8.12. 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 next. 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 supervi Advisers must keep virtually every form of client record and marketing literature on file for five years.

Certain records, such as partnership articles, articles of incorporation, charters, minute books, and stock certificate books, must be kept for at least three years after a firm goes out of business.

A state cannot require an investment adviser to maintain any books and records in addition to those required under the laws of the state in which the adviser’s principal office is located, as long as the firm is registered and is complying with the requirements of that state.

The administrator is allowed to view an investment adviser’s books and records. This allowance extends to the books and records of investment advisers from different states when the administrator needs to review such records as part of an investigation. se (numbers 8 and 11 on the list).

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 pers