by rule, regulation or order prescribe as

14 necessary to determine the applicant's financial

15 responsibility, business repute and qualification to act

16 as an investment adviser.

17 (9) No applicant shall be registered or re-registered

18 as an investment adviser under this Section unless and

19 until each principal of the applicant who is actively

20 engaged in the conduct and management of the applicant's

21 advisory business in this State has passed an examination

22 or completed an educational program conducted by the

23 Secretary of State or an association of investment advisers

24 or similar person, which examination or educational

25 program has been designated by the Secretary of State by

26 rule, regulation or order to be satisfactory for purposes

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1 of determining whether the applicant has sufficient

2 knowledge of the securities business and laws relating

3 thereto to conduct the business of a registered investment

4 adviser.

5 Any person who was a registered investment adviser

6 prior to September 30, 1963, and has continued to be so

7 registered, and any individual who has passed an investment

8 adviser examination administered by the Secretary of

9 State, or passed an examination or completed an educational

10 program designated by the Secretary of State by rule,

11 regulation or order to be satisfactory for purposes of

12 determining whether the applicant has sufficient knowledge

13 of the securities business and laws relating thereto to

14 conduct the business of a registered investment adviser,

15 shall not be required to pass an examination or complete an

16 educational program in order to continue to act as an

17 investment adviser. The Secretary of State may by order

18 waive the examination or educational program requirement

19 for any applicant for registration under this subsection D

20 if the principal of the applicant who is actively engaged

21 in the conduct and management of the applicant's advisory

22 business in this State has had such experience or education

23 relating to the securities business as may be determined by

24 the Secretary of State to be the equivalent of the

25 examination or educational program. Any request for a

26 waiver shall be filed with the Secretary of State in such

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1 form as may be prescribed by rule or regulation.

2 (10) No applicant shall be registered or re-registered

3 as an investment adviser under this Section 8 unless the

4 application for registration or re-registration is

5 accompanied by an application for registration or

6 re-registration for each person acting as an investment

7 adviser representative on behalf of the adviser and a

8 Securities Audit and Enforcement Fund fee that shall not be

9 returnable in any event is paid with respect to each

10 investment adviser representative.

11 (11) The application for registration of an investment

12 adviser shall be accompanied by a filing fee and a fee for

13 each branch office in this State, in each case in the

14 amount established pursuant to Section 11a of this Act,

15 which fees shall not be returnable in any event.

16 (12) The Secretary of State shall notify the investment

17 adviser by written notice (which may be by electronic or

18 facsimile transmission) of the effectiveness of the

19 registration as an investment adviser in this State.

20 (13) Any change which renders no longer accurate any

21 information contained in any application for registration

22 or re-registration of an investment adviser shall be

23 reported to the Secretary of State within 10 business days

24 after the occurrence of the change. In respect to assets

25 and liabilities of an investment adviser that retains

26 custody of clients' cash or securities or accepts

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1 pre-payment of fees in excess of $500 per client and 6 or

2 more months in advance only materially adverse changes need

3 be reported by written notice (which may be by electronic

4 or facsimile transmission) no later than the close of

5 business on the second business day following the discovery

6 thereof.

7 (14) Each application for registration as an

8 investment adviser shall become effective automatically on

9 the 45th day following the filing of the application,

10 required documents or information, and payment of the

11 required fee unless (i) the Secretary of State has

12 registered the investment adviser prior to that date or

13 (ii) an action with respect to the applicant is pending

14 under Section 11 of this Act.

