Colorado § 11-51-401 - Licensing and notice filing requirements.

§ 11-51-401. Licensing and notice filing requirements.

(1) A person shall not transact business in this state as a broker-dealer or sales representative unless licensed or exempt from licensing under section 11-51-402.

(1.5) A person shall not transact business in this state as an investment adviser or investment adviser representative unless the person is licensed or exempt from licensing under section 11-51-402.

(1.6) A federal covered adviser shall not transact business in this state as a federal covered adviser unless the adviser:

(a) Has filed with the securities commissioner the notice and fee required in sections 11-51-403 and 11-51-404; or

(b) Is not required to file pursuant to section 11-51-402 (5).

(2) Neither a broker-dealer nor an issuer shall employ or otherwise engage an individual to act as a sales representative in this state unless the sales representative is licensed or exempt from licensing under section 11-51-402.

(2.5) An investment adviser or federal covered adviser shall not employ or otherwise engage any individual to act as an investment adviser representative in this state unless the individual is licensed in accordance with section 11-51-403 or is exempt from licensing under section 11-51-402.

(3) No broker-dealer, investment adviser, or issuer shall employ or otherwise engage a person to participate in any activity in this state contrary to an order by the securities commissioner applicable to that person under section 11-51-410. A broker-dealer, investment adviser, or issuer does not violate this subsection (3) if the broker-dealer, investment adviser, or issuer sustains the burden of proof that it did not know and in the exercise of reasonable care could not have known of the order. Upon request from a broker-dealer, investment adviser, or issuer and for good cause shown, the securities commissioner may waive the prohibition of this subsection (3) with respect to a person subject to an order under section 11-51-410.

(4) No person shall act as an investment adviser for a local government investment pool trust fund under article 75 of title 24, C.R.S., unless the person has first notified the securities commissioner by filing the form prescribed by the securities commissioner.

Source: L. 90: Entire article R&RE, p. 720, § 1, effective July 1. L. 98: (1.5), (1.6), (2.5), and (4) added and (3) amended, p. 550, § 4, effective January 1, 1999. L. 2026: (1.5), (1.6), and (2.5) amended, (HB 26-1188), ch. 229, p. 1332, § 7, effective August 12.

Editor's note: (1) This section is similar to former § 11-51-105 as it existed prior to 1990.

(2) Section 14(2) of chapter 229 (HB 26-1188), Session Laws of Colorado 2026, provides that the act changing this section applies to cease-and-desist orders and summary suspension orders issued on or after August 12, 2026.

Cross references: For provisions concerning the use of the term "transacting business in this state" in subsections (1.5), (1.6), and (2.5) of this section, see § 11-51-102 (8); for the applicability of subsections (1) and (2), see § 11-51-102 (1) and (2).

ANNOTATION

Law reviews. For article, "Dodd Frank Act Expands Federal and State Regulation of Investment Advisers", see 40 Colo. Law. 15 (Feb. 2011).

Approval or acceptance of the sale of a security is not a necessary element of whether a person is acting as a sales representative. A person who facilitated all aspects of the investment other than the formal acceptance of the agreement is acting as a sales representative. Thus, the person is required to have a license. Black Diamond Fund, LLLP v. Joseph, 211 P.3d 727 (Colo. App. 2009).

Hearing panel's conclusion that a broker-dealer may be construed as engaging in the business of buying or selling securities by authorizing and employing a sales representative on his or her behalf is a reasonable interpretation of section. Where respondents hired an employee to attempt to effectuate purchases and sales of interests in the joint venture, gave him a call list, and authorized him to contact potential investors to solicit their investment and qualify them as venturers, employee was a sales representative within meaning of the section. Joseph v. Mieka Corp., 2012 COA 84, 282 P.3d 509.