Kennyhertz Perry Client Memorandum: Private Right of Action for Selling Unregistered Securities in Kansas
The Kansas Uniform Securities Act (K.S.A. 17-12a101 through 17-12a703) regulates the promotion of speculative securities to protect investors. Enforcement of the Act may be handled by the Kansas Securities Commissioner, but private actions are also authorized in certain circumstances.
A security is any proof of ownership or debt assigned a value and may be sold. Common types of securities are stocks, bonds, and options. The rules regarding “crowdfunding” as a security were relaxed after the JOBS (Jumpstart Our Business Startups) Act was passed in 2012. The JOBS Act allows everyone the ability to invest in startups, with investment caps based on one’s income.
As a general rule, it is unlawful to sell unregistered securities in Kansas. There are two exceptions to that rule:
- The security is a federal covered security, or
- The security, transaction, or offer is exempted from registration.