CHAPTER 117 SENATE BILL No. 110 An  Act concerning securities; relating to certain unlawful acts and penalties therefor; in-
vestigation by commission; civil penalties; amending K.S.A. 17-1264 and 17-1265 and
K.S.A. 2002 Supp. 17-1253, 17-1254, 17-1255 and 17-1266a and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 2002 Supp. 17-1253 is hereby amended to read as
follows: 17-1253. (a) It is unlawful for any person, in connection with the
offer, sale or purchase of any security, directly or indirectly:

      (1) To employ any device, scheme or artifice to defraud;

      (2) to make any untrue statement of a material fact or to omit to state
a material fact necessary in order to make the statements made, in the
light of the circumstances under which they are made, not misleading; or

      (3) to engage in any act, practice or course of business which operates
or would operate as a fraud or deceit upon any person.

      (b) It is unlawful for any person who receives any consideration from
another person primarily for advising the other person as to the value of
securities or their purchase or sale, whether through the issuance of anal-
yses or reports or otherwise:

      (1) To employ any device, scheme or artifice to defraud the other
person;

      (2) to engage in any act, practice or course of business which operates
or would operate as a fraud or deceit upon the other person;

      (3) to knowingly sell any security to or purchase any security from a
client while acting as a principal for such person's own account without
disclosing to such client in writing before the completion of such trans-
action the capacity in which the person is acting and obtaining the consent
of the client to such transaction;

      (4) to knowingly effect any sale or purchase of any security for the
account of a client while acting as a broker for a person other than such
client without disclosing to such client in writing before the completion
of such transaction the capacity in which the person is acting and obtain-
ing the consent of the client to the transaction; and

      (5) to engage in any dishonest or unethical practice as the commis-
sioner may define by rule and regulation. The prohibitions of subsections
3 (3) and 4 of this section (4) shall not apply to any transaction with a
customer of a broker-dealer if such broker-dealer is not acting as an in-
vestment advisor in relation to such transaction.

      (c) It is unlawful for any investment adviser to enter into, extend, or
renew any investment advisory contract if the contract:

      (1) Provides for compensation to the investment adviser on the basis
of a share of capital gains upon or capital appreciation of the funds or any
portion of the funds of the client;

      (2) fails to provide in writing that no assignment of the contract may
be made by the investment adviser without the consent of the other party
to the contract; or

      (3) fails to provide in writing that the investment adviser, if a part-
nership, shall notify the other party to the contract of any change in the
membership of the partnership within a reasonable time after the change.

      Subsection (c)(1) shall not prohibit an investment advisory contract
which provides for compensation based upon the total value of a fund
averaged over a definite period, or as of definite dates or taken as of a
definite date, or in any other manner authorized by rules and regulations
adopted by the commissioner for the purposes of furthering compatibility
with federal regulations authorizing fees based upon a share of the capital
gains upon or capital appreciation of client assets. ``Assignment,'' as used
in this subsection, includes any direct or indirect transfer or hypotheca-
tion of an investment advisory contract by the assignor or of a controlling
block of the assignor's outstanding voting securities by a security holder
of the assignor; but, if the investment adviser is a partnership, no assign-
ment of an investment advisory contract is considered to result from the
death or withdrawal of a minority of the members of the investment
adviser having only a minority interest in the business of the investment
adviser, or from the admission to the investment adviser of one or more
members who, after admission, will be only a minority of the members
and will have only a minority interest in the business.

      (d) In the solicitation of clients of a person described in subsection
(b), it is unlawful for any person to make any untrue statement of a ma-
terial fact, or to omit to state a material fact necessary in order to make
the statement made, in light of the circumstances under which the state-
ment is made, not misleading.

      (e) It is unlawful for any investment adviser to take or have custody
of any securities or funds of any client if:

      (1) The commissioner by rules and regulations prohibits custody; or

      (2) in the absence of such rules and regulations, the investment ad-
viser fails to notify the commissioner that such adviser has or may have
custody.

