IC 23-19-4
Chapter 4. Broker-Dealers, Agents, Investment Advisers,
Investment Adviser Representatives, and Federal Covered
Investment Advisers
IC 23-19-4-1 Broker-dealer registration; exemptions; restrictions on
employment or association; foreign transactions
Sec. 1. (a) It is unlawful for a person to transact business in this
state as a broker-dealer unless the person is registered under this
article as a broker-dealer or is exempt from registration as a
broker-dealer under subsection (b) or (d).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A broker-dealer without a place of business in this state if its
only transactions effected in this state are with:
(A) the issuer of the securities involved in the transactions;
(B) a broker-dealer registered as a broker-dealer under this
article or not required to be registered as a broker-dealer
under this article;
(C) an institutional investor;
(D) a nonaffiliated federal covered investment adviser with
investments under management in excess of one hundred
million dollars ($100,000,000) acting for the account of
others under discretionary authority in a signed record;
(E) a bona fide preexisting customer whose principal place
of residence is not in this state, and the person is registered
as a broker-dealer under the Securities Exchange Act of
1934 or not required to be registered under the Securities
Exchange Act of 1934 and is registered under the securities
act of the state in which the customer maintains a principal
place of residence;
(F) a bona fide preexisting customer whose principal place
of residence is in this state but who was not present in this
state when the customer relationship was established, if:
(i) the broker-dealer is registered under the Securities
Exchange Act of 1934 or not required to be registered
under the Securities Exchange Act of 1934 and is
registered under the securities laws of the state in which
the customer relationship was established and where the
customer had maintained a principal place of residence;
and
(ii) within forty-five (45) days after the customer's first
transaction in this state, the person files an application for
registration as a broker-dealer in this state and a further
transaction is not effected more than seventy-five (75)
days after the date on which the application is filed, or, if
earlier, the date on which the commissioner notifies the
person that the commissioner has denied the application
for registration or has stayed the pendency of the
application for good cause;
(G) not more than three (3) customers in this state during the
previous twelve (12) months, in addition to those customers
specified in clauses (A) through (F) and under clause (H), if
the broker-dealer is registered under the Securities Exchange
Act of 1934 or not required to be registered under the
Securities Exchange Act of 1934 and is registered under the
securities act of the state in which the broker-dealer has its
principal place of business; and
(H) any other person exempted by rule adopted or order
issued under this article.
(2) A person that deals solely in United States government
securities and is supervised as a dealer in government securities
by the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or the Office of Thrift Supervision.
(c) It is unlawful for a broker-dealer, or for an issuer engaged in
offering, offering to purchase, purchasing, or selling securities in this
state, directly or indirectly, to employ or associate with an individual
to engage in an activity related to securities transactions in this state
if the registration of the individual is suspended or revoked or the
individual is barred from employment or association with a
broker-dealer, an issuer, an investment adviser, or a federal covered
investment adviser by an order of the commissioner under this
article, the Securities and Exchange Commission, or a self-regulatory
organization. A broker-dealer or issuer does not violate this
subsection if the broker-dealer or issuer did not know and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from a broker-dealer or issuer and
for good cause, an order under this article may modify or waive, in
whole or in part, the application of the prohibitions of this subsection
to the broker-dealer.
(d) A rule adopted or order issued under this article may permit:
(1) a broker-dealer that is registered in Canada or another
foreign jurisdiction and that does not have a place of business
in this state to effect transactions in securities with or for, or
attempt to effect the purchase or sale of any securities by:
(A) an individual from Canada or another foreign
jurisdiction who is temporarily present in this state and with
whom the broker-dealer had a bona fide customer
relationship before the individual entered the United States;
(B) an individual from Canada or another foreign
jurisdiction who is present in this state and whose
transactions are in a self-directed tax advantaged retirement
plan of which the individual is the holder or contributor in
that foreign jurisdiction; or
(C) an individual who is present in this state, with whom the
broker-dealer customer relationship arose while the
individual was temporarily or permanently resident in
Canada or the other foreign jurisdiction; and
(2) an agent who represents a broker-dealer that is exempt under
this subsection to effect transactions in securities or attempt to
effect the purchase or sale of securities in this state as permitted
for a broker-dealer described in subdivision (1). As added by P.L.27-2007, SEC.23.
