(1) It is unlawful for any person, in
connection with the offer, sale, or purchase of any security, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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
(c) To engage in any act, practice, or course of business which operates or would operate
as a fraud or deceit upon any person.
(2) It is unlawful for a custodian of the funds or securities of a local government
investment pool trust fund organized under the provisions of part 7 of article 75 of title 24,
C.R.S., to effect any transaction to relinquish possession of, distribute, expend, or transfer any of
the assets of the trust fund without the prior written authorization of the board, except for:
(a) The purchase or sale of authorized investments or the exchange of such assets for
other assets of equal or greater value if such sale, purchase, or exchange is solely in the accounts
of the trust fund;
(b) Distributions to participating local governments; or
(c) The payment of routine fees and expenses that have been authorized by the board of
trustees in the annual budget of the trust fund.
(3) It is unlawful for any investment adviser of a local government investment pool trust
fund organized under the provisions of part 7 of article 75 of title 24, C.R.S., to:
(a) Take custody or possession of the funds or securities of the trust fund;
(b) Act as a principal in any transaction in securities with the trust fund unless the
express prior written authorization of the board of trustees is obtained with regard to each such
transaction and unless the transaction is effected without mark-up and at the fair market price of
the securities purchased or sold; or
(c) Deposit, convey, or maintain the funds or securities of the trust fund in any account
that is in any other name than that of the trust fund.
(4) It is unlawful for any broker-dealer or financial institution acting in an advisory
capacity to a local government investment pool trust fund organized under the provisions of part
7 of article 75 of title 24, C.R.S., or any person employed by or directly associated with such
broker-dealer or financial institution to:
(a) Act as a principal in any transaction in securities with the trust fund unless the
express prior written authorization of the board of trustees is obtained with regard to each such
transaction and unless the transaction is effected without mark-up and at the fair market price of
the securities purchased or sold; or
(b) Deposit, convey, or maintain the funds or securities of the trust fund in any account
that is in any other name than that of the trust fund.
(5) It is unlawful for any person who receives, directly or indirectly, any consideration
from another person for advising the other person as to the value of securities or of any purchase
or sale thereof, whether through the issuance of analyses or reports or otherwise to:
(a) Employ any device, scheme, or artifice to defraud any client or prospective client;
(b) Make an untrue statement of a material fact to any client or prospective client or to
omit to state to any client or prospective client any material fact necessary to make the
statements made, in light of the circumstances under which they are made, not misleading, in the
disclosure statement delivered to any client or prospective client pursuant to section 11-51-409.5
or a similar document under the federal "Investment Advisers Act of 1940" or during the
solicitation of any such client or otherwise in connection with providing investment advisory
services; or
(c) Engage in any transaction, act, practice, or course of business that operates or would
operate as a fraud or deceit upon any client or prospective client or that is fraudulent, deceptive,
or manipulative.
(6) It is unlawful for an investment adviser or investment adviser representative acting as
principal for such person's own account or on behalf of a third party to:
(a) Sell a security to a client without disclosing in writing pursuant to section 11-51-
409.5 the capacity in which the investment adviser or investment adviser representative is acting
before the completion of the transaction; or
(b) Fail to obtain the written consent of the client to such transaction after disclosure has
been made and before completion of the transaction.
(7) Nothing in subsection (5) or (6) of this section shall relieve an investment adviser,
federal covered adviser, or investment adviser representative of liability under any other
subsection of this section.
Source: L. 90: Entire article R&RE, p. 728, § 1, effective July 1. L. 93: (2) to (4) added,
p. 326, § 2, effective July 1. L. 98: (5) to (7) added, p. 562, § 16, effective January 1, 1999.
Editor's note: This section is similar to former § 11-51-123 (1) as it existed prior to
1990.
Cross references: For the applicability of this section, see § 11-51-102 (1), (2), and (9);
for the "Investment Advisers Act of 1940", see Pub.L. 76-768, codified at 15 U.S.C. § 80b-1 et
seq.
