New Jersey § 49:3-56

§ 49:3-56.

(a) It shall be unlawful for any person to act as a broker-dealer, agent, investment

adviser or investment adviser representative or Internet site operator in this State unless that person is registered or exempt from registration under

this act; (b) A person shall be exempt from registration as a broker-dealer if, during any period

of 12 consecutive months, that person (1) does not effect more than 15 transactions

with persons other than those specified in paragraph (5) of subsection (c) of section

2 of P.L.1967, c. 93 ( C.49:3-49 ) located within New Jersey; (2) does not effect transactions in more than five customer

accounts of New Jersey residents; or (3) effects transactions with persons who have

no place of residence in New Jersey and who are temporarily located in the State;

if at the time of the transactions described in paragraph (1), (2) or (3) of this

subsection (b), the broker-dealer has no place of business in this State and is a

member in good standing of a recognized self-regulatory organization and is registered

in the state in which the broker-dealer is located; (c) Agents who represent broker-dealers in transactions exempt pursuant to paragraph

(1), (2) or (3) of subsection (b) of this section shall be exempt from registration

for those transactions if they are members of a recognized self-regulatory organization

and registered in the state in which they are located at the time of the transaction; (d) The burden of proving an exemption from registration under this section shall

be on the person claiming the exemption. A person claiming an exemption from registration under this section shall keep his

books and records open to inspection by the bureau. If the bureau chief finds it is in the public interest and necessary for the protection

of investors, the bureau chief may deny any exemption specified in paragraph (1),

(2) or (3) of subsection (b) or in subsection (c) of this section as to any broker-dealer

or agent. The bureau chief may proceed in summary fashion or otherwise; (e) The bureau chief may identify classes of customers, securities, transactions and

broker-dealers for the purpose of increasing the number of transactions or accounts

available under the exemptions specified in paragraph (1), (2) or (3) of subsection

(b) or subsection (c) of this section; (f) The bureau chief may by order identify the self-regulatory organizations recognized

under subsections (b) and (c) of this section and may by rule or order define the

conditions under which non-resident persons are temporarily in New Jersey under paragraph

(3) of subsection (b) of this section; (g) A person shall be exempt from registration as an investment adviser or from making

a notice filing required by section 10 of P.L.1967, c. 93 ( C.49:3-57 ), if: (1) The person has a place of business in this State and during any period of 12 consecutive

months that person does not have more than five clients, who are residents of this

State, other than those specified in subparagraph (vi) of paragraph (2) of subsection

(g) of section 2 of P.L.1967, c. 93 ( C.49:3-49 ); or (2) The person has no place of business in this State, and during any period of 12

consecutive months that person does not have more than five clients, who are residents

of this State, other than those specified in subparagraph (vi) of paragraph (2) of

subsection (g) of section 2 of P.L.1967, c. 93 ( C.49:3-49 ). The bureau chief may by rule or order determine the availability of the exemptions

provided by this subsection (g), including the waiver of the conditions in paragraphs

(1) and (2) of this subsection; (h) It shall be unlawful for any broker-dealer or issuer to employ an agent in this

State unless the agent is registered. The registration of an agent is not effective during any period when he is not associated

with a particular broker-dealer registered under this act or a particular issuer. When an agent begins or terminates a connection with a broker-dealer or issuer,

or begins or terminates those activities which make him an agent, the agent as well

as the broker-dealer or issuer shall promptly notify the bureau. When an agent terminates his connection with a particular broker-dealer or issuer,

his authorization to engage in those activities which make him an agent is terminated; (i) It shall be unlawful for any person to transact business in this State as an investment

adviser unless (1) he is so registered under this act, is exempt from registration

under this act, or is excluded from the definition of investment adviser under this

act, or (2) he is registered as a broker-dealer without the imposition of a condition

under paragraph (5) of subsection (b) of section 11 of P.L.1967, c. 93 ( C.49:3-58 ); (j) It shall be unlawful for any investment adviser required to be registered pursuant

to this section to employ an investment adviser representative, unless the investment

adviser representative is also registered pursuant to this section. It is unlawful for any person registered or required to be registered as an investment

adviser under section 203 of the “Investment Advisers Act of 1940,” 15 U.S.C. s.80b-3 , to employ, supervise, or associate with an investment adviser representative having

a place of business located in this State, unless that investment adviser representative

is registered under this act, or is exempt from registration. The registration of an investment adviser representative is not effective during

any period when the investment adviser representative is not employed by an investment

adviser registered pursuant to this section or registered under section 203 of the

