Series 63

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Administrative Provisions and Other Remedies - Administrative Actions

The Administrator has the power to deny, revoke or suspend registrations or licenses at any time, if the Administrator feels he/she is acting in the public interest. Moreover, the Administrator has an OBLIGATION to not misuse his/her powers for personal gain.

Exam Tips and Tricks
If the Administrator denies, suspends or revokes registration, such an order must be based on a foundation of facts and conclusions of law. Orders of the Administrator must be made only in the public interest.

In addition to the following items (initiated by the Administrator), a broker-dealer may withdraw its own registration at any time and is effective 30 days after an initial withdrawal application is filed (unless there are pending disciplinary proceedings).

Finally, if a broker-dealer withdraws its registration, and then (within one year) the Administrator finds wrongdoing, the Administrator may still commence disciplinary proceedings.

Denial
The Administrator may deny an application if:

  • it is incomplete, contains any misleading information or omits vital facts;
  • within the last 10 years, the applicant was convicted of a securities-related misdemeanor or any felony whatsoever -- regardless of whether it was securities related or not;
  • another Administrator already denied registration, or another suspension or revocation order is already in effect;
  • the Administrator finds that the applicant is not financially solvent, and/or in a state of bankruptcy. This is more frequently applied to firms than to individuals;
  • a court order exists barring the registrant from working in the securities industry; or
  • the Administrator deems that the registrant is not qualified for the type of business he/she intends to pursue. However, an Administrator cannot suspend registration if the registrant can materially prove he/she is qualified.

Look Out!
The exam may say that the registrant has "been enjoined", which means that an injunction has been ordered.

Revocation

  • An Administrator may revoke registration at any time if any one of the above six items (listed under Denial) are found to be true.
  • In addition, the Administrator may revoke the registration of an officer or partner of a firm without crippling the entire firm, although such could also be grounds for revoking the registration of the firm as a larger entity.
  • Registration may be revoked from an agent but not the broker-dealer, if the broker-dealer is found to have been competently supervising the agent - even though that broker-dealer was not able to prevent the agent from committing a fraudulent act. However, if the agent's fraudulent activity was the direct result of a broker-dealer's incompetent supervision, then the broker-dealer's registration is at risk as well.

Suspension
Suspension can occur for the same reasons as denial, although pending a hearing, registration may be reinstated. Hearings must be granted within 15 days of the written request of the party subject to the order.

Cancellation
Though not in the NCCUSA's outline of the Series 63 examination, an Administrator may CANCEL an agent's registration if the agent is found to be deceased or unable to perform his/her duties. In short, if for any reason the agent becomes mentally incompetent (legally), the Administrator may cancel registration.

If an agent disappears and cannot be found after a reasonable search, the Administrator may cancel registration.

Cease and Desist
The Administrator may issue a cease and desist order, if it has determined that a particular action is in violation of the USA. Then, if the order is ignored, the Administrator may have a court intervene and issue an injunction against the party in question.

Civil Liabilities

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