IC 23-19-4-2 Agent registration; exemptions; restrictions on employment or
association; restrictions if no affiliation
Sec. 2. (a) It is unlawful for an individual to transact business in
this state as an agent unless the individual is registered under this
article as an agent or is exempt from registration as an agent under
subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who represents a broker-dealer in effecting
transactions in this state limited to those described in Section
15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(h)(2)).
(2) An individual who represents a broker-dealer that is exempt
under section 1(b) or 1(d) of this chapter.
(3) An individual who represents an issuer with respect to an
offer or sale of the issuer's own securities or those of the issuer's
parent or any of the issuer's subsidiaries, and who is not
compensated in connection with the individual's participation
by the payment of commissions or other remuneration based,
directly or indirectly, on transactions in those securities.
(4) An individual who represents an issuer and who effects
transactions in the issuer's securities exempted by IC 23-19-2-2,
other than IC 23-19-2-2(11) and IC 23-19-2-2(14).
(5) An individual who represents an issuer that effects
transactions solely in federal covered securities of the issuer,
but an individual who effects transactions in a federal covered
security under Section 18(b)(3) or 18(b)(4)(D) of the Securities
Act of 1933 (15 U.S.C. 77r(b)(3) or 77r(b)(4)(D)) is not exempt
if the individual is compensated in connection with the agent's
participation by the payment of commissions or other
remuneration based, directly or indirectly, on transactions in
those securities.
(6) An individual who represents a broker-dealer registered in
this state under section 1(a) of this chapter or exempt from
registration under section 1(b) of this chapter in the offer and
sale of securities for an account of a nonaffiliated federal
covered investment adviser with investments under
management in excess of one hundred million dollars
($100,000,000) acting for the account of others under
discretionary authority in a signed record.
(7) An individual who represents an issuer in connection with
the purchase of the issuer's own securities.
(8) An individual who represents an issuer and who restricts
participation to performing clerical or ministerial acts.
(9) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an agent is effective only while the agent
is employed by or associated with a broker-dealer registered under
this article or an issuer that is offering, selling, or purchasing its
securities in this state.
(d) It is unlawful for a broker-dealer, or an issuer engaged in
offering, selling, or purchasing securities in this state, to employ or
associate with an agent who transacts business in this state on behalf
of broker-dealers or issuers unless the agent is registered under
subsection (a) or exempt from registration under subsection (b).
(e) An individual may not act as an agent for more than one (1)
broker-dealer or one (1) issuer at a time, unless the broker-dealer or
the issuer for which the agent acts are affiliated by direct or indirect
common control or are authorized by rule or order under this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-3 Investment adviser registration; exemptions; restrictions on
employment or association
Sec. 3. (a) It is unlawful for a person to transact business in this
state as an investment adviser unless the person is registered under
this article as an investment adviser or is exempt from registration as
an investment adviser under subsection (b).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A person without a place of business in this state that is
registered under the securities act of the state in which the
person has its principal place of business if its only clients in
this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, or broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state if the investment adviser is
registered under the securities act of the state in which the
clients maintain principal places of residence; or
(D) any other client exempted by rule adopted or order
issued under this article.
(2) A person without a place of business in this state if the
person has had, during the preceding twelve (12) months, not
more than five (5) clients that are resident in this state in
addition to those specified under subdivision (1).
(3) Any other person exempted by rule adopted or order issued
under this article.
(c) It is unlawful for an investment adviser, directly or indirectly,
to employ or associate with an individual to engage in an activity
related to investment advice in this state if the registration of the
individual is suspended or revoked or the individual is barred from
employment or association with an investment adviser, federal
covered investment adviser, or broker-dealer by an order under this
article, the Securities and Exchange Commission, or a self-regulatory
organization, unless the investment adviser did not know, and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from the investment adviser and for
good cause, the commissioner, by order, may waive, in whole or in
part, the application of the prohibitions of this subsection to the
investment adviser.
