Compilation of Rules and Regulations of the State of Georgia › Department 590 - RULES OF OFFICE OF SECRETARY OF STATE › Chapter 590-4 - COMMISSIONER OF SECURITIES › Subject 590-4-5 - BROKER-DEALERS AND AGENTS › Rule 590-4-5-.16 - Dishonest or Unethical Business Practices

Current through Rules and Regulations filed through June 27, 2024
(1) Every entity, organization, or individual
				regulated by the Act shall observe high standards of commercial honor and just
				and equitable principles of trade in the conduct of business. The Commissioner
				may, at his or her discretion, take such action authorized by the Act regarding
				any entity, organization, or individual regulated by the Act.
(2) The following are prohibited acts:
(a) Broker-Dealers
1. Making false, misleading, deceptive, or
				exaggerated, representations or predictions in the offer, purchase or sale of
				securities;
2. Representing,
				agreeing, or guaranteeing, directly or indirectly, in writing or orally that:
(i) There is a guarantee against loss or
				risk;
(ii) The customer's capital
				will increase or that the purchase involves a preservation of original capital
				and protection against loss in value;
(iii) The securities will be repurchased or
				resold; or
(iv) A market will be
				established in the shares that will regularly be bought and sold;
3. Executing a transaction on
				behalf of a customer without authorization to do so;
4. Recommending to a customer the purchase,
				sale or exchange of securities without reasonable grounds to believe that the
				transaction or recommendation is suitable for the customer based on the
				customer's financial condition, investment objectives, and risk
				tolerance;
5. Exercising any
				discretionary power in effecting a transaction for a customer's account without
				first obtaining written authority from the customer, unless the discretionary
				power relates solely to the time and/or price for the execution of the
				order;
6. Effecting transactions
				pursuant to discretionary authority that are excessive in size or frequency in
				relation to the financial resources of the customer or the character of his or
				her account;
7. Knowingly effecting
				transactions in a customer account for the purpose of accumulating or
				compounding commissions;
8.
				Charging an excessive or unreasonable markup or commission;
9. Offering to buy or sell to any person any
				security at a stated price unless such broker-dealer is prepared to purchase or
				sell at such price and under such conditions as are stated at the time of such
				offer to buy or sell;
10. Using any
				advertising or sales presentation in such a fashion as to be deceptive or
				misleading;
11. Marking any order
				ticket or confirmation as unsolicited when in fact the transaction was
				solicited;
12. Executing any
				transaction in a margin account without securing from the customer a properly
				executed written margin agreement promptly after the initial transaction in the
				account;
13. Creating an impression
				of false supply or demand or manipulating a market to create false supply or
				demand;
14. Engaging or aiding in
				"boiler-room" operations or high pressure tactics in connection with the
				promotion of speculative securities by means of an intensive telephone campaign
				or unsolicited calls to persons not known by or having an account with the
				salesperson or broker-dealer, whereby the prospective purchaser is encouraged
				to make a hasty decision to buy, irrespective of his or her investment needs
				and objectives;
15. Representing
				that a security is being offered to a customer "at the market" or a price
				relevant to the market price unless the broker-dealer knows or has reasonable
				grounds to believe that a market for such security exists other than that made,
				created or controlled by such broker-dealer, or by any person for whom he or
				she is acting or with whom he or she is associated in such distribution, or any
				person controlled by, controlling or under common control with such
				broker-dealer;
16. Failing to
				refrain from soliciting prospective customers who have informed the
				broker-dealer that such persons do not want to be solicited, and conducting
				business by telephone at unreasonable times;
17. Failing to furnish to a customer
				purchasing securities in a registered offering, no later than the date of
				confirmation of the transaction, a final or preliminary prospectus, and, if the
				latter, failing to furnish a final prospectus within a reasonable period after
				the effective date of the offering;
18. Failing to make a bona fide offering of
				all of the securities allotted to a broker-dealer for distribution, whether
				acquired as an underwriter, a selling group member, or from a member
				participating in the distribution as an underwriter or selling group
				member;
19. Failing to segregate a
				customer's free securities or securities held in safekeeping; and
20. Hypothecating a customer's securities
				without having a lien thereon unless the broker-dealer secures from the
				customer a properly executed written consent promptly after the initial
				transaction, except as permitted by the rules of the SEC.