Administrative Actions

The administrator has the power to deny, suspend, or revoke registrations for both persons and securities under the Uniform Securities Act (USA), and to bar, censure, or restrict a registrant under the same authority. Two non-disciplinary actions also exist: cancellation and withdrawal.

What Orders Can the Administrator Issue Under This Authority?

The same statutory grant covers three kinds of orders, not just denial, suspension, and revocation:

1. Deny, suspend, or revoke a registration
2. Bar or censure a registrant, or any officer, director, partner, or person occupying a similar status or performing similar functions for a registrant, from employment with a registered broker-dealer or investment adviser
3. Restrict or limit a registrant as to any function or activity of the business for which registration is required

All three order types rest on the same two-part test.

What Is the Two-Part Test for These Orders?

Both conditions must be present. It is not enough to have grounds alone:

1. Public interest: The action must be in the public interest, AND
2. 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 These Orders?

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.
• Only the firm's own insolvency counts against a broker-dealer or investment adviser. If a broker-dealer is solvent but one of its agents is personally insolvent, that agent's insolvency is grounds against the agent, but it is NOT grounds against the broker-dealer.
• Only the firm's own qualifications (or its agents'/IARs') count against a broker-dealer or investment adviser. For a broker-dealer, that means the broker-dealer itself (if an individual) or its agents. For an investment adviser, that means the adviser itself (if an individual) or its investment adviser representatives. A limited partner who supplies capital but performs no securities function cannot be the basis for a "not qualified" order against the firm.

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:

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:

1. Promptly notify the applicant/registrant and the employer (if agent or IAR)
2. State the reasons for the action
3. Set the matter for hearing within 15 days of receiving a written request
4. 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, or is placed under the control of a committee, conservator, or guardian
• Cannot be located after reasonable search

Cancellation is non-disciplinary and carries no bar on future re-registration.

How Does Withdrawal From Registration Work?

Exam Tip: Gotchas

• Two separate ways the Administrator can control withdrawal timing, not one. The proceeding does not have to already be pending on the day the withdrawal is filed. The Administrator can also start a NEW proceeding to revoke, suspend, or impose conditions within 30 days after the application is filed, and that new proceeding controls the withdrawal's timing just the same. Only if neither happens does the 30-day automatic effective date apply, and even then the 1-year willful-violation window still lies in wait.

What Due Process Is Required Before an Order?

No order may be entered (except summary suspension) without:

1. Prior notice to the applicant/registrant (and employer if applicable)
2. Opportunity for hearing
3. Written findings of fact and conclusions of law

What Should You Check on Exam Day?

• The same authority covers three order types under one two-part test: deny/suspend/revoke a registration; bar or censure a registrant or an officer, director, partner, or similar person from employment with a registered broker-dealer or investment adviser; or restrict or limit a registrant as to any function or activity of the business
• 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
• Against a broker-dealer or investment adviser, only the FIRM's own insolvency is a ground; a partner's, officer's, director's, or controlling person's personal insolvency is not
• Against a broker-dealer or investment adviser, the "not qualified" ground can rest only on the firm itself (if an individual) or its agents/IARs, never on an unrelated person such as a passive limited partner
• 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 or placement under a committee/conservator/guardian, 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 UNLESS a revocation/suspension proceeding is already pending when it is filed, OR the Administrator institutes one within 30 days after filing; either trigger puts the timing on the Administrator's terms, and even a clean withdrawal leaves the Administrator free to act on the willful-violation ground within 1 year
• Except for summary suspension, every order requires prior notice, a hearing opportunity, and written findings of fact and conclusions of law