6 DE Admin. Code Rules. Pursuant to the Delaware Securities Act

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Delaware Administrative Code › Title 6 Attorney General's Office › Fraud and Consumer Protection Division › Investor Protection Unit › 6 DE Admin. Code Rules

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Department of Justice

Office of the Attorney General

Investor Protection Unit

Rules Pursuant to the Delaware Securities Act

Part A. General Provisions

100 General Statement and Statutory Authority

The Investor Protection Unit (hereinafter, the "Unit") was created in 1973 with the passage of the Delaware Securities Act (hereinafter, the "Act"), which is found at Chapter 73 of Title 6 of the Delaware Code. The Act is administered by the Attorney General through a Deputy Attorney General designated to act as Investor Protection Director (hereinafter, the "Director"). The Director is the principal executive officer of the Unit and acts for the Attorney General in administering the Act. The purpose of the Act is to prevent the public from being victimized by unscrupulous or over-reaching broker-dealers, investment advisers or agents in the context of selling securities or giving investment advice, as well as to remedy any harm caused by securities law violations.

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

101 References to the Act

A reference in these Rules Pursuant to the Delaware Securities Act (hereinafter, the "Rules") to a provision in the Act shall be deemed to be a reference to the same provision as re-designated under any amendment to the Act.

1 DE Reg. 1978 (06/01/98)

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

102 Interpretive Opinions

The Unit may, in its discretion, provide written no action guidance in response to written requests. No action guidance indicates that, based on the specific facts presented, the Unit would not recommend enforcement action if a proposed transaction or activity goes forward as presented to the Unit. Requests for no action should identify the parties involved, provide complete facts, be addressed to the Director and accompanied by a fee of $500 payable to the State of Delaware

to written requests. No action guidance indicates that, based on the specific facts presented, the Unit would not recommend enforcement action if a proposed transaction or activity goes forward as presented to the Unit. Requests for no action should identify the parties involved, provide complete facts, be addressed to the Director and accompanied by a fee of $500 payable to the State of Delaware. When 1 request contains multiple questions or inquiries that require separate or additional research, each question or inquiry may be treated as a separate request for purposes of calculating the applicable fee. If the fee will be more than $500, the Unit will contact the requesting party regarding the additional cost. No guidance will be issued in the absence of fee payment. Fees are nonrefundable even where the Unit’s guidance declines to provide the requested relief.

The Unit does not provide guidance that involves the provision of legal advice or interpretation of provisions other than those in the Act and the Rules.

1 DE Reg 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

23 DE Reg. 776 (03/01/20)

29 DE Reg. 786 (03/01/26)

103 Vicarious Liability for Violations of the Act

Any violation of the Act, or the Rules, by a person acting in an agency capacity shall, in any legal proceedings brought by the Unit, be deemed to be a violation by both that person and the person for whom the agent is acting, provided that the agent was acting within the scope of his agency.

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

Part B. Practice and Procedure in Administrative Hearings General Rules

200 Construction of Rules of Practice and Procedure

(a) Unless otherwise provided, Part B of the Rules (Rule 200 through Rule 272) governs proceedings before Presiding Officers (as defined in paragraph (d), below) under the Act. Part B does not apply to investigations by the Unit, which are governed by Part C of the Rules.

14)

Part B. Practice and Procedure in Administrative Hearings General Rules

200 Construction of Rules of Practice and Procedure

(b) Part B of the Rules shall be construed and administered to secure the just, speedy, and inexpensive determination of every proceeding.

(c) In any particular proceeding, to the extent that there is a conflict between these Rules and a procedural requirement contained in any statute, the latter shall control.

(d) For the purposes of these Rules, the "Presiding Officer" shall mean either the Director or the individual to whom the Director has delegated his or her authority pursuant to Rule 202 in a particular administrative proceeding commenced under the Act, as the case may be.

(e) For purposes of these Rules:

(1) any term in the singular includes the plural, and any term in the plural includes the singular, if such use would be appropriate;

(2) any use of a masculine, feminine, or neuter gender encompasses such other genders as would be appropriate; and

(3) unless the context requires otherwise, counsel for a party may take any action required or permitted to be taken by such party.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

201 Appearance and Practice in Administrative Proceedings

A person shall not be represented before a Presiding Officer except as stated in paragraphs (a) and (b) of this section or as otherwise permitted by the Presiding Officer:

(a) Representing oneself. In any proceeding, an individual may appear on his or her own behalf.

e taken by such party.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

201 Appearance and Practice in Administrative Proceedings

A person shall not be represented before a Presiding Officer except as stated in paragraphs (a) and (b) of this section or as otherwise permitted by the Presiding Officer:

(a) Representing oneself. In any proceeding, an individual may appear on his or her own behalf.

(b) Representing others. In any proceeding, a person may be represented by an attorney at law admitted to practice before the Supreme Court of the State of Delaware. Attorneys who are not members of the Delaware Bar may be admitted pro hac vice pursuant to Rule 72 of the Rules of the Supreme Court of the State of Delaware as set forth in paragraph (c), below.

(c) Requirement of Delaware Counsel. Pursuant to Rule 72(a) of the Delaware Supreme Court Rules, attorneys who are not members of the Delaware Bar may be admitted pro hac vice in a proceeding in the discretion of the administrative Presiding Officer upon written motion by a member of the Delaware Bar who maintains an office in this State for the practice of law ("Delaware Counsel"). Pursuant to Delaware Supreme Court Rule 72(c), Delaware Counsel for any party shall appear in the matter for which admission pro hac vice is filed and shall sign or receive service of all notices, orders, pleadings or other papers filed in the matter and shall attend all proceedings before the Presiding Officer, unless excused by that Presiding Officer.

or the practice of law ("Delaware Counsel"). Pursuant to Delaware Supreme Court Rule 72(c), Delaware Counsel for any party shall appear in the matter for which admission pro hac vice is filed and shall sign or receive service of all notices, orders, pleadings or other papers filed in the matter and shall attend all proceedings before the Presiding Officer, unless excused by that Presiding Officer.

(d) Designation of address for service; notice of appearance; power of attorney; withdrawal.

(1) Representing oneself. When an individual first makes any filing or otherwise appears on his or her own behalf before a Presiding Officer in a proceeding, he or she shall file with the Director or otherwise state on the record, and keep current, an address at which any notice or other written communication required to be served upon him or her or furnished to him or her may be sent and a telephone number where he or she may be reached during business hours.

(2) Representing others. When a person first makes any filing or otherwise appears in a representative capacity before a Presiding Officer in a proceeding, that person shall file with the Director, and keep current, a written notice stating the name of the proceeding; the representative's name, business address and telephone number; and the name and address of the person or persons represented.

(3) Power of attorney. Any individual appearing or practicing before a Presiding Officer in a representative capacity may be required to file a power of attorney with the Director showing his or her authority to act in such capacity.

(4) Withdrawal. Withdrawal by any individual appearing in a representative capacity shall be permitted only by written order of the Presiding Officer. A motion seeking leave to withdraw shall state with specificity the reasons for such withdrawal.

Officer in a representative capacity may be required to file a power of attorney with the Director showing his or her authority to act in such capacity.

(e) Public Hearings. All hearings shall be public unless otherwise ordered by the Presiding Officer on his or her own motion or after considering the motion of a party.

202 Delegation of Power to Issue Orders and Revocation of Delegation

(a) Pursuant to Section 73-102(c) of the Act, in each administrative proceeding commenced under the Act, the Director delegates to the Presiding Officer appointed under Rule 225A the power and authority to issue a final order, decision or other disposition of the proceeding. Any order issued by the Presiding Officer shall constitute an order of the Director for purposes of judicial review.

(b) In any proceeding involving a delegation under the preceding paragraph (a) of this Rule, the order (including any findings contained therein) of the Presiding Officer shall be treated as the order (and findings) of the Director for purposes of Section 73-502(b) of the Act.

(c) In any proceeding involving a delegation under the preceding paragraph (a) of this Rule, for purposes of appealing an order of the Presiding Officer other than the Director, the Director may have the status of an aggrieved party under Section 73-502 of the Act.

(d) The Director may, at his or her discretion, revoke all or part of a delegation under paragraph (a) of this Rule.

02(b) of the Act.

(d) The Director may, at his or her discretion, revoke all or part of a delegation under paragraph (a) of this Rule.

(e) Procedures for Revocation .

(1) The Director may revoke a delegation of a proceeding at any time before a ruling on a substantive issue by the Presiding Officer, or the taking of oral testimony from the first witness, whichever is earlier.

(2) The Director shall issue a written notice of revocation that states briefly the reason for the revocation and specifies whether all or part of the delegation has been revoked. If only part of the delegation has been revoked, the Director shall specify in the notice of revocation the portions of the proceeding for which the delegation has been revoked.

(3) The Director shall serve the notice of revocation on all parties and the Presiding Officer.

(4) A decision issued by the Director shall reflect the revocation of delegation, and a copy of the revocation notice shall be included as part of the record.

(f) Withdrawal of Delegation with Consent of Parties . The Director may withdraw all or part of a delegation of a case as to a respondent at any time with the consent of that respondent and the Unit.

(g) In any case where a delegation has been revoked or withdrawn, the Director shall be treated as the "Presiding Officer" for purposes of these Rules.

(h) Subparagraph (a) of this Rule shall not apply if an administrative complaint requests that a final determination of the case be made by the Director.

1 DE Reg 1978 (06/01/98)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

203 Subpoenas and Oaths

any case where a delegation has been revoked or withdrawn, the Director shall be treated as the "Presiding Officer" for purposes of these Rules.

(h) Subparagraph (a) of this Rule shall not apply if an administrative complaint requests that a final determination of the case be made by the Director.

1 DE Reg 1978 (06/01/98)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

203 Subpoenas and Oaths

(a) For the purpose of any proceeding under the Act, the Director, the Presiding Officer, or any officer designated by the Director may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the Director or Presiding Officer deems relevant or material to the proceeding. The authority to subpoena witnesses and documents outside the State shall exist to the maximum extent permissible under federal constitutional law.

(b) Subpoenas issued under this Rule shall be subject to and comply with Rule 304.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

204 Disqualification and Recusal of Administrative Presiding Officer

(a) Notice of disqualification . At any time a Presiding Officer believes himself or herself to be disqualified from considering a matter, the Presiding Officer shall issue a notice stating that he or she is withdrawing from the matter and setting forth the reasons therefor.

04.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

204 Disqualification and Recusal of Administrative Presiding Officer

(b) Motion for Withdrawal . Any party who has a reasonable, good faith basis to believe that a Presiding Officer has a personal bias, or is otherwise disqualified from hearing a proceeding, may make a motion to the Presiding Officer that the Presiding Officer withdraw. The motion shall be accompanied by an affidavit setting forth in detail the facts alleged to constitute grounds for disqualification. If the Presiding Officer finds himself or herself not disqualified, he or she shall so rule and shall continue to preside over the proceeding.

18 DE Reg. 394 (11/01/14)

205 Ex Parte Communications

Unless on notice and opportunity for all parties to participate, or to the extent required for the disposition of ex parte matters as authorized by the Act:

(a) No party, or counsel to or representative of a party, shall make or knowingly cause to be made an ex parte communication relevant to the merits of a proceeding to the Presiding Officer with respect to that proceeding.

(b) No Presiding Officer with respect to a proceeding shall make or knowingly cause to be made to a party, or counsel to or representative of a party, an ex parte communication relevant to the merits of that proceeding.

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

206 Orders and Decisions of Presiding Officer

th respect to that proceeding.

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

206 Orders and Decisions of Presiding Officer

(a) Availability for inspection. Each order, decision, and proposed decision of a Presiding Officer shall be available for inspection by the public from the date of entry, unless the order or decision is nonpublic. A nonpublic order or decision shall be available for inspection by any person entitled to inspect it from the date of entry.

(b) Date of entry of orders. The date of entry of an order shall be the date the order is signed. Such date shall be reflected in the order.

1 DE Reg 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

207 Motions

(a) Generally . Unless made during a hearing or conference, a motion shall be in writing, shall state with particularity the grounds therefor, shall set forth the relief or order sought, and shall be accompanied by a written brief of the points and authorities relied upon. All written motions shall be served in accordance with Rule 210, be filed in accordance with Rule 211, meet the requirements of Rule 212, and be signed in accordance with Rule 213. The Presiding Officer may order that an oral motion be submitted in writing. Unless otherwise ordered by the Presiding Officer, if a motion is properly made, the proceeding shall continue pending the determination of the motion. No oral argument shall be heard on any motion unless the Presiding Officer otherwise directs.

(b) Opposing and reply briefs . Briefs in opposition to a motion shall be served and filed within ten days after service of the motion. Reply briefs shall be served and filed within 3 days after service of the opposition.

roperly made, the proceeding shall continue pending the determination of the motion. No oral argument shall be heard on any motion unless the Presiding Officer otherwise directs.

(c) Length limitation . A brief in support of or opposition to a motion shall not exceed 10 pages, exclusive of pages containing any table of contents, table of authorities, or addendum.

(d) Interim orders. The Presiding Officer shall rule on motions and make such other interim orders as are necessary and appropriate.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

Service and Filing of Papers

210 Service of Papers by Parties

(a) When required. In every administrative proceeding, each paper, including each notice of appearance, written motion, brief, or other written communication, shall be served upon each party in the proceeding in accordance with the provisions of this section; provided, however, that absent an order to the contrary, no service shall be required for motions which may be heard ex parte.

(b) Upon a person represented by counsel. Whenever service is required to be made upon a person represented by counsel, service shall be made pursuant to paragraph (c) of this section upon counsel at the address listed on the notice of appearance filed pursuant to Rule 201, unless service upon the person represented is ordered by the Presiding Officer.

ired for motions which may be heard ex parte.