(d) It is unlawful for an investment adviser to employ or associate
with an individual required to be registered under this article as an
investment adviser representative who transacts business in this state
on behalf of the investment adviser unless the individual is registered
under section 4(a) of this chapter or is exempt from registration
under section 4(b) of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-4-4 Investment adviser representative registration; exemptions;
restrictions on conducting business; referrals
Sec. 4. (a) It is unlawful for an individual to transact business in
this state as an investment adviser representative unless the
individual is registered under this article as an investment adviser
representative or is exempt from registration as an investment adviser
representative under subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who is employed by or associated with an
investment adviser that is exempt from registration under
section 3(b) of this chapter or a federal covered investment
adviser that is excluded from the notice filing requirements of
section 5 of this chapter.
(2) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an investment adviser representative is not
effective while the investment adviser representative is not employed
by or associated with an investment adviser registered under this
article or a federal covered investment adviser that has made or is
required to make a notice filing under section 5 of this chapter.
(d) An individual may transact business as an investment adviser
representative for more than one (1) investment adviser or federal
covered investment adviser unless a rule adopted or order issued
under this article prohibits or limits an individual from acting as an
investment adviser representative for more than one (1) investment
adviser or federal covered investment adviser.
(e) It is unlawful for an individual acting as an investment adviser
representative, directly or indirectly, to conduct business in this state
on behalf of an investment adviser or a federal covered investment
adviser if the registration of the individual as an investment adviser
representative is suspended or revoked or the individual is barred
from employment or association with an investment adviser or a
federal covered investment adviser by an order under this article, the
Securities and Exchange Commission, or a self-regulatory
organization. Upon request from a federal covered investment
adviser and for good cause, the commissioner, by order issued, may
waive, in whole or in part, the application of the requirements of this
subsection to the federal covered investment adviser.
(f) An investment adviser registered under this article, a federal
covered investment adviser that has filed a notice under section 5 of
this chapter, or a broker-dealer registered under this article is not
required to employ or associate with an individual as an investment
adviser representative if the only compensation paid to the individual
for a referral of investment advisory clients is paid to an investment
adviser registered under this article, a federal covered investment
adviser who has filed a notice under section 5 of this chapter, or a
broker-dealer registered under this article with which the individual
is employed or associated as an investment adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-5 Federal covered investment adviser requirements; exemptions;
filing
Sec. 5. (a) Except with respect to a federal covered investment
adviser described in subsection (b), it is unlawful for a federal
covered investment adviser to transact business in this state as a
federal covered investment adviser unless the federal covered
investment adviser complies with subsection (c).
(b) The following federal covered investment advisers are not
required to comply with subsection (c):
(1) A federal covered investment adviser without a place of
business in this state if its only clients in this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, and broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state; or
(D) other clients specified by rule adopted or order issued
under this article.
(2) A federal covered investment adviser without a place of
business in this state if the person has had, during the preceding
twelve (12) months, not more than five (5) clients that are
resident in this state in addition to those specified under
subdivision (1).
(3) Any other person excluded by rule adopted or order issued
under this article.
(c) A person acting as a federal covered investment adviser, not
excluded under subsection (b), shall file a notice, a consent to service
of process complying with IC 23-19-6-11, and such records as have
been filed with the Securities and Exchange Commission under the
Investment Advisers Act of 1940 required by rule adopted or order
issued under this article and pay the fees specified in section 10(e)
of this chapter.
(d) The notice under subsection (c) becomes effective upon its
filing. As added by P.L.27-2007, SEC.23.
IC 23-19-4-6 Application for initial registration; requirements; amendments;
national criminal history background check for investment adviser
representative; effective date; renewal; conditions and waivers
Sec. 6. (a) A person shall register as a broker-dealer, agent,
investment adviser, or investment adviser representative by filing an
application and a consent to service of process complying with
IC 23-19-6-11, and paying the fee specified in section 10 of this
chapter and any reasonable fees charged by the designee of the
commissioner for processing the filing. The application must contain:
(1) the information or record required for the filing of a uniform
application; and
(2) upon request by the commissioner, any other financial or
other information or record that the commissioner determines
is appropriate.
