of registration.
1. Disciplinary conditions — applicants. If the administrator finds that the order is
§502.412, UNIFORM SECURITIES ACT (BLUE SKY LAW) 40
in the public interest and subsection 4 authorizes the action, an order issued under this
chapter may deny an application, or may condition or limit registration of an applicant to be
a broker-dealer, agent, investment adviser, or investment adviser representative, and, if the
applicant is a broker-dealer or investment adviser, of a partner, officer, director, or person
having a similar status or performing similar functions, or a person directly or indirectly in
control, of the broker-dealer or investment adviser.
2. Disciplinary conditions — registrants. If the administrator finds that the order is in
the public interest and subsection 4 authorizes the action, an order issued under this chapter
may revoke, suspend, condition, or limit the registration of a registrant and, if the registrant
is a broker-dealer or investment adviser, of a partner, officer, director, or person having a
similar status or performing similar functions, or a person directly or indirectly in control, of
the broker-dealer or investment adviser. However, the administrator shall not do any of the
following:
a. Institute a revocation or suspension proceeding under this subsection based solely on
anorderissuedunderalawofanotherstatethatisreportedtotheadministratororadesignee
of the administrator more than one year after the date of the order on which it is based.
b. Under subsection 4, paragraph “e”, subparagraph (1) or (2), issue an order on the basis
of an order issued under the securities Act of another state unless the other order was based
on conduct for which subsection 4 would authorize the action had the conduct occurred in
this state.
3. Disciplinary penalties — registrants. If the administrator finds that the order is in the
publicinterestandsubsection4,paragraphs“a”through“f”,“h”,“i”,“j”,“l”,or“m”,authorizes
the action, an order under this chapter may censure, impose a bar, or impose a civil penalty
in an amount not to exceed a maximum of ten thousand dollars for a single violation or one
million dollars for more than one violation, or in an amount as agreed to by the parties, on a
registrant, and, if the registrant is a broker-dealer or investment adviser, on a partner, officer,
director, or person having a similar status or performing similar functions, or on a person
directly or indirectly in control, of the broker-dealer or investment adviser.
4. Grounds for discipline. A person may be disciplined under subsections 1 through 3 if
any of the following applies:
a. The person has filed an application for registration in this state under this chapter or
chapter 502, Code 2003 and Code Supplement 2003, within the previous ten years, which,
as of the effective date of registration or as of any date after filing in the case of an order
denying effectiveness, was incomplete in any material respect or contained a statement that,
in light of the circumstances under which it was made, was false or misleading with respect
to a material fact.
b. The person willfully violated or willfully failed to comply with this chapter or chapter
502, Code 2003 and Code Supplement 2003, or a rule adopted or order issued under this
chapter or chapter 502, Code 2003 and Code Supplement 2003, within the previous ten years.
c. The person has been convicted of a felony or within the previous ten years has been
convicted of a misdemeanor involving a security, a commodity future or option contract, or
anaspectofabusinessinvolvingsecurities, commodities, investments, franchises, insurance,
banking, or finance.
d. The person is enjoined or restrained by a court of competent jurisdiction in an action
instituted by the administrator under this chapter or chapter 502, Code 2003 and Code
Supplement 2003, a state, the securities and exchange commission, or the United States
from engaging in or continuing an act, practice, or course of business involving an aspect of
a business involving securities, commodities, investments, franchises, insurance, banking,
or finance.
e. The person is the subject of an order, issued after notice and opportunity for hearing,
by any of the following:
(1) The securities or other financial services regulator of a state or the securities and
exchange commission or other federal agency denying, revoking, barring, or suspending
registrationasabroker-dealer, agent, investmentadviser, federalcoveredinvestmentadviser,
or investment adviser representative.
(2) The securities regulator of a state or the securities and exchange commission against
41 UNIFORM SECURITIES ACT (BLUE SKY LAW), §502.412
a broker-dealer, agent, investment adviser, investment adviser representative, or federal
covered investment adviser.
(3) The securities and exchange commission or a self-regulatory organization suspending
or expelling the registrant from membership in the self-regulatory organization.
(4) A court adjudicating a United States postal service fraud order.
(5) The insurance regulator of a state denying, suspending, or revoking registration as an
insurance agent or insurance producer.
