Section 1-102 - DefinitionsWhen used in this act, the following definitions shall be applicable, unless the context otherwise requires:
(a)"Advertisement" means any communication used in connection with a sale or purchase or an offer to sell or purchase a security which is publicly disseminated by means of print, radio, television, Internet or other media.(b) An "affiliate" of, or a person "affiliated" with, a specified person, means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.(c)"Agent" means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include: (i) an individual who represents an issuer in effecting transactions in securities exempted by section 202 , transactions exempted by section 203 or transactions in a covered security described insections 18(b)(3) and (4)(D) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r ) if no compensation is paid or given directly or indirectly for soliciting any person in this State in connection with any of the foregoing transactions;(ii) an individual who represents a broker-dealer in effecting transactions in this State, which transactions are limited to those described in section 15(i)(3) of the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78o(i)(3)); and (iii) an individual who has no place of business in this State if he effects transactions in this State exclusively with broker-dealers. Except where representing an issuer in effecting transactions in securities registered under section 205 or 206, a bona fide officer, director, or partner or employe of a broker-dealer or issuer, or an individual occupying a similar status or performing similar functions, is an agent only if he otherwise comes within this definition and receives compensation directly or indirectly related to purchases or sales of securities. (d) "Bank" means a bank, savings bank, savings institution, savings and loan association, thrift institution, trust company or similar organization which is organized or chartered under the laws of a state or of the United States, is authorized to and receives deposits and is supervised and examined by an official or agency of a state or by the United States if its deposits are insured by the Federal Deposit Insurance Corporation or a successor authorized by Federal law, and any agency, branch or representative office of a foreign bank that is subject to the same degree of regulation and supervision as a domestic bank.(e)"Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for his own account. "Broker-dealer" does not include: (iii) A bank which meets the exceptions from the definition of "broker" under section 3(a)(4)(B) or (E) or the definition of "dealer" under section 3(a)(5)(B) or (C) of the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78c(a)(4)(B) or (E) or (5)(B) or (C) );(iv) An executor, administrator, guardian, conservator or pledgee;(v) A person who has no place of business in this State if he effects transactions in this State exclusively with or through (A) the issuers of the securities involved in the transactions, (B) broker-dealers or institutional investors;(vi) A person licensed as a real estate broker or agent under the act of February 19, 1980 (P.L. 15, No. 9) , known as the Real Estate Licensing and Registration Act, and whose transactions in securities are isolated transactions incidental to that business; or(vii) Other persons not within the intent of this subsection whom the department by regulation designates.(f) "Commission" means the Banking and Securities Commission of the Commonwealth, as established under Subarticle C of Article XI-A of the act of May 15, 1933 (P.L.565, No.111), known as the Department of Banking and Securities Code.(f.1)"Federally covered adviser" means a person who is registered under section 203 of the Investment Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80b-3 ).(f.2)"Federally covered security" means any security that is a covered security under section 18(b) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77r(b) ).(f.3) "Commissioner" means a member of the commission.(g)"Control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.(g.1) "Department" means the Department of Banking and Securities of this Commonwealth.(h)"Fraud," "deceit" and "defraud" are not limited to common law fraud or deceit.(i)"Guaranteed" means guaranteed as to payment of principal, interest, purchase price, dividend or call premium.(j)"Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications , writings or electronic means, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" does not include: (ii) A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of his profession;(iii) A broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and does not receive special compensation for the investment advice;(iv) A publisher of any bona fide newspaper, news column, newsletter, news magazine or business or financial publication or service, whether communicated in hard copy form or by electronic means or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client and is of general, regular and paid circulation; and the agents and servants thereof in the performance of their regular duties on behalf of such publication or service;(v) A person whose advice, analyses or reports relate only to securities exempted under section 202(a);(vi) A person who has no place of business in this State if his only clients in this State are other investment advisers, federally covered advisers, broker-dealers or institutional investors;(vii) A person who has a place of business in this State and during the preceding twelve-month period has had not more than five clients in or out of this State and does not hold himself out generally to the public as an investment adviser;(viii) A person that is an investment adviser representative;(ix) A federally covered adviser;(x) A person excluded from the definition of "investment adviser" under section 202(a)(11) of the Investment Advisers Act of 1940 (54 Stat. 847, 15 U.S.C. § 80b - 2(a)(11) ); or(xi) Other persons not within the intent of this subsection whom the department by regulation designates.