      (f)  (1) A conviction for an intentional violation of this section is a
severity level 6, nonperson felony. Any violation of this section committed
on or after July 1, 1993, resulting in a loss of $25,000 or more, regardless
of its location on the sentencing grid block, shall have a presumptive
sentence of imprisonment. Any violation of this section resulting in a loss
of $25,000 or more, regardless of its location on the sentencing grid block,
shall have a presumptive sentence of imprisonment.

      (2) A conviction for an intentional violation of this section resulting
in a loss of $100,000 or more is a severity level 4, nonperson felony.

      (3) A conviction for an intentional violation of this section resulting
in a loss of at least $25,000 but less than $100,000 is a severity level 5,
nonperson felony.

      (4) A conviction for an intentional violation of this section resulting
in a loss of less than $25,000 is a severity level 7, nonperson felony.

      Sec.  2. K.S.A. 2002 Supp. 17-1254 is hereby amended to read as
follows: 17-1254. (a) It is unlawful for any person to transact business in
this state as a broker-dealer or agent unless that person is registered under
this act, except in transactions exempt under K.S.A. 17-1262, and amend-
ments thereto.

      (b) It is unlawful for any broker-dealer registered under this act or
issuer to employ or associate with an agent transacting business in this
state unless the agent is registered under this act or engages only in trans-
actions exempt under K.S.A. 17-1262, and amendments thereto. The reg-
istration of an agent is not effective during any period when the agent is
not associated with a particular broker-dealer registered under this act or
a particular issuer. When an agent begins or terminates a connection with
a broker-dealer or issuer, or begins or terminates those activities which
make the person an agent, the agent as well as the broker-dealer or issuer
shall promptly notify the commissioner.

      (c) It is unlawful for any person to transact business in this state as
an investment adviser or as an investment adviser representative unless:

      (1) The person is so registered under this act; or

      (2) the person has no place of business in this state and:

      (A) The person's only clients in this state are investment companies
as defined in the investment company act of 1940, other investment ad-
visers, federal covered advisers, broker-dealers, banks, trust companies,
savings institutions, insurance companies, employee benefit plans with
assets of not less than $1,000,000 and governmental agencies or instru-
mentalities, whether acting for themselves or as trustees with investment
control, or other institutional investors as are designated by rules and
regulations or order of the commissioner; or (B) during the preceding
twelve-month period has had not more than five clients, other than those
specified in subparagraph (A), who are residents of this state.

      (d) It is unlawful for:

      (1) Any person required to be registered as an investment adviser
under this act to employ or associate with an investment adviser repre-
sentative unless the investment adviser representative is registered under
this act or is exempt from registration. The registration of an investment
adviser representative is not effective during any period when such person
is not associated with an investment adviser registered under this act; or

      (2) any federal covered adviser to employ, or associate with an in-
vestment adviser representative having a place of business located in this
state, unless such investment adviser representative is registered under
this act, or is exempt from registration.

      When an investment adviser representative described in paragraphs (1)
or (2) begins or terminates employment or association with an investment
adviser or federal covered adviser, the investment adviser or federal cov-
ered adviser shall promptly notify the commissioner.

      (e) Except with respect to federal covered advisers whose only clients
are those described in paragraph (2) of subsection (c) of this section, it is
unlawful for any federal covered adviser to conduct advisory business in
this state unless such person files with the commissioner such documents
as have been filed with the securities and exchange commission together
with a consent to service of process, and pays an initial and renewal notice
filing fee, if the commissioner by rules and regulations or order requires.
Each notice filing under this section shall be effective from its original
filing date and expire on December 31 each year, unless renewed.

      (f)  (1) A conviction for an intentional violation of subsection (a)
through (d) of this section is a severity level 7, nonperson felony. Any
violation of this section committed on or after July 1, 1993, resulting in a
loss of $25,000 or more, regardless of its location on the sentencing grid
block, shall have a presumptive sentence of imprisonment. This subsec-
tion shall not apply to a failure to notify the commissioner of termination
of employment or association as an agent or investment adviser repre-
sentative. Any violation of this section resulting in a loss of $25,000 or
more, regardless of its location on the sentencing grid block, shall have a
presumptive sentence of imprisonment.