Notes of Decisions
Black Diamaond Fund, LLLP v. Joseph, 211 P.3d 727 (Colo. Ct. App. 2009).
· cites it 39× “Violation of Section 11-51-501 Respondents contend that the Commissioner's express finding that they sold securities in a "fraudulent manner" in violation of section 11-51-501 is not supported by substantial evidence and is an improper interpretation of the scope of that statute.”
People v. Thompson, 2018 COA 83 (Colo. Ct. App. 2018).
· cites it 8× “§ 11-51-501(1). At the time of defendant’s trial, the test for determining whether a note was a security was “the presence of an investment in a common enterprise that is premised on a reasonable expectation of profits to be derived from the entrepren[e]urial or managerial…”
People v. DESTRO, 215 P.3d 1147 (Colo. Ct. App. 2009).
· cites it 8× “Section 11-51-501, C.R.S8.2007, is the securities fraud statute under which defendant was charged.”
People v. Rivera, 56 P.3d 1155 (Colo. Ct. App. 2002).
· cites it 13× “*1162 Section 11-51-501, the specific provision under which defendant was charged, does not contain a culpable mental state for securities fraud.”
People v. Mendenhall, 2015 COA 107 (Colo. Ct. App. 2015).
· cites it 10× “Rather, a defendant may constitutionally be convicted under section 11-51-501, C.R.S. 2014, for fraud "in connection with the offer, sale, or purchase" of any note as long as the note at issue constitutes a security.”
Thompson v. People, 2020 CO 72 (Colo. 2020).
· cites it 3× “Thereafter, the People charged Thompson with two counts of securities fraud under subsections 11-51-501(1)(b) and (1)(c), C.R.”
People v. Prendergast, 87 P.3d 175 (Colo. Ct. App. 2003).
· cites it 12× “Part 5 defines fraud and other prohibited conduct, as alleged here under § 11-51-501.. Part 6 establishes criminal and civil liability for violations of § 11-51-501.”
People v. Robb, 215 P.3d 1253 (Colo. Ct. App. 2009).
· cites it 12× “The Meister and Hoges counts arose under section 11-51-501(1)(b), C.R.S. 2008. That statute provides: (1) It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly: (b) To make any untrue statement of a material fact…”
First Nat'l Bank of Durango v. Lyons, 349 P.3d 1161 (Colo. Ct. App. 2015).
· cites it 17× “2d 1201, 1209 (1976), the Banks argue that to establish a claim under section 11-51-501, unlike a common law negligence claim, the plaintiff need not show that the defendant was negligent.”
People v. Pahl, 169 P.3d 169 (Colo. Ct. App. 2006).
· cites it 5× “Defendant, Gary Pahl, appeals the judgment of conviction entered upon jury verdicts finding him guilty of six counts of securities fraud, §§ 11-51-501 & 11-51-608, C.R.S. 2005; two counts of theft from an at-risk adult, § 18-6.”
Allen v. Martin, 203 P.3d 546 (Colo. Ct. App. 2008).
· cites it 6× “2007, which establishes a criminal penalty for violation of section 11-51-501, C.R.S. 2007. Nor is such a defense mentioned in section 11-51-501 itself.”
— Colo. Rev. Stat. § 11-51-501(1) — 20 cases
Black Diamaond Fund, LLLP v. Joseph, 211 P.3d 727 (Colo. Ct. App. 2009).
“Violation of Section 11-51-501 Respondents contend that the Commissioner's express finding that they sold securities in a "fraudulent manner" in violation of section 11-51-501 is not supported by substantial evidence and is an improper interpretation of the scope of that statute.”
People v. Thompson, 2018 COA 83 (Colo. Ct. App. 2018).
