California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2 - Corporate Securities › Article 8 - Licensing of Broker-Dealers and Agents › Section 260.210 - Agent Procedures for Broker-Dealers

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The procedures set forth in this section are applicable to
					 broker-dealers licensed pursuant to subdivisions (a) and (b) of Section
					 25211 of the Code.
(a) Upon employment of an individual as an
				  agent, a broker-dealer shall (1) obtain a properly executed application for
				  registration, on the Uniform Application for Securities Industry Registration,
				  or Transfer Form ("Form U4"), (2) obtain for its records, evidence that such
				  agent meets the qualification requirements of Section
				  260.217 of these rules, and (3)
				  ascertain (by investigation) the character, business reputation and experience
				  of any individual, prior to executing any transaction on behalf of the
				  broker-dealer. Evidence of compliance with Section
				  260.217 and investigation of the
				  agent, shall be maintained as a part of the records of the broker-dealer as
				  required by Sections
				  260.241 of these rules.
(b) A broker-dealer who registers its agents
				  with Financial Industry Regulatory Authority, Inc. ("FINRA"), shall:
(1) Upon the employment of an individual as
				  an agent, file the Form U4, through the Central Registration Depository (the
				  "CRD") of FINRA in accordance with its procedures, and pay, for transmission to
				  the Commissioner, the fees prescribed by Section
				  260.608.2(a) of
				  these rules. The filing of Form U4 with the CRD does not constitute an
				  automatic "approval" through the CRD. Broker-dealers should not consider an
				  agent "registration" through the CRD approved until approved by the
				  Commissioner and the approval has been received through the CRD. If requested
				  by the Commissioner, additional information, documentation or details
				  pertaining to the Form U4 or properly executed fingerprint information of the
				  agent must be filed directly with the Commissioner within 15 days from the date
				  of the request. In accordance with Section
				  250.16, the Form U4 may be
				  abandoned if the Commissioner does not receive the requested information within
				  the time prescribed. The Commissioner shall "reject" through the CRD an
				  abandoned Form U4.
(2) An agent
				  registered through the CRD may comply with the requirements of this subsection
				  through participation in the "Relicensing" program (the Relicensing program was
				  formerly known as "Temporary Agent Transfer" or "TAT") adopted by the North
				  American Securities Administrators Association ("NASAA"), provided that the
				  agent is eligible and qualifies for registration through the Relicensing
				  program and the broker-dealer has complied will all of the requirements of the
				  Relicensing program with respect to the agent in a timely manner. Agent CRD
				  registration through the Relicensing program shall not waive any rights of the
				  Commissioner to proceed in any disciplinary proceeding or sanction provided for
				  under the Code.
(3) File an
				  amendment to the Form U4 through the CRD within 30 days when there are any
				  changes to the information contained in the original Form U4. If the Form U4 is
				  being amended due to a disciplinary occurrence, a copy of the amendment shall
				  be filed with the Commissioner upon request.
(4) Within 30 days after the termination of
				  an individual as an agent, file the Uniform Termination Notice for Securities
				  Industry Registration Form ("Form U5") through the CRD. The Form U5 shall
				  clearly state the reason(s) for termination. However, if an agent has been
				  terminated for cause, the Form U5 shall, upon request, be filed directly with
				  the Commissioner.
A broker-dealer shall be responsible for the acts,
					 practices, and conduct of an agent in connection with the purchase or sale of
					 securities until such time as they have been properly terminated and the Form
					 U5 has been filed with the CRD of FINRA.