PURPOSE: This rule prescribes the policies and procedures applicable to transactional exemptions under the Missouri Uniform Securities Act for offers and sales of securities pursuant to Regulation D under the Securities Act of 1933. It is intended to facilitate the formation of capital by implementing the congressionally declared policy of uniformity expressed in sections 19(c)(2) and (3) of the Securities Act of 1933, consistent with protection of investors under the Missouri Uniform Securities Act.

1. (1) The commissioner, pursuant to the provisions of section 409.402(c) of the Missouri Uniform Securities Act (the Act) RSMo, exempts the following transactions from the requirements of sections 409.301 and 409.403 of the Act:

   1. (A) Any offer or sale of securities made in compliance with the Securities Act of 1933 (the 1933 Act), Regulation D, rules 230.501– 230.503 and 230.505 or 230.506, which satisfy the following further conditions and limitations:

      1. 1. No exemption under this rule shall be

available for any transaction involving the securities of any issuer, if any of the parties in interest described in the 1933 Act, Regulation A, rule 230.252 section (c), (d), (e) or (f)—

1. A. Has filed a registration statement

which is the subject of a currently effective stop order entered by the commissioner of securities pursuant to the Act or by the securities regulatory authority of any other state, and any such order was entered within five (5) years prior to the commencement of offering;

1. B. Has been convicted within five (5)

years prior to commencement of the offering of any felony or misdemeanor in connection with the purchase or sale of any security or any felony involving fraud or deceit including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

1. C. Is currently subject to an adminis-

trative order or decision issued or brought by the commissioner of securities within five (5) years prior to filing the initial Form D under this rule, or is currently subject to any administrative order or decision issued or brought by a regulatory authority or any state within five (5) years prior to the filing of the initial Form D under this rule, in which fraud or deceit was found;

1. D. Is currently subject to an order or

decision issued by the securities regulatory authority of any state, which order or decision prohibits the use of any exemption from registration in connection with the purchase or sale of securities;

1. E. Is currently subject to any order,

judgment or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction entered within five (5) years prior to the filing of the Form D pursuant to this rule permanently restraining or enjoining, the person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with any state;

1. F. The prohibitions of subparagraphs

(1)(A)1.A.–C. shall not apply if the party in interest, subject to disqualification, is duly licensed or registered to conduct securitiesrelated business in the state in which an administrative order or decision or court judgment was entered against the party in interest; and

1. G. Any disqualification caused by the

subparagraphs (1)(A)1.A.–E. is automatically waived if the securities administrator of the state which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied;

1. 2. The issuer shall file with the com-

missioner of securities one (1) manually signed copy of each notice on Form D at the same time and in the same manner as prescribed by rule 230.503(a) of the Act except that the filing of the Form D required by rule 230.503(a) of the Act shall be filed no later than fifteen (15) days after the first sale of securities subject to the Act (for purposes of determining the date of filing only, sale includes those circumstances described in section 409.401(j)(1) of the Act or the signing of a subscription agreement, contract for sale, or other similar document by the offeree, whichever occurs first). Every person filing the initial notice shall pay the fee prescribed by 15 CSR 30-50.030(2)(F); and

1. 3. The purchaser, if not an accredited

investor as defined in rule 230.501(a) of the 1933 Act, shall meet or the issuer or its agents shall reasonably believe that the investor meets the following condition: The investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to his/her other security holdings and as to his/her financial situation and needs. For the limited purpose of this condition only, it shall be presumed that if the investment does not exceed twenty percent (20%) of the investor’s net worth, it is suitable. Nothing in this rule is intended to relieve registered securities, broker-dealers or agents from the standards of customer suitability otherwise applicable to such registered persons.

1. (2) Nothing in this exemption is intended to or should be construed as in any way relieving issuers or persons acting on behalf of issuers from providing disclosure to prospective investors adequate to satisfy the antifraud provisions of the Act.
2. (3) Offers and sales which are exempt under this rule may not be combined with offers and sales exempt under any other section or rule of the Act; however, nothing in this limitation shall act as an election. Should, for any reason, the offer and sale fail to comply with all of the conditions for this exemption, the issuer may claim the availability of any other applicable exemption.
3. (4) In any proceeding involving this rule, the burden of proving the exemption or an exception from a definition or condition is upon the person claiming it.
4. (5) In view of the objectives of this rule and the purposes and policies underlying the Act, the exemption is not available to any issuer with respect to any transaction which, although in technical compliance with this rule, is part of a plan or scheme to evade registration or the conditions or limitations explicitly stated in this rule.
5. (6) The commissioner of securities, by rule or order before or after the transaction, may increase the number of purchasers or waive 15 CSR 30-54

any other conditions or provisions of this rule.

1. (7) Pursuant to section 409.401(b)(5) of the Act, and only for the purposes of effecting transaction under this rule, agent does not include those officers, directors, general partners or other bona fide employees of the issuer whose primary employment function is other than the sale of securities.
2. (8) A failure to comply with a term, condition or requirement of paragraph (1)(A)2. or

3. 3. of this rule will not result in loss of the exemption from the requirements of section 409.301 of the Act for any offer or sale to a particular individual or entity if the person relying on the exemption shows—

   1. (A) The failure to comply did not pertain to a term, condition or requirement directly intended to protect that particular individual or entity;
   2. (B) The failure to comply was insignificant with respect to the offering as a whole; and
   3. (C) A good faith and reasonable attempt was made to comply with all applicable terms, conditions and requirements of paragraph (1)(A)2. or 3. of this rule.
4. (9) Where an exemption is established only through reliance upon section (8) of this rule, the failure to comply shall nonetheless be actionable by the commissioner under section 409.408 of the Act.

AUTHORITY: section 409.402(c), RSMo 1986.* Emergency rule filed Aug. 12, 1982, effective Aug. 22, 1982, expired Dec. 10, 1982. Original rule filed Aug. 11, 1982, effective Dec. 11, 1982. Emergency amendment filed Aug. 1, 1984, effective Aug. 11, 1984, expired Nov. 11, 1984. Amended: Filed Aug. 1, 1984, effective Nov. 11, 1984. Amended: Filed Jan. 14, 1987, effective June 25, 1987. Amended: Filed Oct. 15, 1987, effective Jan. 29, 1988. Amended: Filed Jan. 3, 1990, effective March 11, 1990. *Original authority: 409.402, RSMo 1967, amended 1977, 1978, 1986.