      (2) A conviction for an intentional violation of subsection (a) through
(d) resulting in a loss of $100,000 or more is a severity level 5, nonperson
felony.

      (3) A conviction for an intentional violation of subsection (a) through
(d) resulting in a loss of at least $25,000 but less than $100,000 is a severity
level 6, nonperson felony.

      (4) A conviction for an intentional violation of subsection (a) through
(d) resulting in a loss of less than $25,000 is a severity level 7, nonperson
felony.

      (5) The provisions of this subsection shall not apply to a failure to
notify the commissioner of termination of employment or association as
an agent or investment adviser representative.

      (g) A broker-dealer, agent, investment adviser or investment adviser
representative may be registered after filing with the commissioner, or
the commissioner's designee as permitted by subsection (p), a written
application containing such relevant information and in such form as the
commissioner may require. The applicant shall be registered if the com-
missioner finds that the applicant and, if applicable, the officers, directors
or partners are of good character and reputation, that the applicant's
knowledge of the securities business and the applicant's financial respon-
sibility are such that the applicant is suitable to engage in the business,
that the applicant has supplied all information required by the commis-
sioner and that the applicant has paid the necessary fee. The commis-
sioner may require as a condition of registration that the applicant and
any officers, directors or partners or, in the case of an investment adviser,
any persons who represent or will represent the investment adviser in
doing or performing any acts or functions which make such person an
investment adviser pass a written examination as evidence of knowledge
of the securities business. In determining the character and reputation of
the applicant, the commissioner may take into consideration any criminal
conviction of such person.

      (h) The commissioner may, by rules and regulations or order, require
a minimum capital for registered broker-dealers, subject to the limitations
of section 15 of the securities exchange act of 1934, and establish mini-
mum financial requirements for investment advisers, subject to the lim-
itations of section 222 of the investment advisers act of 1940, which may
include different requirements for those investment advisers who main-
tain custody of clients' funds or securities or who have discretionary au-
thority over the same and those investment advisers who do not.

      (i) The commissioner may, by rules and regulations or order, require
registered broker-dealers, agents and investment advisers who have cus-
tody of or discretionary authority over client funds or securities, to post
bonds in amounts as the commissioner may prescribe, subject to the lim-
itations of section 15 of the securities and exchange act of 1934 for broker-
dealers and section 222 of the investment advisers act of 1940 for invest-
ment advisers, and may determine their conditions. Any appropriate
deposit of cash or securities shall be accepted in lieu of any bond so
required. No bond may be required of any registrant whose net capital,
or, in the case of an investment adviser, whose minimum financial
requirements exceeds the amounts required by the commissioner. Every
bond shall provide for suit thereon by any person who has a cause of
action under K.S.A. 17-1268, and amendments thereto, and, if the com-
missioner by rules and regulations or order requires, by any person who
has a cause of action not arising under this act. Every bond shall provide
that no suit may be maintained to enforce any liability on the bond unless
brought within the time limitations provided by law.

      (j)  (1) Every registered broker-dealer and investment adviser shall
make and keep such accounts, correspondence, memoranda, papers,
books and other records as the commissioner prescribes by rules and
regulations or order, subject to the limitations provided by section 15 of
the securities exchange act of 1934, in the case of a broker-dealer, and
section 222 of the investment advisers act of 1940, in the case of an
investment adviser. All records so required with respect to an investment
adviser, shall be preserved for such period as the commissioner prescribes
by rules and regulations or order.

      (2) With respect to investment advisers, the commissioner may re-
quire that certain information be furnished or disseminated as necessary
or appropriate in the public interest or for the protection of investors and
advisory clients. To the extent determined by the commissioner, infor-
mation furnished to clients or prospective clients of an investment adviser
that would be in compliance with the investment advisers act of 1940 and
the rules thereunder may be used in whole or partial satisfaction of this
requirement.

