Missouri Code of State Regulations › Title 15 - ELECTED OFFICIALS › Division 30 - Secretary of State › Chapter 59 - Registration and Operations of Commodity Broker-Dealers and Sales Representatives › Section 15 CSR 30-59.180 - Denial, Revocation and Suspension of Registration

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule prescribes grounds for the denial,
				  revocation or suspension of the registration of broker-dealers and sales
				  representatives.
(1) Grounds
				for the denial, revocation and suspension of registration shall include, in
				addition to other grounds specified in section
				409.863(1),
				RSMo, the following "unethical or dishonest
				conduct or practice in the investment commodities or securities business":
(A) Delaying unreasonably and unjustifiably
				or failing to execute orders, liquidate customers' accounts or in making
				delivery of securities or commodities purchased or in the payment upon request
				of free credit balances reflecting completed transactions of any of its
				customers;
(B) Entering into a
				transaction with or for a customer at a price not reasonably related to the
				current market price of the commodity or security or receiving an unreasonable
				commission or profit;
(C) Effecting
				transactions in the account of a customer without authority to do so; or
				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, price, or
				both, for the execution of orders;
(D) Willful switching, churning, overtrading
				or reloading of commodities or securities in a customer's account for the
				purpose of accumulating or compounding commission or inducing trading in a
				customer's account which is excessive in size or frequency in view of the
				financial resources and character of the account;
(E) Recommending to a customer the purchase,
				sale or exchange of any commodity or security without reasonable grounds to
				believe that the transaction or recommendation is suitable for the customer
				based upon reasonable inquiry concerning the customer's investment objectives,
				financial situation and needs and any other relevant information known by the
				applicant or registrant;
(F)
				Engaging in 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 sales representative or broker-dealer
				represented by the sales representative, where the prospective purchaser is
				encouraged to make a hasty decision to buy, irrespective of his/her investment
				needs and objectives;
(G) 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 include all
				information set forth in the final prospectus, or making oral or written
				statements contrary to or inconsistent with the disclosures contained in the
				prospectus;
(H) Failing to furnish
				to a customer purchasing commodities, no later than the date of confirmation of
				the transaction, a disclosure statement as required in
				15 CSR
				30-59.190, or making oral or written statements
				contrary to or inconsistent with the disclosures contained in the
				statement;
(I) Making false,
				misleading, deceptive, exaggerated or flamboyant representations or predictions
				in the solicitation or sale of commodity or security, as, for example
1. That the commodity or security will be
				resold or repurchased;
2. That it
				will be listed or traded on an exchange or established market;
3. That it will result in an assured,
				immediate or extensive increase in value, future market price or return on
				investment;
4. With respect to the
				issuer's financial condition, anticipated earnings, potential growth or
				success;
5. That there is a
				guarantee against risk or loss; or
6. Representing that a commodity or security
				is being offered to a customer at the market or a price related to the market
				price unless the applicant or registrant knows or has reasonable grounds to
				believe that
A. A market for that commodity
				or security exists other than that made, created or controlled by the applicant
				or registrant, or by any person for whom s/he is acting or with whom s/he is
				associated in such distribution, or any person controlled by, controlling or
				under common control with the applicant or registrant; and
B. The commodity or security is traded in an
				established commodities or securities market, and the fact that the applicant
				or registrant is in a control position with respect to the market for that
				commodity or security is fully disclosed to the investor;
(J) Failing to disclose a dual
				agency capacity or effecting transactions upon terms and conditions other than
				those stated per confirmations, or failing to disclose that the applicant or
				registrant 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 security, or if the disclosure is
				not made in writing, failing to give or send a written disclosure at or before
				the completion of the transaction;
(K) 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; or
				entering into an underwriting or selling group agreement which establishes
				unfair or unreasonable terms and conditions or compensation;
(L) Establishing fictitious accounts in order
				to execute transactions which would otherwise be prohibited;
(M) Entering into agreements for selling
				concessions, discounts, commissions or allowances as consideration for services
				in connection with the distribution or sale of a commodity or security in
				Missouri to any unregistered broker-dealer or sales representative, or dividing
				or otherwise splitting the sales representative's commissions, profits or other
				compensation from the purchase or sale of commodities or securities with any
				person not also registered as a sales representative for the same
				broker-dealer, or for a broker-dealer under direct or common control unless
				such person is not required to be registered in order to engage in the
				commodities or securities business in Missouri;
(N) Operating a commodities or 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 provisions concerning use, commingling or hypothecation of
				commodities or securities;
(O)
				Failing or refusing to furnish a customer, upon reasonable request, information
				to which s/he is entitled, or to respond to a formal written demand or
				complaint;
(P) Extending, arranging
				for or participating in arranging for credit to a customer in violation of the
				regulations of the Commodity Futures Trading Commission (CFTC), Securities and
				Exchange Commission (SEC) or the regulations of the Federal Reserve
				Board;
(Q) Executing any
				transaction in a margin account without securing from the customer a properly
				executed written margin agreement, including, but not limited to, written
				authorization for the existence of such an account, within ten (10) days after
				the initial transaction in the account;
(R) Hypothecating a customer's commodities or
				securities without having a lien on the commodities or securities unless the
				broker-dealer secures from the customer a properly executed written consent
				except as permitted by rules of the CFTC or SEC;
(S) Charging unreasonable and inequitable
				fees for services performed, including miscellaneous services such as
				collection of moneys due for principal, dividends or interest, exchange or
				transfer of commodities or securities, appraisals, safekeeping or custody of
				commodities or securities and other services related to its commodities or
				securities business;
(T) Offering
				to buy from or sell to any person any commodity or security at a stated price
				unless the applicant or registrant is prepared to purchase or sell, as the case
				may be, at a price and under conditions as are stated at the time of the offer
				to buy or sell;
(U) Effecting any
				transaction in or inducing the purchase or sale of any commodity or security by
				means of a manipulative, deceptive or fraudulent device, practice, plan,
				program, design or contrivance including, but not limited to:
1. Effecting any transaction in a commodity
				or security which involves no change in the beneficial ownership; and
2. Effecting, alone or with one (1) or more
				other persons, a transaction or series of transactions in any commodity or
				security creating actual or apparent active trading in the commodity or
				security or raising or depressing the price of the commodity or security for
				the purpose of inducing the purchase or sale of the commodity or security by
				others;
(V) Publishing
				or 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
				commodity or security unless the applicant or registrant believes that the
				transaction was a bona fide purchase or sale of the commodity or security; or
				which purports to quote the bid or asked price for any commodity or security,
				unless the applicant or registrant believes that the quotation represents a
				bona fide bid for, or offer of, the commodity or security; or using any
				advertising or sales material in such a fashion as to be deceptive or
				misleading, such as the distribution of any nonfactual datum, 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;
(W) Borrowing of money, commodities or
				securities from a customer by a sales representative, or for a sales
				representative to act as a custodian for money, commodities or securities or an
				executed stock power of a customer;
(X) Sharing, by a sales representative,
				directly or indirectly in profits or losses in the account of any customer
				without the written authorization of the customer and the broker-dealer a sales
				representative represents; and
(Y)
				Effecting commodities or securities transactions not recorded on the regular
				books or records of the broker-dealer the sales representative represents,
				unless the transactions are authorized in writing by the broker-dealer prior to
				the execution of the transaction.