(1) Personal service by handing a copy to the person required to be served; or leaving a copy at the person's office with a clerk or other person in charge thereof, or, if there is no one in charge, leaving it in a conspicuous place therein; or, if the office is closed, or the person to be served has no office, leaving it at the person's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein;

(2) Mailing the papers through the U.S. Postal Service by first class, registered, or certified mail or Express Mail delivery addressed to the person;

(3) Sending the papers through a commercial courier service or express delivery service; or

(4) Transmitting the papers by e-mail or facsimile machine where the following conditions are met:

(A) The persons serving each other by e-mail or facsimile transmission have agreed to do so in a writing, signed by each party, and

(B) Receipt of each document served by e-mail or facsimile is confirmed by a receipt or other means agreed to by the parties.

(d) When service is complete. Personal service, service by U.S. Postal Express Mail or service by commercial courier or express delivery service is complete upon delivery. Service by mail is complete upon mailing. Service by e-mail or facsimile is complete upon confirmation of transmission by delivery of a receipt or other agreed-to method of confirmation.

or other means agreed to by the parties.

(e) " Long-arm" service of process to initiate a proceeding . Any service of process that would be effective to create personal jurisdiction in the Superior Court under Section 3104 of Title 10 of the Delaware Code shall be effective to create personal jurisdiction in the Department of Justice administrative forum under these Rules.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

211 Filing of Papers with the Director: Procedures

(a) When to file . All papers required to be served by a party upon any person shall be filed with the Director at the time of service or promptly thereafter. Papers required to be filed with the Director must be received within the time limit, if any, for such filings.

(b) Where to file . Filing of papers with the Director shall be made by filing the original papers with the Director and (unless the Director is the Presiding Officer) 1 copy with the Presiding Officer.

(c) To whom to direct the filing . All motions, objections, applications or other filings made during a proceeding shall be directed to and decided by the Presiding Officer.

(d) Certificate of service . Papers filed with the Director and the Presiding Officer shall be accompanied by a certificate stating the name of the person or persons served, the date of service, the method of service and the mailing address, e-mail, or facsimile telephone number to which service was made, if not made in person.

18 DE Reg. 394 (11/01/14)

212 Filing of Papers: Form

residing Officer.

18 DE Reg. 394 (11/01/14)

212 Filing of Papers: Form

(a) Specifications. Papers filed in connection with any administrative proceeding shall:

(1) Be on 1 grade of unglazed white paper measuring 8-1/2 x 11 inches, except that, to the extent that the reduction of larger documents would render them illegible, such documents may be filed on larger paper;

(2) Be typewritten or printed in 12-point typeface or otherwise reproduced by a process that produces permanent and plainly legible copies;

(3) Include at the head of the paper, or on a title page, the title of the proceeding, the names of the parties, the subject of the particular paper or pleading, and the file number assigned to the proceeding;

(4) Be paginated with left hand margins at least 1 inch wide, and other margins of at least 1 inch;

(5) Be double-spaced, with single-spaced footnotes and single-spaced indented quotations; and

(6) Be stapled, clipped or otherwise fastened in the upper left corner.

(b) Signature required. All papers must be dated and signed as provided in Rule 213.

(c) Suitability for recordkeeping . Documents which, in the opinion of the Director, are not suitable for computer scanning may be rejected.

(d) Form of briefs . All briefs containing more than 10 pages shall include a table of contents, an alphabetized table of cases, a table of statutes, and a table of other authorities cited, with references to the pages of the brief wherein they are cited.

13.

(c) Suitability for recordkeeping . Documents which, in the opinion of the Director, are not suitable for computer scanning may be rejected.

(e) Scandalous or impertinent matter . Any scandalous or impertinent matter contained in any brief or pleading or in connection with any oral presentation in a proceeding may be stricken on order of the Presiding Officer.

18 DE Reg. 394 (11/01/14)

213 Filing of Papers: Signature Requirement and Effect

(a) General requirements . Every filing of a party represented by counsel shall be signed by Delaware Counsel of record in his or her name and shall state that counsel's business address, e-mail address, and telephone number. A party who acts as his or her own counsel shall sign his or her individual name and state his or her address, e-mail address, and telephone number on every filing.

(b) Effect of signature .

(1) The signature of a counsel or party shall constitute a certification that:

(A) the person signing the filing has read the filing;

(B) to the best of his or her knowledge, information and belief, formed after reasonable inquiry, the filing is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and

(C) the filing is not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of adjudication.

(2) If a filing is not signed, the Presiding Officer shall strike the filing, unless it is signed promptly after the omission is called to the attention of the person making the filing.

r the extension, modification, or reversal of existing law; and

(C) the filing is not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of adjudication.

(2) If a filing is not signed, the Presiding Officer shall strike the filing, unless it is signed promptly after the omission is called to the attention of the person making the filing.

(3) Pursuant to Title 6, Chapter 12A-107(d) of the Delaware Code, an electronic signature may satisfy the signature requirement.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

214 Computation of Time

(a) Computation. In computing any period of time prescribed in or allowed by these Rules or by order of the Presiding Officer, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday or State legal holiday, in which event the period runs until the end of the next day that is not a Saturday, Sunday or State legal holiday. Intermediate Saturdays, Sundays and State legal holidays shall be excluded from the computation when the period of time prescribed or allowed is 7 days or less, not including any additional time allowed for service by mail in paragraph (b) of this section. If on the day a filing is to be made, weather or other conditions have caused the designated filing location to close, the filing deadline shall be extended to the end of the next day that is neither a Saturday, Sunday nor State legal holiday.

the period of time prescribed or allowed is 7 days or less, not including any additional time allowed for service by mail in paragraph (b) of this section. If on the day a filing is to be made, weather or other conditions have caused the designated filing location to close, the filing deadline shall be extended to the end of the next day that is neither a Saturday, Sunday nor State legal holiday.

(b) Additional time for service by mail. If service is made by mail, 3 days shall be added to the prescribed period for response.

18 DE Reg. 394 (11/01/14)

Pleadings and Prehearing Practice

220 Complaints: General

If the Unit believes that any person is violating or has violated any provision of the Act or any rule, order, or condition lawfully imposed thereunder, it may issue a complaint as set forth in Rule 221. The complaint shall be served on each party as provided in Rule 210 and filed at the time of service with the Director pursuant to Rule 211. The service and filing of the complaint constitutes the commencement of the administrative proceeding. As set forth in Rule 225A, upon the filing of a complaint, the Director shall give notice to the Attorney General (or his or her designee) that the complaint has been filed and request that the Attorney General (or his or her designee) appoint a Presiding Officer to hear the matter, unless the Director decides to act as the Presiding Officer in the proceeding or the Unit’s complaint has requested that the Director act as the Presiding Officer in the proceeding.

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

221 Complaints: Form and Content

Each complaint shall be in writing and signed by a Deputy Attorney General. The complaint shall specify in reasonable detail the conduct alleged to constitute the violative activity and the statutory provision, rule, order or other condition the respondent is alleged to be violating or to have violated. If the complaint consists of several causes of action, each cause shall be stated separately

18 DE Reg. 394 (11/01/14)

222 Complaints: Amendment and Withdrawal

(a) At any time prior to the filing of a responsive pleading or the commencement of a hearing (whichever is earlier), the Unit may amend a complaint to include new matters of fact or law. After the filing of a responsive pleading or the commencement of a hearing, upon motion by the Unit, the Presiding Officer may permit amendment of a complaint to include new matters of fact or law.

(b) At any time prior to the filing of a responsive pleading or the commencement of a hearing (whichever is earlier), the Unit may withdraw its complaint. Such withdrawal shall be without prejudice to refiling, and the Unit shall be permitted to file a complaint based on allegations concerning the same facts and circumstances that are set forth in the withdrawn complaint. The Unit may withdraw its complaint after the filing of a responsive pleading or commencement of a hearing; however, upon motion of the respondent, the Presiding Officer, after considering the facts and circumstances of the withdrawal, shall determine whether the withdrawal shall be with prejudice.

18 DE Reg. 394 (11/01/14)

223 Repealed

13 DE Reg. 667 (11/01/09)

224 Answers to Complaints

(a) Form, service, notice. Each respondent named in a complaint shall answer and serve an answer to the complaint on the Unit, all other parties, and the Presiding Officer within 25 days after service of the complaint on such respondent pursuant to Rule 210 and at the time of service file such answer with the Director pursuant to Rules 211, 212 and 213. The Presiding Officer may extend such period for good cause.

e, notice. Each respondent named in a complaint shall answer and serve an answer to the complaint on the Unit, all other parties, and the Presiding Officer within 25 days after service of the complaint on such respondent pursuant to Rule 210 and at the time of service file such answer with the Director pursuant to Rules 211, 212 and 213. The Presiding Officer may extend such period for good cause.

(b) Content, affirmative defenses. Unless otherwise ordered by the Presiding Officer, an answer shall specifically admit, deny, or state that the respondent does not have and is unable to obtain sufficient information to admit or deny each allegation in the complaint. When a respondent intends to deny only part of an allegation, the respondent shall specify so much of it as is admitted and deny only the remainder. A statement of lack of information shall be deemed a denial. Any allegation not denied shall be deemed admitted. Any affirmative defense shall be asserted in the answer.

(d) Extension of Time to Answer Amended Complaint. If a complaint is amended pursuant to Rule 222, the time for filing an answer or amended answer shall be extended to 10 days after service of the amended complaint. If any respondent has already filed an answer, such respondent shall have 15 days after service of the amended complaint, unless otherwise ordered by the Presiding Officer, within which to file an amended answer.

wer Amended Complaint. If a complaint is amended pursuant to Rule 222, the time for filing an answer or amended answer shall be extended to 10 days after service of the amended complaint. If any respondent has already filed an answer, such respondent shall have 15 days after service of the amended complaint, unless otherwise ordered by the Presiding Officer, within which to file an amended answer.

(e) Failure to Answer, Default .

(1) If the respondent does not file an answer within the time required, the Presiding Officer shall send a second notice to such respondent requiring an answer within 10 days after service of the second notice, or within such longer period as the Presiding Officer in his or her discretion may order. The second notice shall state that failure of the respondent to reply within the period specified shall allow the Presiding Officer, in the exercise of his or her discretion, to:

(A) treat as admitted by the respondent the allegations in the complaint; and

(B) enter a default decision against the respondent.

(2) If no answer is filed within the time required by the second notice, the Presiding Officer may treat as admitted by the respondent the allegations in the complaint and enter a default decision against the respondent.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

225 Request for Hearing

(a) Investor Protection Unit Request for Hearing. With the filing of its complaint or at any time later, the Unit may request a hearing. The Unit may request that the hearing be convened within a specified time after the filing of the complaint, but in no event shall that hearing be required to be held earlier than 30 days after service and filing of the complaint other than in summary proceedings under the Act.

otection Unit Request for Hearing. With the filing of its complaint or at any time later, the Unit may request a hearing. The Unit may request that the hearing be convened within a specified time after the filing of the complaint, but in no event shall that hearing be required to be held earlier than 30 days after service and filing of the complaint other than in summary proceedings under the Act.

(b) Respondent Request for Hearing. With the filing of respondent's answer such respondent may request a hearing. If a respondent requests a hearing, a hearing shall be granted. A respondent who fails to request a hearing with the filing of his or her answer waives the right to a hearing unless the Presiding Officer grants, for good cause shown, a later filed motion by such respondent requesting a hearing.

(c) Presiding Officer Order Requiring Hearing. Any complaint may be set down for a hearing upon order of the Presiding Officer. The Presiding Officer may set a complaint for hearing in the absence of a request for hearing by any party.

(d) Notice of Hearing. The Presiding Officer shall issue a notice stating the date, time and place of the hearing, and shall serve such notice on the parties at least 28 days before the hearing, unless in the discretion of the Presiding Officer, he or she determines that extraordinary circumstances require a shorter notice period, or the parties waive the notice period.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

225 A Appointment of a Presiding Officer

stating the date, time and place of the hearing, and shall serve such notice on the parties at least 28 days before the hearing, unless in the discretion of the Presiding Officer, he or she determines that extraordinary circumstances require a shorter notice period, or the parties waive the notice period.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

225 A Appointment of a Presiding Officer

(a) The Director shall maintain a Register of Presiding Officers listing persons who may, upon designation, act as Presiding Officers in proceedings brought by the Unit under the Act. Persons eligible for listing on the Register of Presiding Officers shall include any Deputy Attorney General (other than a Deputy Attorney General assigned to the Investor Protection Unit) and any other attorney admitted to practice law in the State of Delaware. Any person’s listing on the Register of Presiding Officers shall be subject to the approval of the Attorney General (or his or her designee).

(b) Preference shall be given to Presiding Officers with experience practicing securities law, or those with an academic background in securities law.

(c) Upon receipt of a notice from the Director that a complaint has been filed, the Attorney General (or his or her designee) shall issue an Order delegating the responsibility for conducting the hearing (including, where relevant, the powers in Rule 202(a)) to a Presiding Officer selected by the Attorney General (or his or her designee) from the Register of Presiding Officers. The Order shall grant to the Presiding Officer all powers that are reasonably necessary to adjudicate the matter before him or her, provided, however, that the Presiding Officer’s powers shall not include any power that these Rules specifically limit to the Attorney General or the Director.

g Officer selected by the Attorney General (or his or her designee) from the Register of Presiding Officers. The Order shall grant to the Presiding Officer all powers that are reasonably necessary to adjudicate the matter before him or her, provided, however, that the Presiding Officer’s powers shall not include any power that these Rules specifically limit to the Attorney General or the Director.