“§ 11-51-501(1). At the time of defendant’s trial, the test for determining whether a note was a security was “the presence of an investment in a common enterprise that is premised on a reasonable expectation of profits to be derived from the entrepren[e]urial or managerial…”
First Nat'l Bank of Durango v. Lyons, 349 P.3d 1161 (Colo. Ct. App. 2015).
“2d 1201, 1209 (1976), the Banks argue that to establish a claim under section 11-51-501, unlike a common law negligence claim, the plaintiff need not show that the defendant was negligent.”
People v. Mendenhall, 2015 COA 107 (Colo. Ct. App. 2015).
“Rather, a defendant may constitutionally be convicted under section 11-51-501, C.R.S. 2014, for fraud "in connection with the offer, sale, or purchase" of any note as long as the note at issue constitutes a security.”
— Colo. Rev. Stat. § 11-51-501(1)(b) — 17 cases
People v. Thompson, 2018 COA 83 (Colo. Ct. App. 2018).
“§ 11-51-501(1). At the time of defendant’s trial, the test for determining whether a note was a security was “the presence of an investment in a common enterprise that is premised on a reasonable expectation of profits to be derived from the entrepren[e]urial or managerial…”
Thompson v. People, 2020 CO 72 (Colo. 2020).
“Thereafter, the People charged Thompson with two counts of securities fraud under subsections 11-51-501(1)(b) and (1)(c), C.R.”
People v. Prendergast, 87 P.3d 175 (Colo. Ct. App. 2003).
“Part 5 defines fraud and other prohibited conduct, as alleged here under § 11-51-501.. Part 6 establishes criminal and civil liability for violations of § 11-51-501.”
Black Diamaond Fund, LLLP v. Joseph, 211 P.3d 727 (Colo. Ct. App. 2009).
“Violation of Section 11-51-501 Respondents contend that the Commissioner's express finding that they sold securities in a "fraudulent manner" in violation of section 11-51-501 is not supported by substantial evidence and is an improper interpretation of the scope of that statute.”
— Colo. Rev. Stat. § 11-51-501(1)(c) — 8 cases
People v. Thompson, 2018 COA 83 (Colo. Ct. App. 2018).
“§ 11-51-501(1). At the time of defendant’s trial, the test for determining whether a note was a security was “the presence of an investment in a common enterprise that is premised on a reasonable expectation of profits to be derived from the entrepren[e]urial or managerial…”
People v. Rivera, 56 P.3d 1155 (Colo. Ct. App. 2002).
“*1162 Section 11-51-501, the specific provision under which defendant was charged, does not contain a culpable mental state for securities fraud.”
People v. Robb, 215 P.3d 1253 (Colo. Ct. App. 2009).
“The Meister and Hoges counts arose under section 11-51-501(1)(b), C.R.S. 2008. That statute provides: (1) It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly: (b) To make any untrue statement of a material fact…”
Thompson v. People, 2020 CO 72 (Colo. 2020).
“Thereafter, the People charged Thompson with two counts of securities fraud under subsections 11-51-501(1)(b) and (1)(c), C.R.”
— Colo. Rev. Stat. § 11-51-501(1l)(c) — 1 case
People v. Mendenhall, 2015 COA 107 (Colo. Ct. App. 2015).
“Rather, a defendant may constitutionally be convicted under section 11-51-501, C.R.S. 2014, for fraud "in connection with the offer, sale, or purchase" of any note as long as the note at issue constitutes a security.”
— Colo. Rev. Stat. § 11-51-501(5) — 1 case
— Colo. Rev. Stat. § 11-51-501(c) — 1 case
People v. Rivera, 56 P.3d 1155 (Colo. Ct. App. 2002).
“*1162 Section 11-51-501, the specific provision under which defendant was charged, does not contain a culpable mental state for securities fraud.”
Annotations are extracted automatically from the opinions in the
Syfert caselaw corpus and ranked by authority, recency, and
treatment. Dots show Syfertize treatment of the citing case itself.