15 D-5. A registered investment adviser or federal covered

16 investment adviser desiring to register an investment adviser

17 representative shall file an application with the Secretary of

18 State, in the form as the Secretary of State may by rule or

19 order prescribe, which the investment adviser representative

20 is required by this Section to provide to the investment

21 adviser, executed, verified, or authenticated by the

22 investment adviser representative and setting forth or

23 accompanied by:

24 (1) The name, residence, and business address of the

25 investment adviser representative;

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1 (2) A statement whether any federal or state license or

2 registration as a dealer, salesperson, investment adviser,

3 or investment adviser representative has ever been

4 refused, canceled, suspended, revoked or withdrawn;

5 (3) The nature of employment with, and names and

6 addresses of, employers of the investment adviser

7 representative for the 10 years immediately preceding the

8 date of application;

9 (4) A brief description of any civil or criminal

10 proceedings, of which fraud is an essential element,

11 pending against the investment adviser representative and

12 whether the investment adviser representative has ever

13 been convicted of a felony or of any misdemeanor of which

14 fraud is an essential element;

15 (5) Such additional information as the Secretary of

16 State may by rule or order prescribe as necessary to

17 determine the investment adviser representative's business

18 repute or qualification to act as an investment adviser

19 representative;

20 (6) Documentation that the individual has passed an

21 examination conducted by the Secretary of State, an

22 organization of investment advisers, or similar person,

23 which examination has been designated by the Secretary of

24 State by rule or order to be satisfactory for purposes of

25 determining whether the applicant has sufficient knowledge

26 of the investment advisory or securities business and laws

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1 relating to that business to act as a registered investment

2 adviser representative; and

3 (7) A Securities Audit and Enforcement Fund fee

4 established under Section 11a of this Act, which shall not

5 be returnable in any event.

6 The Secretary of State may by order waive the examination

7 requirement for an applicant for registration under this

8 subsection D-5 who has had the experience or education relating

9 to the investment advisory or securities business as may be

10 determined by the Secretary of State to be the equivalent of

11 the examination. A request for a waiver shall be filed with the

12 Secretary of State in the form as may be prescribed by rule or

13 order.

14 A change that renders no longer accurate any information

15 contained in any application for registration or

16 re-registration as an investment adviser representative must

17 be reported to the Secretary of State within 10 business days

18 after the occurrence of the change. If the activities that

19 rendered an individual an investment adviser representative

20 for the investment adviser are terminated, the investment

21 adviser shall notify the Secretary of State in writing (which

22 may be by electronic or facsimile transmission), within 30 days

23 of the investment adviser representative's termination, using

24 the appropriate termination notice form as the Secretary of

25 State may prescribe by rule or order.

26 A registered investment adviser representative may

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1 transfer his or her registration under this Section 8 for the

2 unexpired term of the registration from one registered

3 investment adviser to another by the giving of notice of the

4 transfer by the new investment adviser to the Secretary of

5 State in the form and subject to the conditions as the

6 Secretary of State shall prescribe. The new registered

7 investment adviser shall promptly file an application for

8 registration of the investment adviser representative as

9 provided in this subsection, accompanied by the Securities

10 Audit and Enforcement Fund fee prescribed by paragraph (7) of

11 this subsection D-5.

12 E. (1) Subject to the provisions of subsection F of Section

13 11 of this Act, the registration of a dealer, limited Canadian

14 dealer, salesperson, investment adviser, or investment adviser

15 representative may be denied, suspended or revoked if the

16 Secretary of State finds that the dealer, limited Canadian

17 dealer, Internet portal, salesperson, investment adviser, or

18 investment adviser representative or any principal officer,

19 director, partner, member, trustee, manager or any person who

20 performs a similar function of the dealer, limited Canadian

21 dealer, Internet portal, or investment adviser:

22 (a) has been convicted of any felony during the 10 year

23 period preceding the date of filing of any application for

24 registration or at any time thereafter, or of any

25 misdemeanor of which fraud is an essential element;

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1 (b) has engaged in any unethical practice in connection

2 with any security, or in any fraudulent business practice;

3 (c) has failed to account for any money or property, or

4 has failed to deliver any security, to any person entitled

5 thereto when due or within a reasonable time thereafter;

6 (d) in the case of a dealer, limited Canadian dealer,

7 or investment adviser, is insolvent;