(b) If the information or record contained in an application filed
under subsection (a) is or becomes inaccurate or incomplete in a
material respect, the registrant shall promptly file a correcting
amendment.
(c) At the time of application for an initial registration as an
investment adviser representative under this article, the
commissioner shall require each applicant to submit fingerprints for
a national criminal history background check (as defined in
IC 10-13-3-12) by the Federal Bureau of Investigation, for use by the
commissioner in determining whether the applicant should be denied
registration under this chapter for any reason set forth in section
12(d) of this chapter. The applicant shall pay any fees or costs
associated with the fingerprints and background check required
under this subsection.
(d) If an order is not in effect and a proceeding is not pending
under section 12 of this chapter, registration becomes effective at
noon on the forty-fifth day after a completed application is filed,
unless the registration is denied. A rule adopted or order issued under
this article may set an earlier effective date or may defer the effective
date until noon on the forty-fifth day after the filing of any
amendment completing the application.
(e) A registration is effective until midnight on December 31 of
the year for which the application for registration is filed. Unless an
order is in effect under section 12 of this chapter, a registration may
be automatically renewed each year by filing such records as are
required by rule adopted or order issued under this article, by paying
the fee specified in section 10 of this chapter, and by paying costs
charged by the designee of the commissioner for processing the
filings.
(f) A rule adopted or order issued under this article may impose
other conditions, not inconsistent with the National Securities
Markets Improvement Act of 1996. An order issued under this article
may waive, in whole or in part, specific requirements in connection
with registration as are in the public interest and for the protection of
investors. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.9.
IC 23-19-4-7 Succession; organization change; name change; change of control
Sec. 7. (a) A broker-dealer or investment adviser may succeed to
the current registration of another broker-dealer or investment
adviser or a notice filing of a federal covered investment adviser, and
a federal covered investment adviser may succeed to the current
registration of an investment adviser or notice filing of another
federal covered investment adviser, by filing as a successor an
application for registration under section 1 or 3 of this chapter or a
notice under section 5 of this chapter for the unexpired portion of the
current registration or notice filing.
(b) A broker-dealer or investment adviser that changes its form of
organization or state of incorporation or organization may continue
its registration by filing an amendment to its registration if the
change does not involve a material change in its financial condition
or management. The amendment becomes effective when filed or on
a date designated by the registrant in its filing. The new organization
is a successor to the original registrant for the purposes of this
article. If there is a material change in financial condition or
management, the broker-dealer or investment adviser shall file a new
application for registration. A predecessor registered under this
article shall stop conducting its securities business other than
winding down transactions and shall file for withdrawal of
broker-dealer or investment adviser registration within forty-five (45)
days after filing its amendment to effect succession.
(c) A broker-dealer or investment adviser that changes its name
may continue its registration by filing an amendment to its
registration. The amendment becomes effective when filed or on a
date designated by the registrant.
(d) A change of control of a broker-dealer or investment adviser
may be made in accordance with a rule adopted or order issued under
this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-8 Termination notice; transfer of employment or association;
temporary registration; prevention or suspension of transfer;
cancellation or termination of registration; reinstatement
Sec. 8. (a) If an agent registered under this article terminates
employment by or association with a broker-dealer or issuer, or if an
investment adviser representative registered under this article
terminates employment by or association with an investment adviser
or federal covered investment adviser, or if either registrant
terminates activities that require registration as an agent or
investment adviser representative, the broker-dealer, issuer,
investment adviser, or federal covered investment adviser shall
promptly file a notice of termination. If the registrant learns that the
broker-dealer, issuer, investment adviser, or federal covered
investment adviser has not filed the notice, the registrant may do so.
