Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 38 - SECURITIES - REPEALED › Subchapter 4 - DENIAL OF APPLICATION, SUSPENSION, AND REVOCATION OF REGISTRATION OF DEALERS, SALESPERSONS, INVESTMENT ADVISERS, AND INVESTMENT ADVISER REPRESENTATIVES › Section 16-38-7 - Denial, suspension, and revocation

Current through June, 2024
(a) A proceeding to
				deny an application for registration, or to suspend or revoke the effectiveness
				of a registration may be instituted by the commissioner if the action is in the
				public interest, reasonable grounds exist that the applicant or registrant has
				violated or failed to comply with any provision of chapter
				485, HRS, or this chapter, or the
				applicant or registrant has demonstrated its unworthiness to transact the
				business of a dealer, issuer, or salesperson.
(b) Without in any way limiting the
				generality thereof, for the purposes of section 485-15(11), HRS, any of the
				following shall demonstrate an applicant's or registrant's unworthiness to
				transact the business of a dealer, issuer, or salesperson:
(1) Causing unreasonable delay or failure to
				execute orders, liquidate customers' accounts, or in making delivery of
				securities purchased or remittances (or credit) for securities sold;
(2) Selling securities at unfair prices in
				relation to market value, or with unreasonable or excessive markups or
				commissions;
(3) Effecting
				transactions in the account of a customer without the customer's knowledge or
				consent or maintaining discretionary accounts without written
				authorization;
(4) Wilful
				switching, churning, overtreading, or reloading of securities in a customer's
				account for the ostensible purpose of accumulating or compounding
				commissions;
(5) Inducing a
				customer to invest beyond the customer's known immediate financial resources,
				or without regard to the nature and character of the account;
(6) Engaging or aiding in "boiler room"
				operations or high-pressure tactics in connection with the promotion of
				speculative offerings or "hot-issues" by means of an intensive telephone
				campaign or unsolicited calls to persons not known by, nor having an account
				with the salesperson or dealer represented by the applicant, whereby the
				prospective purchaser is encouraged to make a hasty decision to buy,
				irrespective of the prospective purchaser's investment needs and
				objectives;
(7) Participating in
				the solicitation or offer for sale of promotional securities without the use
				and dissemination of a prospectus (where required), or making oral or written
				statements contrary to or inconsistent with the disclosures contained
				therein;
(8) Making false,
				misleading, deceptive, exaggerated, or flamboyant representations or
				predictions in the solicitation or sale of a security. Examples of this include
				without limitation misrepresenting:
(A) That
				the security shall be resold or repurchased;
(B) That the security shall be listed or
				traded on an exchange or established market;
(C) That the security shall result in an
				assured, immediate or extensive increase in value, future market price, or
				return on investment;
(D) With
				respect to the issuer's financial condition, anticipated earnings, potential
				growth, or success; or
(E) That
				there is a guarantee against risk or loss;
(9) Failing to disclose a dual agency
				capacity or effecting transactions upon terms and conditions other than those
				stated per confirmations;
(10)
				Failing to make a bona fide public offering pursuant to an underwriting
				agreement or entering into an arrangement which establishes unfair or
				unreasonable terms and conditions or compensation;
(11) Establishing fictitious accounts in
				order to execute transactions which would otherwise be prohibited;
(12) Entering into agreements for selling
				concessions, discounts, commissions, or allowances as consideration for
				services in connection with the distribution or sale of a security in Hawaii to
				any non-licensed dealer or salesperson, unless the person is not required to be
				registered in order to engage in the securities business in this
				State;
(13) Operating a securities
				business while being unable to meet current liabilities, or violating any rule
				or order relating to minimum capital, bond, record-keeping and reporting
				requirements, or provision concerning use, commingling, or hypothecation of
				customers' funds or securities;
(14) Failing or refusing to furnish a
				customer, upon reasonable request, information to which the customer is
				entitled, or to respond to a formal written demand or complaint;
(15) Failing to comply with any rule of a
				national securities exchange or self-regulatory organization approved by the
				SEC; or
(16) Failing to cooperate
				with, or providing false or incomplete information to, the commissioner in
				connection with any investigation under this chapter or chapter
				485, HRS.