8 (e) in the case of a dealer, limited Canadian dealer,

9 salesperson, or registered principal of a dealer or limited

10 Canadian dealer (i) has failed reasonably to supervise the

11 securities activities of any of its salespersons or other

12 employees and the failure has permitted or facilitated a

13 violation of Section 12 of this Act or (ii) is offering or

14 selling or has offered or sold securities in this State

15 through a salesperson other than a registered salesperson,

16 or, in the case of a salesperson, is selling or has sold

17 securities in this State for a dealer, limited Canadian

18 dealer, issuer or controlling person with knowledge that

19 the dealer, limited Canadian dealer, issuer or controlling

20 person has not complied with the provisions of this Act or

21 (iii) has failed reasonably to supervise the

22 implementation of compliance measures following notice by

23 the Secretary of State of noncompliance with the Act or

24 with the regulations promulgated thereunder or both or (iv)

25 has failed to maintain and enforce written procedures to

26 supervise the types of business in which it engages and to

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1 supervise the activities of its salespersons that are

2 reasonably designed to achieve compliance with applicable

3 securities laws and regulations;

4 (f) in the case of an investment adviser, has failed

5 reasonably to supervise the advisory activities of any of

6 its investment adviser representatives or employees and

7 the failure has permitted or facilitated a violation of

8 Section 12 of this Act;

9 (g) has violated any of the provisions of this Act;

10 (h) has made any material misrepresentation to the

11 Secretary of State in connection with any information

12 deemed necessary by the Secretary of State to determine a

13 dealer's, limited Canadian dealer's, or investment

14 adviser's financial responsibility or a dealer's, limited

15 Canadian dealer's, investment adviser's, salesperson's, or

16 investment adviser representative's business repute or

17 qualifications, or has refused to furnish any such

18 information requested by the Secretary of State;

19 (i) has had a license or registration under any Federal

20 or State law regulating securities, commodity futures

21 contracts, or stock futures contracts refused, cancelled,

22 suspended, withdrawn, revoked, or otherwise adversely

23 affected in a similar manner;

24 (j) has had membership in or association with any

25 self-regulatory organization registered under the Federal

26 1934 Act or the Federal 1974 Act suspended, revoked,

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1 refused, expelled, cancelled, barred, limited in any

2 capacity, or otherwise adversely affected in a similar

3 manner arising from any fraudulent or deceptive act or a

4 practice in violation of any rule, regulation or standard

5 duly promulgated by the self-regulatory organization;

6 (k) has had any order entered against it after notice

7 and opportunity for hearing by a securities agency of any

8 state, any foreign government or agency thereof, the

9 Securities and Exchange Commission, or the Federal

10 Commodities Futures Trading Commission arising from any

11 fraudulent or deceptive act or a practice in violation of

12 any statute, rule or regulation administered or

13 promulgated by the agency or commission;

14 (l) in the case of a dealer or limited Canadian dealer,

15 fails to maintain a minimum net capital in an amount which

16 the Secretary of State may by rule or regulation require;

17 (m) has conducted a continuing course of dealing of

18 such nature as to demonstrate an inability to properly

19 conduct the business of the dealer, limited Canadian

20 dealer, salesperson, investment adviser, or investment

21 adviser representative;

22 (n) has had, after notice and opportunity for hearing,

23 any injunction or order entered against it or license or

24 registration refused, cancelled, suspended, revoked,

25 withdrawn, limited, or otherwise adversely affected in a

26 similar manner by any state or federal body, agency or

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1 commission regulating banking, insurance, finance or small

2 loan companies, real estate or mortgage brokers or

3 companies, if the action resulted from any act found by the

4 body, agency or commission to be a fraudulent or deceptive

5 act or practice in violation of any statute, rule or

6 regulation administered or promulgated by the body, agency

7 or commission;

8 (o) has failed to file a return, or to pay the tax,

9 penalty or interest shown in a filed return, or to pay any

10 final assessment of tax, penalty or interest, as required

11 by any tax Act administered by the Illinois Department of

12 Revenue, until such time as the requirements of that tax

13 Act are satisfied;

14 (p) (blank);

15 (q) has failed to maintain the books and records

16 required under this Act or rules or regulations promulgated

17 under this Act or under any requirements established by the

18 Securities and Exchange Commission or a self-regulatory

19 organization;