      (k) The commissioner shall maintain records of registration, notice
filings and orders pertaining to broker-dealers, agents, investment advi-
sers, federal covered advisers and investment adviser representatives. Un-
less the commissioner has designated alternative registration expiration
dates as permitted by subsection (p), every registration under this section
shall expire December 31 each year, but any registration for the suc-
ceeding year shall be renewed upon written application and payment of
the fee as herein provided without filing a further statement or furnishing
any further information unless specifically required by the commissioner.
Unless the commissioner has designated alternative registration renewal
dates as permitted by subsection (p), application for renewals must be
made not later than December 31 in each year; otherwise, they shall be
treated as original applications.

      (l) The fee for original or renewal registration of each broker-dealer
and each investment adviser shall be not more than $300. The fee for an
original or renewal notice filing of each federal covered adviser shall be
not more than $300. The fee for original or renewal registration of each
agent and investment adviser representative shall be not more than $50.
Each fee for original registration shall be payable with the application for
original registration and each fee for renewal of registration shall be pay-
able with the application for renewal and, in either case, the fee shall not
be returned if the application is withdrawn. The commissioner shall es-
tablish such fees by rules and regulations.

      (m) The commissioner may by order deny, suspend or revoke the
registration of any broker-dealer, agent, investment adviser or investment
adviser representative if the commissioner finds that such an order is in
the public interest and that the applicant or registrant, or, in the case of
a broker-dealer or investment adviser, any partner, officer or director or
any person occupying a similar status or performing similar functions:

      (1) Has filed an application for registration which as of its effective
date (, or as of any date after filing in the case of an order denying ef-
fectiveness), was incomplete in any material respect or contained any
statement which was, in the light of the circumstances under which it was
made, false or misleading with respect to any material fact;

      (2) has willfully violated or willfully failed to comply with any provi-
sion of this act or any rules and regulations or order under this act;

      (3) has been convicted, within the past 10 years, of any misdemeanor
involving a security or any aspect of the securities business or of any
felony, if the commissioner determines, after investigation, that such per-
son has not been sufficiently rehabilitated to warrant the public trust;

      (4) is permanently or temporarily enjoined by any court of competent
jurisdiction from engaging in or continuing any conduct or practice as an
investment adviser, broker-dealer, or as an affiliated person or employee
of an investment company, depository institution, insurance company, or
involving any aspect of the securities business or commodities investment
business;

      (5) is the subject of an order of the commissioner denying, suspend-
ing or revoking registration as a broker-dealer, agent, investment adviser
or investment adviser representative;

      (6) is the subject of an order entered within the past five years by the
securities administrator of any other state or by the securities and
exchange commission denying, suspending or revoking registration as a
broker-dealer, agent, investment adviser or investment adviser represen-
tative (, or the substantial equivalent of those terms as defined in this
act), or is the subject of an order of the securities and exchange commis-
sion suspending or expelling the person from a national securities
exchange or national securities association registered under the federal
securities exchange act of 1934, or is the subject of an order by the com-
modities futures trading commission denying, suspending or revoking
registration under the commodities exchange act, or is the subject of an
order suspending or expelling from membership in or association with a
member of a self-regulatory organization registered under the securities
exchange act of 1934 or the commodities exchange act, or is the subject
of a United States post office fraud order; but the commissioner may not
enter any order under this clause on the basis of an order under any other
state act unless that order was based on facts which would currently con-
stitute a ground for an order under this section;

      (7) has engaged in dishonest or unethical practices in the securities
business;

      (8) in the case of a broker-dealer or investment adviser, is insolvent,
either in the sense that such person's liabilities exceed such person's assets
or in the sense that such person cannot meet such person's obligations as
they mature;

      (9) is not qualified on the basis of such factors as training, experience,
and knowledge of the securities business, but the commissioner may not
enter an order solely on the basis of lack of experience if the applicant or
registrant is qualified by training or knowledge or both;

      (10) is failing to keep or maintain sufficient records to permit an audit
disclosing the condition of the registrant's business;

      (11) has failed to pay the proper registration fee; but the commis-
sioner may not enter a revocation order under this clause, and the com-
missioner shall vacate any denial order entered under this clause when
the deficiency has been corrected;

      (12) has failed reasonably to supervise an agent, investment adviser
representative or employee to ensure compliance with this act; or

      (13) has willfully and without cause failed to comply with a request
for information by the commissioner or person designated by the com-
missioner in conducting investigations or examinations under this act.

