Series 65

Remedies and Administrative Provisions - Administrator Authority and Actions

The Uniform Securities Act gives the state Administrator jurisdiction in all of the following instances:
  • Either the representative or his/her client resides in the state
  • An offer is directed from the state
  • An offer is directed into the state
  • An offer is accepted in the state
  • The transaction occurred in the state
Extent of State Administrator Authority: Offers
The Act gives the Administrator very broad powers that apply to offers made either verbally or in writing. The powers apply to broker-dealers, agents, investment advisers, and investment adviser representatives. The Administrator may require different qualifications for IAs than for IARs.

The following scenarios are not considered offers made in the state:
  • If an offer is made in a newspaper with a general paid circulation that is published outside of the state (or if it is published in the state but more than two/thirds of its circulation is outside the state); or
  • If an offer is made through radio, TV, or internet in another state
Extent of State Administrator Authority: IA and IAR Registration
The Administrator can deny, suspend, or revoke IA or IAR registration if it is in the public interest AND the registrant:
  • Files a materially false, incomplete or misleading application
  • Willfully violates any provision of the Uniform Securities Act
  • Is prohibited by court order from engaging in the securities industry
  • Becomes insolvent
  • Fails to pay required fees
  • Is convicted of any felony or misdemeanor involving the securities industry
  • Engages in unethical or dishonest business practices
  • Is unqualified due to lack of experience, training or knowledge
  • Fails to properly supervise employees
However, the Administrator cannot deny, suspend or revoke a registration solely based on lack of experience if the applicant is otherwise qualified by training or knowledge. In addition, the Administrator may condition registration as an IA or IAR only if the person does not also Act as a broker-dealer or an agent.

Exam Tips and Tricks
While the above list of potential reasons to deny a registration application includes "lack of experience, training, or knowledge," note that the paragraph that follows states that the Administrator cannot deny or revoke a registration based on "lack of experience if otherwise qualified by training or knowledge." You are likely to be tested on that distinction, so watch for answers that state that the Administrator can deny registration if it is in the public interest and the IA has a degree in finance but no investment adviser experience. That answer would be incorrect, since the IA does have training or knowledge.




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