20 (r) has refused to allow or otherwise impeded designees

21 of the Secretary of State from conducting an audit,

22 examination, inspection, or investigation provided for

23 under Section 8 or 11 of this Act;

24 (s) has failed to maintain any minimum net capital or

25 bond requirement set forth in this Act or any rule or

26 regulation promulgated under this Act;

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1 (t) has refused the Secretary of State or his or her

2 designee access to any office or location within an office

3 to conduct an investigation, audit, examination, or

4 inspection;

5 (u) has advised or caused a public pension fund or

6 retirement system established under the Illinois Pension

7 Code to make an investment or engage in a transaction not

8 authorized by that Code;

9 (v) if a corporation, limited liability company, or

10 limited liability partnership has been suspended,

11 canceled, revoked, or has failed to register as a foreign

12 corporation, limited liability company, or limited

13 liability partnership with the Secretary of State;

14 (w) is permanently or temporarily enjoined by any court

15 of competent jurisdiction, including any state, federal,

16 or foreign government, from engaging in or continuing any

17 conduct or practice involving any aspect of the securities

18 or commodities business or in any other business where the

19 conduct or practice enjoined involved investments,

20 franchises, insurance, banking, or finance;

21 (2) If the Secretary of State finds that any registrant or

22 applicant for registration is no longer in existence or has

23 ceased to do business as a dealer, limited Canadian dealer,

24 Internet portal, salesperson, investment adviser, or

25 investment adviser representative, or is subject to an

26 adjudication as a person under legal disability or to the

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1 control of a guardian, or cannot be located after reasonable

2 search, or has failed after written notice to pay to the

3 Secretary of State any additional fee prescribed by this

4 Section or specified by rule or regulation, the Secretary of

5 State may by order cancel the registration or application.

6 (3) Withdrawal of an application for registration or

7 withdrawal from registration as a dealer, limited Canadian

8 dealer, salesperson, investment adviser, or investment adviser

9 representative becomes effective 30 days after receipt of an

10 application to withdraw or within such shorter period of time

11 as the Secretary of State may determine, unless any proceeding

12 is pending under Section 11 of this Act when the application is

13 filed or a proceeding is instituted within 30 days after the

14 application is filed. If a proceeding is pending or instituted,

15 withdrawal becomes effective at such time and upon such

16 conditions as the Secretary of State by order determines. If no

17 proceeding is pending or instituted and withdrawal

18 automatically becomes effective, the Secretary of State may

19 nevertheless institute a revocation or suspension proceeding

20 within 2 years after withdrawal became effective and enter a

21 revocation or suspension order as of the last date on which

22 registration was effective.

23 F. The Secretary of State shall make available upon request

24 the date that each dealer, investment adviser, salesperson, or

25 investment adviser representative was granted registration,

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1 together with the name and address of the dealer, limited

2 Canadian dealer, or issuer on whose behalf the salesperson is

3 registered, and all orders of the Secretary of State denying or

4 abandoning an application, or suspending or revoking

5 registration, or censuring the persons. The Secretary of State

6 may designate by rule, regulation or order the statements,

7 information or reports submitted to or filed with him or her

8 pursuant to this Section 8 which the Secretary of State

9 determines are of a sensitive nature and therefore should be

10 exempt from public disclosure. Any such statement, information

11 or report shall be deemed confidential and shall not be

12 disclosed to the public except upon the consent of the person

13 filing or submitting the statement, information or report or by

14 order of court or in court proceedings.

15 G. The registration or re-registration of a dealer or

16 limited Canadian dealer and of all salespersons registered upon

17 application of the dealer or limited Canadian dealer shall

18 expire on the next succeeding anniversary date of the

19 registration or re-registration of the dealer; and the

20 registration or re-registration of an investment adviser and of

21 all investment adviser representatives registered upon

22 application of the investment adviser shall expire on the next

23 succeeding anniversary date of the registration of the

24 investment adviser; provided, that the Secretary of State may

25 by rule or regulation prescribe an alternate date which any

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1 dealer registered under the Federal 1934 Act or a member of any

