Corporations, Associations, and Partnerships
Rhode Island Uniform Securities Act
Licensing of Broker-Dealers, Sales Representatives, and Investment Advisers and Investment Adviser Representatives
R.I. Gen. Laws § 7-11-212
§ 7-11-212. Grounds for denial, suspension, and revocation.
(a) The director may by order:
(1) Deny, suspend, or revoke a license;
(2) Limit the securities activities that an applicant or licensed person may perform in this state;
(3) Bar a broker-dealer or investment adviser from conducting any securities activities in this state;
(4) Bar an applicant or licensed person from association with a licensed broker-dealer or investment adviser; or
(5) Bar from employment with a licensed broker-dealer or investment adviser a person who is a partner, officer, director, or a person occupying a similar status or performing a similar function for an applicant or licensed person.
(b) These actions may be taken only if the director finds that the order is in the public interest and that the applicant or licensed person or, in the case of a broker-dealer or investment adviser, a partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the broker-dealer or investment adviser has done any of the following:
(1) Filed an application for licensing with the director which, as of its effective date or any date after filing in the case of an order denying effectiveness, contained any untrue statement of material fact or omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
(2) Willfully violated or willfully failed to comply with this chapter, a predecessor act, or a rule or order under this chapter or a predecessor act;
(3) Is the subject of an adjudication or determination, after notice and opportunity for hearing, within the last five (5) years by a securities agency or administrator of another state or a court of competent jurisdiction that the person has willfully violated the Securities Act of 1933, 15 U.S.C. § 77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., or the Commodity Exchange Act, 7 U.S.C. § 2 et seq., or the securities law of any other state but only if the acts constituting the violation of that state's law would constitute a violation of this chapter had the acts occurred in this state;
(4) Within the last ten (10) years, has been convicted of a felony or misdemeanor which the director finds:
(i) Involves the purchase or sale of a security; the taking of a false oath, the making of a false report, bribery, perjury, burglary, robbery, or attempt or conspiracy to commit any of the foregoing offenses;
(ii) Arises out of the conduct of business as a broker-dealer, investment adviser, depository institution, insurance company, or fiduciary; or
(iii) Involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities or attempt or conspiracy to commit any of the above offenses;
(5) Is permanently or temporarily enjoined by a court of competent jurisdiction from acting as an investment adviser, underwriter, broker-dealer, or as an affiliated person or employee of an investment company, depository institution, or insurance company, or from engaging in or continuing conduct or practice in connection with any of the foregoing activities, or in connection with the purchase or sale of a security;
(6) Is the subject of an order of the director denying, suspending, or revoking the person's license as a broker-dealer, sales representative, investment adviser, or investment adviser representative;
(7) Is the subject of any of the following orders that are currently effective and were issued within the last five (5) years:
(i) An order by the securities agency or administrator of another state or Canadian province or territory, or by the Securities and Exchange Commission, entered after notice and opportunity for hearing, denying, suspending, or revoking the person's license as a broker-dealer, sales representative, investment adviser, or investment adviser representative, or the substantial equivalent of those terms as defined in this chapter;
(ii) A suspension or expulsion from membership in or association with a member of a self-regulatory organization registered under the Securities Exchange Act of 1934 or the Commodity Exchange Act;
(iii) A United States postal service fraud order;
(iv) A cease and desist order entered after notice and opportunity for hearing by the director, the securities agency or administrator of another state, or a Canadian province or territory, the Securities and Exchange Commission, or the commodity futures trading commission; or
(v) An order by the commodity futures trading commission denying, suspending, or revoking registration under the Commodity Exchange Act;
(8) Has engaged in unethical or dishonest practices in the securities business;
(9) Is insolvent, either in the sense that liabilities exceed assets, or in the sense that obligations cannot be met as they mature, but the director may not enter an order against a broker-dealer or investment adviser under this subsection without a finding of insolvency as to the broker-dealer or investment adviser;
(10) Is determined by the director in compliance with § 7-11-213 not to be qualified on the basis of the lack of training, experience, and knowledge of the securities business;
(11) Has failed reasonably to supervise a sales representative, investment adviser representative, or an employee; or
(12) Has failed to pay the proper filing fee within thirty (30) days after being notified by the director of a deficiency, but the director shall vacate an order under this subsection when the deficiency is corrected.
(c) The director may not begin a proceeding on the basis of a fact or transaction known to the director when the license became effective unless the proceeding is begun within the ninety (90) days after issuance of the license.
(d) If the director finds that an applicant or licensed person is no longer in existence, has ceased to do business as a broker-dealer, sales representative, investment adviser, or investment adviser representative, is adjudicated mentally incompetent or subjected to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the director may by order deny the application or revoke the license.
History of Section.
P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 1997, ch. 56, § 1.