      (n) The commissioner may by emergency order suspend registration
pending final determination of any proceeding under this section. Upon
the entry of any order under this section, the commissioner shall promptly
notify the applicant or registrant (,as well as the employer or prospective
employer if the applicant or registrant is an agent or investment adviser
representative), that it has been entered and of the reasons therefor and
that, upon written request, the matter will be set for a hearing which shall
be conducted in accordance with the provisions of the Kansas adminis-
trative procedure act.

      (o) The commissioner may cancel the registration or application in
accordance with the provisions of the Kansas administrative procedure
act, if the commissioner finds that any registrant or applicant for regis-
tration is: (1) No longer in existence or has ceased to do business as a
broker-dealer, agent, investment adviser or investment adviser represen-
tative; (2) an adjudged incapacitated person; or (3) cannot be located after
reasonable search.

      (p)  (1) The commissioner may participate, in whole or in part, with
any national securities association or national securities exchange regis-
tered with the United States securities and exchange commission under
the federal securities exchange act of 1934 or with any association of state
securities administrators in any registration depository where the broker-
dealer, agent, investment adviser or investment adviser representative
registrations required by subsection (g) may be centrally or simultane-
ously effected and the accompanying registration fees may be collected
for all states that require the registration of such persons and participate
in the registration depository.

      (2) If the commissioner finds that participation in the registration
depository is in the public interest, the commissioner may by rules and
regulations or by order require that:

      (A) Applications for the registration or the renewal of the registration
of any broker-dealer, agent, investment adviser or investment adviser rep-
resentative as required by this section may be made through the regis-
tration depository;

      (B) alternative registration expiration and renewal dates for regis-
tered broker-dealers, agents, investment advisers and investment adviser
representative be utilized in lieu of the registration expiration and renewal
dates provided under subsection (k);

      (C) all fees for the registration or the renewal of the registration of
any broker-dealer, agent, investment adviser or investment adviser rep-
resentative be collected by the registration depository in the dollar
amounts required by subsection (l), provided that such fees are subse-
quently submitted to the commissioner pursuant to K.S.A. 17-1270, and
amendments thereto, and remitted by the commissioner pursuant to
K.S.A. 17-1271, and amendments thereto.

      (3) Subsequent to the effective date of any rules and regulations or
order of the commissioner that is adopted under subsection (p)(2):

      (A) All applications for the registration or the renewal of the regis-
tration of any broker-dealer, agent, investment adviser or investment ad-
viser representative, and all documents supporting such applications,
which shall be filed with or received by the registration depository shall
be deemed to be filed with or received by the commissioner pursuant to
subsection (g), when such applications or documents are received by the
registration depository; and

      (B) any statement which is contained in any application for the reg-
istration or the renewal of the registration of any broker-dealer, agent,
investment adviser or investment adviser representative or contained in
any document supporting such applications, which is filed with or re-
ceived by the registration depository and which is, at the time and in light
of the circumstances under which it is made, false or misleading in any
material respect shall constitute a violation of K.S.A. 17-1264, and amend-
ments thereto.

      Sec.  3. K.S.A. 2002 Supp. 17-1255 is hereby amended to read as
follows: 17-1255. (a) It is unlawful for any person to offer or sell any
security in this state, unless:

      (1) It is registered under this act;

      (2) the security or transaction is exempt under K.S.A. 17-1261 or 17-
1262, and amendments thereto; or

      (3) it is a federal covered security for which the fee has been paid
and documents have been filed as required by K.S.A. 2002 Supp. 17-
1270a.

      (b)  (1) A conviction for an intentional violation of this section is a
severity level 7, nonperson felony. Any violation of this section committed
on or after July 1, 1993, resulting in a loss of $25,000 or more, regardless
of its location on the sentencing grid block, shall have a presumptive
sentence of imprisonment. Any violation of this section resulting in a loss
of $25,000 or more, regardless of its location on the sentencing grid block,
shall have a presumptive sentence of imprisonment.