2 self-regulatory association approved pursuant thereto, a

3 member of a self-regulatory organization or stock exchange in

4 Canada, or any investment adviser may elect as the expiration

5 date of its dealer or limited Canadian dealer and salesperson

6 registrations, or the expiration date of its investment adviser

7 registration, as the case may be. A registration of a

8 salesperson registered upon application of an issuer or

9 controlling person shall expire on the next succeeding

10 anniversary date of the registration, or upon termination or

11 expiration of the registration of the securities, if any,

12 designated in the application for his or her registration or

13 the alternative date as the Secretary may prescribe by rule or

14 regulation. Subject to paragraph (9) of subsection C of this

15 Section 8, a salesperson's registration also shall terminate

16 upon cessation of his or her employment, or termination of his

17 or her appointment or authorization, in each case by the person

18 who applied for the salesperson's registration, provided that

19 the Secretary of State may by rule or regulation prescribe an

20 alternate date for the expiration of the registration.

21 H. Applications for re-registration of dealers, limited

22 Canadian dealers, Internet portals, salespersons, investment

23 advisers, and investment adviser representatives shall be

24 filed with the Secretary of State prior to the expiration of

25 the then current registration and shall contain such

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1 information as may be required by the Secretary of State upon

2 initial application with such omission therefrom or addition

3 thereto as the Secretary of State may authorize or prescribe.

4 Each application for re-registration of a dealer, limited

5 Canadian dealer, Internet portal, or investment adviser shall

6 be accompanied by a filing fee, each application for

7 re-registration as a salesperson shall be accompanied by a

8 filing fee and a Securities Audit and Enforcement Fund fee

9 established pursuant to Section 11a of this Act, and each

10 application for re-registration as an investment adviser

11 representative shall be accompanied by a Securities Audit and

12 Enforcement Fund fee established under Section 11a of this Act,

13 which shall not be returnable in any event. Notwithstanding the

14 foregoing, applications for re-registration of dealers,

15 limited Canadian dealers, Internet portals, and investment

16 advisers may be filed within 30 days following the expiration

17 of the registration provided that the applicant pays the annual

18 registration fee together with an additional amount equal to

19 the annual registration fee and files any other information or

20 documents that the Secretary of State may prescribe by rule or

21 regulation or order. Any application filed within 30 days

22 following the expiration of the registration shall be

23 automatically effective as of the time of the earlier

24 expiration provided that the proper fee has been paid to the

25 Secretary of State.

26 Each registered dealer, limited Canadian dealer, Internet

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1 portal, or investment adviser shall continue to be registered

2 if the registrant changes his, her, or its form of organization

3 provided that the dealer or investment adviser files an

4 amendment to his, her, or its application not later than 30

5 days following the occurrence of the change and pays the

6 Secretary of State a fee in the amount established under

7 Section 11a of this Act.

8 I. (1) (a) Every registered dealer, limited Canadian

9 dealer, Internet portal, and investment adviser shall make and

10 keep for such periods, such accounts, correspondence,

11 memoranda, papers, books and records as the Secretary of State

12 may by rule or regulation prescribe. All records so required

13 shall be preserved for 3 years unless the Secretary of State by

14 rule, regulation or order prescribes otherwise for particular

15 types of records.

16 (b) Every registered dealer, limited Canadian dealer,

17 Internet portal, and investment adviser shall provide to the

18 Secretary of State, upon request, such accounts,

19 correspondence, memoranda, papers, books, and records as the

20 Secretary of State may by rule or regulation prescribe, that it

21 possesses and that it preserves for periods of longer than 3

22 years.

23 (2) Every registered dealer, limited Canadian dealer,

24 Internet portal, and investment adviser shall file such

25 financial reports as the Secretary of State may by rule or

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1 regulation prescribe.

2 (3) All the books and records referred to in paragraph (1)

3 of this subsection I are subject at any time or from time to

4 time to such reasonable periodic, special or other audits,

5 examinations, or inspections by representatives of the

6 Secretary of State, within or without this State, as the

7 Secretary of State deems necessary or appropriate in the public

8 interest or for the protection of investors.

