§ 17-12a604 — Administrative enforcement; control person liability

Kansas § 17-12a604

• Jurisdiction: Kansas
• Ch. 17: CORPORATIONS
• Art. 12a: UNIFORM SECURITIES ACT

Text

(a) Cease and desist order. If the administrator finds that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this act or a rule adopted or order issued under this act or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of this act or a rule adopted or order issued under this act, the administrator may:
(1) Issue an order directing the person to cease and desist from engaging in the act, practice, or course of business or to take other action necessary or appropriate to comply with this act;
(2) issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under K.S.A. 17-12a401(b)(1)(D) or 17-12a401(b)(1)(F), and amendments thereto, or an investment adviser under K.S.A. 17-12a403(b)(1)(C), and amendments thereto; or
(3) issue an order under K.S.A. 17-12a204, and amendments thereto.
(b) Additional administrative sanctions and remedies. If the administrator finds, by written findings of fact and conclusions of law, that a person has violated this act or a rule adopted or order issued under this act, the administrator, in addition to any other power granted under this act, may enter an order against the person containing one or more of the following sanctions or remedies:
(1) A civil penalty up to $25,000 for each violation. If any person is found to have violated any provision of this act, and such violation is committed against elder or disabled persons, as defined in K.S.A. 50-676, and amendments thereto, in addition to any civil penalty otherwise provided by law, the administrator may impose an additional penalty not to exceed $15,000 for each such violation. The total penalty against a person shall not exceed $1,000,000;
(2) a bar or suspension from association with a broker-dealer or investment adviser registered in this state;
(3) an order requiring the person to pay restitution for any loss or disgorge any profits arising from the violation, including, in the administrator's discretion, the assessment of interest from the date of the violation at the rate provided for interest on judgments by K.S.A. 16-204, and amendments thereto; or
(4) an order charging the person with the actual cost of the investigation or proceeding.
(c) Procedures for orders. (1) An order under subsection (b) shall not be entered unless the administrator first provides notice and opportunity for hearing in accordance with the provisions of the Kansas administrative procedures act.
(2) An order under subsection (a) is effective on the date of issuance. Upon issuance of the order, the administrator shall promptly serve each person subject to the order with a copy of the order. The order must include a statement of the reasons for the order and notice that upon receipt of a written request the matter will be set for a hearing which shall be conducted in accordance with the provisions of the Kansas administrative procedures act. If a person subject to the order does not request a hearing and none is ordered by the administrator within 30 days after the date of service of the order, the order becomes final as to that person 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 it until final determination.
(3) An order under subsection (a) may contain a notice of the administrator's intent to seek administrative sanctions or remedies under subsection (b). If the person subject to the order does not request a hearing and none is ordered by the administrator within 30 days after service of the order, the administrator may modify the order to include sanctions or remedies under subsection (b). If a hearing is requested or ordered, the administrator, after notice and opportunity for hearing, shall by written findings of fact and conclusions of law vacate, modify, or make permanent the order, and the administrator may modify the order to include sanctions or remedies under subsection (b).
(d) Filing of certified final order with court; effect of filing. If a petition for judicial review of a final order is not filed in accordance with K.S.A. 17-12a609, and amendments thereto, the administrator may file a certified copy of the final order with the clerk of a court of competent jurisdiction. The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.
(e) Enforcement by court; further civil penalty. If a person does not comply with an order under this section, the administrator may petition a court of competent jurisdiction to enforce the order. The court may not require the administrator to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not greater than $25,000 for each violation and may grant any other relief the court determines is just and proper in the circumstances.
(f) Control person liability. A person that controls, directly or indirectly, a person who has violated this act or a rule adopted or order issued under this act may be sanctioned by order of the administrator under subsection (b) to the same extent as the violating person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of the conduct that is a ground for sanctions under this section.

Legislative History

L. 2004, ch. 154, § 43; L. 2024, ch. 30, § 3; July 1.