Consent To Service Of Process

A consent to service of process appoints the Administrator to receive legal papers and is filed:

1. A.With every transactionThis confuses a registration document with transactional paperwork like confirmations and account records. The consent to service of process is filed as part of getting registered, not generated trade by trade.
2. B.Annually with renewalThere is something right here: registrations themselves do expire annually and must be renewed, so assuming every registration document recycles is understandable. The consent is the exception. It is a standing appointment of the Administrator as attorney for service and stays on file permanently without being refiled.
3. C.Only upon requestThis inverts the purpose of the filing. The consent exists so the Administrator always has a way to serve legal papers, which only works if it is already on file. Waiting for a request would defeat the point, so it is a precondition to registration rather than a response to one.
4. D.Once with the initial application and kept on file permanentlyCorrect - filed once, remains effective.

Why: It is filed once with the initial registration and remains on file permanently.

Ondine Vasari is completing her first application for registration as an agent in State M and asks her compliance officer what the consent to service of process she is signing actually accomplishes. Under the Uniform Securities Act, the consent:

1. A.waives her right to a hearing before the Administrator in any disciplinary proceedingNo registration document waives hearing rights. Notice and opportunity for hearing are protected by the Act itself.
2. B.may be revoked by her at any time on written notice to the AdministratorThe consent is irrevocable. Allowing revocation would let a registrant escape the state jurisdiction after the fact.
3. C.must be refiled with the Administrator with each annual renewal of her registrationIt is filed once with the initial application and remains in force. Renewal filings do not repeat it.
4. D.appoints the Administrator as her attorney to receive service of process in non-criminal actions arising from her securities activity, with the same force as personal serviceCorrect. That is precisely the function of the consent, and it is why an out-of-state registrant can be reached by the state courts.

Why: The consent to service of process appoints the Administrator as the applicant attorney to receive service of process in any non-criminal suit or proceeding that arises out of the applicant securities activity in the state. Service on the Administrator carries the same force and validity as personal service on the applicant. It is filed with the initial application, is irrevocable, and does not have to be refiled with each renewal.

Ambergate Foundry is incorporated in State H and has no office, agent or property in State I. It proposes to register an offering of its common stock in State I. Its counsel prepares the registration statement, financial statements and filing fee. Under the Uniform Securities Act, what else must accompany the filing?

1. A.A surety bond equal to ten percent of the aggregate offering priceBonding applies to certain registered persons, not to securities registration statements.
2. B.Nothing further, because an issuer with no presence in the state files only the statement, financials and feeThe consent to service of process is the missing item, and its absence is precisely why a non-resident issuer must file it.
3. C.An irrevocable consent to service of process appointing the Administrator to receive service on the issuer behalfCorrect. A non-resident issuer registering a security must file the consent along with its registration statement.
4. D.A certificate from the State H Administrator confirming that the offering is registered in the issuer home stateNo home state certificate is required. Each state makes its own determination.

Why: The Act requires every applicant for registration, including an out-of-state issuer registering a security, to file an irrevocable consent appointing the Administrator as attorney to receive service of process in non-criminal proceedings arising out of the offering. Without it a state court would have no reliable way to reach an issuer that has no presence in the state, so the consent is a standing condition of doing business there.

Larkmont Securities is filing its initial broker-dealer registration application with the Administrator of State N. Included in the filing is a consent to service of process. Under the Uniform Securities Act, that document:

1. A.Must be refiled with the Administrator at each annual renewal of the registration.Incorrect. The consent is filed once with the initial application and continues in force.
2. B.Appoints the Administrator to receive legal process in noncriminal actions arising from the applicant activities in the state, and remains in effect permanently without annual refiling.Correct. It is a one-time, continuing appointment covering noncriminal proceedings.
3. C.Is required only of applicants that maintain no place of business within the state.Incorrect. Every applicant for registration files one, whether or not it has an office in the state.
4. D.Waives the applicant right to contest any civil action a client brings against it in that state.Incorrect. It addresses service of process only and surrenders no defense on the merits.

Why: A consent to service of process appoints the Administrator as the applicant attorney to receive service of legal papers in any noncriminal suit or proceeding arising out of the applicant activities in the state. Its practical effect is that a defrauded resident does not have to chase an out-of-state firm across state lines to serve it. The consent is filed once, with the initial application, and remains in force permanently. It does not have to be refiled at each renewal, and it waives no substantive defenses.