9 (4) At the time of an audit, examination, or inspection,

10 the Secretary of State, by his or her designees, may conduct an

11 interview of any person employed or appointed by or affiliated

12 with a registered dealer, limited Canadian dealer, Internet

13 portal, or investment advisor, provided that the dealer,

14 limited Canadian dealer, Internet portal, or investment

15 advisor shall be given reasonable notice of the time and place

16 for the interview. At the option of the dealer, limited

17 Canadian dealer, Internet portal, or investment advisor, a

18 representative of the dealer or investment advisor with

19 supervisory responsibility over the individual being

20 interviewed may be present at the interview.

21 J. The Secretary of State may require by rule or regulation

22 the payment of an additional fee for the filing of information

23 or documents required to be filed by this Section which have

24 not been filed in a timely manner. The Secretary of State may

25 also require by rule or regulation the payment of an

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1 examination fee for administering any examination which it may

2 conduct pursuant to subsection B, C, D, or D-5 of this Section

3 8.

4 K. The Secretary of State may declare any application for

5 registration or limited registration under this Section 8

6 abandoned by order if the applicant fails to pay any fee or

7 file any information or document required under this Section 8

8 or by rule or regulation for more than 30 days after the

9 required payment or filing date. The applicant may petition the

10 Secretary of State for a hearing within 15 days after the

11 applicant's receipt of the order of abandonment, provided that

12 the petition sets forth the grounds upon which the applicant

13 seeks a hearing.

14 L. Any document being filed pursuant to this Section 8

15 shall be deemed filed, and any fee being paid pursuant to this

16 Section 8 shall be deemed paid, upon the date of actual receipt

17 thereof by the Secretary of State or his or her designee.

18 M. (Blank).

19 (Source: P.A. 99-182, eff. 1-1-16; 100-872, eff. 8-14-18.)

20 (815 ILCS 5/12) (from Ch. 121 1/2, par. 137.12)

21 Sec. 12. Violation. It shall be a violation of the

22 provisions of this Act for any person:

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1 A. To offer or sell any security except in accordance

2 with the provisions of this Act.

3 B. To deliver to a purchaser any security required to

4 be registered under Section 5, Section 6 or Section 7

5 hereof unless accompanied or preceded by a prospectus that

6 meets the requirements of the pertinent subsection of

7 Section 5 or of Section 6 or of Section 7.

8 C. To act as a dealer, Internet portal, salesperson,

9 investment adviser, or investment adviser representative,

10 unless registered as such, where such registration is

11 required, under the provisions of this Act.

12 D. To fail to file with the Secretary of State any

13 application, report or document required to be filed under

14 the provisions of this Act or any rule or regulation made

15 by the Secretary of State pursuant to this Act or to fail

16 to comply with the terms of any order of the Secretary of

17 State issued pursuant to Section 11 hereof.

18 E. To make, or cause to be made, (1) in any sworn

19 testimony before the Secretary of State or the Illinois

20 Securities Department within the Office of the Secretary,

21 orapplication, report or document filed under this Act or

22 any rule or regulation made by the Secretary of State

23 pursuant to this Act, any statement which was false or

24 misleading with respect to any material fact or (2) any

25 statement to the effect that a security (other than a

26 security issued by the State of Illinois) has been in any

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1 way endorsed or approved by the Secretary of State or the

2 State of Illinois.

3 F. To engage in any transaction, practice or course of

4 business in connection with the sale or purchase of

5 securities which works or tends to work a fraud or deceit

6 upon the purchaser or seller thereof.

7 G. To obtain money or property through the sale of

8 securities by means of any untrue statement of a material

9 fact or any omission to state a material fact necessary in

10 order to make the statements made, in the light of the

11 circumstances under which they were made, not misleading.

12 H. To sign or circulate any statement, prospectus, or

13 other paper or document required by any provision of this

14 Act or pertaining to any security knowing or having

15 reasonable grounds to know any material representation

16 therein contained to be false or untrue.

17 I. To employ any device, scheme or artifice to defraud

18 in connection with the sale or purchase of any security,

19 directly or indirectly.

