State v. Hager

Summary

The North Dakota Supreme Court affirmed the revocation of Bruce Hager’s probation after finding that he violated probation conditions by possessing firearms and acting as an unregistered securities agent. The court held that federal securities law did not preempt North Dakota’s requirements for registering individuals involved in securities transactions and that Hager was not exempt from registration.

Holdings

1. NSMIA preempts state securities laws requiring registration of covered securities, but it does not preempt state laws requiring registration of individuals involved in the offer or sale of securities.
2. Hager was not an issuer for purposes of the North Dakota Securities Act merely because he owned a one-percent interest in RAHFCO and worked for the company.
3. An individual is an agent under N.D.C.C. § 10-04-02(1) when the individual represents an issuer in effecting or attempting to effect purchases or sales of securities; the definition is not limited to third parties outside the issuer's organization.
4. Hager was not exempt from agent registration because the applicable exemption does not apply when the agent receives commissions or other remuneration based directly or indirectly on transactions in the securities.
5. The district court did not clearly err in finding that Hager violated probation by acting as an unregistered agent and did not abuse its discretion by revoking probation.

Questions Presented

1. Whether federal securities law, including NSMIA and the Rule 506 exemption, preempted North Dakota laws requiring registration of individuals involved in selling covered securities.
2. Whether Hager qualified as an issuer rather than an agent and was therefore exempt from North Dakota's agent-registration requirement.
3. Whether Hager qualified for the statutory exemption from agent registration despite receiving compensation from RAHFCO.
4. Whether the district court clearly erred in finding that Hager acted as an unregistered agent and abused its discretion by revoking probation.

Disposition

affirmed