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State Securities Administrators and the Uniform Securities Act

INTRODUCTION

The state securities administrator has the authority to enforce all of the provisions of the Uniform Securities Act (USA) within its state. The state securities administrator may deny revoke, or suspend the registration of a security, an agent, or a firm. The administrator may also revoke an exemption from registration, subpoena and investigate any registrant, and amend rules as required. The North American Securities Administrators Association (NASAA) is the oldest investor-protection organization in the country and represents the interest of all of the state securities administrators. NASAA also writes policies and administers the Series 63,65, and 66 exams.

ACTIONS BY THE STATE SECURITIES ADMINISTRATOR

A state securities administrator may take action to bar, suspend, censure, or restrict the activities of a registrant if the administrator finds it in the public interest and the applicant or registrant does one or more of the following:

• Fails to pay filing fees.

• Is insolvent.

• Fails to supervise employees.

• Willfully violates the securities or banking laws of another country or has had a foreign regulator deny, revoke, or suspend its registration within the last five years.

• Violates federal securities or commodities laws.

• Has been convicted of any felony within the last 10 years.

• Has been convicted of a securities-related misdemeanor.

• Willfully violates any provision of the USA.

• Files an incomplete, false, or misleading application for registration.

• Has been temporarily or permanently enjoined from the securities business 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 unethical or dishonest business practices.

The administrator deeming it in the public interest is not enough to take action. The applicant must have been involved in one or more of the activities listed above. If the administrator is going to take action against the applicant, it must notify the applicant promptly in writing of its intention and must provide a hearing for the applicant within 15 days of receiving the request for a hearing. An administrator may deny an applicant's registration based on lack of knowledge, training, or experience, but a lack of experience may not be the sole basis for the denial of a registration.

CANCELLATION OF A 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 ceased doing business, or cannot be located. If, for example, the administrator sends a notice to a registrant and the notice is returned to the administrator as undeliverable with no known forwarding address, the administrator would have reasonable grounds for canceling the registration. Additionally, an individual's registration may be canceled if he or she has been deemed mentally incompetent by a court of law. The cancellation of a registration by the administrator is not a disciplinary or punitive action; it is more clerical in nature.

WITHDRAWAL OF A REGISTRATION

A broker dealer, investment adviser, or an agent may request that its registration with the state be withdrawn. The withdrawal will become effective 30 days after the administrator receives the request if no revocation or suspension proceedings are in process. The administrator has up to one year after the withdrawal of an applicant's registration to take action against the applicant to suspend or revoke their registration.

 
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