On July 1, 2014, new registration requirements for bullion coin dealers and coin dealer representatives operating in Minnesota or doing business with Minnesota consumers took full effect. Under the new Minnesota bullion coin law, all bullion coin dealers and coin dealer representatives who engage in a bullion coin transaction or transactions with consumers residing in Minnesota that exceeds $5,000 in the aggregate during the 12 months immediately preceding July 1, 2014, or at any time following July 1, 2014, must register with the Minnesota Department of Commerce. See Minn. Stat. § 80G.02.
Who Are Bullion Coin Dealers and Coin Dealer Representatives Under Minnesota Law?
Minnesota’s new registration requirement applies only to “bullion coin dealers” or “coin dealer representatives”. A “bullion coin dealer” as any person who (1) buys, sells, solicits, or markets bullion coins or investments in bullion coins to consumers and is either incorporated, registered, domiciled, or otherwise located in this state, or (2) does business with a consumer domiciled, residing, or otherwise located in the State of Minnesota. Minn. Stat. § 80G.01, subd. 3. “Bullion coin” means any coin containing more than one percent by weight of silver, gold, platinum, or other precious metal. Minn. Stat. § 80G.01, subd. 2. A “coin dealer representative” means any natural person acting as an employee, contractor, or agent of a bullion coin dealer and who has interactions with consumers for the purpose of the buying, selling, solicitation, or marketing of bullion coins or investments in bullion coins. Minn. Stat. § 80G.01, subd. 4.
Certain persons, however, are exempted from the definition of “bullion coin dealer”, including the following:
(1) a person who engages only in wholesale bullion coin transactions with bullion coin dealers who sell at retail and are properly registered under this chapter;
(2) a person who engages only in transactions at occasional garage or yard sales held at the seller’s residence, farm auctions held at the seller’s residence, or estate sales held at the decedent’s residence;
(3) a person who is properly registered pursuant to chapter 80A, or the federal Securities Exchange Act of 1934 and rules promulgated thereunder as a securities broker dealer or broker dealer agent;
(4) an auctioneer who auctions coins at auction on behalf of an owner, if the auctioneer does not take title or ownership of the coins, or the operator of an Internet Web site that allows users to offer the sale of coins through that Web site, does not set the price, is not the seller of record, and does not take possession of any coins to be offered;
(5) a person who engages only in transactions at occasional trade shows where the consumer is present and the transaction is made at the trade show; or
(6) a federally or state-chartered bank, bank and trust, savings bank, savings association, or credit union or any operating subsidiary of them.
Minn. Stat. § 80G.01, subd. 3(b).
Under Minn. Stat. § 80G.02, subd. 1, any person meeting the statutory definitions of bullion coin dealer or coin dealer representative who has engaged in any transaction or transactions exceeding $5,000 in the aggregate in the 12 months preceding July 1, 2014 or in any 12-month period prior to July 1 of any subsequent calendar year must register with the Minnesota Department of Commerce.
All registrations and renewals will expire on June 30 of each year and must be renewed if the bullion coin dealer or coin dealer representative continues to do business in Minnesota. The initial registration fee is $25 for bullion coin dealers and $10 for coin dealer representatives, although this fee may be adjusted annually by the commissioner. See Minn. Stat. § 80G.02.
Obstacles to Becoming a Registered Bullion Coin Dealer or Coin Dealer Representative
The commissioner must deny any application for registration or renewal of a bullion coin dealer if the dealer, its owners or officers have been convicted of any financial crime or any crime involving fraud or theft in any court within the previous ten years. Minn. Stat. § 80G.04, subds. 1 and 2. Additionally, the commissioner must revoke any existing registration for a bullion coin dealer or coin dealer representative who is convicted of a financial crime or any crime involving fraud or theft.
Additionally, the commissioner may suspend, revoke or refuse to issue or renew a bullion coin dealer or coin dealer representative registration as a result of one or more of the following:
(1) providing incorrect, false, misleading, or incomplete information to the commissioner or refusing to allow a reasonable inspection of information and documents in the possession of the bullion coin dealer, coin dealer representative, or a third party or to allow a reasonable inspection of premises;
(2) obtaining or attempting to obtain a registration through misrepresentation or fraud;
(3) having a bullion coin dealer or coin dealer representative registration or its equivalent, including licensure under section 325F.73, denied, suspended, or revoked by any locality within the state or other state, province, district, or territory;
(4) being permanently or temporarily enjoined by any court of competent jurisdiction or being ordered to cease and desist by a government agency from engaging in or continuing any conduct or practice involving the buying, selling, soliciting, or marketing of bullion coins, investments in bullion coins, or precious metal to consumers;
(5) violating the provisions of this chapter or sections 45.027, 325D.43 to 325D.48, 325F.67, 325F.68 to 325F.69, 325F.694, and 325F.73 to 325F.744, or federal or state taxation or labor law; or
(6) violating a subpoena or order of the commissioner or a court issued pursuant to this chapter or sections 45.027, 325D.43 to 325D.48, 325F.67, 325F.68 to 325F.69, 325F.694, 325F.70, and 325F.73 to 325F.744.
To ensure compliance with these regulations, each bullion coin dealer based in Minnesota or selling to customers based in Minnesota should establish a screening procedure for all owners, officers and coin dealer representatives prior to applying for registration or renewal. This screening should be completed no more than 60 days prior to application for registration or renewal and should include a national criminal history record search, a judgment search, and a county criminal history search for all counties where the owner, officer, or coin dealer representative has resided within the past ten years. The searches should be obtained from a reputable vendor authorized to do business in Minnesota.
When utilizing a third party vendor to conduct such background searches, the bullion coin dealer should ensure that the requirements of the federal Fair Credit Reporting Act are followed.
For more information on how these registration requirements and other provisions of the new Minnesota bullion coin law affect bullion coin dealers and coin dealer representatives, contact the Minnesota administrative law attorneys of Trepanier MacGillis Battina P.A.
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