Washington Administrative Code › Title 460 - Financial Institutions, Department of (Securities Division) › Chapter 460-21B - Broker-dealer practices › Section 460-21B-060 - Dishonest or unethical business practices - Broker-dealers

Current through Register Vol. 24-14, July 15, 2024
The phrase "dishonest or unethical practices" as used in
				RCW
				 21.20.110(1)(g) as applied
				to broker-dealers is hereby defined to include any of the following:
(1) Engaging in a pattern of unreasonable and
			 unjustifiable delays in the delivery of securities purchased by any of its
			 customers and/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
			 which is excessive in size or frequency in view of the financial resources and
			 character of the account;
(3)
			 Recommending to a customer to purchase, sell or exchange 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, financial situation and 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) 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;
(6) Executing any
			 transaction in a margin account without securing from the customer a properly
			 executed written margin agreement promptly after the initial transaction in the
			 account;
(7) Failing to segregate
			 customers' free securities or securities held in safekeeping;
(8) Hypothecating a customer's securities
			 without having a lien thereon unless the broker-dealer secures from the
			 customer a properly executed written consent promptly after the initial
			 transaction, except as permitted by rules of the securities and exchange
			 commission;
(9) 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;
(10) Failing to furnish to
			 a customer purchasing securities in an offering, no later than the date of
			 confirmation of the transaction, a final or preliminary prospectus, and if the
			 latter, failing to furnish a final prospectus within a reasonable period after
			 the effective date of the offering;
(11) 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 securities, appraisals, safekeeping, or custody of securities and
			 other services related to its securities business;
(12) 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;
(13) 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/she is acting or with whom he/
			 she is associated in such distribution, or any person controlled by,
			 controlling or under common control with such broker-dealer;
(14) 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 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;
			 provided, however, nothing in this subsection shall prohibit a broker-dealer
			 from entering bona fide agency cross transactions for its customer;
(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;