Quick Answer
The state Administrator may deny, suspend, revoke, bar, censure, or restrict a broker-dealer (BD) registration on a statutory ground plus a public-interest finding, or cancel it for non-punitive reasons like the firm ceasing to exist. Every order needs prior notice, a hearing opportunity, and written findings, except a summary postponement or suspension pending a proceeding.
With registration requirements understood, the next question is: what can go wrong? The state Administrator has broad authority to take action against a broker-dealer's (BD's) registration. That authority comes with procedural safeguards.
What Actions Can the Administrator Take?
- Deny, suspend, or revoke a BD's registration
- Bar or censure a registrant, or an officer, director, or partner of a registrant, from employment with a registered BD or investment adviser
- Restrict or limit a registrant as to any function or activity of the business for which registration is required
- Cancel a registration or application (non-punitive administrative cleanup, covered separately below)
- Denial, suspension, revocation, bar, censure, and restriction are all disciplinary actions and must be in the public interest. Cancellation has no public-interest element
- The Administrator must provide prior notice, an opportunity for hearing, and written findings of fact and conclusions of law before issuing a final order. All three. The single carve-out is a summary postponement or suspension pending final determination of a proceeding, not an "emergency"
Key point: The "public interest" standard is required for every disciplinary action (denial, suspension, revocation, restriction, bar, censure). It is not an element of cancellation.
What Are the Grounds for Denial, Revocation, or Suspension?
The Administrator may act against a registration on any of the following grounds:
| Ground | Details |
|---|---|
| Filing deficiencies | Incomplete, misleading, or materially inaccurate registration application |
| Felony conviction | Any felony conviction within the past 10 years |
| Securities-related misdemeanor | Conviction of a misdemeanor involving a security or any aspect of the securities business within the past 10 years |
| Injunction | Permanently or temporarily enjoined by a court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business |
| Prior order of this Administrator | Subject to an order of this state's Administrator denying, suspending, or revoking registration as a BD, agent, investment adviser, or investment adviser representative |
| Adjudication by another state | An adjudication or determination, after notice and opportunity for hearing, within the past 10 years, by another state's securities or commodities agency or administrator (or a court of competent jurisdiction) that the person willfully violated the Securities Act of 1933, Securities Exchange Act of 1934, Investment Advisers Act of 1940, Investment Company Act of 1940, Commodity Exchange Act, or another state's securities or commodities law |
| Foreign action | Willful violation of foreign securities or banking law, or within the past 5 years a foreign regulator's denial, revocation, or suspension of registration, or a foreign exchange or self-regulatory organization's suspension or expulsion |
| Violation of the Act or a federal act | Willful violation of, or willful failure to comply with, the Uniform Securities Act (USA) or a predecessor act, or any rule or order under either, or any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or the Commodity Exchange Act. The federal acts are reached directly here: no other state's adjudication is needed, and no 10-year lookback applies |
| Dishonest or unethical conduct | Engaging in dishonest or unethical practices in the securities business |
| Insolvency | The BD is insolvent (liabilities exceed assets, or unable to meet obligations as they mature). The proviso: the Administrator may not enter an order against a broker-dealer or investment adviser under this ground without a finding of insolvency as to the firm itself. A partner's, officer's, or director's personal insolvency is not enough |
| Lack of qualifications | Not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided below. Lack of experience alone is never enough: the Administrator may not enter an order solely on that basis if the person is qualified by training or knowledge or both. The Administrator also may not act against a BD for the lack of qualification of anyone other than the BD itself (if an individual) or its agent |
| Failure to supervise | Failure to reasonably supervise agents or employees (the wording for a broker-dealer; for an investment adviser it is adviser representatives or employees) to assure their compliance with the Act |
| Failure to pay the filing fee | Failure to pay the proper filing fee. This ground supports a denial order only, never suspension or revocation, and the Administrator must vacate the order once the deficiency is corrected |
Exam Tip: Gotchas
- Non-securities misdemeanors are NOT grounds for action. Only felonies and securities-related misdemeanors within the past 10 years qualify. A traffic offense or other non-securities misdemeanor alone is not enough.
- The 10-year lookback applies to both felonies and securities-related misdemeanors. Convictions older than 10 years are not grounds for denial or revocation.
What Is the 90-Day Rule?
After registration becomes effective, the Administrator's ability to bring a proceeding based on a disclosed prior order is limited:
The Administrator may not institute a suspension or revocation proceeding based solely on a final judicial or administrative order that the applicant made known to the Administrator before the effective date of registration, unless the proceeding is instituted within 90 days following registration.
Two conditions must both be present for the bar to apply:
| Condition | Requirement |
|---|---|
| Disclosed final order | The applicant itself disclosed a final judicial or administrative order to the Administrator before registration became effective |
| Elapsed time | More than 90 days have passed since registration |
Note what the bar does not reach:
- Denial is not covered. The bar applies only to suspension and revocation proceedings. Nothing in this provision limits a denial.
- A stayed or appealable order is not "final." An order that is stayed or subject to further review or appeal is not a "final judicial or administrative order," so it never triggers the bar.
- Undisclosed facts: The bar reaches only orders the applicant disclosed. If the Administrator learns of a prior order some other way, or discovers pre-registration conduct after effectiveness, there is no time-bar.