“Investment Advisers Act of 1940,” 15 U.S.C. s.80b-3 . When an investment adviser representative described in this subsection begins or

terminates employment with an investment adviser, the investment adviser and the investment

adviser representative shall promptly notify the bureau chief. When an investment adviser representative terminates his connection with a particular

investment adviser, his authorization to engage in those activities which make him

an investment adviser representative is terminated; (k) The bureau chief may summarily bar, pending final determination of any proceeding

under this subsection, any person, who has been convicted of any crime of embezzlement

under state, federal or foreign law or any crime involving any theft, forgery or fraudulent

practices in regard to any state, federal or foreign securities, banking, insurance,

or commodities trading laws or anti-fraud laws, from being a partner, officer or director

of an issuer, broker-dealer or investment adviser, or from occupying a similar status

or performing a similar function or from directly or indirectly controlling or being

under common control or being controlled by an issuer, broker-dealer or investment

adviser, or from acting as a broker-dealer, agent or investment adviser in this State. Any person barred by this subsection shall be entitled to request a hearing by the

same procedures as set forth in subsection (c) of section 3 of P.L.1967, c. 93 ( C.49:3-50 ); ( l ) Notwithstanding any other provision of this act, the bureau chief may bring an administrative

or court action pursuant to section 29 of P.L.1997, c. 276 ( C.49:3-70.1 ), to seek and obtain civil penalties for violations of this section; (m) Every registration shall expire one year from its effective date unless renewed,

except that the bureau chief may by rule provide that registrations shall all expire

on the same date; (n) Except with respect to advisers whose only clients are those described in subparagraph

(vi) of paragraph (2) of subsection (g) of section 2 of P.L.1967, c. 93 ( C.49:3-49 ), it is unlawful for any person who is registered or required to be registered under

section 203 of the “Investment Advisers Act of 1940,” 15 U.S.C. s.80b-3 , as an investment adviser to conduct advisory business in this State, unless that

person files those documents filed with the Securities and Exchange Commission with

the bureau chief, as the bureau chief may by rule or otherwise require, and a fee

and consent to service of process, as the bureau chief, by rule or otherwise, may

require; ( o ) Notwithstanding anything to the contrary in this act, until October 11, 1999, the

bureau chief may require the registration of any person who is registered or required

to be registered as an investment adviser under section 203 of the “Investment Advisers

Act of 1940,” 15 U.S.C. s.80b-3 , and who has failed to promptly pay the fees required by subsection (n) of this section

after being notified in writing by the bureau chief of the non-payment or underpayment

of those fees. A person shall be considered to have promptly paid those fees if they are remitted

to the bureau chief within 15 days following that person's receipt of the written

notification from the bureau chief; (p) For the purposes of this section, each applicant for registration shall submit

to the bureau chief, the applicant's name, address, fingerprints and written consent

for a criminal history record background check to be performed. The bureau chief is hereby authorized to exchange fingerprint data with and receive

criminal history record information from the State Bureau of Identification in the

Division of State Police and the Federal Bureau of Investigation consistent with applicable

State and federal laws, rules and regulations. The applicant shall bear the cost for the criminal history record background check,

including all costs of administering and processing the check. The Division of State Police shall promptly notify the bureau chief in the event

a current holder of a license or prospective applicant, who was the subject of a criminal

history record background check pursuant to this section, is arrested for a crime

or offense in this State after the date the background check was performed.