The Vermont Statutes Online

Title 9 : Commerce and Trade

Chapter 150 : Securities Act

Subchapter 004 : BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER REPRESENTATIVES, AND FEDERAL COVERED INVESTMENT ADVISERS

• § 5412. Denial, revocation, suspension, withdrawal, restriction, condition, or limitations of registration

  (a) If the Commissioner finds that the order is in the public interest and subsection (d) of this section 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.

  (b) If the Commissioner finds that the order is in the public interest and subsection (d) of this section 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 Commissioner may not:

  (1) institute a revocation or suspension proceeding under this subsection based on an order issued under a law of another state that is reported to the Commissioner or a designee of the Commissioner more than one year after the date of the order on which it is based; or

  (2) under subdivision (d)(5)(A) or (B) of this section, 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 (d) of this section would authorize the action had the conduct occurred in this State.

  (c) If the Commissioner finds that the order is in the public interest and subdivisions (d)(1) through (6), (8), (9), (10), (12), or (13) of this section authorize the action, an order under this chapter may censure, impose a bar on, or impose a civil penalty on a registrant in an amount not more than $15,000.00 for each violation and recover the costs of the investigation from the registrant, and, if the registrant is a broker-dealer or investment adviser, 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. The limitations on civil penalties contained in this subsection shall not apply to settlement agreements.

  (d) A person may be disciplined under subsections (a) through (c) of this section if the person:

  (1) has filed an application for registration in this State under this chapter or the predecessor act within the previous 10 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;

  (2) willfully violated or willfully failed to comply with this chapter or the predecessor act or a rule adopted or order issued under this chapter or the predecessor act within the previous 10 years. As used in this subdivision, the term “willfully” means purposely or willingly committing the act or making the omission and does not require an intent to violate the law or to injure another or to acquire any advantage;

  (3) has been convicted of a felony or within the previous 10 years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;

  (4) is enjoined or restrained by a court of competent jurisdiction in an action instituted by the Commissioner under this chapter or the predecessor act, 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;

  (5) is the subject of an order, issued after notice and opportunity for hearing by:

  (A) 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 registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative;

  (B) the securities regulator of a state or the Securities and Exchange Commission against a broker-dealer, agent, investment adviser, investment adviser representative, or federal covered investment adviser;

  (C) the Securities and Exchange Commission or a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization;

  (D) a court adjudicating a U.S. Postal Service fraud order;

  (E) the insurance regulator of a state denying, suspending, or revoking registration as an insurance agent; or

  (F) a depository institution or financial services regulator suspending or barring the person from the depository institution or other financial services business;

  (6) 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;

  (7) 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 Commissioner may not enter an order against an applicant or registrant under this subdivision without a finding of insolvency as to the applicant or registrant;

  (8) refuses to allow or otherwise impedes the Commissioner from conducting an audit or inspection under subsection 5411(d) of this chapter or refuses access to a registrant’s office to conduct an audit or inspection under subsection 5411(d);

  (9) has failed to supervise reasonably 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 the predecessor act or a rule adopted or order issued under this chapter or the predecessor act within the previous 10 years;

  (10) has not paid the proper filing fee within 30 days after having been notified by the Commissioner of a deficiency, but the Commissioner shall vacate an order under this subdivision when the deficiency is corrected;

  (11) after notice and opportunity for a hearing, has been found within the previous 10 years:

  (A) 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;

  (B) 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; or

  (C) 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;

  (12) 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;

  (13) has engaged in dishonest or unethical practices in the securities, commodities, investment, franchise, banking, finance, or insurance business within the previous 10 years; or

  (14) 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 may not be based on this subdivision if the individual has successfully completed all examinations required by subsection (e) of this section. The Commissioner may require an applicant for registration under section 5402 or 5404 of this chapter who has not been registered in a state within the two years preceding the filing of an application in this State to complete successfully an examination.

  (e) 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 completed successfully 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 Commissioner determines that the examination is not necessary or appropriate in the public interest and for the protection of investors.

  (f) If the Commissioner finds it necessary to preserve the public welfare, the Commissioner may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the Commissioner shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, and that, within 15 days after the receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the Commissioner within 30 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 Commissioner, 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.

  (g) An order issued may not be issued under this section, except under subsection (f) of this section, without:

  (1) appropriate notice to the applicant or registrant;

  (2) opportunity for hearing; and

  (3) findings of fact and conclusions of law in a record in accordance with the procedures set forth in 3 V.S.A. chapter 25 (Administrative Procedure Act).

  (h) A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the Commissioner under subsections (a) through (c) of this section 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.

  (i) The Commissioner may not institute a proceeding under subsection (a), (b), or (c) of this section based solely on material facts actually known by the Commissioner unless an investigation or the proceeding is instituted within one year after the Commissioner actually acquires knowledge of the material facts. (Added 2005, No. 11, § 1, eff. July 1, 2006; amended 2005, No. 122 (Adj. Sess.), § 13; 2017, No. 80, § 3.)