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| 3. Section 16102(15)(B): This paragraph excludes from the | | definition of "investment adviser" certain professionals whose | | performance of investment advice is "solely incidental" to the | | practice of their profession. Consistent with the predecessor act, | | receiving additional compensation solely for investment advice | | negates this definitional exclusion, because specific compensation | | indicates that the advice was not incidental in nature. |
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| | | 4. Section 16102(17)(D): Maine has modified the model | | Uniform Securities Act by adding paragraph (D), "[t]he issuer of | | a fractional or pooled interest in a viatical or life settlement | | contract," within the definition of issuer, similar to the | | predecessor act. |
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| | | 5. Section 16102(28): Maine has modified the model Uniform | | Securities Act definition of security so as to place investments | | in a viatical and life settlement contract within the main body | | of the definition (as they appeared in the Revised Maine | | Securities Act) and not as examples of investment contracts. | | This modification is intended to ensure that the same standards | | will be applied in Maine when determining whether such | | investments fall within the definition. Further, Maine has added | | into the body of the definition certain oil and gas interests | | that were also included in the Revised Maine Securities Act as a | | type of security. |
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| | | 6. Section 16102(28)(B): Maine has elected to exclude | | variable annuities in the definition of a security, an option | | included in the model Uniform Securities Act. In evaluating this | | option, Maine determined that it would be appropriate to update | | the Maine Insurance Code to include rule-making authority for the | | Superintendent of Insurance to adopt rules regarding the | | suitability of sales of variable annuities. |
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| | | 7. Section 16102(28)(D): The term "profits" should be | | interpreted in light of the United States Supreme Court's | | decision in SEC v. Edwards, 124 S. Ct. 892 (2004), which | | clarified the meaning of the investment contract definition first | | set forth in SEC v. Howey, 66 S. Ct. 1100 (1946). Referring to | | Howey, the Court stated: "[W]e were speaking of the profits that | | investors seek on their investment, not the profits of the scheme | | in which they invest. We used 'profits' in the sense of income | | or return, to include for example, dividends, other periodic | | payments, or the increased value of the investment. There is no | | reason to distinguish between promises of fixed returns and | | promises of variable returns for purposes of the test, so | | understood." Edwards, 124 S. Ct. at 897. |
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