      (2) A conviction for an intentional violation of this section resulting
in a loss of $100,000 or more is a severity level 5, nonperson felony.

      (3) A conviction for an intentional violation of this section resulting
in a loss of at least $25,000 but less than $100,000 is a severity level 6,
nonperson felony.

      (4) A conviction for an intentional violation of this section resulting
in a loss of less than $25,000 is a severity level 7, nonperson felony.

      Sec.  4. K.S.A. 17-1264 is hereby amended to read as follows: 17-
1264. (a) It is unlawful for any person to make or cause to be made, in
any document filed with the commissioner or in any proceeding under
this act, any statement which is, at the time and in the light of the cir-
cumstances under which it is made, false or misleading in any material
respect while knowing the statement made to be false or misleading in
any material respect.

      (b) A conviction for an intentional violation of this section is a severity
level 10 8, nonperson felony. Any violation of this section committed on
or after July 1, 1993, resulting in a loss of $25,000 or more, regardless of
its location on the sentencing grid block, shall have a presumptive sen-
tence of imprisonment.

      Sec.  5. K.S.A. 17-1265 is hereby amended to read as follows: 17-
1265. (a) The commissioner may: (1) Make public or private investigations
within or outside of this state as necessary to determine whether any
registration should be granted, denied or revoked or whether any person
has violated or is about to violate any provision of this act or any rule or
order hereunder, or to aid in the enforcement of this act or in the pre-
scribing of forms or adoption of rules and regulations; (2) require or
permit any person to file a statement in writing, under oath or otherwise
as the commissioner determines, of all the facts and circumstances con-
cerning the matter to be investigated; and (3) publish information con-
cerning any violation of this act or any rule or order hereunder.

      (b) The commissioner may appoint special investigators to aid in in-
vestigations conducted pursuant to the Kansas securities act. Such special
investigators shall have authority to make arrests, serve subpoenas and all
other process, conduct searches and seizures, store evidence, and carry
firearms, concealed or otherwise while investigating violations of this act
and to generally enforce all the criminal laws of this state as violations of
such laws are encountered by such special investigators. The director as
defined in K.S.A. 74-5602 and amendments thereto is authorized to offer
and carry out a special course of instruction for special investigators per-
forming law enforcement duties under authority of this subsection (b).
Such special investigators shall not carry firearms without having first
successfully completed such special law enforcement training course.

      (c) For the purpose of any investigation or proceeding under this act,
the commissioner or any officer designated by the commissioner may
administer oaths and affirmations, subpoena witnesses, compel their at-
tendance, take evidence, and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents or records
which the commissioner deems relevant or material to the inquiry.

      (d) In case of contumacy by, or refusal to obey a subpoena issued to
any person, any court of competent jurisdiction, upon application by the
commissioner, may issue to that person an order requiring the person to
appear before the commissioner, or the officer designated by the com-
missioner, there to produce documentary evidence if so ordered or to
give evidence touching the matter under investigation or in question. Any
failure to obey the order of the court may be punished by the court as a
contempt of court.

      (e) No person is excused from attending and testifying or from pro-
ducing any document or record before the commissioner, or in obedience
to the subpoena of the commissioner or any officer designated by the
commissioner, or in any proceeding instituted by the commissioner, on
the ground that the testimony or evidence (, documentary or otherwise),
required of the person may tend to incriminate the person or subject the
person to a penalty or forfeiture. No individual may be prosecuted or
subjected to any penalty or forfeiture for or on account of any transaction,
matter or thing concerning which such person is compelled, after claiming
privilege against self-incrimination, to testify or produce evidence (, doc-
umentary or otherwise), except that the individual so testifying shall not
be exempt from prosecution and punishment for perjury committed in
so testifying.

      (f) The commissioner may issue and apply to enforce subpoenas in
this state at the request of a securities agency or administrator of another
state if the activities constituting an alleged violation for which the infor-
mation is sought would be a violation of the Kansas securities act if the
activities had occurred in this state.