(d) Notwithstanding the foregoing or anything in Rule 265(b), the Director may elect to be the Presiding Officer in any particular proceeding by providing notice to the Attorney General (or his or her designee) and each of the parties in the proceeding that the Director shall act as Presiding Officer in the proceeding. In such event, all references to a "Presiding Officer" in these Rules shall be treated as a reference to the Director, as the context may require.

(e) Part B of these Rules (Rules 200-272) shall govern all proceedings by and before the Presiding Officer.

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

226 Pre-hearing Conferences

(a) Purpose of conferences. The purpose of prehearing conferences include, but are not limited to:

(1) expediting the disposition of the proceeding;

(2) establishing early and continuing control of the proceeding by the Presiding Officer; and

(3) improving the quality of the hearing through more thorough preparation.

(b) Procedure. On his or her own motion or at the request of a party, the Presiding Officer may, in his or her discretion, direct counsel or any party to meet for an initial, final or other prehearing conference. Such conferences may be held with or without the Presiding Officer present as the Presiding Officer deems appropriate. Where such a conference is held outside the presence of the Presiding Officer, the Presiding Officer shall be advised promptly by the parties of any agreements reached. Such conferences also may be held with 1 or more persons participating by telephone or other remote means.

ence. Such conferences may be held with or without the Presiding Officer present as the Presiding Officer deems appropriate. Where such a conference is held outside the presence of the Presiding Officer, the Presiding Officer shall be advised promptly by the parties of any agreements reached. Such conferences also may be held with 1 or more persons participating by telephone or other remote means.

(c) Subjects to be discussed. At a prehearing conference consideration may be given and action taken with respect to any and all of the following:

(1) simplification and clarification of the issues;

(2) exchange of witness and exhibit lists and copies of exhibits;

(3) stipulations, admissions of fact, and stipulations concerning the contents, authenticity or admissibility into evidence of documents;

(4) matters of which official notice may be taken;

(5) the schedule for exchanging prehearing motions or briefs, if any;

(6) the method of service for papers;

(7) summary disposition of any or all issues;

(8) settlement of any or all issues;

(9) determination of hearing dates;

(10) amendments to the complaint or answers thereto;

(11) disclosure of anticipated evidence at the hearing; and

(12) such other matters as may aid in the orderly and expeditious disposition of the proceeding.

(d) Prehearing orders . At or following the conclusion of any conference held pursuant to this section, the Presiding Officer shall enter a ruling or order which recites the agreements reached and any procedural determinations made by the Presiding Officer.

(e) Failure to appear: default . Any person who is named as a respondent in a complaint and who fails to appear, in person or through a representative, at a prehearing conference of which he or she has been duly notified may be deemed in default pursuant to Rule 252(a). A party may make a motion to set aside a default pursuant to Rule 252(b).

rocedural determinations made by the Presiding Officer.

(f) Pre-hearing submissions . In connection with the pre-hearing conference, the Presiding Officer, on his or her own motion or at the request of a party, may order any party to furnish such information as deemed appropriate.

18 DE Reg. 394 (11/01/14)

227 Repealed

14 DE Reg. 664 (01/01/11)

228 Repealed

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

229 Repealed

14 DE Reg. 664 (01/01/11)

230 Repealed

13 DE Reg. 667 (11/01/09)

231 Motion for Summary Disposition on the Pleadings

(a) After a respondent's answer has been filed, the respondent or the Unit may make a motion for summary disposition of any or all allegations of the complaint with respect to that respondent. Any motion for summary disposition on the pleadings shall be filed within 30 days after the filing of the respondent's answer unless otherwise ordered by the Presiding Officer. Notwithstanding the provisions of Rule 207, unless otherwise ordered by the Presiding Officer, any opposition or response to a motion for summary disposition shall be filed within 14 days after service of the motion. Unless otherwise ordered by the Presiding Officer, reply briefs shall be filed within 5 days after service of the opposition or response.

(b A motion for summary disposition pursuant to paragraph (a) shall be accompanied by a supporting memorandum of points and authorities. The motion for summary disposition and supporting memorandum of points and authorities shall not exceed 25 pages in length.

. Unless otherwise ordered by the Presiding Officer, reply briefs shall be filed within 5 days after service of the opposition or response.

(c) Unless the Presiding Officer decides to defer decision on the motion, he or she may grant the motion for summary disposition if, considering the facts in a light most favorable to the nonmoving party, there is no material issue of fact and the moving party is entitled to a summary disposition as a matter of law. Otherwise, the Presiding Officer shall deny or defer the motion.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

232 Repealed

13 DE Reg. 677 (11/01/09)

Administrative Hearings

240 Hearings

Hearings for the purpose of taking evidence shall be held upon order of the Presiding Officer. All hearings shall be conducted in a fair, impartial, expeditious and orderly manner.

18 DE Reg. 394 (11/01/14)

241 Hearings to be Public

All hearings, except hearings on ex parte applications for a summary order under the Act, shall be public unless otherwise ordered by the Presiding Officer on his or her own motion or the motion of a party. No hearing shall be nonpublic where all respondents request that the hearing be made public.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

242 Continuance of Hearing

Any motion for a continuance of the hearing date shall be filed as far in advance of the hearing date as practicable. Motions should state with specificity the reason for the continuance request.

243 Procedure

motion of a party. No hearing shall be nonpublic where all respondents request that the hearing be made public.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

242 Continuance of Hearing

Any motion for a continuance of the hearing date shall be filed as far in advance of the hearing date as practicable. Motions should state with specificity the reason for the continuance request.

243 Procedure

(a) Unless otherwise ordered by the Presiding Officer, no later than 20 days prior to the date of the hearing the Unit shall submit to each respondent and to the Presiding Officer copies of all documentary evidence and the names of the witnesses the Unit intends to present in its case-in-chief at the hearing. Unless otherwise ordered, no later than 10 days prior to the date of the hearing each respondent shall submit to the Unit and to the Presiding Officer all documentary evidence and the names of the witnesses the respondent intends to present at the hearing. If a party intends to use the testimony of an expert witness, that party shall include as part of its documentary production a curriculum vitae or statement of the expert's qualifications and a written summary of the expert’s opinions on the topic of the intended testimony.

(b) In the administrative hearing, each party is entitled to present its case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as, in the discretion of the Presiding Officer, may be required for a full and true disclosure of the facts.

18 DE Reg. 394 (11/01/14)

244 Testimony

Witnesses shall testify under oath or affirmation. The oath or affirmation may be administered by a Deputy Attorney General, notary public or any other officer authorized to administer oaths and affirmations under Delaware law.

245 Evidence: Admissibility

The Presiding Officer shall receive relevant evidence and may exclude all evidence that is irrelevant, immaterial or unduly repetitious.

18 DE Reg

tnesses shall testify under oath or affirmation. The oath or affirmation may be administered by a Deputy Attorney General, notary public or any other officer authorized to administer oaths and affirmations under Delaware law.

245 Evidence: Admissibility

The Presiding Officer shall receive relevant evidence and may exclude all evidence that is irrelevant, immaterial or unduly repetitious.

18 DE Reg. 394 (11/01/14)

246 Evidence: Objections and Offers of Proof

(a) Objections . Objections to the admission or exclusion of evidence must be made on the record and shall be in short form, stating the grounds relied upon. Exceptions to any ruling thereon by the Presiding Officer need not be noted at the time of the ruling. Such exceptions will be deemed waived on appeal to the Court of Chancery, however, unless raised in a proposed finding or conclusion filed pursuant to Rule 248.

(b) Offers of proof . Whenever evidence is excluded from the record, the party offering such evidence may make an offer of proof, which shall be included in the record. Excluded material shall be retained pursuant to Rule 249.

18 DE Reg. 394 (11/01/14)

247 Evidence: Reference to Delaware Uniform Rules of Evidence

The Presiding Officer may make reference to and be guided by the Delaware Uniform Rules of Evidence in receiving relevant evidence under Rule 245 and ruling on objections under Rule 246. Notwithstanding those rules, the Presiding Officer may admit any evidence that reasonable and prudent individuals would commonly accept in the conduct of their affairs, and give probative effect to that evidence. Evidence may not be excluded solely on the ground that it is hearsay.

18 DE Reg. 394 (11/01/14)

248 Proposed Findings of Fact, Conclusions of Law, and Post-Hearing Briefs

under Rule 246. Notwithstanding those rules, the Presiding Officer may admit any evidence that reasonable and prudent individuals would commonly accept in the conduct of their affairs, and give probative effect to that evidence. Evidence may not be excluded solely on the ground that it is hearsay.

18 DE Reg. 394 (11/01/14)

248 Proposed Findings of Fact, Conclusions of Law, and Post-Hearing Briefs

(a) At the discretion of the Presiding Officer, the parties may be ordered to file proposed findings of fact and conclusions of law, or post-hearing briefs, or both. The Presiding Officer may order that such proposed findings and conclusions be filed together with, or as part of, post-hearing briefs.

(b) Proposed findings of fact or other statements of fact in briefs shall be supported by specific references to the record.

(c) In any case in which the Presiding Officer has ordered the filing of proposed findings of fact and conclusions of law, or post-hearing briefs, the Presiding Officer shall, after consultation with the parties, prescribe the period within which proposed findings of fact and conclusions of law or post-hearing briefs are to be filed. Such period shall be reasonable under all the circumstances but the total period allowed for the filing of post-hearing submissions shall not exceed 60 days after the conclusion of the hearing unless the Presiding Officer, for good cause shown, permits a different period and sets forth in an order the reasons why a longer period is necessary.

(d) Unless the Presiding Officer orders otherwise, each post-hearing submission shall not exceed 25 pages, exclusive of cover sheets, tables of contents and tables of authorities.

18 DE Reg. 394 (11/01/14)

249 Record of Hearings

sion of the hearing unless the Presiding Officer, for good cause shown, permits a different period and sets forth in an order the reasons why a longer period is necessary.

(d) Unless the Presiding Officer orders otherwise, each post-hearing submission shall not exceed 25 pages, exclusive of cover sheets, tables of contents and tables of authorities.

18 DE Reg. 394 (11/01/14)

249 Record of Hearings

(a) Contents of the record . The record shall consist of:

(1) The complaint and answers thereto; the notice of hearing; and any amendments to those documents;

(2) Each application, motion, submission or other paper, and any amendments, motions, objections, and exceptions to or regarding them;

(3) Each stipulation, transcript of testimony and document or other item admitted into evidence;

(4) With respect to a request to disqualify a Presiding Officer or to allow the Presiding Officer’s withdrawal under Rule 204, each affidavit or transcript of testimony taken and the decision made in connection with the request;

(5) All proposed findings and conclusions;

(6) Each written order issued by the Presiding Officer; and

(7) Any other document or item accepted into the record by the Presiding Officer.

(b) Retention of documents not admitted. Any document offered in evidence but excluded, and any document marked for identification but not offered as an exhibit, shall not be considered a part of the record but shall be retained until the later of the date upon which an order ending the proceeding becomes final, or the conclusion of any judicial review of the Director’s or Presiding Officer’s order.

) Retention of documents not admitted. Any document offered in evidence but excluded, and any document marked for identification but not offered as an exhibit, shall not be considered a part of the record but shall be retained until the later of the date upon which an order ending the proceeding becomes final, or the conclusion of any judicial review of the Director’s or Presiding Officer’s order.

(c) Substitution of copies. A true copy of a document may be substituted for any document in the record or any document retained pursuant to paragraph (b) of this section.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

250 Supplementation of Record

Upon motion filed within 10 days of the conclusion of the hearing, any party may seek leave from the Presiding Officer to supplement the record with additional relevant material evidence. Where the party shows to the satisfaction of the Presiding Officer that there were reasonable grounds for failure to adduce the evidence in the hearing, the Presiding Officer may allow the evidence to be heard in such manner and upon such conditions as the Presiding Officer considers proper.

18 DE Reg. 394 (11/01/14)

251 Final Decision After a Hearing

(a) In any administrative proceeding in which a hearing is held and in which the delegation to the Presiding Officer to issue an order under Rule 202(a) has not been revoked:

(1) The Presiding Officer shall issue a final written decision, which shall be filed with the Director and served upon the parties. Such decisions should generally be issued within 60 days after the last day of the hearing or the filing of any post-hearing submission, whichever is later. The decision shall include:

(A) a summary of the evidence;

(B) findings of fact and the evidentiary bases therefor;

(D) sanctions or relief, if any.

(2) The Presiding Officer may order any remedy authorized under the Act.

issued within 60 days after the last day of the hearing or the filing of any post-hearing submission, whichever is later. The decision shall include:

(A) a summary of the evidence;

(B) findings of fact and the evidentiary bases therefor;

(D) sanctions or relief, if any.

(2) The Presiding Officer may order any remedy authorized under the Act.

(3) Upon the filing of his or her decision, the Presiding Officer shall certify the administrative record and submit the record to the Director.

(b) In any administrative proceeding in which a hearing is held and in which the delegation to the Presiding Officer to issue an order under Rule 202(a) has been revoked:

(1) The Presiding Officer shall file with the Director and serve upon the parties a proposed decision containing:

(A) a summary of the evidence;

(B) proposed findings of fact and the evidentiary bases therefor;

(D) proposed sanctions or relief, if any.

(2) Upon the filing of his or her proposed decision, the Presiding Officer shall certify the administrative record and submit the record to the Director, who shall, at that time, have exclusive jurisdiction over the proceeding.