20 J. When acting as an investment adviser, investment

21 adviser representative, or federal covered investment

22 adviser, by any means or instrumentality, directly or

23 indirectly:

24 (1) To employ any device, scheme or artifice to defraud

25 any client or prospective client;

26 (2) To engage in any transaction, practice, or

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1 course of business which operates as a fraud or deceit

2 upon any client or prospective client; or

3 (3) To engage in any act, practice, or course of

4 business which is fraudulent, deceptive or

5 manipulative. The Secretary of State shall for the

6 purposes of this paragraph (3), by rules and

7 regulations, define and prescribe means reasonably

8 designed to prevent such acts, practices, and courses

9 of business as are fraudulent, deceptive, or

10 manipulative.

11 K. When offering or selling any mineral investment

12 contract or mineral deferred delivery contract:

13 (1) To employ any device, scheme, or artifice to

14 defraud any customer, prospective customer, or

15 offeree;

16 (2) To engage in any transaction, practice, or course

17 of business that operates as a fraud or deceit upon any

18 customer, prospective customer, or offeree; or

19 (3) To engage in any act, practice, or course of

20 business that is fraudulent, deceptive, or

21 manipulative. The Secretary of State shall for the

22 purposes of this paragraph (3), by rules and

23 regulations, define and prescribe means reasonably

24 designed to prevent acts, practices, and courses of

25 business as are fraudulent, deceptive, or

26 manipulative.

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1 L. To knowingly influence, coerce, manipulate, or

2 mislead any person engaged in the preparation or audit of

3 financial statements or appraisals to be used in the offer

4 or sale of securities for the purpose of rendering such

5 financial statements or appraisals materially misleading.

6 (Source: P.A. 99-182, eff. 1-1-16.)

7 Section 15. The Payday Loan Reform Act is amended by

8 changing Section 2-5 as follows:

9 (815 ILCS 122/2-5)

10 Sec. 2-5. Loan terms.

11 (a) Without affecting the right of a consumer to prepay at

12 any time without cost or penalty, no payday loan may have a

13 minimum term of less than 13 days.

14 (b) Except for an installment payday loan as defined in

15 this Section, no payday loan may be made to a consumer if the

16 loan would result in the consumer being indebted to one or more

17 payday lenders for a period in excess of 45 consecutive days.

18 Except as provided under subsection (c) of this Section and

19 Section 2-40, if a consumer has or has had loans outstanding

20 for a period in excess of 45 consecutive days, no payday lender

21 may offer or make a loan to the consumer for at least 7

22 calendar days after the date on which the outstanding balance

23 of all payday loans made during the 45 consecutive day period

24 is paid in full. For purposes of this subsection, the term

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1 "consecutive days" means a series of continuous calendar days

2 in which the consumer has an outstanding balance on one or more

3 payday loans; however, if a payday loan is made to a consumer

4 within 6 days or less after the outstanding balance of all

5 loans is paid in full, those days are counted as "consecutive

6 days" for purposes of this subsection.

7 (c) Notwithstanding anything in this Act to the contrary, a

8 payday loan shall also include any installment loan otherwise

9 meeting the definition of payday loan contained in Section

10 1-10, but that has a term agreed by the parties of not less

11 than 112 days and not exceeding 180 days; hereinafter an

12 "installment payday loan". The following provisions shall

13 apply:

14 (i) Any installment payday loan must be fully

15 amortizing, with a finance charge calculated on the

16 principal balances scheduled to be outstanding and be

17 repayable in substantially equal and consecutive

18 installments, according to a payment schedule agreed by the

19 parties with not less than 13 days and not more than one

20 month between payments; except that the first installment

21 period may be longer than the remaining installment periods

22 by not more than 15 days, and the first installment payment

23 may be larger than the remaining installment payments by

24 the amount of finance charges applicable to the extra days.

25 In calculating finance charges under this subsection, when

26 the first installment period is longer than the remaining

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1 installment periods, the amount of the finance charges

2 applicable to the extra days shall not be greater than

3 $15.50 per $100 of the original principal balance divided

4 by the number of days in a regularly scheduled installment

5 period and multiplied by the number of extra days

6 determined by subtracting the number of days in a regularly

7 scheduled installment period from the number of days in the

8 first installment period.