- Mixed basis: If the proceeding also rests on post-registration conduct or other grounds (not solely the disclosed final order), the bar does not apply.
- Renewal registrations: The 90-day limitation does not apply to renewal registrations.
Why the rule exists: It prevents the Administrator from letting a registration take effect despite an order the applicant openly disclosed, letting the registrant rely on it and build their business, and then suspending or revoking it months or years later on that same disclosed order. When the applicant has put the order on the table, prompt action is required.
Exam Tip: Gotchas
- The number is 90 days, not 30. The 30-day figure belongs to stop orders on securities registrations, which is a different rule with a different trigger (any fact or transaction known to the Administrator at effectiveness). Do not mix the two.
- The trigger is a final order the applicant disclosed, not "facts the Administrator knew." If the Administrator happened to know something the applicant never disclosed, the 90-day bar does not apply at all.
- Suspension and revocation only. The bar says nothing about denial, and it says nothing about stayed or appealable orders (those are not "final").
- "Solely" matters. The bar applies only when the proceeding rests entirely on that disclosed final order. Any other ground removes the time restriction.
How Does Cancellation Differ from Revocation?
This distinction appears frequently on the exam:
| Action | Nature | When Used |
|---|---|---|
| Cancellation | Non-punitive | The registrant or applicant for registration is no longer in existence, has ceased doing business, is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search |
| Revocation | Punitive (disciplinary) | Based on misconduct or other grounds listed above |
- Cancellation is administrative cleanup; the firm is simply gone or unreachable
- Revocation is a consequence of wrongdoing
Exam Tip: Gotchas
- Gone, unreachable, or legally incapacitated = cancellation, not revocation. If a BD has gone out of business and cannot be found, the Administrator cancels (not revokes) the registration. Cancellation is non-punitive; revocation is reserved for misconduct.
- Mental incompetence is a cancellation trigger, not a disciplinary one. A registrant adjudicated mentally incompetent, or placed under a committee, conservator, or guardian, gets cancelled. Nothing was done wrong, so revocation would be the wrong answer.
What Happens When a BD Withdraws Its Registration?
A BD may voluntarily leave the securities business through withdrawal:
- File an application to withdraw from registration
- Withdrawal becomes effective 30 days after receipt of the application, or a shorter period the Administrator determines, unless a revocation or suspension proceeding is pending when the application is filed, or a proceeding to revoke, suspend, or impose conditions is instituted within 30 days after the application is filed
- If a proceeding is pending or is instituted, withdrawal becomes effective at the time and on the conditions the Administrator sets by order
- Even if withdrawal takes effect cleanly, the Administrator may institute a revocation or suspension proceeding within 1 year after it became effective, for willful violations only, and may enter the order as of the last date on which registration was effective
Key point: A broker-dealer (BD) cannot escape enforcement by withdrawing. The Administrator can hold the withdrawal while a proceeding is pending, and retains a 1-year reach even after a clean withdrawal.
Exam Tip: Gotchas
- Withdrawal is not effective immediately. The default is 30 days, though the Administrator may allow a shorter period, and the Administrator can block it if a proceeding is pending or is started within 30 days of filing.
- A clean withdrawal is not the end of it. If the withdrawal took effect and the Administrator later discovers willful violations, there is still a 1-year window to revoke or suspend, backdated to the last date registration was effective. "The firm withdrew, so nothing can be done" is a wrong answer inside that year.
What Procedural Protections Apply?
The Uniform Securities Act builds in safeguards to prevent arbitrary government action:
- Prior notice required before any final action
- Opportunity for hearing must be provided
- Written findings of fact and conclusions of law must accompany the order
- Disciplinary actions must be in the public interest
- Summary action is the only carve-out: the Administrator may summarily postpone or suspend a registration pending final determination of a proceeding. The trigger is a pending proceeding, not an emergency or urgency. After entering the order the Administrator must promptly notify the applicant or registrant and state the reasons for the order, and once a written request for a hearing is received the matter must be set down for hearing within 15 days. If no hearing is requested and none is ordered, the order simply stays in effect until modified or vacated
Exam Tip: Gotchas
- Insolvency alone is grounds for action. The BD does not need to have committed fraud; being unable to meet obligations is enough.
- Disciplinary actions require public interest; every order (including cancellation) requires prior notice, opportunity for hearing, and written findings of fact and conclusions of law, the only exception being a summary postponement or suspension pending final determination.
What Should You Check on Exam Day?
- Separate the Administrator's five disciplinary powers (deny, suspend, revoke, bar/censure, restrict/limit) from cancellation. Disciplinary powers need public interest plus a ground; cancellation needs neither.
- Confirm the 10-year lookback applies only to felonies and securities-related misdemeanors, and that the 90-day time-bar applies only to suspension or revocation based solely on a disclosed final order.
- On a cancellation-versus-revocation fact pattern, ask whether the firm did something wrong (revocation) or simply vanished, closed, or became incapacitated (cancellation).
- On a withdrawal fact pattern, check whether a proceeding is pending or started within 30 days, and remember the 1-year reach for willful violations even after a clean withdrawal.