(b) If an agent registered under this article terminates employment
by or association with a broker-dealer registered under this article
and begins employment by or association with another broker-dealer
registered under this article, or if an investment adviser
representative registered under this article terminates employment by
or association with an investment adviser registered under this article
or a federal covered investment adviser that has filed a notice under
section 5 of this chapter and begins employment by or association
with another investment adviser registered under this article or a
federal covered investment adviser that has filed a notice under
section 5 of this chapter, then upon the filing by or on behalf of the
registrant, within thirty (30) days after the termination, of an
application for registration that complies with the requirement of
section 6(a) of this chapter and payment of the filing fee required
under section 10 of this chapter, the registration of the agent or
investment adviser representative is:
(1) immediately effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record does not contain a new or amended disciplinary
disclosure within the previous twelve (12) months; or
(2) temporarily effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record contains a new or amended disciplinary disclosure
within the preceding twelve (12) months.
(c) The commissioner may withdraw a temporary registration if
there are or were grounds for discipline as specified in section 12 of
this chapter and the commissioner does so within thirty (30) days
after the filing of the application. If the commissioner does not
withdraw the temporary registration within the thirty (30) day period,
registration becomes automatically effective on the thirty-first day
after filing.
(d) The commissioner may prevent or suspend the effectiveness
of a transfer of an agent or investment adviser representative under
subsection (b)(1) or (b)(2) based on the public interest and the
protection of investors. The commissioner, by order, may also extend
a temporary registration to permit further time to review the
qualifications of an applicant.
(e) If the commissioner determines that a registrant or applicant
for registration is no longer in existence or has ceased to act as a
broker-dealer, agent, investment adviser, or investment adviser
representative, or is the subject of an adjudication of incapacity or is
subject to the control of a committee, conservator, or guardian, or
cannot reasonably be located, a rule adopted or order issued under
this article may require the registration be canceled or terminated or
the application denied. The commissioner may reinstate a canceled
or terminated registration, with or without hearing, and may make the
registration retroactive. As added by P.L.27-2007, SEC.23.
IC 23-19-4-9 Withdrawal of registration
Sec. 9. Withdrawal of registration by a broker-dealer, agent,
investment adviser, or investment adviser representative becomes
effective sixty (60) days after the filing of the application to
withdraw or within any shorter period as provided by rule adopted or
order issued under this article unless a revocation or suspension
proceeding is pending when the application is filed. If a proceeding
is pending, withdrawal becomes effective when and upon such
conditions as required by rule adopted or order issued under this
article. The commissioner may institute a revocation or suspension
proceeding under section 12 of this chapter within one (1) year after
the withdrawal became effective automatically and issue a revocation
or suspension order as of the last date on which registration was
effective if a proceeding is not pending. As added by P.L.27-2007, SEC.23.
IC 23-19-4-10 Fees; transmittal of fee; exception
Sec. 10. (a) A person shall pay a fee of two hundred fifty dollars
($250) when initially filing an application for registration as a
broker-dealer and a fee of one hundred twenty-five dollars ($125)
when filing a renewal of registration as a broker-dealer. If the filing
results in a denial or withdrawal, the commissioner shall retain all of
the fee.
(b) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an agent, a fee of twenty-five
dollars ($25) when filing a renewal of registration as an agent, and
a fee of twenty-five dollars ($25) when filing for a change of
registration as an agent. If the filing results in a denial or withdrawal,
the commissioner shall retain all of the fee.
(c) A person shall pay a fee of one hundred dollars ($100) when
filing an application for registration as an investment adviser and a
fee of fifty dollars ($50) when filing a renewal of registration as an
investment adviser. If the filing results in a denial or withdrawal, the
commissioner shall retain all of the fee.
(d) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an investment adviser
representative, a fee of twenty-five dollars ($25) when filing a
renewal of registration as an investment adviser representative, and
a fee of twenty-five dollars ($25) when filing a change of registration
as an investment adviser representative. If the filing results in a
denial or withdrawal, the commissioner shall retain all of the fee.
(e) A federal covered investment adviser required to file a notice
under section 5 of this chapter shall pay an initial fee of fifty dollars
($50) and an annual notice fee of fifty dollars ($50).