(3) Upon receipt of the record and the Presiding Officer’s proposed decision, the Director shall give notice to the parties of receipt of the record and proposed decision and afford the parties, including the Unit, the opportunity to submit, within 30 days of the Director’s receipt of the record and proposed decision, exceptions to the proposed decision.

(4) After review of the record, the Presiding Officer’s proposed decision, and the parties’ exceptions (if any), the Director shall issue a final decision in the matter.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

252 Final Decision Upon Default; Motion To Set Aside Default

t, within 30 days of the Director’s receipt of the record and proposed decision, exceptions to the proposed decision.

(4) After review of the record, the Presiding Officer’s proposed decision, and the parties’ exceptions (if any), the Director shall issue a final decision in the matter.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

252 Final Decision Upon Default; Motion To Set Aside Default

(a) The Presiding Officer may issue an order deeming a party to be in default and determining the proceeding against that party upon consideration of the record, including the complaint, the allegations of which may be deemed to be true, without the requirement of findings of fact and law, if that party fails:

(1) to appear, in person or through a representative, at a hearing or conference of which that party has been notified;

(2) to answer, to respond to a dispositive motion within the time provided, or otherwise to defend the proceeding; or

(3) to cure a deficient filing within the time specified by the Presiding Officer.

(b) A motion to set aside a default may be filed with the Director within a reasonable time and shall state the reasons for the failure to appear or defend, and shall specify the nature of the proposed defense in the proceeding. In order to prevent injustice and on such conditions as may be appropriate, the Director may for good cause shown set aside a default.

13 DE Reg. 667 (11/01/09)

18 DE Reg

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

253 Contemptuous Conduct

If a party, counsel to a party or witness engages in conduct in violation of an order of the Presiding Officer, or other contemptuous conduct during an administrative proceeding, the Presiding Officer may impose sanctions therefor, including the issuance of an order: (i) excluding the party, his or her counsel, or both from any further participation in the proceeding; (ii) striking pleadings or evidence from the record; (iii) providing that certain facts shall be taken to be established for purposes of the proceeding; or (iv) providing for such other relief as is just and equitable under the circumstances.

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

Practice and Procedure Regarding Summary Orders

260 Basis for Issuance of Summary Order Postponing or Suspending the Effectiveness of a Registration Statement

Except as provided in subsection (i) of this Rule, a summary order postponing or suspending the effectiveness of any registration statement may be issued, either on the initiative of the Director or upon application of the Unit, whenever such an order is in the public interest and any of the following criteria are met:

(a) The registration statement as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment or report, is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;

ic interest and any of the following criteria are met:

(b) Any provision of the Act or any rule, order, or condition lawfully imposed under the Act has been violated, in connection with the offering, by

(1) the person filing the registration statement,

(2) the issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer, or

(3) any underwriter;

(c) The security registered or sought to be registered is the subject of an administrative stop order or similar order or permanent or temporary injunction of any court of competent jurisdiction entered under any federal or state act applicable to the offering;

(d) The issuer's enterprise or method of business includes or would include activities which are illegal where performed;

(e) The offering has worked or tended to work a fraud upon purchasers or would so operate;

(f) The offering has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participation, or unreasonable amounts or kinds of options;

(g) The applicant or registrant has failed to pay the proper filing fee; but the Director or Presiding Officer shall vacate any such order when the deficiency has been corrected;

(h) When a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by Section 73-203(b)(4) of the Act.

ticipation, or unreasonable amounts or kinds of options;

(g) The applicant or registrant has failed to pay the proper filing fee; but the Director or Presiding Officer shall vacate any such order when the deficiency has been corrected;

(h) When a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by Section 73-203(b)(4) of the Act.

(i) A summary order may be issued suspending the offer or sale of a covered security under Section 18(b)(2) of the Securities Act of 1933 only if the order is in the public interest and the issuer has failed to comply with the requirements of Section 73-208 of the Act.

1 DE Reg 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

261 Basis for Issuance of Summary Order Denying or Revoking Exemption

A summary order may be issued, either on the initiative of the Director or upon application of the Unit, denying or revoking any exemption claimed under Sections 73-207(a)(9), (a)(11), or (b)(1)-(13) of the Act, whenever it appears that such exemption is inapplicable, either generally or with respect to a specific security or transaction.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

262 Basis for Issuance of Summary Order Postponing or Suspending the Registration of a Broker-Dealer, Broker-Dealer Agent, Investment Adviser or Investment Adviser Representative

A summary order may be issued, either on the initiative of the Director or upon application of the Unit, postponing or suspending the registration of a broker-dealer, broker-dealer agent, investment adviser or investment adviser representative if such an order is in the public interest and the applicant or registrant or, in the case of a broker-dealer or investment adviser, any partner, officer, director, or any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser:

r-dealer agent, investment adviser or investment adviser representative if such an order is in the public interest and the applicant or registrant or, in the case of a broker-dealer or investment adviser, any partner, officer, director, or any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser:

(a) has filed an application for registration which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact; or

(b) has wilfully violated or wilfully failed to comply with any provision of the Act; or

(d) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business; or

(e) is the subject of a cease and desist order or of an order denying, suspending, or revoking registration as a broker-dealer, broker-dealer agent, investment adviser or investment adviser representative; or

(f) is the subject of an order entered within the past 10 years by the securities administrator of any other state, a state authority that supervises or examines banks, saving associations, or credit unions, a state insurance commission (or any agency or office performing like functions), the Securities and Exchange Commission, FINRA (or any agency or office performing like function), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C

f any other state, a state authority that supervises or examines banks, saving associations, or credit unions, a state insurance commission (or any agency or office performing like functions), the Securities and Exchange Commission, FINRA (or any agency or office performing like function), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit Union Administration, either ordering the person to cease and desist from engaging in or continuing any conduct or practice involving any aspect of the securities business, or suspending, denying or revoking registration (or similar punitive action) as a broker-dealer, broker-dealer agent, investment adviser or investment adviser representative or the substantial equivalent of those terms as defined in the Act and these Rules; or is suspended or expelled from or found to have violated a rule of a national securities exchange or national securities association registered under the Securities Exchange Act of 1934 (15 U.S.C. §78, et seq.) either by action of a national securities exchange or national securities association, the effect of which action has not been stayed by administrative or judicial order; or is the subject of a United States post office fraud order; or is subject to a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct; or

(g) has engaged in dishonest or unethical practices within or outside this State; or

(h) is insolvent, either in the sense that the person’s liabilities exceed the person’s assets or in the sense that the person cannot meet the person’s obligations as they mature; or

(i) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business; or

conduct; or

(g) has engaged in dishonest or unethical practices within or outside this State; or

(h) is insolvent, either in the sense that the person’s liabilities exceed the person’s assets or in the sense that the person cannot meet the person’s obligations as they mature; or

(i) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business; or

(j) has failed reasonably to supervise (1) the person’s agents or employees, if the person is a broker-dealer or broker-dealer agent with supervisory responsibilities, or (2) the person’s adviser representatives or employees if the person is an investment adviser or investment adviser representative with supervisory responsibilities, and such failure may be inferred from an agent's, investment adviser representative's, or employee's violations;

(k) has failed to pay the proper filing fee, but the Presiding Officer or Director shall vacate any denial or suspension order when the deficiency has been corrected; or

(l) has violated or failed to comply with any lawful order issued by the Director or by a Presiding Officer acting pursuant to delegated authority under Rules 202 or 225A; or

(m) has within the past 10 years been a partner, officer, director, controlling person or any person occupying a similar status or performing similar functions in a broker-dealer or investment adviser whose registration in this State or any state, or with the SEC, has been revoked for disciplinary reasons, or whose membership in a national securities exchange or national securities association has been terminated for disciplinary reasons.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg

ons in a broker-dealer or investment adviser whose registration in this State or any state, or with the SEC, has been revoked for disciplinary reasons, or whose membership in a national securities exchange or national securities association has been terminated for disciplinary reasons.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

263 Basis for Issuance of Summary Cease and Desist Order

Whenever it appears that a person has violated the Act by failing to register or engaging in fraud or other prohibited conduct, the Director may summarily issue a cease and desist order against that person under Section 73-601(c) of the Act.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

264 Procedure for Issuance of Summary Order

(a) Procedure. A summary order may be issued either on the initiative of the Director or upon application of the Unit to the Director in the form of an administrative complaint filed by the Unit.

(b) Information required with application. Where the Unit has requested the issuance of a summary order upon application to the Director, the administrative complaint shall: set forth a statement of the facts upon which the application is based, together with supporting documentation; cite to the relevant statutory provision or rule that each respondent is alleged to have violated; and state the summary relief sought against each respondent. The application shall include a proposed order imposing the summary relief sought and notifying respondent of the right to a hearing provided in Rule 265.

(c) Record of proceedings. A record from which a verbatim transcript can be prepared shall be made of all hearings, including ex parte presentations made by the Unit.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

265 Procedure After Issuance of Summary Order

ief sought and notifying respondent of the right to a hearing provided in Rule 265.

(c) Record of proceedings. A record from which a verbatim transcript can be prepared shall be made of all hearings, including ex parte presentations made by the Unit.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

265 Procedure After Issuance of Summary Order

(a) Notice. Any person who is the subject of a summary order shall promptly be given notice of that order and of the reasons therefor. Notice shall be given by means reasonably calculated to give actual notice of issuance of the order, including telephone notification and service of the order pursuant to Rule 210. Such notice shall include notification that the subject of the order may request a hearing and that if such a request is made in writing the hearing shall be scheduled within 15 days from the date the written request is received.

(b) Request for hearing. Any person who is the subject of a summary order may request a hearing before a Presiding Officer on an application to set aside, limit or suspend the summary order. The request for hearing is to be filed with the Director and served on the Unit within 25 days of service of the notice of the order. If a hearing is requested, a Presiding Officer will be selected in accordance with the procedures set forth in Rule 225A.

(c) Procedure at hearing . The procedure at a hearing on a summary order shall be determined by the Presiding Officer, with the understanding that each party shall be entitled to be heard in person or through counsel. The Presiding Officer shall rule on the admissibility of evidence and other matters, including, but not limited to: whether oral testimony will be heard; the time allowed each party for the submission of evidence or argument; and whether post-hearing submission of briefs or proposed findings of fact and conclusions of law will be permitted and if so, the procedures for submissions.

hrough counsel. The Presiding Officer shall rule on the admissibility of evidence and other matters, including, but not limited to: whether oral testimony will be heard; the time allowed each party for the submission of evidence or argument; and whether post-hearing submission of briefs or proposed findings of fact and conclusions of law will be permitted and if so, the procedures for submissions.

(d) Final Decision After Hearing - Delegated Powers. In any hearing on a summary order in which the delegation to the Presiding Officer to issue an order under Rule 202(a) has not been revoked:

(1) After hearing evidence pursuant to subsection (c) of this Rule, the Presiding Officer shall, within 15 days of the hearing, issue a final written decision, which shall be filed with the Director and served upon the parties, containing:

(A) A summary of the evidence;

(B) Findings of fact and the evidentiary bases therefor;

(D) Relief, if any.

(2) Upon the filing of his or her decision, the Presiding Officer shall certify the administrative record and submit the record to the Director.

(e) Final Decision After Hearing – Revoked Powers. In any hearing on a summary order in which the delegation to the Presiding Officer to issue an order under Rule 202(a) has been revoked:

(1) After hearing evidence pursuant to subsection (c) of this Rule, the Presiding Officer shall, within 15 days of the hearing, file with the Director and serve upon the parties a proposed decision containing:

(A) A summary of the evidence;

(B) Proposed findings of fact and the evidentiary bases therefor;

(D) Proposed relief, if any.

e evidence;

(B) Proposed findings of fact and the evidentiary bases therefor;

(D) Proposed relief, if any.

(3) Upon receipt of the record and the Presiding Officer’s proposed decision, the Director shall forthwith give notice to the parties of receipt of the record and proposed decision and afford the parties, including the Unit, the opportunity to submit, within 10 days of the Director’s receipt of the record and proposed decision, exceptions to the proposed decision.

(4) After review of the record, the Presiding Officer’s proposed decision, and the parties’ exceptions (if any), the Director shall, no later than 45 days from the end of the hearing, issue a final decision in the matter.

(f) Duration. Unless set aside, limited or suspended, either by the Director or a court of competent jurisdiction, a summary order shall remain in effect until the completion of the proceedings on whether a permanent order shall be entered or, if no such proceedings occur, until otherwise modified or vacated by the Director.

1 DE Reg. 1978 (06/01/98)

13 DE Reg. 667 (11/01/09)

14 DE Reg. 664 (01/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

266 Violation of Cease and Desist Orders

If any person who is the subject of a cease and desist order, or any agent or employee of such person, subsequent to the issuance of the order engages in the prohibited conduct, the Director may certify the facts and apply for a contempt order to any Judge of the Superior Court, who shall upon such application hear the evidence as to the acts complained of. If the evidence warrants, the Judge shall punish such person, in the same manner and to the same extent as for a contempt committed before the Superior Court, or shall commit such person upon the same conditions as if the doing of the forbidden act had occurred with reference to the process of, or in the presence of, the Superior Court.

