New Rules Under The Colorado Securities Act Now Effective by Herrick K. Lidstone, Jr.August 9, 2017 12:14 pm
New Rules Under The Colorado Securities Act Now Effective
By Herrick K. Lidstone, Jr., Burns, Figa & Will, P.C.
The Colorado Securities Act, found at C.R.S. § 11-51-101 et seq. (the “CSA”), is
administered by the Securities Commissioner (C.R.S. § 11-51-701) subject to the oversight of the
Colorado Securities Board (C.R.S. § 11-51-702.5(4). The CSA, like securities acts in many
other states has a broad applicability to “securities” and requires the availability of a registration
or an exemption from registration before securities are offered or sold to investors in or from
Colorado; it requires the licensing of broker-dealers, investment advisers, and their
representatives involved in securities transactions in Colorado; and the CSA provides significant
enforcement powers to the Commissioner including bringing cease and desist actions
(C.R.S. § 11-51-606(1.5)), or civil or administrative enforcement actions (C.R.S. § 11-51-601, -602, and -606).
Under C.R.S. § 11-51-603, the Commissioner may refer evidence of a violation of the
CSA that constitutes a felony or misdemeanor to the attorney general’s office or the appropriate
district attorney for consideration of prosecution.
The Commissioner has adopted rules interpreting the CSA which are found at 3 CCR
704-1, available through the Colorado Secretary of State’s website. C.R.S. § 24-4-103(11)
requires that the Secretary of State maintain the official publication of the state’s administrative
rules. The Securities Division has also maintained its “Notice of Proposed Rulemaking,”
“Draft Statement of Basis and Purpose” for the rulemaking (dated March 6, 2017), and the redlined rule
changes as originally proposed on the Division of Securities website (Rulemaking Combined
Notice_3-31-17.pdf, available at https://www.colorado.gov/pacific/dora/rulemaking-noticesopinions
(last reviewed August 7, 2017).
On July 15, 2017, the new rules under the CSA became effective. While the
republication included many unchanged rules, there were substantive updates which will be
discussed in this memorandum.
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