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

Exam Tip: Gotchas

• Three parties must notify the Administrator when an agent changes firms, not just the agent
• The old employer reports the termination; the new employer reports the 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 the USA's special pathway for Canadian firms
• 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

• A Canadian agent registered under this route is exempt from all requirements of the Act only while acting within the transaction limits of that route (the two permitted categories of person from Canada, institutional business, and anything else the Act separately permits). Step outside those limits and the exemption does not apply. While acting within them, the exemption covers everything except:
  • The antifraud provisions
  • The specific requirements of the Canadian BD pathway (application via home jurisdiction, consent to service of process, good-standing maintenance, immediate reporting of criminal or fraud-related actions)
• A Canadian agent's registration may only be denied, suspended, or revoked for:
  • Breach of the antifraud provisions
  • Breach of the Canadian BD pathway 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 violations and breaches of the Canadian BD pathway requirements

What Should You Check on Exam Day?

• A firm change always triggers three notifications: the agent, the old employer, and the new employer
• Canadian BD agents file through their home jurisdiction, not Form U4, and must stay in good standing there
• "Forthwith" means immediately, not within 30 days like an ordinary Form U4 amendment
• The antifraud provisions apply to Canadian agents even though almost everything else is waived
• Denial, suspension, or revocation of a Canadian agent's registration can rest only on an antifraud breach or a breach of the Canadian pathway's own requirements