18 DE Reg. 394 (11/01/14)

Appeal to the Court of Chancery

270 Right to Judicial Review

Any person aggrieved by an order of the Director or the Presiding Officer, as the case may be, may obtain a review of the order in the Court of Chancery. Upon review, the Court of Chancery has the authority to determine questions of law de novo. The factual findings of the Director or the Presiding Officer, as the case may be, if supported by material and substantial evidence, shall be conclusive on the Court of Chancery. The filing of a complaint seeking review does not operate as a stay of the Director’s or the Presiding Officer’s order, as the case may be, unless specifically ordered by the Court.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

271 Procedure

dure

A party seeking review must file a written complaint with the Court of Chancery within 60 days of entry of the Director’s or the Presiding Officer’s order, as the case may be. The complaint shall be served forthwith on the Director (unless it is filed by the Director) and the other parties to the administrative proceeding. The party seeking review must pay the costs of transcribing the record. Upon completion of the record transcription, the Director shall certify and file with the Court of Chancery: a copy of the record transcription; all evidence upon which the order was entered; and any documents or other proffered evidence retained pursuant to Rule 249(b) relevant to the complaint (together, the "Administrative Record"). If the Administrative Record is not filed with the Chancery Court within 20 days of the filing of the complaint, the Director shall notify the Court and receive additional time in which to file and certify the record. A continued failure by the party seeking review to pay the costs of transcription shall result in dismissal of the complaint without any need for the Director to file the record in Court.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

272 Repealed

13 DE Reg. 667 (11/01/09)

Part C. Investigations

300 Scope of Rules Regarding Investigations

The Rules of Part C (Rule 300 through Rule 307) apply only to investigations conducted by the Unit. They do not apply to administrative proceedings under the Act.

18 DE Reg. 394 (11/01/14)

301 Nature and Purpose of Investigations

rd in Court.

13 DE Reg. 667 (11/01/09)

18 DE Reg. 394 (11/01/14)

272 Repealed

13 DE Reg. 667 (11/01/09)

Part C. Investigations

300 Scope of Rules Regarding Investigations

The Rules of Part C (Rule 300 through Rule 307) apply only to investigations conducted by the Unit. They do not apply to administrative proceedings under the Act.

18 DE Reg. 394 (11/01/14)

301 Nature and Purpose of Investigations

(a) The Director may in his or her discretion make such public or private investigations within or outside the State as he or she deems necessary to determine whether any person has violated, is violating, or is about to violate any provision of the Act or the Rules or otherwise to aid in the enforcement of the Act. Where, from complaints received from members of the public, communications from Federal or State agencies, examination of filings made with the Unit, or otherwise, it appears that there may be violations of the Act or the Rules, a preliminary investigation is generally made. Unless otherwise ordered by the Unit, all investigations are non-public and the reports thereon are for the Unit’s use only.

(b) After investigation or otherwise, the Unit may in its discretion take 1 or more of the following actions: initiation of administrative proceedings looking to the imposition of remedial sanctions, initiation of injunctive proceedings in the courts, and, in the case of a willful violation, criminal prosecution. The Unit may also, in an appropriate case, refer the matter to, or grant requests for access to its files made by, domestic and foreign governmental authorities or foreign securities authorities, self-regulatory organizations, and other persons or entities.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

302 Information Obtained in Investigations

(a) Information or documents obtained by the Unit in the course of any investigation or examination, unless made a matter of public record, shall be deemed non-public.

tic and foreign governmental authorities or foreign securities authorities, self-regulatory organizations, and other persons or entities.

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302 Information Obtained in Investigations

(a) Information or documents obtained by the Unit in the course of any investigation or examination, unless made a matter of public record, shall be deemed non-public.

(b) The Director may in his or her discretion and upon a showing that such information is needed, provide nonpublic information in the Unit’s possession to any of the following persons if the person receiving such nonpublic information provides such assurances of confidentiality as the Director deems appropriate:

(1) A federal, state, local or foreign government or any political subdivision, authority, agency or instrumentality of such government;

(2) A self-regulatory organization as defined in Section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. §78, et seq.) (the "Exchange Act"), or any similar organization empowered with self-regulatory responsibilities under the federal securities laws (as defined in Section 3(a)(47) of the Exchange Act), the Commodity Exchange Act (7 U.S.C. 1, et seq.) or any substantially equivalent foreign statute or regulation;

(3) A foreign financial regulatory authority as defined in Section 3(a)(52) of the Exchange Act;

(4) The Securities Investor Protection Corporation or any trustee or counsel for a trustee appointed pursuant to Section 5(b) of the Securities Investor Protection Act of 1970;

(5) A trustee in bankruptcy;

(6) A bar association, state accountancy board or other federal, state, local or foreign licensing or oversight authority, or a professional association or self-regulatory authority to the extent that it performs similar functions; or

(7) A duly authorized agent, employee or representative of any of the above persons.

of the Securities Investor Protection Act of 1970;

(5) A trustee in bankruptcy;

(7) A duly authorized agent, employee or representative of any of the above persons.

(1) The Director’s authority or discretion to provide or refuse to provide access to, or copies of, nonpublic information in the Unit’s possession in accordance with such other authority or discretion as the Director possesses by statute, or rule; or

(2) The Director’s responsibilities under the Freedom of Information Act, 29 Del.C. §10001 et seq.

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

303 Rights of Witnesses

(a) Any person compelled to appear, or who appears by request or permission of the Unit, in person in any investigative proceeding may be accompanied, represented and advised by counsel, provided, however, that all witnesses shall be sequestered, and unless permitted in the discretion of the Unit, no witness or counsel accompanying any such witness shall be permitted to be present during the examination of any other witness called in such proceeding.

(b) The right to be accompanied, represented and advised by counsel shall mean the right of a person testifying to have an attorney present during any investigative proceeding and to have this attorney advise such person before, during and after the conclusion of such examination, question such person briefly at the conclusion of the examination to clarify any of the answers such person has given, and make summary notes during such examination solely for the use of such person.

18 DE Reg. 394 (11/01/14)

304 Subpoenas

attorney present during any investigative proceeding and to have this attorney advise such person before, during and after the conclusion of such examination, question such person briefly at the conclusion of the examination to clarify any of the answers such person has given, and make summary notes during such examination solely for the use of such person.

18 DE Reg. 394 (11/01/14)

304 Subpoenas

(a) For the purpose of any investigation under the Act, the Director, any Deputy Attorney General in the Unit, or any officer designated by the Director may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the Director deems relevant or material to the inquiry. The Director’s authority to subpoena witnesses and documents outside the State shall exist to the maximum extent permissible under federal constitutional law.

(b) Subpoenas may be issued to any person (provided, however, that no subpoena shall issue, except upon request by the Unit, to any complaining witness) and may require that person, among other things, to:

(1) Testify under oath;

(2) Answer written interrogatories under oath;

(3) Produce documents and tangible things; and

(4) Permit inspection and copying of documents.

(1) Describe generally the nature of the investigation;

(2) If the subpoena requires testimony under oath, specify the date, time and place for the taking of testimony;

(3) If the subpoena requires answers to written interrogatories, contain a copy of the written interrogatories;

(4) If the subpoena requires the production of tangible things or documents:

(A) describe the things and documents to be produced with reasonable specificity, and

(B) specify a date, time, and place at which the things and documents are to be produced;

place for the taking of testimony;

(3) If the subpoena requires answers to written interrogatories, contain a copy of the written interrogatories;

(4) If the subpoena requires the production of tangible things or documents:

(A) describe the things and documents to be produced with reasonable specificity, and

(B) specify a date, time, and place at which the things and documents are to be produced;

(5) Notify the person to whom the subpoena is directed of the obligation to supplement responses under Rule 306;

(6) Advise the person to whom the subpoena is directed that the person may be represented by counsel; and

(7) Identify a member of the Unit who may be contacted in reference to the subpoena.

(d) Subpoenas to corporations and other entities.

(1) A subpoena directed to a corporation, partnership, or other entity that requires testimony under oath shall describe with reasonable particularity the subject matter of the testimony.

(2) An entity that receives a subpoena to answer written interrogatories or to testify under oath shall designate 1 or more of its officers, agents, employees, or other authorized persons familiar with the subject matter specified in the subpoena to respond to the subpoena on its behalf.

(3) The persons designated by an entity to respond to a subpoena on its behalf shall answer the interrogatories or testify as to all matters known or reasonably available to the entity.

(4) A subpoena directed to an entity that requires testimony under oath or answers to written interrogatories shall advise the entity of its obligations under this Rule.

(e) Service of subpoena.

(1) A subpoena may be served by personal service or by mail.

(2) The person who serves a subpoena shall complete a certificate of service attesting to the method and date of service.

(f) Effect of other proceedings . The pendency or beginning of administrative or judicial proceedings against a person by the Unit does not relieve the person of his or her obligation to respond to a subpoena issued under this Rule.

may be served by personal service or by mail.

(2) The person who serves a subpoena shall complete a certificate of service attesting to the method and date of service.

(g) Refusal to testify or produce documents .

(1) No person is excused from attending and testifying or from producing any document or record before the Director, or in obedience to the subpoena of the Director or any officer designated by the Director or in any proceeding instituted by the Director, on the ground that the testimony or evidence (documentary or otherwise) required may tend to incriminate the person or subject the person to penalty or forfeiture; but no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he or she is compelled, after claiming his or her privilege against self-incrimination, to testify or produce evidence (documentary or otherwise), except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

(2) In case of contumacy by, or refusal to obey a subpoena issued to, any person registered under Section 73-302 the Act, the Director may suspend or revoke that registrant's license pursuant to the provisions of Section 73-304 of the Act.

(documentary or otherwise), except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

(h) Petition to modify or quash subpoena.

(1) A person served with a subpoena under this Rule may request that the subpoena be modified or quashed.

(2) A petition to modify or quash a subpoena issued under this Rule shall be filed with the Director or, if one has been appointed, the Presiding Officer, within 10 days of service of the subpoena or by the date specified for compliance with the subpoena, whichever is earlier. The petition shall set forth good cause why the subpoena should be modified or quashed.

(3) A Presiding Officer may be appointed under Rule 225A to rule on the petition to modify or quash.

(i) Application to Court of Chancery upon refusal to obey subpoena . In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Court of Chancery, upon application by the Director, may issue to the person an order requiring such person to appear before the Court of Chancery or the officer designated by the Director, there to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the Court may be punished by the Court as a contempt of court.

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

305 Testimony Under Oath

A witness may be required to provide testimony under oath as part of an investigation under the Act. A witness who provides testimony under oath may be accompanied and represented by counsel as provided for in Rule 303. Testimony shall be recorded by tape recorder, stenographer or other device

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

305 Testimony Under Oath

18 DE Reg. 394 (11/01/14)

306 Production of Things and Documents

(a) Any person may be required to produce things or documents in response to a subpoena under the Act.

(b) If a person responding to a subpoena for production of things or documents withholds a record or document on the basis of a privilege, the person shall state, with respect to each document:

(1) the name and title of the author of the document;

(2) the names and titles of all persons to whom the document was addressed;

(3) the names and titles of all persons to whom copies of the document were sent;

(4) the date on which the document was written or otherwise produced and the date on which it was mailed, sent, or delivered to its addressee;

(5) the number of pages in the document;

(6) a brief description of the nature or subject matter of the document;

(7) the basis on which the document is being withheld; and

(8) the paragraph number of the subpoena to which the document is responsive.

(c) Obligation to supplement responses. If a person has responded to a subpoena under this Rule and later discovers or obtains additional documents or things responsive to the subpoena, the person shall supplement the response as soon as reasonably possible.

18 DE Reg. 394 (11/01/14)

307 Written Submissions by Interested Persons

paragraph number of the subpoena to which the document is responsive.

18 DE Reg. 394 (11/01/14)

307 Written Submissions by Interested Persons

(a) Persons who become involved in an investigation may, on their own initiative, submit a written statement to the Director setting forth their interests and position in regard to the subject matter of the investigation. Upon request, the Unit, in its discretion, may advise such persons of the general nature of the investigation, including the indicated violations as they pertain to them, and the amount of time that may be available for preparing and submitting a statement prior to the presentation of a Unit recommendation to the Director for the commencement of an administrative or injunction proceeding. Submissions by interested persons should be forwarded to the Director with a copy to the Unit’s staff members conducting the investigation and should be clearly referenced to the specific investigation to which they relate. In the event a recommendation for the commencement of an enforcement proceeding is presented by the Unit, any submissions by interested persons will be considered prior to commencement of any proceeding.

(b) Regardless of any voluntary written submission provided under Rule 307(a), the Director may require any person to file a statement in writing, under oath or otherwise as the Director determines, as to any or all of the facts and circumstances concerning the matter under investigation.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

Part D. Securities Registration and Notice Filings

400 Registration by Coordination

(a) Any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination.

, as to any or all of the facts and circumstances concerning the matter under investigation.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

Part D. Securities Registration and Notice Filings

400 Registration by Coordination

(a) Any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination.

(b) A person who seeks to register a security by coordination shall file with the Unit the following documents and information:

(1) A completed application Form U-1, Uniform Application to Register Securities;

(2) An irrevocable consent appointing the Investor Protection Director agent for service of process, executed by the issuer on Form U-2, Uniform Consent to Service of Process;

(3) One copy of the registration statement, as amended, filed with the SEC, which shall include (or which information shall otherwise be provided): a specification of the amount of the securities offered in Delaware; the states in which the offering has been or is being made; and any adverse order, judgment or decree entered in connection with the offering by any regulatory authority, court or the SEC;

(4) One copy of the prospectus in the latest form on file with the SEC;

(5) The appropriate filing fee as determined under Rule 404; and

(6) Any other document or information requested by the Unit.

