Quick Answer
Denying, suspending, or revoking a registration always requires both a public-interest finding and a specific statutory ground. A disclosed final order limits suspension or revocation to 90 days after registration. Summary actions skip the hearing but require notice, reasons, and a hearing within 15 days of request; cancellation and withdrawal are separate, non-disciplinary paths.
The administrator has the power to deny, suspend, or revoke registrations for both persons and securities under the Uniform Securities Act (USA). Two non-disciplinary actions also exist: cancellation and withdrawal.
What Is the Two-Part Test for Denial, Suspension, or Revocation?
Both conditions must be present. It is not enough to have grounds alone:
- Public interest: The action must be in the public interest, AND
- Specific statutory ground: At least one ground must exist
The administrator cannot act on public interest alone without a triggering ground, and cannot act on a ground alone without a public interest finding. Both prongs are required.
What Are the Grounds for Denial, Suspension, or Revocation?
| Ground | Key Details |
|---|---|
| Misleading application | Application was incomplete in any material respect or contained false/misleading statements |
| Willful violation | Willfully violated or failed to comply with the USA, Securities Act of 1933, Securities Exchange Act of 1934, Investment Advisers Act of 1940, Investment Company Act of 1940, or Commodity Exchange Act |
| Criminal conviction | Convicted within the past 10 years of any misdemeanor involving a security or securities business, or any felony |
| Enjoined | Permanently or temporarily enjoined from engaging in securities business |
| Subject to state order | Subject to another Administrator's order denying, suspending, or revoking registration |
| Other jurisdiction action | Subject to an adjudication within the past 10 years by another state or federal regulator for willful violations |
| Unethical practices | Engaged in dishonest or unethical practices in the securities business |
| Insolvency | Liabilities exceed assets or cannot meet obligations as they mature |
| Foreign violation | Willfully violated foreign jurisdiction securities/banking laws, or subject to foreign regulatory action within past 5 years |
| Not qualified | Not qualified based on training, experience, and knowledge |
| Failure to supervise | Failed reasonably to supervise agents (broker-dealer) or investment adviser representatives (IARs) |
| Unpaid filing fee | Failed to pay proper filing fee (denial only; vacated when corrected) |
Exam Tip: Gotchas
- Felony conviction of any type (not just securities-related) within the past 10 years is grounds for denial, but for misdemeanors, only those involving securities or the securities business qualify. A misdemeanor DUI would NOT be grounds; a misdemeanor for petty theft from a client WOULD be.
- Lack of experience alone cannot be the sole basis for denial if the applicant is qualified by training or knowledge. The Administrator must consider that agents supervised by a registered broker-dealer need not have the same qualifications as the broker-dealer itself.
What Is the 90-Day Rule?
An applicant who discloses a skeleton in the closet should not have it used against them a year later. So once registration is effective, the Administrator has a limited window to act on what the applicant disclosed:
The Administrator may not institute a suspension or revocation proceeding based solely on a final judicial or administrative order the applicant disclosed before the effective date, unless the proceeding is instituted within 90 days following registration.
All of these must line up for the time-bar to apply:
| Condition | Requirement |
|---|---|
| Type of proceeding | Suspension or revocation (a denial is not covered; the registration is already effective) |
| Type of basis | A final judicial or administrative order, not facts or conduct generally |
| Who disclosed it | The applicant made it known to the Administrator before the effective date |
| Sole basis | The proceeding rests on nothing else |
| Elapsed time | More than 90 days have passed since registration |
If any piece is missing, the bar does not apply:
- Not final: An order that is stayed or subject to further review or appeal is not a "final" order, so it never starts the clock.
- Not disclosed by the applicant: The bar protects disclosure. An order the Administrator dug up independently, or facts the applicant concealed, are not covered.
- Mixed basis: If the proceeding also rests on other 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.
Exam Tip: Gotchas
- 90 days for persons, 30 days for securities. The Administrator gets 90 days to move against a person's registration on a disclosed final order. The 30-day window belongs to the separate stop-order rule for securities registrations. Same idea, different number, different trigger. Mixing them up is the classic trap.
- The triggers differ too. The 90-day person rule turns on a final order the applicant disclosed. The 30-day stop-order rule turns on a fact or transaction known to the Administrator when the registration statement became effective. Broader trigger, shorter window.
- The bar reaches suspension and revocation only. Denial is not on the list, which makes sense: the window opens at registration, so there is nothing left to deny.
- "Solely" matters. The bar applies only when the proceeding rests entirely on the disclosed final order. Any other ground removes the time restriction.
- A stayed or appealable order is not final, so the applicant cannot start the clock by disclosing one.
What Happens During a Summary (Emergency) Action?
The administrator may summarily postpone or suspend registration without a prior hearing.
After a summary action, the administrator must:
- Promptly notify the applicant/registrant and the employer (if agent or IAR)
- State the reasons for the action
- Set the matter for hearing within 15 days of receiving a written request
- If no hearing is requested and none ordered, the summary order remains in effect until modified or vacated
Exam Tip: Gotchas
- A cease and desist order can be issued without a prior hearing. But a denial, suspension, or revocation requires prior notice, hearing opportunity, and written findings, UNLESS it is a summary (emergency) action, which is temporary pending a full hearing.
When Can the Administrator Cancel a Registration?
The administrator may cancel (not revoke) a registration if the registrant:
- Is no longer in existence or has ceased doing business
- Is subject to an adjudication of mental incompetence
- Cannot be located after reasonable search
Cancellation is non-disciplinary and carries no bar on future re-registration.
How Does Withdrawal From Registration Work?
| Item | Rule |
|---|---|
| Who initiates | The registrant (voluntary) |
| Effective date | 30 days after receipt of the application (or sooner if Administrator determines) |
| Pending proceedings | If a revocation/suspension proceeding is pending when withdrawal is filed, withdrawal becomes effective only on the Administrator's terms |
| Post-withdrawal jurisdiction | Administrator may still institute proceedings on the willful-violation ground within 1 year after withdrawal becomes effective |
What Due Process Is Required Before an Order?
No order may be entered (except summary suspension) without:
- Prior notice to the applicant/registrant (and employer if applicable)
- Opportunity for hearing
- Written findings of fact and conclusions of law
What Should You Check on Exam Day?
- Both prongs are always required: a public-interest finding, plus at least one listed statutory ground. Neither prong alone is enough
- A felony of any type counts within 10 years; a misdemeanor only counts if it involves securities or the securities business
- Lack of experience alone cannot be the sole basis for denial if the applicant is otherwise qualified by training or knowledge
- The 90-day rule blocks suspension or revocation based solely on a final order the applicant disclosed before the effective date; it does not apply to denial or to renewal registrations, and a stayed or appealable order is not "final"
- Summary (emergency) actions skip the prior hearing, but the Administrator must promptly notify the person, state reasons, and set a hearing within 15 days of a written request
- Cancellation is non-disciplinary (entity gone, incompetence, cannot be located) and carries no bar on future re-registration; it is different from revocation
- Withdrawal becomes effective 30 days after the application is received, but a pending revocation or suspension proceeding controls, and the Administrator can still act on the willful-violation ground within 1 year after withdrawal
- Except for summary suspension, every order requires prior notice, a hearing opportunity, and written findings of fact and conclusions of law