7.10.5.3 Reasons for Disciplining an Adviser, IAR, Broker-Dealer, or Agent
According to the Uniform Securities Act, there are 12 categories for which a securities professional or firm might be disciplined by a state securities administrator, as long as the order is in the public interest. It is not uncommon for a disciplinary action to contain charges in multiple categories.
Since the exact wording of the code is quite extensive, each of the 12 areas has been simplified below. Note that the word “person” is used in its most general legal sense to mean either a natural person or an entity, such as a broker-dealer or investment adviser, and so a reference to “him” or “his” may actually be referring to a firm. Please note that an agent or an IAR who is not an officer, director, or partner of a firm cannot be disciplined due to either insolvency or failure to supervise (numbers 8 and 11 on the list below).
1. Filing incomplete applications. Any person filing an application that is missing material (important) information can have action brought against them.
2. Willfully violating securities regulations. If a person breaks any of the rules within the Uniform Securities Act or a predecessor act, such as the Securities Exchange Act of 1934, the Securities Act of 1933, or the Investment Company Act of 1940, they can be held accountable and disciplined.
3. Within the last 10 years, having prior felony convictions or securities-related misdemeanors. A previous felony does not necessarily mean a person’s registration application won’t be approved, but it’s definitely a huge hurdle. If the felony occurred within the previous 10 years, it absolutely must be disclosed to the