(c) An application for registration by coordination shall become effective in Delaware simultaneously with the registration statement filed with the SEC provided the following conditions have been met:

(1) All documents and information required by (b) above have been filed with the Unit;

(2) No stop order is in effect and no proceeding is pending under Section 73-206 of the Act;

(3) The registration statement has been on file with the Unit for at least 10 days; and

ctive in Delaware simultaneously with the registration statement filed with the SEC provided the following conditions have been met:

(1) All documents and information required by (b) above have been filed with the Unit;

(2) No stop order is in effect and no proceeding is pending under Section 73-206 of the Act;

(3) The registration statement has been on file with the Unit for at least 10 days; and

(4) A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions have been on file for at least 2 business days and the offering is made within those limitations.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

401 Registration by Qualification

(a) Any security may be registered by qualification. A person who seeks to register a security by qualification shall file with the Unit the following documents and information:

(1) A completed application Form U-1, Uniform Application to Register Securities;

(2) An irrevocable consent appointing the Investor Protection Director agent for the service of process, executed by the issuer on Form U-2, Uniform Consent to Service of Process;

(3) One copy of an executed registration statement which complies with SEC Form S-1, together with all exhibits, which shall include all information required under Sections 73-204(b)(1)-(16) and 73-205(b) of the Act. For securities offerings pursuant to Tier 1 of Regulation A for which Form 1-A has been filed with the SEC, filing a copy of Form 1-A with the Unit will satisfy the registration statement filing requirement.

(4) One copy of the prospectus which is to be provided to offerees under Section 73-204(d) of the Act;

(5) The appropriate filing fee as determined under Rule 404; and

(6) Any other document or information requested by the Unit.

Tier 1 of Regulation A for which Form 1-A has been filed with the SEC, filing a copy of Form 1-A with the Unit will satisfy the registration statement filing requirement.

(4) One copy of the prospectus which is to be provided to offerees under Section 73-204(d) of the Act;

(5) The appropriate filing fee as determined under Rule 404; and

(6) Any other document or information requested by the Unit.

(b) Unless otherwise ordered by the Director, the prospectus which is sent or given to each person to whom an offer is made shall contain all the information contained in the registration statement filed with the Unit under subsection (a) of this Rule. The prospectus shall be written in plain English and presented in a format that is clear and easy to understand, with appropriate headings and subheadings.

(c) An application for registration by qualification shall become effective in Delaware when so ordered by the Director provided no order has been issued pursuant to Section 73-206 of the Act.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

402 Repealed

14 DE Reg. 664 (01/01/11)

403 Notice Filings for Offerings of Investment Company Securities

(a) Except as provided in subsection (b) hereof, no investment company that is registered under the Investment Company Act of 1940 or that has currently filed a registration statement under the Securities Act of 1933 is required to file with the Director, either prior to the initial offer or after the initial offer in this state of a security which is a covered security under Section 18(b)(2) of the Securities Act of 1933, a copy of any document which is part of a federal registration statement filed with the SEC or is part of an amendment to such federal registration statement; provided, however, that if an investment company does not file with the Director a copy of its federal registration statement and any amendments thereto, together with a consent to service of process and the fees provided herein, such investment company shall, prior to the in

t of a federal registration statement filed with the SEC or is part of an amendment to such federal registration statement; provided, however, that if an investment company does not file with the Director a copy of its federal registration statement and any amendments thereto, together with a consent to service of process and the fees provided herein, such investment company shall, prior to the initial offer of such a covered security, file with the Director a Form NF for such security, together with a consent to service of process signed by the issuer and a filing fee equal to 1/2 of 1% of the maximum aggregate offering price of securities to be offered in Delaware in the initial offering, but not less than $200 or more than $1,000. An issuer that indicates on the Form NF that it is offering an "indefinite" amount of shares in Delaware shall pay a filing fee of $1,000.

(b) An investment company that is registered under the Investment Company Act of 1940 or that has filed a registration statement under the Securities Act of 1933 shall file, upon written request of the Director and within the time period set forth in the request, a copy of any document identified in the request that is part of the federal registration statement filed with the SEC or part of an amendment of such federal registration statement.

(c) An investment company offering in Delaware will be treated as a separate security where the offering involves a fund with a share price, asset value, class of shareholders, or set of assets that differs from those of other securities for which other notice filings have been made. Generally, this means that separate investment company "series" or "portfolios" will be treated as separate securities for purposes of notice filings under this section.

treated as a separate security where the offering involves a fund with a share price, asset value, class of shareholders, or set of assets that differs from those of other securities for which other notice filings have been made. Generally, this means that separate investment company "series" or "portfolios" will be treated as separate securities for purposes of notice filings under this section.

(d) The initial filing of a Form NF by an investment company pursuant to paragraph (a) hereof is effective for 1 year commencing upon the later of receipt by the Director of the Form NF and fees or the effectiveness of the offering with the Securities and Exchange Commission. The investment company must renew its notice filing (or notice filings, where multiple filings were made for multiple series or portfolios) annually by filing with the Director prior to the expiration of a current notice filing, either a copy of the issuer's registration statement or a Form NF and a filing fee in accordance with paragraph (a) hereof. A notice filing renewed pursuant to this subsection shall take effect upon the expiration of the notice filing being renewed.

1 DE Reg. 1978 (06/01/98)

18 DE Reg. 394 (11/01/14)

404 Fees

(a) Fees for registering securities by coordination or by qualification shall be 1/2 of 1.0% of the maximum aggregate offering price of securities to be offered in Delaware during the initial registration period, but not less than $200 or more than $1,000.

(b) The amount of securities to be registered in Delaware shall be specifically stated in the Form U-1. However, if the applicant pays the maximum filing fee of $1,000, the amount to be registered in Delaware may be stated in the Form U-1 as "indefinite" or "unlimited."

price of securities to be offered in Delaware during the initial registration period, but not less than $200 or more than $1,000.

(c) The fee for notice filings for covered securities under Section 18(b)(4)(E) of the Securities Act of 1933 pursuant to Section 73-208(b) of the Act and Rule 406 shall be 1/2 of 1.0% of the maximum aggregate offering price of securities to be offered in Delaware during the initial registration period, but not less than $200 or more than $1,000.

(d) The fee for notice filings for covered securities under Section 18(b)(3) of the Securities Act of 1933 pursuant to Section 73-208(c) of the Act shall be 1/2 of 1% of the maximum aggregate offering price of securities to be offered in Delaware during the initial registration period, but not less than $200 or more than $1,000.

(e) The fee for notice filings for offerings pursuant to the Intrastate Crowdfunding exemption in Section 73-207(b)(15) and Rule 408 shall be $300.

(f) All filing fees are due at the time of the initial application. No application fee is refundable even though an application may be withdrawn or denied.

(g) Any filing fee required by these Rules that is not paid when due shall be doubled, unless the Director waives the late payment, but in no case shall the total fee be more than the relevant statutory maximum amount.

18 DE Reg. 394 (11/01/14)

20 DE Reg

ling fees are due at the time of the initial application. No application fee is refundable even though an application may be withdrawn or denied.

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

405 Filing of Sales Literature

Any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser, must be filed with the Director unless the security or transaction is exempted by Section 73-207 of the Act or the security is a federal covered security under Section 73-208 of the Act.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

406 Notice Filings For Covered Securities Under Section 18(b)(4)(E) of the U.S. Securities Act of 1933

(a) An issuer offering a security that is a covered security under Section 18(b)(4)(E) of the Securities Act of 1933 (or as such section may be renumbered), including a security that is being offered under SEC Rule 506, 17 C.F.R. §230.506, shall file with the Director a notice on SEC Form D no later than 15 days after the first sale of such covered security in this state, or if an earlier filing is required by the SEC, at such earlier date, if a sale is contemplated in Delaware.

(b) For purposes of these Rules, "SEC Form D" is defined as the document adopted by the SEC and in effect on September 1, 1996 (and as may be amended by the SEC from time to time), entitled "FORM D; Notice of Sale of Securities pursuant to Regulation D, Section 4(6), and/or Uniform Limited Offering Exemption", including Part E and the Appendix.

earlier date, if a sale is contemplated in Delaware.

(c) Form D notice filings and related fees may be filed electronically with and transmitted to the Electronic Filing Depository ("EFD"), an internet based filing service operated and developed by the North American Securities Administrators Association. Effective June 1, 2017, all such notice filings shall be submitted electronically through EFD.

(1) Any documents or fees required to be filed with the Director that are not permitted to be filed with, or cannot be accepted by, EFD shall be filed directly with the Director.

(2) A duly authorized person of the issuer shall affix his or her electronic signature to the Form D filing by typing his or her name in the appropriate fields and submitting the filing to the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). Submission of a filing shall constitute irrefutable evidence of legal signature by any individual whose name is typed on the filing.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

407 Notice Filings for SEC Tier 2 Regulation A Filings

e fields and submitting the filing to the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). Submission of a filing shall constitute irrefutable evidence of legal signature by any individual whose name is typed on the filing.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

407 Notice Filings for SEC Tier 2 Regulation A Filings

(a) Initial filing. An issuer planning to offer or sell securities in Delaware exempt from registration under Tier 2 of Regulation A, Rule 251(a)(2) and Section 18(b)(3) of the Securities Act of 1933, shall submit the following prior to the initial offer or sale:

(1) A completed Regulation A - Tier 2 notice filing form or copies of all documents filed with the Securities and Exchange Commission;

(2) A consent to service of process on Form U-2 if not filing on the Regulation A - Tier 2 notice filing form; and

(3) The filing fee prescribed by Section 73-208(c) and Rule 404(d).

(b) Effective period. The initial notice filing is effective for 12 months.

20 DE Reg. 728 (03/01/17)

29 DE Reg. 786 (03/01/26)

408 Intrastate Crowdfunding

(a) Each issuer of securities relying on the intrastate crowdfunding exemption found in 6 Del.C. §73-207(b) (15) shall file a notice with the Investor Protection Unit pursuant to 6 Del.C. §73-207(b) (15)(h) on Form DCF. The notice must include all documentation required by Form DCF and shall be filed with the Investor Protection Unit no later than 10 days prior to the first offer of securities in reliance on the exemption. Incomplete filings will be rejected. The filing fee required by Section 73-207(b)(15)(o) and Rule 404(e) shall be submitted with the filing.

pursuant to 6 Del.C. §73-207(b) (15)(h) on Form DCF. The notice must include all documentation required by Form DCF and shall be filed with the Investor Protection Unit no later than 10 days prior to the first offer of securities in reliance on the exemption. Incomplete filings will be rejected. The filing fee required by Section 73-207(b)(15)(o) and Rule 404(e) shall be submitted with the filing.

(b) Each internet site operator participating in a securities offering pursuant to the intrastate crowdfunding exemption found in 6 Del.C. §73-207(b) (15) shall register with the Investor Protection Unit by filing Form DIO, unless exempted from registration by 6 Del.C. §73-207(b) (15)(k)(2). Registrations must be received and approved prior to the internet site operator participating in a securities offering. Incomplete registrations will be rejected.

20 DE Reg. 728 (03/01/17)

29 DE Reg. 786 (03/01/26)

Part E. Exemptions from Registration

500 Registration Not Required of Federal Covered Securities

Federal covered securities, as defined in Section 73-103(a)(6) of the Act, are not required to be registered under Section 73-202 of the Act. Notwithstanding this Rule, however, notice filings are required for registered investment company offerings under Rule 403; and for offers or sales of securities in Delaware pursuant to SEC Rule 506 under the Securities Act of 1933, 17 C.F.R. §230.506.

1 DE Reg 1978 (06/01/98)

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

501 Designated Exchange Exemption

Any security listed or approved for listing upon notice of issuance on the Chicago Board Options Exchange is exempted from Sections 73-202, 73-208 and 73-211 of the Act pursuant to Section 73-207(a)(8) of the Act.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

502 Limited Offering Exemption

(a) The exemption under Section 73-207(b)(9) of the Act is withdrawn as to any security offered or sold in Delaware.

sting upon notice of issuance on the Chicago Board Options Exchange is exempted from Sections 73-202, 73-208 and 73-211 of the Act pursuant to Section 73-207(a)(8) of the Act.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

502 Limited Offering Exemption

(a) The exemption under Section 73-207(b)(9) of the Act is withdrawn as to any security offered or sold in Delaware.

(b) Except as provided otherwise in these Rules, an offer of securities in the State of Delaware that qualifies for exemption under any limited or private offering exemption in or promulgated pursuant to the Securities Act of 1933 or the Securities and Exchange Act of 1934, including Rule 504 of SEC Regulation D (17 C.F.R. §§230.504), shall be exempt from the requirements of Sections 73-202, 73-208 and 73-211 of the Act, so long as the issuer has filed with the Director a notice on Form LOE ("Notice of Limited Offering Exemption") no later than 15 days after the first sale of such security in this state.

14 DE Reg. 664 (01/01/11)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

23 DE Reg. 776 (03/01/20)

503 Accredited Investor Exemption

Any offer or sale of a security by an issuer in a transaction that meets the following requirements of this Rule is exempted from the securities registration requirements of the Act.

(a) Sales of securities shall be made only to persons who are or the issuer reasonably believes are "accredited investors" as that term is defined in SEC Rule 501(a) of Regulation D, 17 C.F.R. §230.501(a).

(b) The exemption is not available to an issuer that is in the development stage that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.

lieves are "accredited investors" as that term is defined in SEC Rule 501(a) of Regulation D, 17 C.F.R. §230.501(a).

(c) The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sale shall be presumed to be with a view to distribution and not for investment, except a resale pursuant to a registration statement effective under the securities registration requirements of the Act or to an accredited investor pursuant to another applicable exemption under the Act.

(d) Disqualification .

(1) This exemption is not available to an issuer if the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director or officer of such underwriter:

(A) within the last 10 years, has filed a registration statement that is the subject of a currently effective registration stop order entered by any state securities administrator or the SEC;

(B) within the last 10 years, has been convicted of any criminal offense in connection with the offer, purchase or sale of any security, or involving fraud or deceit;

(C) is currently subject to any order, judgment or decree of any court of competent jurisdiction, entered within the last 10 years, temporarily, preliminarily or permanently restraining or enjoining such party from engaging in or continuing to engage in any conduct or practice involv

any criminal offense in connection with the offer, purchase or sale of any security, or involving fraud or deceit;

(e) General Announcement.

