Utah Administrative Code

The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (see Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).

NOTE: For a list of rules that have been made effective since August 1, 2019, please see the codification segue page.

NOTE TO RULEFILING AGENCIES: Use the RTF version for submitting rule changes.


R164. Commerce, Securities.

Rule R164-32. Codification of Precedent.

As in effect on August 1, 2019

Table of Contents

R164-32-1. Codification of Precedent.

(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

(c) was geographically distant from the activities through which the LLC was managed.

(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

(C) risk factors; or

(ii) the offerer's:

(A) criminal history;

(B) regulatory history; or

(C) financial history, including:

(I) bankruptcies; or

(II) civil judgments.

(c) Pursuant to SD-13-0030 (Oct. 14, 2014), an offerer makes a material omission by failing to disclose:

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

(A) financial statements of the common enterprise;

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

(C) methodology for valuing shares or similar investment units;

(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.

KEY

securities regulation, precedent, statutory interpretation

Date of Enactment or Last Substantive Amendment

June 22, 2015

Authorizing, Implemented, or Interpreted Law

61-1-24; 63G-3-201(2); 63G-3-201(3); 63G-3-201(6); 61-1-13(1)(ee)(ii)(B); 61-1-13(1)(s)(i); 61-1-1(2); 61-1-21.1


Additional Information

Contact

For questions regarding the content or application of rules under Title R164, please contact the promulgating agency (Commerce, Securities). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.