Arizona Administrative Code › Title 14 - PUBLIC SERVICE CORPORATIONS; CORPORATIONS AND ASSOCIATIONS; SECURITIES REGULATION › Chapter 6 - Corporation Commission - Investment Management › Article 2 - DUTIES OF INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES › Section R14-6-203 - Dishonest and Unethical Practices

Current through Register Vol. 30, No. 28, July 12, 2024
"Dishonest and unethical practices," with respect to
				  investment advisers and investment adviser representatives subject to A.R.S.
				  §
									44-3201(A)(13),
				  shall include but not be limited to the following:
1. Refusing to allow or otherwise impeding
				the Commission from conducting an investigation or examination under the IM Act
				or any rule adopted thereunder.
2.
				Placing an order to purchase or sell a security for the account of a client
				without authority to do so.
3.
				Placing an order to purchase or sell a security for the account of a client
				upon instruction of a 3rd party without first obtaining a written 3rd-party
				trading authorization from the client.
4. Exercising any discretionary power in
				placing an order for the purchase or sale of securities for a client without
				first obtaining written discretionary authority, unless the discretionary power
				relates solely to the price at which, or the time when, an order involving a
				definite amount of specified securities shall be executed, or both.
5. Inducing trading in a client's account
				that is excessive in size or frequency in view of the financial resources,
				investment objectives, and character of the account.
6. Borrowing money or securities from a
				client or client's account unless the client has authorized the borrowing in
				writing and is a dealer, an affiliate, or relative of the investment adviser or
				investment adviser representative, or a financial institution or other entity
				engaged in the business of loaning funds or securities.
7. Loaning money to a client unless the
				investment adviser or investment adviser representative is a financial
				institution or other entity engaged in the business of loaning funds or the
				client is an affiliate or relative of the investment adviser or investment
				adviser representative.
8.
				Misrepresenting to any client, or prospective client, the qualifications of the
				investment adviser, the investment adviser representative, or an employee, or
				misrepresenting the nature of the investment advisory services being offered or
				fees to be charged for such services, or omitting to state a material fact
				necessary to make the statements made regarding qualifications, services, or
				fees, in light of the circumstances under which they were made, not
				misleading.
9. Providing a report
				or recommendation to any client prepared by someone other than the investment
				adviser or investment adviser representative without disclosing that fact. This
				prohibition does not apply to a situation where the investment adviser or
				investment adviser representative uses published research reports or
				statistical analyses to render investment advice or where the investment
				adviser or investment adviser representative orders such a report in the
				ordinary course of providing service.
10. Charging a client an investment advisory
				fee that is unreasonable in light of the type of services to be provided, the
				experience and expertise of the investment adviser or the investment adviser
				representative, and the sophistication and bargaining power of the
				client.
11. Failing to disclose to
				a client in writing before entering into or renewing an investment advisory
				agreement with that client, or before any investment advice is rendered, any
				material conflict of interest relating to the investment adviser, the
				investment adviser representative, or an employee that could reasonably be
				expected to impair the rendering of unbiased and objective advice including but
				not limited to:
a. Compensation arrangements
				connected with investment advisory services to clients that are in addition to
				compensation from such clients for those services; and
b. Charging a client an investment advisory
				fee for rendering investment advice without disclosing that compensation for
				executing securities transactions pursuant to such investment advice will be
				received by the investment adviser, the investment adviser representative, or
				an employee.