Agent Conduct Requirements

The final piece of agent regulation covers ongoing conduct obligations: how agents must handle changes in employment and the special rules that apply to Canadian broker-dealer agents.

Employer Notification on Change of Association

When an agent begins or terminates a connection with a broker-dealer or issuer, or begins or terminates the activities that make the person an agent:

• The agent must promptly notify the Administrator
• The broker-dealer or issuer (both old and new employer) must promptly notify the Administrator

This means when an agent switches firms, up to three separate notifications are required:

• Failure to provide prompt notification by any party is a violation of the Act
• The employer files Form U5 (Uniform Termination Notice) to document the termination
• The new employer files the agent's Form U4 to establish the new association

Exam Tip: Gotchas

• Three parties must notify the Administrator when an agent changes firms, not just the agent
• The old employer files Form U5 (termination); the new employer files Form U4 (new association)

Canadian Broker-Dealer Agents

The Uniform Securities Act (USA) provides a special limited registration pathway for agents representing Canadian broker-dealers:

Eligibility

• The agent must represent a Canadian broker-dealer registered under Section 201-A
• The Canadian agent may effect transactions in the state as permitted for the Canadian broker-dealer (BD)

Registration Requirements

The Canadian agent must:

• File an application in the form required by the Canadian jurisdiction where the BD has its head office
• File a consent to service of process
• Be registered in good standing in the Canadian jurisdiction
• Maintain provincial/territorial registration in good standing

Ongoing Obligations

• The Canadian agent must inform the Administrator forthwith (immediately) of any:
  • Criminal action taken against the agent
  • Any finding or sanction involving fraud, theft, deceit, or misrepresentation

Scope of Registration

• Canadian agents are exempt from all requirements of the Act except:
  • The antifraud provisions
  • The specific requirements in Section 201-A
• A Canadian agent's registration may only be denied, suspended, or revoked for:
  • Breach of the antifraud provisions
  • Breach of Section 201-A requirements

Exam Tip: Gotchas

• Canadian BD agents are exempt from most USA requirements, but they are NEVER exempt from the antifraud provisions
• Canadian agents use their home jurisdiction's application form, not the standard Form U4
• "Forthwith" means immediately: Canadian agents must immediately report criminal actions and fraud-related findings
• The Administrator's authority over Canadian agents is limited to antifraud and Section 201-A violations