(1) A general announcement of the proposed offering may be made by any means.

(2) The general announcement shall include only the following information, unless additional information is specifically permitted by the Director:

(A) The name, address and telephone number of the issuer of the securities;

(B) The name, a brief description and price (if known) of any security to be issued;

(D) The type, number and aggregate amount of securities being offered;

(E) The name, address and telephone number of the person to contact for additional information; and

(F) A statement that:

(1) sales will only be made to accredited investors;

(2) no money or other consideration is being solicited or will be accepted by way of this general announcement; and

(3) the securities have not been registered with or approved by any state securities agency or the SEC and are being offered and sold pursuant to an exemption from registration.

(f) The issuer, in connection with an offer, may provide information in addition to the general announcement under paragraph (e), if such information:

(1) is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; or

(2) is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.

ion.

(f) The issuer, in connection with an offer, may provide information in addition to the general announcement under paragraph (e), if such information:

(1) is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; or

(2) is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.

(g) No telephone solicitation shall be permitted unless prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.

(h) Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not disqualify the issuer from claiming the exemption under this rule.

(i) The issuer must file or cause to be filed with the Director a notice of exemption in the form prescribed by the Director and a copy of any general announcement, within 15 days after the first sale in this state.

1 DE Reg. 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

504 World Class Foreign Issuer Exemptions

Any security that meets all of the following conditions shall be exempt from the securities registration requirements of the Act:

(a)

(1) Equity securities, except options, warrants, preferred stock, subscription rights, securities convertible into equity securities or any right to subscribe to or purchase such options, warrants, convertible securities or preferred stock;

(2) Units consisting of equity securities permitted under subparagraph (1) and warrants to purchase the same equity security being offered in the unit;

ct:

(a)

(2) Units consisting of equity securities permitted under subparagraph (1) and warrants to purchase the same equity security being offered in the unit;

(3) Non-convertible debt securities rated in 1 of the 4 highest rating categories of a nationally recognized statistical rating organization registered with the SEC under Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. § 780-7) or such other statistical rating organization the Director by rule or order may designate. For purpose of this subparagraph, the term "non-convertible debt securities" means securities that cannot be converted for at least 1 year from the date of issuance and then, only into equity shares of the issuer or its parent; or

(4) American Depository Receipts representing securities described in subparagraphs (1) and (2) above;

(b) The issuer is not organized under the laws of the United States, or of any state, territory or possession of the United States, or of the District of Columbia or Puerto Rico;

(c) The issuer, at the time an offer or sale is made in reliance on the securities exemption embodied in this Rule, has been a going concern engaged in continuous business operations for the immediate past 5 years and during that period has not been the subject of a proceeding relating to insolvency, bankruptcy, involuntary administration, receivership or similar proceeding. For purposes of this paragraph, the operating history of any predecessor that represented more than 50%of the value of the assets of the issuer that otherwise would have met the conditions of this Rule may be used toward the 5 year requirement;

ng that period has not been the subject of a proceeding relating to insolvency, bankruptcy, involuntary administration, receivership or similar proceeding. For purposes of this paragraph, the operating history of any predecessor that represented more than 50%of the value of the assets of the issuer that otherwise would have met the conditions of this Rule may be used toward the 5 year requirement;

(d) The issuer, at the time an offer or sale is made in reliance on the securities exemption embodied in this Rule, has a public float of US $1 billion or more. For purposes of this paragraph:

(1) The term "public float" means the market value of all outstanding equity shares owned by non-affiliates;

(2) The term "equity shares" means common shares, non-voting equity shares and subordinate or restricted voting equity shares, but does not include preferred shares; and

(3) An "affiliate" is anyone who owns beneficially, directly or indirectly, or exercises control or direction over, more than 10% of the outstanding equity shares of such person;

(e) The market value of the issuer's equity shares, at the time an offer or sale is made in reliance on the securities exemption embodied in this Rule, is US $3 billion or more. For purposes of this paragraph, the term "equity shares" means common shares, non-voting equity shares and subordinate or restricted voting equity shares, but does not include preferred shares; and

(f) The issuer, at the time an offer or sale is made in reliance on the securities exemption embodied in this Rule, has a class of equity securities listed for trading on or through the facilities of a foreign securities market included in SEC Rule 902(a)(1) or designated by the SEC under SEC Rule 902(a)(2) under the U.S. Securities Act of 1933, 17 C.F.R. §§230.902 & 901.

18 DE Reg. 394 (11/01/14)

505 Offers of Securities Through the Internet

s made in reliance on the securities exemption embodied in this Rule, has a class of equity securities listed for trading on or through the facilities of a foreign securities market included in SEC Rule 902(a)(1) or designated by the SEC under SEC Rule 902(a)(2) under the U.S. Securities Act of 1933, 17 C.F.R. §§230.902 & 901.

18 DE Reg. 394 (11/01/14)

505 Offers of Securities Through the Internet

(a) A communication that is placed on the internet by or on behalf of an issuer that is designed to raise capital or to distribute information on securities, products or services and that is directed generally to anyone having access to the internet, whether through postings on "Bulletin Boards," displays on webpages, the placement of internet advertisements, postings on or through application or social media websites, or otherwise (an "Internet Communication"), shall not constitute an offer within the meaning of Section 73-103(a) of the Act, and shall therefore not be required to be registered under the Act, provided that:

(1) The Internet Communication indicates by a prominent legend at the beginning of the Internet Communication that the securities are not being offered to any person in a state where such offer or sale would be in violation of the law;

(2) An offer of the issuer's securities is not otherwise directed to any person in Delaware by, or on behalf of, the issuer; and

(3) Unless otherwise exempt under the Act, no sale of the issuer's securities is made in Delaware, as a result of the Internet Communication.

(4) The Internet Communication contains a mechanism, including and without limitations, technical "firewalls" or other implemented policies and procedures, designed reasonably to ensure that no sale occurs in Delaware.

(b) Reliance on the exemption provided by this Rule does not preclude an issuer from relying on other available exemptions for offers provided under the Act.

Internet Communication.

(b) Reliance on the exemption provided by this Rule does not preclude an issuer from relying on other available exemptions for offers provided under the Act.

(c) The term "internet" for the purposes of this Rule includes the internet, the world wide web and similar proprietary and common carrier electronic systems, including mobile and cellular internet technology.

1 DE Reg 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

23 DE Reg. 776 (03/01/20)

29 DE Reg. 786 (03/01/26)

506 Claim of Exemption by Persons Organized and Operated Not for Private Profit but Exclusively for Religious Purposes

Any security issued by a person organized and operated not for private profit but exclusively for religious, educational, benevolent or charitable purposes shall be exempt from the securities registration requirement of the Act provided as follows:

(a) The issuer is (1) a religious organization affiliated with, associated with, or authorized by a religious denomination or denominations; or (2) a religious organization that consists of or acts on behalf of individual or local churches or local or regional church organizations.

(b) The issuer is an organization that qualifies and operates under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended;

(1) has been in existence for over 10 years;

(2) has received audited financial statements with an unqualified opinion from a certified public accountant for its most recent 3 fiscal years; and

(3)has experienced no defaults on any outstanding obligations to investors for the period that it has issued securities.

e of 1986, as amended;

(1) has been in existence for over 10 years;

(2) has received audited financial statements with an unqualified opinion from a certified public accountant for its most recent 3 fiscal years; and

(3)has experienced no defaults on any outstanding obligations to investors for the period that it has issued securities.

(d) The issuer's:

(1) cash, cash equivalents and readily marketable assets have had a market value of at least 5% of the principal balance of its total outstanding debt securities for the last 3 fiscal years or 36 months prior to the issue; or

(2) net worth, as that term is used in Generally Accepted Accounting Principles, has been at least equal to 3% of its total assets for the last 3 fiscal years or 36 months prior to the issue.

(e) Prior to any sale of the securities, the issuer provides an investor with a disclosure document reflecting financial and other information concerning the issuer and relevant risks involved in the investment.

(f) The issuer makes loans to or otherwise utilizes the net proceeds of the offering in support of:

(1) local churches, or other religious organizations affiliated or associated with such churches; or

(2) related religious organizations.

(g) The issuer:

(1) has a net worth, as that term is used in Generally Accepted Accounting Principles, of $5 million or more which includes all church owned property; or

issuer makes loans to or otherwise utilizes the net proceeds of the offering in support of:

(1) local churches, or other religious organizations affiliated or associated with such churches; or

(2) related religious organizations.

(g) The issuer:

(1) has a net worth, as that term is used in Generally Accepted Accounting Principles, of $5 million or more which includes all church owned property; or

(2) makes loans, secured by either real property or by a pledge of readily marketable securities, at all times, having equal or greater value than the loan amount, to finance the purchase, construction or improvement of church related property, buildings, related capital expenditures, or to refinance existing debt to be secured by such property, or for other operating expenses of the entities described in (f) above, provided the obligation is secured by such property.

18 DE Reg. 394 (11/01/14)

507 Claim of Exemption for 9-Month Commercial Paper

Section 73-207(a)(10) of the Act exempts from registration any commercial paper which arises out of a current transaction (or the proceeds of which have been or are to be used for current transactions), and which evidences an obligation to pay cash within 9 months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal. This exemption is a narrow and specialized one. It applies only to prime quality negotiable commercial paper of a type not ordinarily purchased by the general public, that is, paper issued to facilitate well recognized types of current operational business requirements and of a type eligible for discounting by Federal Reserve Banks. The exemption is not available for the unregistered public offering of promissory or collateral trust notes or similar evidences of debt of any issuer directly to public investors through solicitation or otherwise

he general public, that is, paper issued to facilitate well recognized types of current operational business requirements and of a type eligible for discounting by Federal Reserve Banks. The exemption is not available for the unregistered public offering of promissory or collateral trust notes or similar evidences of debt of any issuer directly to public investors through solicitation or otherwise. Pursuant to Section 73-202 of the Act, any such offering must be registered or exempt from registration under an exemption other than that provided by Section 73-207(a)(10) of the Act.

15 DE Reg. 529 (10/01/11)

508 Recognized Securities Manuals

(a) Each of the following manuals shall be deemed a "Recognized Securities Manual" for the purposes of Section 73-207(b)(2) of the Act:

(1) Mergent's Industrial Manual

(2) Mergent's Transportation Manual

(3) Mergent's Public Utility Manual

(4) Mergent's Bank and Finance Manual

(5) Fitch's Individual Stock Bulletin

(6) Mergent's OTC Industrial Manual

(7) OTCQB Market

(8) OTCQX Market

(b) The term "manual" for purposes of this rule includes all commonly recognized formats of publications, including electronically stored media and electronic dissemination over the internet.

1 DE Reg. 1978 (06/01/98)

4 DE Reg. 1184 (01/01/01)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

509 Unsolicited Sales

Acknowledgment by letter from a customer that a sale was unsolicited is a prerequisite to the application of the exemption set forth at Section 73-207(b)(3) of the Act.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

510 Transactional Exemption for Certain Institutional Buyers

g. 1184 (01/01/01)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

20 DE Reg. 728 (03/01/17)

509 Unsolicited Sales

Acknowledgment by letter from a customer that a sale was unsolicited is a prerequisite to the application of the exemption set forth at Section 73-207(b)(3) of the Act.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

510 Transactional Exemption for Certain Institutional Buyers

(a) Pursuant to Section 73-207(b)(8) of the Act, offers or sales to institutional buyers are exempted from Sections 73-202, 73-208 and 73-211 of the Act. For purposes of this exemption, "institutional buyers" include the following:

(1) an "accredited investor" as defined in SEC Rule 501(a)(1)-(4), (7) and (8), 17 C.F.R. §230.501(a)(1)-(4), (7), (8), excluding, however, any self-directed employee benefit plan with investment decisions made solely by persons that are "accredited investors" as defined in Rule 501(a)(5)-(6);

(2) any "qualified institutional buyer" as that term is defined in SEC Rule 144A(a)(1), 17 C.F.R. §230.144A(a)(1); and

(3) a corporation, partnership, trust, estate, or other entity (excluding individuals) having a net worth of not less than $5 million or a wholly-owned subsidiary of such entity, as long as the entity was not formed for the purpose of acquiring the specific securities.

(b) For purposes of determining a purchaser's total assets or net worth under this Rule, the issuer and the seller may rely upon the entity's most recent annual balance sheet or other financial statement which shall have been audited by an independent accountant or which shall have been verified by a principal of the purchaser.

y was not formed for the purpose of acquiring the specific securities.

(c) The offer or sale of securities is not exempt under Section 73-207(b)(8) of the Act or this Rule if the institutional buyer is in fact acting only as an agent for another purchaser that is not an institutional buyer or financial institution listed in Section 73-207(b)(8) of the Act.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

511 Confirmation of Availability of Exemption

No oral communication with the Unit may be relied upon as proving the availability of any exemption or any exclusion from a definition. Such confirmation may only be obtained by a written opinion from the Unit. A written opinion may be obtained by submitting the fee set forth in Rule 102 along with a full description of the subject matter, the party or parties on whose behalf relief is sought, copies of any relevant documents and the identity of the section or sections of the Act or the Rules on which the exemption or exclusion is based. The Unit will not issue opinions that create an exemption that is not set forth in the Act or Rules, and it will not advise on the availability of an exemption except on a case-by-case basis.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

Part F. Broker-Dealers, Broker-Dealer Agents, and Issuer Agents

600 Registration of Broker-Dealers

(a) A person applying for a license as a broker-dealer in Delaware shall make application for such license on Form BD (Uniform Application for Broker-Dealer Registration). Amendments to such applications shall also be made on Form BD.