(j.1) "Investment adviser representative" means: (i) Except as provided in paragraph (iii), with respect to any investment adviser registered or required to be registered under this act, any partner, officer, director or person occupying a similar status or performing similar functions, or other individuals employed by or associated with an investment adviser who performs any of the following: (A) Makes any recommendations or otherwise renders advice regarding securities;(B) Manages accounts or portfolios of clients;(C) Determines which recommendation or advice regarding securities should be given;(D) Provides investment advice or holds himself or herself out as providing investment advice;(E) Supervises employes who perform any of the foregoing; or(F) Receives compensation to solicit, offer or negotiate for the sale of or for selling investment advice.(ii) With respect to any federally covered adviser, any individual employed by or associated with a federally covered adviser who is an "investment adviser representative" and who has a "place of business" in this State as those terms are defined in the rules and regulations of the Securities and Exchange Commission.(iii) An investment adviser representative may not include;(A) individuals who perform only clerical or ministerial acts;(B) an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services; or(C) other individuals that the department determines by regulation.(k) "Institutional investor" means any bank, insurance company, pension or profit sharing plan or trust (except a municipal pension plan or system), investment company, as defined in the Investment Company Act of 1940, or any person, other than an individual, which controls any of the foregoing, the Federal Government, State or any agency or political subdivision thereof, except public school districts of this State, or any other person so designated by regulation of the department.(k.1)"Knowing and knowingly" as used in sections 407(a) , 511 , 512(a) and 513 shall have the same meaning as the term "knowingly" is defined in18 Pa.C.S. § 302(b)(2) (relating to general requirements of culpability).(l)"Issuer" means any person who issues or proposes to issue any security, and any promoter who acts for an issuer proposed to be formed. With respect to certificates of deposit, voting trust certificates or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued; except that with respect to equipment-trust certificates or like securities, the term "issuer" means the person by whom the equipment or property is or is to be used. With respect to certificates of interest or participation in oil, gas or mining titles or leases or in payments out of production under such titles or leases, the term "issuer" means the person or persons actively managing the exploration or development of the property who sell such interests or participations or payments or any person or persons who subdivide and sell such interests or participations or payments. The determination of the person or persons actively managing the exploration or development of the property shall be made on the basis of the actual relationship of the parties and not on the basis of the legal designation of a person's interest. Members of unincorporated associations, which members have limited liability, and any trustee or member of a trust, committee or other legal entity shall not be deemed to be an "issuer" for the purposes of this act.(l.1)"Municipal pension plan or system" means a pension plan or system provided by a municipality as those terms are defined in section 102 of the act of December 18, 1984 (P.L. 1005, No. 205), known as the Municipal Pension Plan Funding Standard and Recovery Act.(m)"Non-issuer transaction" means any transaction not directly or indirectly for the benefit of the issuer.(n)"Person" means an individual, corporation, partnership, association, joint stock company, syndicate, trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, government, political subdivision of a government, or any other entity.(o)"Promoter" includes (i) any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; (ii) any person who, in connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services or property, or both services and property, ten per cent or more of any class of securities of the issuer or ten per cent or more of the proceeds from the sale of any class of securities. For purposes of sections 207 and 208, a "promoter" includes (iii) any person who is described in clauses (i) and (ii); (iv) any person who is an officer or director of the issuer; (v) any person who legally or beneficially owns, directly or indirectly, five per cent or more of any class of the issuer's equity securities; or (vi) any person who is an affiliate of a person described in clause (i), (ii), (iii), (iv) or (v). " Promoter" does not include a person who receives securities or proceeds solely as underwriting compensation if that person does not otherwise come within the definition of "promoter."(p)"Publish" means publicly to issue or circulate by newspaper, mail, radio, television, Internet or other media or otherwise to disseminate to the public.(q)"Reporting company" means any person which has been required to file, and has filed, all required periodic reports with the Securities and Exchange Commission and has filed all annual reports, if any, which it is required to file for at least twelve months prior to the time of application of this definition for persons filing pursuant to the provisions of section 13 or 15(d) of the Securities Exchange Act of 1934 or the provisions of section 30 of the Investment Company Act of 1940. (r)(i)"Sale" or "sell" includes every sale, disposition or exchange, and every contract of sale of, or contract to sell, a security or interest in a security for value or any issuance of securities pursuant to any merger, consolidation, sale of assets or other corporate reorganization, involving the exchange of securities, in whole or in part, for the securities of any other person.