Exemptions for small security transactions approved

Senators gave final approval May 2 to a bill that changes provisions relating to small securities transactions.

LB205, sponsored by Columbus Sen. Paul Schumacher, amends the Securities Act of Nebraska to exempt certain small offers and sales of securities.

The bill exempts from registration a transaction by a Nebraska issuer selling solely to Nebraska residents when:
• the proceeds in any three-year period do not exceed $250,000;
• no commission is paid except to a registered agent of a registered broker-dealer;
• the issuer or a connected individual has not engaged in a state or federal securities law violation;
• the issuer files a notice with the director of Banking and Finance;
• the offeree receives a disclosure statement;
• the purchaser signs a subscription agreement; and
• the issuer files a statement with the director.

No fine shall be imposed for a statement or omission of material fact related to an exempted transaction unless made with the intent to defraud or mislead.

In addition, a person who sells a qualifying security by means of an untrue statement of material fact, made with intent to defraud or mislead, may be held liable to a buyer in a civil action to recover the consideration, interest and attorney fees. The burden of proof is on the claimant.

LB205 passed on a 41-0 vote.