(1) A viatical settlement broker or a viatical settlement provider may not solicit, enter into, or negotiate viatical settlement contracts unless a broker or provider, through the exercise of due diligence, ensures that:

(a) the method of funding the financial obligations of a viatical settlement provider does not involve, directly or indirectly, an offer and sale of a "security", as defined in 30-10-103 (22) , MCA; or

(b) if the method of funding the financial obligations of a viatical settlement provider does involve, directly or indirectly, an offer and sale of a "security", as defined in 30-10-103 (22) , MCA, a related offer and sale of a security is in compliance with the Securities Act of Montana, 30-10-101 , et seq., MCA.

(2) A viatical settlement provider shall provide a letter verifying that it is in compliance with (1) (a) and (1) (b) with the application and the yearly report to the commissioner.