(ii)"Offer" or "offer to sell" includes every direct or indirect attempt or offer to sell or dispose of, or solicitation of an offer to purchase, a security or interest in a security for value.(iii) Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.(iv) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.(v) A purported gift of assessable stock (for which the statutory consideration has not been paid) involves an offer and sale.(vi) An offer of rescission made pursuant to section 504(e) involves an offer and sale.(vii) The terms "sale," "sell," "offer" and "offer to sell" do not include: (A) any bona fide secured transaction in, or loan of, outstanding securities; or (B) any dividend payable with respect to the securities of a corporation in the same or any other class of securities of such corporation.(viii) A dividend or distribution by any person to all or any class of its security holders of the securities of any other person, whether or not such dividend or distribution is for value, involves a sale.(s) "Securities Act of 1933," "Securities Exchange Act of 1934," "Public Utility Holding Company Act of 2005," "Trust Indenture Act of 1939," "Investment Advisers Act of 1940," "Investment Company Act of 1940" and "Internal Revenue Code of 1986" mean the Federal statutes of those names as amended , or any successor statutes thereto. Section numbers of such statutes or regulations adopted thereunder and referred to herein include such amendments thereto as may be adopted .(s.1) "Securities and Exchange Commission" means the United States Securities and Exchange Commission.(s.2)"Self-regulatory organization" means a national securities exchange registered under the Securities Exchange Act of 1934, a national securities association registered under the Securities Exchange Act of 1934 or Investment Advisors Act of 1940, a clearing agency registered under the Securities Exchange Act of 1934, the Municipal Securities Rulemaking Board established under the Securities Exchange Act of 1934 or an organization operating under the authority of the Commodity Futures Trading Commission.(t)"Security" means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; share of beneficial interest in a business trust; certificate of interest or participation in any profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; limited partnership interest; fractional undivided interest in oil, gas or other mineral rights; put, call, straddle, option or privilege on a security, certificate of deposit of a security or group or index of securities including any interest in the securities or based upon the value of the securities, or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency; membership interest in a limited liability company of any class or series, including any fractional or other interest in such interest, unless excluded by clause (v); or, in general, any interest or instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. All of the foregoing are securities whether or not evidenced by written document. "Security" does not include: (i) Any beneficial interest in any voluntary inter vivos trust which is not created for the purpose of carrying on any business; or(ii) Any beneficial interest in any testamentary trust; or(iii) Any insurance or endowment policy or annuity contract under which an insurance company admitted in this State promises to pay a sum of money (whether or not based upon the investment performance of a segregated fund) either in a lump sum or periodically for life or some other specified period; or(iv) Any certificate issued under section 809 of The Insurance Company Law of 1921, act of May 17, 1921 (P.L.682), as amended; or(v) A membership interest in a limited liability company where all of the following conditions are satisfied:(A) The membership interest is in a company that is not managed by managers;(B) The purchaser of the membership interest enters into a written commitment to be engaged actively and directly in the management of the company; and(C) The purchaser of the membership interest, in fact, does participate actively and directly in the management of the company.(u)"State" means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.(v)"Underwriter" means a person who has agreed with an issuer or other person on whose behalf a distribution is to be made (i) to purchase securities for distribution or (ii) to distribute securities for or on behalf of such issuer or other person or (iii) to manage or supervise a distribution of securities for or on behalf of such issuer or other person.(w)"Wilful and wilfully" mean the following:(1) As used in all sections of the act except section 511 with respect to a wilful violation of section 401(a) of the act, and notwithstanding any law or statute to the contrary, wilful means that the person acted intentionally in the sense that the person intended to do the act and was aware of what the person was doing. Proof of evil motive or intent to violate the act or knowledge that the person's conduct violated the act is not required.(2) For purposes of section 511 with respect to a wilful violation of section 401(a) of the act, wilful means that the person acted intentionally, knowingly or recklessly as those terms are defined in 18 Pa.C.S. § 302 (relating to general requirements of culpability).Amended by P.L. 678 2014 No. 52, § 1, eff. 8/9/2014.1972, Dec. 5, P.L. 1280, No. 284, § 102, effective Jan. 1, 1973. Amended 1990, Dec. 18, P.L. 755, No. 190, § 1, effective in 60 days; 1994, Dec. 7, P.L. 869, No. 126, § 1, effective in 90 days; 1998, Nov. 24, P.L. 829, No. 109, § 1, effective in 60 days; 2002, July 4, P.L. 721, No. 108, § 1, effective in 60 days; 2004, Nov. 23, P.L. 924, No. 128, § 1, effective Jan. 24, 2005; 2004, Nov. 23, P.L. 930, No. 132, § 1, effective Jan. 24, 2005.