Mississippi Administrative Code › Title 1 - Secretary of State › Part 14 - Securities Regulation › Chapter 5 - REGISTRATION OF BROKER-DEALERS AND AGENTS › Rule 1-14-5.21 - Standards of Conduct

Current through June 25, 2024
Each broker-dealer and agent shall observe high standards of
				  commercial honor and just and equitable principles of trade in the conduct of
				  their business. Acts, conduct, and practices, including, but not limited to,
				  the following are considered contrary to such standards and may constitute
				  grounds for denial, suspension, or revocation of registration, imposition of
				  fines, a bar, or such other action authorized by statute.
A.
Broker-dealers
.
1. Causing any unreasonable delays in the
				placement of orders, execution of orders, or the delivery of securities
				purchased by any of its customers or in the payment upon request of free credit
				balances reflecting completed transactions of any of its customers.
2. Inducing trading in a customer's account
				that is excessive in size or frequency in view of the financial resources,
				investment objectives of the customer, and character of the account.
3. Recommending to a customer the purchase,
				sale, or exchange of any security without reasonable grounds to believe that
				such transaction or recommendation is suitable for the customer based upon
				reasonable inquiry concerning the customer's investment objectives, age,
				financial situation, risk tolerance, needs, and any other relevant information
				known by the broker-dealer.
4.
				Executing a transaction on behalf of a customer without authorization to do
				so.
5. Marking any order tickets or
				confirmations as unsolicited when in fact the transaction is
				solicited.
6. Exercising any
				discretionary power in effecting a transaction for a customer's account without
				first obtaining written discretionary authority from the customer, unless the
				discretionary power relates solely to the time and/or price for the execution
				of orders.
7. Extending, arranging
				for, or participating in arranging for credit to a customer in violation of the
				Securities Exchange Act of 1934 or the regulations of the Federal Reserve
				Board.
8. Executing any transaction
				in a margin account without obtaining from the customer a properly executed
				written margin agreement prior to the settlement date for the initial
				transaction in the account.
9.
				Failing to segregate customers' free securities or securities held in
				safekeeping.
10. Hypothecating a
				customer's securities without having a lien thereon unless written consent is
				first obtained, except as permitted by rules of the SEC.
11. Entering into a transaction with or for a
				customer at a price not reasonably related to the current market price of the
				security or receiving an unreasonable commission or profit.
12. Failing to furnish to a customer
				purchasing securities in an offering, no later than the date of confirmation of
				the transaction, either a final prospectus or a preliminary prospectus and an
				additional document, which together includes all information set forth in the
				final prospectus.
13. Charging
				unreasonable and inequitable fees for services performed, including
				miscellaneous services such as collection of monies due for principal,
				dividends, or interest; exchange or transfer of securities; appraisals,
				safekeeping, or custody of securities; and other services related to its
				securities business, except where such fees are negotiated or have been
				previously consented to by the customer.
14. Offering to buy from or sell to any
				person any security at a stated price unless such broker-dealer is prepared to
				purchase or sell, as the case may be, at such price and under such conditions
				as are stated at the time of such offer to buy or sell.
15. Representing that a security is being
				offered to a customer "at the market" or a price relevant to the market price,
				unless such 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 is associated in such
				distribution, or any person controlled by, controlling, or under common control
				with such broker-dealer.
16.
				Effecting any transaction in or inducing the purchase or sale of any security
				by means of any manipulative, deceptive, or fraudulent device, practice, plan,
				program, design, or contrivance which may include, but not be limited to:
a. Effecting any transaction in a security
				which involves no change in the beneficial ownership thereof;
b. Entering an order or orders for the
				purchase or sale of any security with the knowledge that an order or orders of
				substantially the same size, at substantially the same time, and for
				substantially the same price, for the sale of any such security, has been or
				will be entered by or for the same or different parties for the purpose of
				creating a false or misleading appearance of active trading in the security or
				a false or misleading appearance with respect to the market for the security;
				however, nothing in this Subsection shall prohibit a broker-dealer from
				entering bona fide agency cross transactions for its customers;
c. Effecting, alone or with one or more other
				persons, a series of transactions in any security creating actual or apparent
				active trading in such security or raising or depressing the price of such
				security, for the purpose of inducing the purchase or sale of such security by
				others;
d. Contradicting or
				negating the importance of any information contained in a prospectus or other
				offering materials with intent to deceive or mislead, or using any advertising
				or sales presentation in a deceptive or misleading manner;
e. In connection with the offer, sale, or
				purchase of a security, falsely leading a customer to believe that the
				broker-dealer or agent is in possession of material, nonpublic information
				which would impact the value of the security;
f. In connection with the solicitation of a
				sale or purchase of a security, engaging in a pattern or practice of making
				contradictory recommendations to different investors with similar investment
				objectives for some to sell and others to purchase the same security, at or
				about the same time, when not justified by the particular circumstance of each
				investor.
17.
				Guaranteeing a customer against loss in any securities account of such customer
				carried by the broker-dealer or in any securities transaction effected by the
				broker- dealer with or for such customer.
18. Publishing, circulating, or causing to be
				published or circulated any notice, circular, advertisement, newspaper article,
				investment service, or communication of any kind which purports to report any
				transaction as a purchase or sale of any security unless such broker-dealer
				believes that such transaction was a bona fide purchase or sale of such
				security; or which purports to quote the bid price or asked price of any
				security, unless such broker-dealer believes that such quotation represents a
				bona fide bid for, or offer of, such security.
19. Using any advertising or sales
				presentation in such a fashion as to be deceptive or misleading. An example of
				such practice would be distribution of any nonfactual data, material, or
				presentation based on conjecture; unfounded or unrealistic claims; or
				assertions in any brochure, flyer, or display by words, pictures, graphs, or
				otherwise designed to supplement, detract from, supersede, or defeat the
				purpose or effect of any prospectus or disclosure.
20. Failing to disclose that the
				broker-dealer is controlled by, controlling, affiliated with, or under common
				control with the issuer of any security before entering into any contract with
				or for a customer for the purchase or sale of such security, and if such
				disclosure is not made in writing, it shall be supplemented by written
				disclosure at or before the completion of the transaction.
21. Failing to make a bona fide public
				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.
				This includes, among other things, (1) transferring securities to a customer's,
				another broker-dealer's, or a fictitious account with the understanding that
				those securities will be returned to the broker-dealer or its nominees or (2)
				"parking" or withholding securities.
22. Failure or refusal to furnish a customer,
				upon reasonable request, information to which he is entitled or to respond to a
				formal written request or complaint.
23. Violating any laws or rules of the SEC or
				a national securities exchange or any national securities association of which
				it is a member or violating any federal or state securities law or any rule or
				regulation promulgated thereunder.