Court Opinion

ID: 3266332
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:34:52.42929+00
Date Added: 2024-06-11T14:00:01.506081
License: Public Domain

The Honorable Michael Lamoureux State Representative 312 West Main Street Russellville, Arkansas 72801-3727
Dear Representative Lamoureux:
I am writing in response to your request for an opinion on the following question concerning a "registration issue under Section23-42-302 of the Arkansas Securities Act (effective August 13, 2001)."1 Specifically, you pose the following question:
  If a currently registered Arkansas Broker/Dealer submits, to the Commissioner's Designee, a properly completed representative's application (for an applicant who has passed all required exams) together with the appropriate fee, would such applicant be a registered representative, under the act, on the thirtieth day following submission, if no denial order is in effect and no proceedings are pending?
RESPONSE
In my opinion the answer to this question is "no," the registration does not become effective thirty days after "submission," but becomes effective (unless the Commissioner determines an earlier effective date), thirty days after the application is "completed." The language of A.C.A. § 23-43-302, as well as the Rules and Regulations of the Arkansas Securities Commissioner, make clear that submission of the application is not synonymous with the application being "completed."
The applicable statute provides in pertinent part as follows:
  (a) A broker-dealer, agent, investment adviser, or representative may obtain an initial or renewal registration by filing with the Securities Commissioner or the commissioner's designee an application and fee, together with a consent to service of process pursuant to § 23-42-107(a).
* * *
  (c) The application shall contain whatever information the commissioner by rule requires concerning such matters as:
(1) The applicant's form and place of organization;
  (2) The applicant's proposed method of doing business;
  (3) The qualifications, disciplinary history, and business history of the applicant . . .
  (4) Any investigation, proceeding, order, injunction, arrest, or conviction of any felony or misdemeanor; and
(5) The applicant's financial condition and history.
  (d) The commissioner may provide for a written examination to be taken by each class of applicants to be used as one (1) of the bases in determining an applicant's qualifications to be registered. . . .
  (e) The commissioner is authorized to conduct an investigation in order that he may determine the fitness of any applicant. Each applicant shall pay to the commissioner an investigation fee, and the amount of each fee shall be determined on the same basis as is the examination fee required of broker-dealers under § 23-42-306(d).
 (f) If no denial order is in effect or no proceeding is pending under § 23-42-308, registration becomes effective on the thirtieth day after the application is completed. The commissioner may determine an earlier effective date upon review of the application.
  (g) Applications which have not been completed within a period of one hundred eighty (180) days after filing with the commissioner may be deemed abandoned and considered withdrawn by the applicant, provided the applicant has been notified of the deficiencies to the application and afforded a reasonable opportunity to correct such deficiencies.
  (h) A registered broker-dealer, investment adviser, or person required to make a notice filing pursuant to § 23-42-301(c)(1) may file an application for registration or notice filing of a successor, whether or not the successor is then in existence. Such application or notice filing shall comply with the requirements for an initial application or notice filing.
A.C.A. § 23-42-302 (Emphasis added).
Under the statute, it appears that the date of submission of the application is not synonymous with the date the application is "completed." In my opinion this is apparent from the fact that an "investigation" is contemplated, and from a review of subsection (g) above, which addresses applications that have not been "completed" within one-hundred and eighty days of "filing." Obviously, therefore, the statute does not treat the action of "filing" an application as necessarily being coterminous with the application being "completed." If this had been the intention the legislature could have easily stated that the registration becomes effective on the thirtieth day after submission orfiling. Your question makes reference to the submission of a "properly completed representative's application." The question of whether an application is "properly completed" may not, in my opinion, based upon the foregoing, be determined by the applicant at the time of submission, but requires a determination by the Commissioner.
The applicable rules and regulations promulgated to enforce the statute above are also instructive on the question. For purposes of application of these rules, I assume your question has reference to the agent of a broker-dealer (sometimes referred to as representative), and not to an investment adviser or investment adviser representative. With regard to broker/dealers or agents, Rule 302.01(B) of the "Rules of the Arkansas Securities Commissioner" (available atwww.securities.arkansas.gov) provides in pertinent part that "Each filing for initial and renewal registration shall be complete only if it contains information set forth in Sections23-42-302 through -305 of the Act in the manner prescribed by the Commissioner." Rule 302.01(B)(2)(a), regarding initial agent applications for registered broker/dealers, provides as follows:
  Initial agent applications for a broker-dealer registered or to be registered with the NASD ["National Association of Securities Dealers, Inc. (see Rule 102.01 (17)] must be submitted directly to the CRD ["Central Registration Depository"] system on a Uniform Application Form U-4 along with the initial agent registration fee as set forth in Section 23-42-304 of the Act.
Rule 302.01(D) addresses the effective date of the registration, as follows:
  EFFECTIVE AND POST-EFFECTIVE REGISTRATION REQUIREMENTS. Upon completion of the application,
compliance with the examination(s) requirement, payment of the fees and acceptance by the Commissioner, initial registration will become effective.
  1. For purposes of this section, those broker-dealers who are eligible and choose to do so may use NASAA/NASD Central Registration Depository ("CRD"). Upon filing the completed application as set forth in Rule 302.01B the Commissioner will either accept such application or notify the applicant of the matters still to be resolved.
  2. Notification by either the CRD system or the Commissioner will be given to each broker-dealer evidencing the broker-dealer and each agent's registration. . . .
(Emphasis added).
This rule requires more than submission of the application and the expiration of 30 days prior to the "completion of the application." In addition to the items you mention, it requires the "completion" of the application and acceptance by the Commissioner.
In my opinion, therefore, in response to your question, the answer is "no," registration under A.C.A. § 23-42-302 does not become effective thirty days after "submission," but, rather, unless approved earlier by the Commissioner, becomes effective thirty days after the application is "completed." The Rules and Regulations of the Commissioner also require acceptance by the Commissioner prior to the effectiveness of the registration.
Deputy Attorney General Elana C. Wills prepared the foregoing opinion, which I hereby approve.
Sincerely,
MIKE BEEBE Attorney General
MB:ECW/cyh
1 Your reference to the effective date of August 13, 2001 is unclear. The statute at issue was originally adopted in 1959 and last amended in 1997. See A.C.A. § 23-42-302 ("History").