Series 63: Reasons For Disciplining An Adviser

Taken from our Series 63 Online Guide

Reasons for Disciplining an Adviser

According to the Uniform Securities Act, there are 12 categories for which an adviser might be disciplined by a state securities administrator, if the order is in the public interest. It is not uncommon for disciplinary action against an adviser 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. Be sure to review the entire code at least once.

Filing incomplete applications. Any adviser filing an application that is missing material (important) information can have action brought against them.

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, he or she can be held accountable and disciplined.

Within the last 10 years, having prior felony convictions or securities-related misdemeanors. While a previous felony does not necessarily mean an adviser’s registration application won’t be approved, it’s definitely a huge hurdle. If the felony occurred within the previous 10 years, it absolutely must be disclosed to the state administrator and an explanation must be provided. All securities-related misdemeanors that occurred within the last 10 years must also be disclosed.

Court-ordered limitations. If a court confirms the administrator’s charges by limiting or prohibiting an adviser’s right to operate, this could (and probably would) result in an action against the adviser’s registrat

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