Additional Information for broker-dealers, investment advisers and representatives of either:

As a broker-dealer, investment adviser or representative of either, the provisions of the North Carolina Securities Act can be summarized in these three principles:

  • Securities Registration: Before a security can be lawfully offered for sale or sold, that security must be either
  • registered with the Securities Division,
  • eligible for an exemption from the registration requirement, or
  • a "covered security” (such as a mutual fund or NYSE-listed security) to which state registration requirements do not apply.
  • Dealer/ Salesman Registration: Individuals and companies must register with the Securities Division before engaging in the business of carrying out securities offers, purchases, or sales. They must register as either a securities dealer or salesman unless certain exceptions apply.
  • Antifraud Provisions: It is against the law to do any of the following things in the course of the offer, sale, or purchase of a security:
  • Make an untrue statement of a material fact,
  • Omit a material fact if the omission would be misleading, and
  • Engage in any act, practice, or scheme which would deceive or defraud someone

There are statutory exemptions and exclusions from the registration requirements. The person claiming an exception or exclusion has the burden of proving eligibility for the exception or exclusion. There are no exceptions or exclusions from the antifraud provisions.

The Securities Act gives persons who suffer damage as a result of a violation of certain provisions of the Act the right to demand repayment from the violator. This right is called a right of "rescission", and the events giving rise to it and the conditions on the exercise of it are set forth at N.C. Gen. Stat. § 78A-56. The victim has a limited time within which to demand rescission, so prompt action is of the greatest importance.

Willful violations of certain provisions of the Securities Act can be prosecuted by the State as felonies. Criminal penalties for violations of the Act are set forth at N.C. Gen. Stat. § 78A-57.

Return to FAQ's