ARTICLE 4 Broker-Dealers, Agents, Investment Advisers, Investment Adviser Representatives, and Federal Covered Investment Advisers
Section 421-B:4-412
421-B:4-412 Denial, Revocation, Suspension, Withdrawal, Restriction, Condition, or Limitation of Registration. –
(a) Disciplinary conditions, applicants. If the secretary of state finds that the order is in the public interest and subsection (d) authorizes the action, an order issued under this chapter may deny an application, or may condition or limit registration: (1) of an applicant to be a broker-dealer, agent, investment adviser, or investment adviser representative, and (2) if the applicant is a broker-dealer or investment adviser, of any partner, officer, director, person having a similar status or performing similar functions, or person directly or indirectly controlling the broker-dealer or investment adviser.
(b) Disciplinary conditions, registrants. If the secretary of state finds that the order is in the public interest and subsection (d) 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, any partner, officer, or director, any person having a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser. However, the secretary of state, under subsection (d)(5)(A) or (d)(5)(B), may not issue an order on the basis of an order under the state securities act of another state unless the other order was based on conduct for which subsection (d) would authorize the action had the conduct occurred in this state.
(c) Disciplinary penalties, registrants. If the secretary of state finds that the order is in the public interest and subsection (d) other than subsection (d)(7), (d)(11) or (d)(14) 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 $2,500 for each violation on a registrant and if the registrant is (i) a broker-dealer or investment adviser, (ii) any partner, officer, or director, any person having similar functions, or (iii) any person directly or indirectly controlling the broker-dealer or investment adviser.
(d) Grounds for discipline. A person may be disciplined under subsections (a) through (c) 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 an order issued under this chapter or the predecessor act within the previous 10 years;
(3) has been convicted of a felony or within the previous 10 years has been convicted of a misdemeanor involving (i) a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance, or (ii) theft, fraud, or any other offense involving dishonesty;
(4) is enjoined or restrained by a court of competent jurisdiction in an action instituted by the secretary of state 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, depository institution, insurance, or other financial services regulator of a state or by 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 by 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 by a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization;
(D) a court adjudicating a United States Postal Service fraud order;
(E) the insurance regulator of a state denying, suspending, or revoking the registration of an insurance agent; or
(F) a depository institution regulator suspending or barring a person from the depository institution 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 secretary of state may not enter an order against an applicant or registrant under subsection (d)(7) without a finding of insolvency as to the applicant or registrant;
(8) refuses to allow or otherwise impedes the secretary of state from conducting an audit or inspection under RSA 421-B:4-411(d) or refuses access to a registrant's office to conduct an audit or inspection under RSA 421-B:4-411(d);
(9) 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 the predecessor act or a rule adopted or order issued under this chapter or the predecessor act;
(10) has not paid the proper filing fee within 30 days after having been notified by the secretary of state of a deficiency, but the secretary of state shall vacate an order under subsection (d)(10) 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 subsection (d)(14) if the individual has successfully completed all examinations required by subsection (e). The secretary of state may require an applicant for registration under RSA 421-B:4-402 or RSA 421-B:4-404 who has not been registered in a state within the 2 years preceding the filing of an application in this state to successfully complete an examination.
(e) Examinations.
(1) Each applicant for individual broker-dealer registration or registration as an agent of a broker-dealer shall provide the secretary of state with proof of obtaining a passing score on the Uniform Securities Agent State Law Examination (Series 63 examination) or the Uniform Combined State Law Examination (Series 66 examination).
(2) Each applicant for individual investment adviser licensure or investment adviser representative registration shall provide the secretary of state with proof of obtaining a passing score on one of the following examination requirements:
(A) The Uniform Investment Adviser Law Examination (Series 65 examination); or
(B) The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).
(3)(A) Any individual who was registered or licensed as an investment adviser or investment adviser representative in any jurisdiction in the United States on January 1, 2000 shall not be required to satisfy the examination requirements for investment adviser registration in this state, except that the secretary of state may require additional examinations for any individual found to have violated any state or federal securities law.
(B) Any individual who has not been registered or licensed in any jurisdiction for a period of 2 years shall be required to comply with the examination requirements.
(4)(A) The examination requirement shall not apply to an individual who upon application holds one of the following professional designations:
(i) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;
(ii) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;
(iii) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;
(iv) Chartered Financial Analyst (CFA) awarded by the CFA Institute;
(v) Chartered Investment Counselor (CIC) awarded by the Investment Advisor Association; or
(vi) Such other professional designation as the secretary of state may by rule or order recognize.
(B) The examination requirements shall not apply to a solicitor that submits an application to the secretary of state containing:
(i) A request for a waiver of the examination requirements;
(ii) A copy of the solicitation agreement;
(iii) A copy of the disclosure document of the investment adviser on whose behalf the solicitor solicits or refers clients disclosing the arrangements between the solicitor and the investment adviser; and
(iv) An undertaking that, prior to, or at the time of, entering into any investment advisory contract with a client, the investment adviser will obtain from such client a signed and dated acknowledgment of receipt of the investment adviser's written disclosure statement and acknowledgment that the investment advisory contract is being entered into pursuant to a solicitation arrangement with the solicitor as described in the investment adviser's written disclosure statement.
(f) Summary process. The secretary of state 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 secretary of state 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 secretary of state 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 secretary of state, 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) Procedural requirements. An order issued may not be issued under this section, except under subsection (f), 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 RSA 541-A.
(h) 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 secretary of state under subsections (a) through (c) 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.