Vol. 9, No. 3, Pg. 44. The National Securities Markets Improvement Act of 1996.

• Author: By Charles M. Condon

South Carolina Lawyer

1997.

Vol. 9, No. 3, Pg. 44.

The National Securities Markets Improvement Act of 1996

44THE NATIONAL SECURITIES MARKETS IMPROVEMENT ACT OF 1996By Charles M. CondonState and federal securities laws have undergone a number of significant changes within the past year.

In South Carolina, the General Assembly moved the Division of Securities from the Secretary of State to the Attorney General's Office effective July 1, 1996. Thus, the Attorney General's duties now include administering the South Carolina Uniform Securities Act and serving ex officio as Securities Commissioner.

On the federal front, the National Securities Markets Improvement Act (NSMIA) became law on October 11, 1996. The effects of the Act are significant because it changes how mutual funds and certain other offerors give notice of offerings in South Carolina. Other areas of state regulation are affected as well.

NSMIA consists of five sections, only two of which have a significant impact on people engaging in securities transactions in South Carolina. Significant changes contained in these sections are addressed below.

Section I: The Capital Markets Efficiency Act of 1996

Notice of filing requirements substituted for prior registration requirements for covered securities. Title I of the Act amends the Securities Act of 1933 to provide that state laws requiring the registration or qualification of securities or securities transactions do not apply to "covered securities," as defined in § 18(b) of the Capital Markets Act. "Covered securities" include, among other securities, those listed on the New York Stock Exchange, American Stock Exchange or the NASDAQ/National Market System; those listed by an Investment Company under the Investment Company Act of 1940; and any security sold only to "qualified purchasers," as defined in § 209(b) of Title II of NSMIA.

Pursuant to § 209(b) of Title II, the term "qualified purchaser" includes any natural person with at least $5,000,000 in investments; any company with at least $5,000,000 in investments that is owned by or for two or more persons who are related in ways specified by the Act; certain trusts; and any person who owns and invests on a discretionary basis at least $25,000,000 in investments.

The securities listed above were exempt from registration under South Carolina's Uniform Securities...