Ark. Code Ann. § 23-42-501 (2026)

Research References

U. Ark. Little Rock L.J.

Survey—Securities, 11 U. Ark. Little Rock L.J. 255.

U. Ark. Little Rock L. Rev.

John F. Griffee, IV, Guide to Structuring Resales of Restricted Securities Held by Control and Non-Control Holders Under Federal and Arkansas Law, 38 U. Ark. Little Rock L. Rev. 1 (2015).

Frances S. Fendler & A. Heath Abshure, Private Civil Liability Under the Arkansas Securities Act, 38 U. Ark. Little Rock L. Rev. 125 (2016).

Case Notes

Purpose.

It was not the intent of the Arkansas Securities Act to allow the law to be used by sophisticated brokers and dealers for promotional projects thereby reaping consultant benefits, sales commissions, and other benefits, without fully complying with the requirements of the law. Graham v. Kane, 264 Ark. 949, 576 S.W.2d 711 (1979).

Burden of Proof.

Upon the showing of a sale of a security, the burden shifts to the seller to show that the security was either registered or exempt from the Arkansas Securities Act, or that the buyer is estopped from claiming civil damages. McMullan v. Molnaird, 24 Ark. App. 126, 749 S.W.2d 352 (1988).

Duty to Register.

Since the law of this state imposes an absolute duty on directors to register securities prior to sale, blame for not registering securities cannot be shifted to the securities department investigators and enforcers. Robertson v. White, 635 F. Supp. 851 (W.D. Ark. 1986).

Ignorance of a duty to register securities, or to procure their exemption, can in no way excuse the failure to do so; the only conceivable excuse under the “lack of knowledge” defense would be if the director affirmatively believed that the securities were registered, and even then, § 23-42-106 demands that such mistaken knowledge be not the product of negligence, and the director bears the burden of proving that he was not so negligent. Robertson v. White, 635 F. Supp. 851 (W.D. Ark. 1986).

Ignorance of the securities law in no way excuses failure to register securities, or to procure their exemption. Hogg v. Jerry, 299 Ark. 283, 773 S.W.2d 84 (1989).

Evidence.

It makes little difference whether defendants be classified as dealers, promoters or representatives; the evidence established that they were engaged in selling stock without first registering same, or obtaining a certificate of approval, and neither the stock nor the transactions were exempt and thus under the undisputed facts, defendants, as a matter of law, clearly violated the securities act. Arkansas Real Estate Co. v. Fullerton, 232 Ark. 713, 339 S.W.2d 947 (1960) (decision under prior law).

Conviction of one charged with violation of this section who defended on the ground that he had obtained an exemption for the security sold under § 23-42-504(a)(9) was not sustained by evidence that the defendant sold the security to persons who were not on the list of offerees filed with the Securities Commissioner in compliance with a rule of the commissioner. Gaskin v. State, 244 Ark. 541, 426 S.W.2d 407 (1968).

Investor's motion for summary judgment on the issue of defendants' liability for failure to register under the Arkansas Security Act, § 23-42-101 et seq. was denied because there were issues remaining concerning whether or not defendants were exempt from the state registration as a “covered security” under federal law; the fact that defendants did not file a Federal Form D did not, by itself, preclude defendants from asserting that the securities they sold were exempt. Hamby v. Clearwater Consulting Concepts, LLLP, 428 F. Supp. 2d 915 (E.D. Ark. 2006).

Exemptions.

An agricultural and mechanical fair association was held exclusively “educational” so that no permit was required for the sale of its stock. Saxon v. Ark. State Fair Ass'n, 181 Ark. 750, 27 S.W.2d 505 (1930) (decision under prior law).

Where sellers of joint venture interests in an apartment complex received over $20,000 for “consulting fees,” and where the sellers organized, constructed, managed and controlled the properties of the joint venture, the joint venture interests were not exempt from registration. Schultz v. Rector-Phillips-Morse, Inc., 261 Ark. 769, 552 S.W.2d 4 (1977).

Statute of Limitations.

In the absence of any indication that the legislature intended to make the extension of the statute of limitations by the 1973 amendment to § 23-42-106 retroactive, that statute of limitations was applicable only to causes of action arising after the 1973 act became effective; therefore a civil action for an illegal sale of securities was barred where the sale was made prior to the enactment of the 1973 amendment, but suit was not commenced until after the expiration of the statute of limitations prior to the 1973 amendment. Morton v. Tullgren, 263 Ark. 69, 563 S.W.2d 422 (1978).

Cited: Long v. Mabry, 250 Ark. 947, 470 S.W.2d 319 (1971); Graham v. Kane, 264 Ark. 949, 576 S.W.2d 711 (1979); Bank of Waldron v. Scott County Bank, 267 Ark. 407, 590 S.W.2d 654 (1979); Tanenbaum v. Agri-Capital, Inc., 885 F.2d 464 (8th Cir. 1989); Hunter v. State, 330 Ark. 198, 952 S.W.2d 145 (1997); Rooney v. Williamson, 167 F.3d 1185 (8th Cir. 1999).