529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

Part F. Broker-Dealers, Broker-Dealer Agents, and Issuer Agents

600 Registration of Broker-Dealers

(b) An applicant shall file its application, together with the fee required by Section 73-302 of the Act, and shall file with the Director such other information as the Director may reasonably require.

(c) Registration expires at the end of the calendar year. Any broker-dealer may renew its registration by filing with the Financial Industry Regulatory Authority's (hereinafter, "FINRA") Central Registration Depository (herineafter, "CRD") such information as is required by FINRA, together with the fee required by the Act.

(d) Except for a broker-dealer that is a sole proprietorship or the substantial equivalent, a broker-dealer registered with the Director shall register with the Director at least 1 broker-dealer agent.

(e) For the purposes of Section 73-302(a) of the Act, an application will not be deemed complete until a broker-dealer is also registered through CRD with FINRA, with the Securities and Exchange Commission, and with the principal state in which the broker-dealer does business (if registration in such state is required by that state), or at the discretion of the Director.

(f) An application for registration will not be effective until the registration has been approved by the Unit on CRD.

lete until a broker-dealer is also registered through CRD with FINRA, with the Securities and Exchange Commission, and with the principal state in which the broker-dealer does business (if registration in such state is required by that state), or at the discretion of the Director.

(f) An application for registration will not be effective until the registration has been approved by the Unit on CRD.

(g) If an applicant fails to provide information requested by the Unit in connection with the application within 60 days of the Unit’s request, the Unit may mark the application "abandoned" on CRD. If the applicant wishes to continue to seek registration, it may submit a new application at any time.

1 DE Reg 1978 (06/01/98)

7 DE Reg 213 (08/01/03)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

601 Registration of Broker-Dealer Agents

(a) A person applying for a license as a broker-dealer agent in Delaware shall make application for such license on Form U-4 (Uniform Application for Securities Industry Registration or Transfer). Amendments to such application shall also be made on Form U-4.

(b) An applicant for registration as a broker-dealer agent shall file his or her application, together with the fee required by of the Act, with FINRA’s CRD and shall file with the Director such other information as the Director may reasonably require.

(c) Registration expires at the end of the calendar year. Any broker-dealer may renew its registration by filing with FINRA, such information as is required by FINRA, together with the fee required by the Act.

(d) For the purposes of Section 73-302(a) of the Act, an application will not be deemed complete until a broker-dealer agent is also registered through CRD with FINRA and with the principal state in which the broker-dealer agent does business (if registration in such state is required by that state), or at the discretion of the Director.

equired by FINRA, together with the fee required by the Act.

(e) An application for registration will not be effective until the registration has been approved by the Unit on CRD.

(f) If an applicant fails to provide information requested by the Unit in connection with the application within 60 days of the Unit’s request, the Unit may mark the application "abandoned" on CRD. If the applicant wishes to continue to seek registration, it may submit a new application at any time.

1 DE Reg. 1978 (06/01/98)

7 DE Reg. 213 (08/01/03)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

602 Registration of Issuer Agents

(a) A person applying for a license as an issuer agent in Delaware shall make application for such license on Form U-4 (Uniform Application for Securities Industry Registration or Transfer). Amendments to such application shall also be made on Form U-4.

(b) An applicant for registration as an issuer agent shall file the application and the fee required by the Act with the Director, together with further information as the Director may reasonably require.

(c) Any applicant for an issuer agent license must also pass or receive credit for the Uniform Securities Agent State Law Examination (Series 63) or the Uniform Combined State Law Examination (Series 66).

1 DE Reg. 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

603 Continuing Obligation of Registrants to Keep Information Current

ay reasonably require.

1 DE Reg. 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

29 DE Reg. 786 (03/01/26)

603 Continuing Obligation of Registrants to Keep Information Current

(a) Persons registering or registered as broker-dealers, broker-dealer agents or issuer agents are required to keep reasonably current the information set forth in their applications for registration and to notify the Director of any material change to any information reported in their application for registration. An applicant or registrant may notify the Director of such material change by filing an amendment through FINRA’s CRD. All other persons shall notify the Director directly.

(b) Failure to keep current the information set forth in an application or to notify the Director of any material change to any information reported in the application shall constitute a waiver of any objection to or claim regarding any action taken by the Director in reliance on information currently on file with the Director.

1 DE Reg. 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

604 Minimum Financial Requirements and Financial Reporting Requirements of Broker-Dealers

(a) Each broker-dealer registered or required to be registered under the Act shall comply with SEC Rules 15c3-1 (17 C.F.R. §240.15c3-1), 15c3-2 (17 C.F.R. §240.15c3-2), and 15c3-3 (17 C.F.R. §240.15c3-3).

(b) Each broker-dealer registered or to be registered under the Act shall comply with SEC Rule 17a-11 (17 C.F.R. §240.17a-11) and shall file with the Director, upon request, copies of notices and reports required under SEC Rules 17a-5 (17 C.F.R. §240.17a-5), 17a-10 (17 C.F.R. §240.17a-10), and 17a-11 (17 C.F.R. §240.17a-11).

3-1), 15c3-2 (17 C.F.R. §240.15c3-2), and 15c3-3 (17 C.F.R. §240.15c3-3).

(c) To the extent that the SEC promulgates changes to the above-referenced rules, broker-dealers in compliance with such rules as amended shall not be subject to enforcement action by the Unit for violation of this Rule to the extent that the violation results solely from the broker-dealer's compliance with the amended SEC rule.

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

605 Bonding Requirements of Intrastate Broker-Dealers

Every broker-dealer registered or required to be registered under the Act whose business is exclusively intrastate, who does not make use of any facility of a national securities exchange, and who is not registered under Section 15 of the Securities Exchange Act of 1934 shall be bonded in an amount of not less than $100,000 by a bonding company qualified to do business in this state.

606 Recordkeeping Requirements of Broker-Dealers

(a) Unless otherwise provided by order of the SEC, each broker-dealer registered or required to be registered under the Act shall make, maintain, and preserve books and records in compliance with SEC Rules 17a-3 (17 C.F.R. §240.17a-3), 17a-4 (17 C.F.R. §240.17a-4), and 15c2-11 (17 C.F.R. §240.15c2-11).

(b) To the extent that the SEC promulgates changes to the above-referenced rules, broker-dealers in compliance with such Rules as amended shall not be subject to enforcement action by the Unit for violation of this Rule to the extent that the violation results solely from the broker-dealer's compliance with the amended SEC rule.

18 DE Reg. 394 (11/01/14)

607 Use of the Internet for General Dissemination of Information on Products and Services

nges to the above-referenced rules, broker-dealers in compliance with such Rules as amended shall not be subject to enforcement action by the Unit for violation of this Rule to the extent that the violation results solely from the broker-dealer's compliance with the amended SEC rule.

18 DE Reg. 394 (11/01/14)

607 Use of the Internet for General Dissemination of Information on Products and Services

(a) Broker-dealers and broker-dealer agents who use the internet to distribute information on securities, products or services through communications made on the internet directed generally to anyone having access to the internet, and transmitted through postings on Bulletin Boards, displays on webpages, the placement of internet advertisements, postings on or through applications or social media websites, or otherwise (an "Internet Communication") shall not be deemed to be "transacting business" in Delaware for purposes of Section 73-301 of the Act based solely on the Internet Communication if the following conditions are met:

(1) The Internet Communication contains a legend in which it is clearly stated that:

(A) the broker-dealer or agent in question may only transact business in a state requiring registration if first registered, excluded or exempted from state broker-dealer or agent registration requirements, as the case may be; and

(B) follow-up, individual responses to persons in Delaware by such broker-dealer, or agent that involve either the effecting or attempting to effect transactions in securities, will not be made absent compliance with state broker-dealer or agent registration requirements, or an applicable exemption or exclusion;

d from state broker-dealer or agent registration requirements, as the case may be; and

(2) The Internet Communication contains a mechanism, including and without limitations, technical "firewalls" or other implemented policies and procedures, designed reasonably to ensure that prior to any subsequent, direct communication with prospective customers or clients in Delaware, said broker-dealer or agent is first registered in Delaware or qualifies for an exemption or exclusion from such requirement. Nothing in this paragraph shall be construed to relieve a state registered broker-dealer or agent from any applicable securities registration requirement in Delaware;

(3) The Internet Communication does not involve either effecting or attempting to effect transactions in securities in Delaware over the internet, but is limited to the dissemination of general information on securities, products or services; and

(4) In the case of an agent:

(A) the affiliation with the broker-dealer is prominently disclosed within the Internet Communication;

(B) the broker-dealer with whom the agent is associated retains responsibility for reviewing and approving the content of any Internet Communication by the agent;

(C) the broker-dealer with whom the agent is associated first authorizes the distribution of information on the securities, products or services through the Internet Communication; and

(D) in disseminating information through the Internet Communication, the agent acts within the scope of the authority granted by the broker-dealer;

d approving the content of any Internet Communication by the agent;

(C) the broker-dealer with whom the agent is associated first authorizes the distribution of information on the securities, products or services through the Internet Communication; and

(D) in disseminating information through the Internet Communication, the agent acts within the scope of the authority granted by the broker-dealer;

(b) The position expressed in this Rule extends to state broker-dealer and agent registration requirements only, and does not excuse compliance with applicable securities registration, antifraud or related provisions;

(c) Nothing in this Rule shall be construed to affect the activities of any broker-dealer and agent engaged in business in Delaware that is not subject to the jurisdiction of the Director as a result of the National Securities Markets Improvement Act of 1996, as amended.

1 DE Reg. 1978 (06/01/98)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

608 Registration Exemption for Certain Canadian Broker-Dealers

(a) A Canadian broker-dealer which meets the conditions of this Rule as set forth below shall be exempt from the registration requirement of Section 73-301 of the Act.

(b) To be eligible for this exemption, the broker-dealer must be resident in Canada, have no office or other physical presence in Delaware, and comply with the following conditions:

(1) Only effects or attempts to effect transactions in securities with, or for, 1 or more of the following:

(A) a person from Canada who is temporarily present in Delaware, with whom the Canadian broker-dealer had a bona fide business-client relationship before the person entered Delaware;

(B) a person from Canada who is present in Delaware, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor; or

rom Canada who is temporarily present in Delaware, with whom the Canadian broker-dealer had a bona fide business-client relationship before the person entered Delaware;

(B) a person from Canada who is present in Delaware, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor; or

(2) Is registered in its home province or territory, and a member in good standing of a self-regulatory organization or stock exchange in Canada;

(3) Files with the Director a notice in the form of the current application required by the jurisdiction in which its head office is located;

(4) Files with the Director a consent to service of process in a form which complies with the requirements of Section 73-702 of the Act.

(5) Discloses to its clients in Delaware that it is not subject to the full regulatory requirements of the Act; and

(6) Is not in violation of Section 73-201 of the Act or any rules promulgated thereunder.

(c) Exempt transactions . Offers or sales of any security effected by a broker-dealer who is exempt from registration under this Rule are exempt from the registration requirements of Section 73-202 of the Act and the filing requirements of Section 73-211 of the Act.

(d) Agent exemption . An agent who represents a Canadian broker-dealer that is exempt from registration under this Rule is also exempt from the registration requirement of Section 73-301 of the Act, provided such agent maintains his or her provincial or territorial registration in good standing.

ion requirements of Section 73-202 of the Act and the filing requirements of Section 73-211 of the Act.

(e) Denial, Suspension or Revocation . The Director may by order deny, suspend, or revoke the exemption of a particular Canadian broker-dealer provided pursuant to Rule 608 if he or she finds that the order is in the public interest and that the Canadian broker-dealer (or any partner, officer, director, or any person occupying a similar status or performing similar functions, or any person directly or indirectly, controlling the broker-dealer) has done anything prohibited by Section 73-304(a)(1) to (8),(12) or (13) of the Act.

7 DE Reg. 213 (08/01/03)

15 DE Reg. 529 (10/01/11)

18 DE Reg. 394 (11/01/14)

609 Dishonest or Unethical Practices

(a) Each broker-dealer and broker-dealer agent registered in Delaware is required to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. The acts and practices described below in this Rule, among others, are considered contrary to such standards and may constitute grounds for denial, suspension or revocation of registration or such other action authorized by the Act.

ler agent registered in Delaware is required to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. The acts and practices described below in this Rule, among others, are considered contrary to such standards and may constitute grounds for denial, suspension or revocation of registration or such other action authorized by the Act.

(b) Broker-Dealers . For the purposes of Section 73-304(a)(7) of the Act, dishonest or unethical practices by a broker-dealer shall include, but not be limited to, the following conduct:

(1) Engaging in an unreasonable and unjustifiable delay in the delivery of securities purchased by any of its customers or in the payment, upon request, of free credit balances reflecting completed transactions of any of its customers, or failing to notify customers of their right to receive possession of any certificate of ownership to which they are entitled;

(2) Inducing trading in a customer's account that is excessive in size or frequency in view of the customer's investment objective, level of sophistication in investments, and financial situation and needs;

(3) Recommending a transaction or investment strategy involving a security or securities without reasonable grounds to believe that such transaction or investment strategy is suitable for the customer, in light of the customer's investment profile, including but not limited to, age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information material to the investment, based on the information obtained through the reasonable diligence of the broker-dealer or agent to ascertain the customer’s investment profile along with such other information about the customer’s investment profile known to the broker-dealer or agent;

bjectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and

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