Series 66 - State Securities Administrator: The Uniform Securities Act
NASAA's model rules and policy statements include the following:
* detailing dishonest and unethical business practices of broker dealers and agents. * relating to dishonest sales practices relating to the sale of investment company products by broker dealers and agents. *detailing requirements for broker dalers conducting business on the premises of other financial (banking) institutions. *Model Rule covering unethical business practices of investment advisers. *Model Rule detailing requirements for investment advisers who maintain custody of client funds.
Action against an Issuer of securities: cont's
*Any officer or director has been convicted of a securities crime. *The registratin statement is false, misleading, or incomplete. *The security is subject to a court injunction. *Promoter's fees of offering expense are excessive or unreasonable. *The offering is fraudulent.
The administrator may take action if they find it IN THE PUBLIC interest and the applicant or registrant does ONE or more of the following:
*Fail to pay filing fees.*Is insolvent.*Fails to supervise employees.*Willfully violater the securities or banking laws of anthoer country or has had a foreign regulator deny, revoke, or suspend its registration within the last 5yrs. *Violate federal securities or commodities laws. *Has been convicted of any felony within the last 10 yrs. *Has been convicted of a securities-related misdemeanor. *Willfully violates any provision of the USA. *Files an incomplete, false , or misleading application for registration.
The administrator may take action if they find it IN THE PUBLIC interest and the applicant or registrant does ONE or more of the following: cont's
*Has been temporarily or permanently enjoined from the securities busines by a court of law. *Has been subject to an order by a state securities administrator denying, revoking, or suspending its registration. *Is deemed unqualified due to a lack of experience, training, or knowledge. *Engages in unthical or dishonest business practices.
Investment adviser breach their fiduciary duty or are found to have made unsuitable transactins based on client's investment ojbectives can be held liable for :
*The amount of the loss. *Interest on the amount invested. *Reasonable legal costs. *The cost of the advice. MINUS any income received as result of the advice.
Rule Changes
An administrator may change or amed rules as he or she deems necessary. All rules enacted by the administratr wil have the same force and effect as rules enacted under the USA. The order may be appealed to the court system within 60 days by any aggrieved party. *The appeal will not act as a temporary STAY to the order unless first so ordered by a court.
Raido Televsion and Newspaper distribution
An advertiisement, offer, or solicitation will not have been made and will be outside the jurisdicion of a state securities administrator. *television broadcast originated outside the administrator's state. * radio broadcast originated outside the administrator's state. *newspaper or periodical was published inside the state but two-thirds of its circulation is outside of teh state of publication. e.g.,New York times
Civil and Criminal Penalties
Anyone who is found to have criminally violated the laws of teh USA is sujbect to $5000 fine and or 3 year in prision. People who violate the Investment adviser Act 1930 are subject $10,000 fine and /or 5 years in prison. * the statute of limitations for an administrator taking action is 5 yrs.
A state securities administrator may take action to
Bar, suspend, censure, or restrict the activities of a registrant.
Administrative Orders
Broker dealer was engaging in sales practices that violated the USA. the administrator may issue an order suspending that broker dealer's registration with the state for 60 days, any affected party may challenge an administratior's order with 60 days. during the time the challenge is pending the order will remain in effect
The state securities administrator may NOT:
Establish requirement for broker dealer that exceed federal requirements. *Establish requirements for investment advisers that exceed that requriement of the adviser's home state. *Require the registration of federally covered advisers.
Statute of Limitations
If a buyer of a security finds that sale of the security violates any of the provisions of the USA. the urchaser has 2yrs from the discovery of the violation or 3 yrs from teh purchase date, whichever comes first to take action .
The Administrator takes action against the applicant.
Must notify the applicant promptly in writing of its intention. Must provide a hearing for the applicant within 15 days of receving the request for a hearing.
Adminstratior's Jurisdiction over Securiiities Transactions
ORIGINATED within their state. Are DIRECTED into theri state. An ACCEPTED in their state.
Cancellation of registration
The administrator may CANCEL the registration of a broker dealer, investment adviser or an agent if the registrant or applicant no longer exists, has cased doing business, or cannot be located ** Individual's registration may be cancled if he or she has been deemed MENTALLY INCOMPETENT by a court of law . the cancellation of a registratin not a disciplinary or punitive action.
Action against an Issuer of securities: cont's 2
The administrator may also revoke a security's EXEMPTION form registration. needed in the public interest and the exemption was based on a false, misleading, fraudulent, or unethical practice or statment. can do it without PRIOR notice, revoke the exempt status or securities transaction.
Investigations
The administrator may also subpoena people, books and records in any state and may administer oaths to compel people to testify. Anyone who displays contempt for the administrator's order is guilty of CONTUMACY and may be found CONTEMPT for court. court enforce it.
Action against an Issuer of securities :
The administrator may deny, revoke, or suspend the registration of a security if it deems it is in THE PUBLIC INTEREST AND:
The state securities administrator has the authority to enforce all the provisions of the Uniform Securities Act (USA) with its state.
The state securities administrator may deny,revoke, or suspend the registration of a security, an agen or a firm. The can revoke an exemption form registration, subpoena and investigate any registrant, and admed rules are required.
Withdrawal of a registration
The withdrawal will becom effective 30 days after the administrator receives the request . if no revocation or suspension proceedings are in process. The administrator has up to 1 year after the withdrawal of an applicant's registratin to take actin against the applicatnt to suspend or revoke the registraion.
Revoked the registration of a firm
all individuals whose registrations were not revoked would be required to find a new firm to become associate with.
Suspends the registration of a firm
all the individuals who are registered with the firm will have their registrations placed in suspense status. after the term of suspension has been completed, all registratios will be reactivated.
The North American Securities Administrators Association (NSAA)
is the older investor-protection organization in the country and represents the interest of all the state securities adminstrations. NASAA alos wirtes policy and administers the Series 63,65,66.
Right of rescission The acknowledgment by the client is neither valid nor enforceable and in no way protects the representative or the firm.
seller of security determines that the sale of securities has violated any provision of the USA . the seller may offer the affected parties rescission . Must be in writing and include an agreement to repurchase the securities at the original purchase price and must include interest for the time period that the money was invested. if buy accept the offer of rescission with 30 days. the seller has no further liability. e.g., a private placement that pay the representative a commission and is in violation of the USA. or the investor is a nonaccredited investor and signs a letter stating that he recognizes that the investment is in violation of the USA .
An offer or sale of asecurity that may be converted or exchanged into another security also constitute an offer or sale of the security into which the origianl security may be converted.
state securities administrators may: *investigate securities-related business within their borders. *Issue subpoenas for people, books,and records from any state. *Compel witnesses to testify. *Issue cease and desisit orders and seek injunctions. *Deny, Suspend,or revoke registrations, licenses, and exemptions. *Adopt and amend rules.
A person has engaged in or is about to engage in anyactivity that would violate the USA
the administrator may issue a cease and desist order without a hearing . only court of law has the authority to force compliance with the order and to prescribe penaltis for violating the orer.
When securities are sold improperly, the buyer can recover the ORIGIANL PRUCHASE PRICE in addition to other losses.
when improper INVESTMENT ADVICE is offered, the purchaser of the advice is entitled to recover the cost of the advice and losses incurred but is NOT the ORIGNAL PURCHASE PRICE from the adviser.
The North America Securities Administrators Association is a body of state regulators.
whom is responsible for administering the provisions of the Uniform Securities Act within their state. Together they make up an advisory committee that refine and amed the uniform securities act through the adpoption of module rules and policy statements.