      Sec.  6. K.S.A. 2002 Supp. 17-1266a is hereby amended to read as
follows: 17-1266a. (a) If the commissioner determines after notice and
opportunity for a hearing that any person has engaged, is engaging or is
about to engage in any act or practice constituting a violation of any pro-
vision of this act or any rule and regulation or order hereunder, the com-
missioner by order may require that such person cease and desist from
the unlawful act or practice and take such affirmative action as in the
judgment of the commissioner will carry out the purposes of this act.

      (b) If the commissioner makes written findings of fact that the public
interest will be irreparably harmed by delay in issuing an order under
subsection (a), the commissioner may issue an emergency temporary
cease and desist order. Such order, even when not an order within the
meaning of K.S.A. 77-502, and amendments thereto, shall be subject to
the same procedures as an emergency order issued under K.S.A. 77-536,
and amendments thereto. Upon the entry of such an order, the commis-
sioner shall promptly notify the person subject to the order that it has
been entered, of the reasons and that upon written request the matter
will be set for a hearing which shall be conducted in accordance with the
provisions of the Kansas administrative procedure act. If no hearing is
requested and none is ordered by the commissioner, the order will remain
in effect until it is modified or vacated by the commissioner. If a hearing
is requested or ordered, the commissioner, after notice of and opportu-
nity for hearing to the person subject to the order, shall by written find-
ings of fact and conclusions of law vacate, modify or make permanent the
order.

      (c) If the commissioner reasonably believes that a person has violated
this act or a rule and regulation or order of the commissioner under this
act, the commissioner, in addition to any specific power granted under
this act, after notice and hearing in an administrative proceeding, unless
the right to notice and hearing is waived by the person against whom the
sanction is imposed, may:

      (1) Censure the person if the person is a registered broker-dealer,
agent, investment adviser or investment adviser representative;

      (2) issue an order against an applicant, registered person or other
person who knowingly violates this act or a rule or order of the commis-
sioner under this act, imposing a civil penalty up to a maximum of $5,000
$25,000 for each violation. If any person is found to have violated any
provision of this act, and such violation is committed against elder or
disabled persons, as defined in K.S.A. 50-676, and amendments thereto,
in addition to any civil penalty otherwise provided by law, the commis-
sioner may impose an additional penalty not to exceed $15,000 for each
such violation;

      (3) bar or suspend the person from association with a broker-dealer
or investment adviser registered in this state; or

      (4) issue an order requiring the person to pay restitution for any loss
arising from the violation or requiring the person to disgorge any profits
arising from the violation. Such order may include the assessment of in-
terest not to exceed 15% per annum from the date of the violation.

      (d) Every hearing in an administrative proceeding shall be public un-
less the commissioner in the commissioner's discretion grants a request
joined in by all the respondents that the hearing be conducted privately.

      New Sec.  7. (a) It is unlawful for any person to intentionally influ-
ence, coerce, manipulate or mislead any person in connection with finan-
cial statements or appraisals to be used in the offer, sale or purchase of
securities for the purpose of rendering such financial statements or ap-
praisals materially misleading.

      (b) A conviction for a violation of this section is a severity level 8,
nonperson felony.

      New Sec.  8. (a) It is unlawful for any person to:

      (1) Alter, destroy, shred, mutilate, conceal, cover up or falsify any
record with the intent to impede, obstruct or influence any investigation
by the commissioner or the commissioner's designee;

      (2) alter, destroy, shred, mutilate or conceal a record with the intent
to impair the object's integrity or availability for use in a proceeding be-
fore the commissioner or a proceeding brought by the commissioner; or

      (3) take action harmful to a person with the intent to retaliate, in-
cluding, but not limited to, interference with lawful employment of such
person, for providing truthful information relating to a violation of the
Kansas securities act.

      (b) Violation of this section is a severity level 8, nonperson felony.

 Sec.  9. K.S.A. 17-1264 and 17-1265 and K.S.A. 2002 Supp. 17-1253,
17-1254, 17-1255 and 17-1266a are hereby repealed.

 Sec.  10. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 21, 2003.
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