(6) Adepositoryinstitutionregulatororfinancialservicesregulatorsuspendingorbarring
the person from the depository institution or other financial services business.
f. The person is the subject of an adjudication or determination, after notice and
opportunity for hearing, by the securities and exchange commission, the commodity futures
trading commission, the federal trade commission, a federal depository institution regulator,
or a depository institution, insurance, or other financial services regulator of a state that the
person willfully violated the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Advisers Act of 1940, the Investment Company Act of 1940, or the Commodity
Exchange Act, the securities or commodities law of a state, or a federal or state law under
which a business involving investments, franchises, insurance, banking, or finance is
regulated.
g. The person is insolvent, either because the person’s liabilities exceed the person’s
assets or because the person cannot meet the person’s obligations as they mature, but the
administrator shall not enter an order against an applicant or registrant under this paragraph
without a finding of insolvency as to the applicant or registrant.
h. The person refuses to allow or otherwise impedes the administrator from conducting
an audit or inspection under section 502.411, subsection 4, or refuses access to a registrant’s
office to conduct an audit or inspection under section 502.411, subsection 4.
i. The person has failed to reasonably supervise an agent, investment adviser
representative, or other individual, if the agent, investment adviser representative, or other
individual was subject to the person’s supervision and committed a violation of this chapter
or chapter 502, Code 2003 and Code Supplement 2003, or a rule adopted or order issued
under this chapter or chapter 502, Code 2003 and Code Supplement 2003, within the
previous ten years.
j. Thepersonhasnotpaidtheproperfilingfeewithinthirtydaysafterhavingbeennotified
by the administrator of a deficiency, but the administrator shall vacate an order under this
paragraph when the deficiency is corrected.
k. The person after notice and opportunity for a hearing has been found within the
previous ten years to have done any of the following:
(1) By a court of competent jurisdiction to have willfully violated the laws of a foreign
jurisdiction under which the business of securities, commodities, investment, franchises,
insurance, banking, or finance is regulated.
(2) To have been the subject of an order of a securities regulator of a foreign jurisdiction
denying, revoking, or suspending the right to engage in the business of securities as a
broker-dealer, agent, investment adviser, investment adviser representative, or similar
person.
(3) To have been suspended or expelled from membership by or participation in a
securities exchange or securities association operating under the securities laws of a foreign
jurisdiction.
l. The person is the subject of a cease and desist order issued by the securities and
exchange commission or issued under the securities, commodities, investment, franchise,
banking, finance, or insurance laws of a state.
m. The person has engaged in dishonest or unethical practices in the securities,
commodities, investment, franchise, banking, finance, or insurance business within the
previous ten years.
n. The person is not qualified on the basis of factors such as training, experience, and
knowledge of the securities business. However, in the case of an application by an agent
for a broker-dealer that is a member of a self-regulatory organization or by an individual
for registration as an investment adviser representative, a denial order shall not be based
§502.412, UNIFORM SECURITIES ACT (BLUE SKY LAW) 42
on this paragraph if the individual has successfully completed all examinations required
by subsection 5. The administrator may require an applicant for registration under section
502.402 or 502.404 who has not been registered in a state within the two years preceding the
filing of an application in this state to successfully complete an examination.
5. Examinations. A rule adopted or order issued under this chapter may require that
an examination, including an examination developed or approved by an organization of
securities regulators, be successfully completed by a class of individuals or all individuals.
An order issued under this chapter may waive, in whole or in part, an examination as to
an individual and a rule adopted under this chapter may waive, in whole or in part, an
examination as to a class of individuals if the administrator determines that the examination
is not necessary or appropriate in the public interest and for the protection of investors.
6. Summaryprocess. Theadministratormaysuspendordenyanapplicationsummarily;
restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty
onaregistrantbeforefinaldeterminationofanadministrativeproceeding. Upontheissuance
of an order, the administrator shall promptly notify each person subject to the order that the
order has been issued, the reasons for the action, and that within fifteen days after the receipt
ofarequestinarecordfromthepersonthematterwillbescheduledforahearing. Ifahearing
is not requested and none is ordered by the administrator within thirty days after the date of
service of the order, the order becomes final by operation of law. If a hearing is requested or
ordered, the administrator, after notice of and opportunity for hearing to each person subject
to the order, may modify or vacate the order or extend the order until final determination.
Section 17A.18A is inapplicable to a summary order issued under this subsection.
7. Procedural requirements. An order issued shall not be issued under this section,
except under subsection 6, without all of the following:
a. Appropriate notice to the applicant or registrant.
b. Opportunity for hearing.
c. Findings of fact and conclusions of law in a record in accordance with chapter 17A.
8. Control person liability. A person that controls, directly or indirectly, a person not
in compliance with this section may be disciplined by order of the administrator under
subsections 1 through 3 to the same extent as the noncomplying person, unless the
controlling person did not know, and in the exercise of reasonable care could not have
known, of the existence of conduct that is a ground for discipline under this section.
9. Limit on investigation or proceeding. The administrator shall not institute a
proceeding under subsection 1, 2, or 3 based solely on material facts actually known by the
administrator unless an investigation or the proceeding is instituted within two years after
the administrator actually acquires knowledge of the material facts.