2023 Laws of Puerto Rico › TITLE TEN - Commerce (§§ 1 — 4196) › Subtitle 1 - Regulation of Business Generally (§§ 1 — 998q) › Chapter 37 - Uniform Securities Act (§§ 851 — 898) › Subchapter II - Registration of Broker-Dealers, Agents and Investment Advisers (§§ 861 — 864) › § 864 - Denial, revocation, suspension, cancellation, and withdrawal of registration

(a) The Commissioner may, through an order to that effect, deny, suspend or revoke any registration should he/she find that:
(1) It is so required in the public interest, and
(2) the applicant or the person registered or, in the case of a broker-dealer or an investment adviser, or any partner, official, director, or person occupying a similar position or performing similar functions or any person who directly or indirectly controls the broker-dealer or the investment adviser:
(A) Has filed an application for registration which as of its effective date or as of any date after having been filed, in the case of an order denying effectiveness, was incomplete in any material aspect or contained any statement which was, in light of the circumstances under which it was made, false or deceptive regarding any material fact;
(B) has violated or intentionally failed to comply with any provision of this chapter or any regulation or order promulgated by virtue of the provisions of this chapter;
(C) has been convicted, within the past ten (10) years, for any misdemeanor relative to any transaction in which securities were involved or for any felony;
(D) has been enjoined, permanently or temporarily, by any court of competent jurisdiction, from engaging in or continuing any conduct or practice involving any aspect of the securities business;
(E) is subject to an order issued by the Commissioner denying, suspending or revoking his/her registration as broker-dealer, agent or investment adviser;
(F) is subject to an order issued by the Securities Commissioner of any state or by the Securities and Exchange Commission denying or revoking his/her registration as broker-dealer, agent or investment adviser or the substantial equivalent of those terms as defined in this chapter, or is subject to an order of the Securities and Exchange Commission suspending or expelling him/her from a national securities exchange or a national securities association registered pursuant to the Securities Exchange Act of 1934, or is subject to a United States Postal Service Department fraud order: but
(i) The Commissioner may not initiate a revocation or suspension proceeding under paragraph (F) after one (1) year from the date of the order, and
(ii) he/she may not issue an order under paragraph (F) based on another order issued under the laws of another state, unless said order is based on facts which would normally constitute grounds for an order under this section;
(G) has engaged in dishonest or unethical practices in the securities business;
(H) is insolvent, either in the sense that his/her liabilities exceed his/her assets, or in the sense that he/she cannot meet his/her obligations as they come due; but the Commissioner may not issue an order against a broker-dealer or investment adviser under this clause without a finding of insolvency of the broker-dealer or investment adviser; or
(I) is not qualified regarding his/her training, experience or knowledge of the securities business, except as provided in subsection (b) of this section.
(J) has reasonably failed to supervise his/her agents, if a broker-dealer, or his/her employees, if an investment adviser; or
(K) has not paid the registration fee; but the Commissioner may only issue a denial order under this clause and shall render ineffective said order as soon as the deficiency as been corrected.
The Commissioner may not initiate a suspension or revocation proceeding on the basis of a fact or transaction known to him/her when the registration became effective unless said proceeding is initiated within the subsequent ninety (90) days.
(b) The following provisions shall govern the application of subsection (a)(2)(I) of this section:
(1) The Commissioner shall not issue any order whatsoever against a broker-dealer on the basis of the lack of qualifications of any person other than:
(A) The broker-dealer him/herself, if he/she is an individual, or
(B) an agent of the broker-dealer.
(2) The Commissioner shall not issue any order whatsoever against an investment adviser on the basis of the lack of qualifications of any person other than:
(A) The investment adviser him/herself, if he/she is an individual, or
(B) any other person who represents the investment adviser in the performance of any of the functions which make him/her an investment adviser.
(3) The Commissioner shall not issue an order based exclusively on the lack of experience, should the applicant or the registrant be qualified because of his/her training or knowledge, or both.
(4) The Commissioner shall consider that an agent who will work under the supervision of a registered broker-dealer does not need to have the same qualifications as a broker-dealer.
(5) The Commissioner shall consider that an investment adviser is not necessarily qualified solely on the basis of his/her experience as broker-dealer or agent. Should the former determine that an applicant for initial or renewal registration as broker-dealer is not qualified to act as investment adviser, he/she may, through an order, condition the applicant’s registration as broker-dealer so that the latter may not be able to conduct business as investment adviser in Puerto Rico.
(6) The Commissioner may, through regulations, order an examination which may be oral, written or both, which shall be taken by any class of or all applicants, as well as by those persons who represent or shall represent an investment adviser in the performance of any of the functions which make him/her an investment adviser.
(c) The Commissioner, through an order, may summarily defer or suspend the registration pending the final determination in any proceeding initiated under this section. After the order has been issued, the Commissioner shall promptly notify the applicant or registrant, as well as the employer or prospective employer, if the applicant or the registrant is an agent, that the order has been issued, the reasons for doing so, and that within fifteen (15) days after the receipt of a written request, the matter shall be scheduled for a hearing. If no hearing is requested and none is ordered by the Commissioner, the order shall remain in effect until it is modified or rendered ineffective by the Commissioner. Should the hearing be requested or ordered, the Commissioner, after notice of and opportunity for a hearing, may modify, render ineffective or defer said order until its final determination.
(d) Should the Commissioner find that any registrant or applicant for registration has ceased to exist or to conduct business as broker-dealer, agent or investment adviser, or has been declared mentally incompetent or is under the control of a committee, commission, curator, tutor or guardian, or cannot be located after a reasonable search, the Commissioner may, through an order, cancel the registration or application for registration.
(e) Withdrawal from registration as broker-dealer, agent or investment adviser shall become effective [thirty] 30 days after receipt of an application for withdrawal, or within a lesser period of time, as the Commissioner may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions concerning said withdrawal is initiated within [thirty] 30 days after the application is filed. Should any proceeding whatsoever be pending or initiated, the withdrawal shall become effective at the time and under the conditions the Commissioner may determine through an order. Should no proceeding whatsoever be pending or initiated and should the withdrawal be automatically effective, the Commissioner may, nevertheless, initiate a revocation or suspension proceeding pursuant to the provisions of subsection (a)(2)(B) within a year after the withdrawal became effective and issue a revocation or stop order effective as of the last date on which the registration was effective.
(f) No order may be issued under any part of this section, except for the first sentence or subsection (c) without:
(1) Prior proper notice to the applicant or registrant (as well as to the employer or prospective employer, should the applicant or registrant be an agent),
(2) the opportunity of a hearing, and
(3) findings of fact and conclusions of law are stated in writing.
History —June 18, 1963, No. 60, p. 128, § 204; Aug. 11, 1996, No. 114, § 8.