Arizona Administrative Code › Title 14 - PUBLIC SERVICE CORPORATIONS; CORPORATIONS AND ASSOCIATIONS; SECURITIES REGULATION › Chapter 4 - Corporation Commission - Securities › Article 1 - IN GENERAL RELATING TO THE ARIZONA SECURITIES ACT › Section R14-4-130 - Dishonest and Unethical Conduct

Current through Register Vol. 30, No. 28, July 12, 2024
A. For purposes of A.R.S. §§
									44-1961(A)(13)
				 and
				44-1962(10),
				dishonest or unethical practices in the securities industry shall include but
				not be limited to the following:
1.
				Unreasonable delay in the delivery of securities or funds to the extent that
				the dealer or salesman is in a position to control or direct the delivery of
				the securities or funds. The burden of proof of inability to deliver shall rest
				with the dealer or salesman.
2.
				Representing that securities will be listed, or that application for listing
				will be made on a securities exchange or the National Association of Securities
				Dealers Automated Quotation (NASDAQ) system or other quotation system without
				reasonable basis in fact for the representation.
3. Inducing trading in a customer's account
				which is excessive in size or frequency in view of the customer's financial
				resources, the character of the account, and other relevant factors.
4. Recommending to a customer the purchase,
				sale or exchange of any security without reasonable grounds to believe that the
				recommendation is suitable for the customer. Such suitability shall be
				determined on the basis of information furnished by the customer after such
				inquiry as may be necessary under the circumstances, concerning the customer's
				investment objectives, financial situation and needs, and other information
				known by the person making the recommendation. Each registered dealer shall
				require and maintain information regarding its customers necessary to make such
				determination prior to engaging in any transaction based upon a recommendation
				by the firm or its registered salesman.
5. Selling a security in violation of Section
				15(g) of the Securities Exchange Act of 1934, 15 U.S.C.A. 78o(g) (West 1981
				& Supp. 1991) ("Section 15(g)") which is incorporated herein by reference
				and is on file with the Office of the Secretary of State.
6. Executing a transaction on behalf of a
				customer without authority to do so.
7. Executing a transaction pursuant to
				general discretionary authority for the account of a customer without first
				obtaining general discretionary authority in writing from such customer. This
				provision shall not apply to discretion as to the price at which or the time
				when an order given by a customer for the purchase or sale of a definite amount
				of a specified security shall be executed.
8. Acting on an agency basis for both the
				seller and the purchaser of a security (other than U.S. Savings Bonds or
				municipal securities) without disclosing that fact to both the seller and the
				purchaser on the confirmation.
9.
				While acting on an agency basis for a customer in any transaction, charging the
				customer more than a fair commission or service charge, taking into
				consideration all relevant circumstances including market conditions with
				respect to a security at the time of the transaction, the expenses of executing
				the order and the value of any service rendered by reason of experience in and
				knowledge of the security and the market therefor.
10. While acting on a principal basis for a
				customer in any transaction, charging an excessive markup or markdown, taking
				into consideration all relevant circumstances including market conditions with
				respect to a security at the time of the transaction, the expenses of executing
				the order and the value of any service rendered by reason of experience in and
				knowledge of the security and the market therefor.
11. Entering into a transaction with a
				customer in a security at a price not reasonably related to the market price of
				the security.
12. Extending credit
				to a customer in violation of
				12 CFR
				220.1 through 220.18(1991) (hereinafter
				referred to as "Regulation T") which is incorporated herein by reference and is
				on file with the Office of the Secretary of State.
13. Selling an equity security to, or
				purchasing an equity security from, a customer without disclosing on the
				confirmation that the dealer is acting as a market maker in that security.
				"Market maker" as used herein shall mean any specialist permitted to act as a
				dealer, and any dealer who, with respect to a security, holds himself out (by
				entering quotations in an inter-dealer communications system or otherwise) as
				being willing to buy and sell such security for his own account on a regular or
				continuous basis.
14. Employing, in
				connection with the purchase or sale of a security, a manipulative or deceptive
				device or contrivance.
15.
				Borrowing of money or securities by a salesman from a customer, except when the
				customer is a relative of the salesman or a person in the business of lending
				funds.
16. Making unauthorized use
				of securities or funds of a customer or converting customer securities or funds
				for personal benefit.
17. While
				registered as a salesman, effecting securities transactions which have not been
				recorded on the records of the dealer with whom such salesman is registered at
				the time of the transaction.
18. As
				a registered salesman, operating an account under a fictitious name with intent
				to deceive or for an illegal purpose.
19. Engaging in a pattern of marking order
				tickets as unsolicited when the dealer or salesman directly or indirectly
				recommended the transaction or introduced the customer to the
				security.
20. Using sales materials
				or conducting sales presentations in a deceptive or misleading
				fashion.