9 (ii) An installment payday loan may be refinanced by a

10 new installment payday loan one time during the term of the

11 initial loan; provided that the total duration of

12 indebtedness on the initial installment payday loan

13 combined with the total term of indebtedness of the new

14 loan refinancing that initial loan, shall not exceed 180

15 days. For purposes of this Act, a refinancing occurs when

16 an existing installment payday loan is paid from the

17 proceeds of a new installment payday loan.

18 (iii) In the event an installment payday loan is paid

19 in full prior to the date on which the last scheduled

20 installment payment before maturity is due, other than

21 through a refinancing, no licensee may offer or make a

22 payday loan to the consumer for at least 2 calendar days

23 thereafter.

24 (iv) No installment payday loan may be made to a

25 consumer if the loan would result in the consumer being

26 indebted to one or more payday lenders for a period in

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1 excess of 180 consecutive days. The term "consecutive days"

2 does not include the date on which a consumer makes the

3 final installment payment.

4 (d) (Blank).

5 (e) No lender may make a payday loan to a consumer if the

6 total of all payday loan payments coming due within the first

7 calendar month of the loan, when combined with the payment

8 amount of all of the consumer's other outstanding payday loans

9 coming due within the same month, exceeds the lesser of:

10 (1) $1,000; or

11 (2) in the case of one or more payday loans, 25% of the

12 consumer's gross monthly income; or

13 (3) in the case of one or more installment payday

14 loans, 22.5% of the consumer's gross monthly income; or

15 (4) in the case of a payday loan and an installment

16 payday loan, 22.5% of the consumer's gross monthly income.

17 No loan shall be made to a consumer who has an outstanding

18 balance on 2 payday loans, except that, for a period of 12

19 months after March 21, 2011 (the effective date of Public Act

20 96-936), consumers with an existing CILA loan may be issued an

21 installment loan issued under this Act from the company from

22 which their CILA loan was issued.

23 (e-5) Except as provided in subsection (c)(i), no lender

24 may charge more than $15.50 per $100 loaned on any payday loan,

25 or more than $15.50 per $100 on the initial principal balance

26 and on the principal balances scheduled to be outstanding

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1 during any installment period on any installment payday loan.

2 Except for installment payday loans and except as provided in

3 Section 2-25, this charge is considered fully earned as of the

4 date on which the loan is made. For purposes of determining the

5 finance charge earned on an installment payday loan, the

6 disclosed annual percentage rate shall be applied to the

7 principal balances outstanding from time to time until the loan

8 is paid in full, or until the maturity date, whichever occurs

9 first. No finance charge may be imposed after the final

10 scheduled maturity date.

11 When any loan contract is paid in full, the licensee shall

12 refund any unearned finance charge. The unearned finance charge

13 that is refunded shall be calculated based on a method that is

14 at least as favorable to the consumer as the actuarial method,

15 as defined by the federal Truth in Lending Act. The sum of the

16 digits or rule of 78ths method of calculating prepaid interest

17 refunds is prohibited.

18 (f) A lender may not take or attempt to take an interest in

19 any of the consumer's personal property to secure a payday

20 loan.

21 (g) A consumer has the right to redeem a check or any other

22 item described in the definition of payday loan under Section

23 1-10 issued in connection with a payday loan from the lender

24 holding the check or other item at any time before the payday

25 loan becomes payable by paying the full amount of the check or

26 other item.

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1 (h) For the purpose of this Section, "substantially equal

2 installment" includes a last regularly scheduled payment that

3 may be less than, but no more than 5% larger than, the previous

4 scheduled payment according to a disclosed payment schedule

5 agreed to by the parties.

6 (Source: P.A. 100-201, eff. 8-18-17.)

7 (815 ILCS 5/2.10a rep.)

8 Section 20. The Illinois Securities Law of 1953 is amended

9 by repealing Section 2.10a.

10 Section 99. Effective date. This Act takes effect upon

11 becoming law.".