R164-32. Codification of Precedent, R164. Commerce, Securities, Utah Administrative Code

Utah Administrative Code (Current through November 1, 2019)

R164. Commerce, Securities

R164-32. Codification of Precedent

R164-32-1. Codification of Precedent

Latest version.

(1) Authority and purpose.

(a) The Division enacts this rule pursuant to Utah Code Subsections 63G-3-201(2), (3), (6) and Section 61-1-24.

(b) This rule incorporates the principles of law:

(i) that are established by final adjudicative decisions by the Utah Securities Commission, the Division Director, or an Administrative Law Judge; and

(ii) where:

(A) agency action meets criteria requiring rulemaking as set forth in the Utah Administrative Rulemaking Act; or

(B) the Division issues a written interpretation of a state or federal legal mandate.

(2) Limited liability company exemption, Section 61-1-13(1)(ee)(ii)(B). Pursuant to SD-12-0076 (Aug. 8, 2013), a material issue of fact as to whether a respondent may claim the limited liability company exemption is created by a single investor's sworn statement that the investor:

(a) purchased shares in an LLC solely for investment purposes;

(b) took no part in the management of the LLC; or

(3) Common enterprise, Section 61-1-13(1)(s)(i). Pursuant to SD-13-0018, 0019, 0020 (Nov. 8, 2013), a common enterprise includes a circumstance in which value tendered by an offeree is:

(a) deposited into the offerer's personal or business financial account(s); and

(b) subjected to the offerer's personal control and oversight.

(4) False statement or material omission, Section 61-1-1(2).

(a) Pursuant to SD-13-0018, 0019, 0020 (Nov. 8, 2013), a rebuttable presumption of material omission is created by an investor's sworn statement that, had a certain piece of information been provided, it would have caused the investor to:

(i) question or disbelieve representations made by the offerer in connection with the transaction; or

(ii) decline to purchase the offered security.

(b) Pursuant to SD-11-0041, 0042 (April 7, 2014), an offerer makes a material omission by failing to disclose:

(i) specific information about the investment itself, including:

(A) the identity of the person to whom funds will be entrusted;

(B) the track record of the investment; or

(ii) the offerer's:

(A) criminal history;

(B) regulatory history; or

(I) bankruptcies; or

(II) civil judgments.

(i) specific information about the investment itself, including:

(A) financial statements of the common enterprise;

(B) history of late or missed payments to investors;

(D) basis for any unit value that is represented or anticipated as deriving from:

(I) future sale of the units;

(II) future sale or acquisition of the common enterprise; or

(II) any similar future event; or

(E) registration status of the security being offered; or

(ii) the offerer's:

(A) tax liens; or

(B) licensure or lack thereof.

(d) Pursuant to SD-11-0041, 0042 (April 7, 2014), it is not necessary that money change hands or that an investor suffer a financial loss before an administrative action may be taken against an offerer for false statement or material omission.

(e) Pursuant to SD-11-0041, 0042 (April 7, 2014), liability for a false statement or material omission is not limited to the person who creates or first promotes an investment.

(5) Statutes of limitation, including Section 61-1-21.1.

(a) Pursuant to SD-12-0001 (March 27, 2014), the statute of limitation specified in Section 61-1-21.1 is inapplicable to an administrative disciplinary hearing.

(b) Pursuant to SD-14-0039, 0040 (Jan. 6, 2015), there is no statute of limitation applicable to administrative actions filed by the Division under the Uniform Securities Act where no civil complaint is filed.