(f) A person required to pay a filing or notice fee under this
section may transmit the fee through or to a designee as a rule or
order provides under this article.
(g) An investment adviser representative who is registered as an
agent under section 2 of this chapter and who represents a person that
is both registered as a broker-dealer under section 1 of this chapter
and registered as an investment adviser under section 3 of this
chapter or required as a federal covered investment adviser to make
a notice filing under section 5 of this chapter is not required to pay
an initial or annual registration fee for registration as an investment
adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-11 Minimum financial requirements; financial reports; amendment;
records; audits or inspections; insurance or posting bond;
supervision; continuing education; compliance reports
Sec. 11. (a) Subject to Section 15(h) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order
issued under this article may establish minimum financial
requirements for broker-dealers registered or required to be
registered under this article and investment advisers registered or
required to be registered under this article.
(b) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222(b) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a(b)), a broker-dealer
registered or required to be registered under this article and an
investment adviser registered or required to be registered under this
article shall file such financial reports as are required by a rule
adopted or order issued under this article. If the information
contained in a record filed under this subsection is or becomes
inaccurate or incomplete in a material respect, the registrant shall
promptly file a correcting amendment.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a):
(1) a broker-dealer registered or required to be registered under
this article and an investment adviser registered or required to
be registered under this article shall make and maintain the
accounts, correspondence, memoranda, papers, books, and other
records required by rule adopted or order issued under this
article;
(2) broker-dealer records required to be maintained under
subdivision (1) may be maintained in any form of data storage
acceptable under Section 17(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78q(a)) if they are readily accessible to the
commissioner; and
(3) investment adviser records required to be maintained under
subdivision (1) may be maintained in any form of data storage
required by rule adopted or order issued under this article.
(d) The records of a broker-dealer registered or required to be
registered under this article and of an investment adviser registered
or required to be registered under this article are subject to such
reasonable periodic, special, or other audits or inspections by a
representative of the commissioner, within or outside this state, as
the commissioner considers necessary or appropriate in the public
interest and for the protection of investors. An audit or inspection
may be made at any time and without prior notice. The commissioner
may copy, and remove for audit or inspection copies of, all records
the commissioner reasonably considers necessary or appropriate to
conduct the audit or inspection. The commissioner may assess a
reasonable charge for conducting an audit or inspection under this
subsection.
(e) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order issued
under this article may require a broker-dealer or investment adviser
that has custody of or discretionary authority over funds or securities
of a customer or client to obtain insurance or post a bond or other
satisfactory form of security in an amount not to exceed fifty
thousand dollars ($50,000). The commissioner may determine the
requirements of the insurance, bond, or other satisfactory form of
security. Insurance or a bond or other satisfactory form of security
may not be required of a broker-dealer registered under this article
whose net capital exceeds, or of an investment adviser registered
under this article whose minimum financial requirements exceed, the
amounts required by rule or order under this article. The insurance,
bond, or other satisfactory form of security must permit an action by
a person to enforce any liability on the insurance, bond, or other
satisfactory form of security if instituted within the time limitations
in IC 23-19-5-9(g).
(f) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), an agent may not have custody of
funds or securities of a customer except under the supervision of a
broker-dealer and an investment adviser representative may not have
custody of funds or securities of a client except under the supervision
of an investment adviser or a federal covered investment adviser. A
rule adopted or order issued under this article may prohibit, limit, or
impose conditions on a broker-dealer regarding custody of funds or
securities of a customer and on an investment adviser regarding
custody of securities or funds of a client.
(g) With respect to an investment adviser registered or required to
be registered under this article, a rule adopted or order issued under
this article may require that information or other records be furnished
or disseminated to clients or prospective clients in this state as
necessary or appropriate in the public interest and for the protection
of investors and advisory clients.
(h) A rule adopted or order issued under this article may require
an individual registered under section 2 or 4 of this chapter to
participate in a continuing education program approved by the
Securities and Exchange Commission and administered by a
self-regulatory organization or, in the absence of such a program, a
rule adopted or order issued under this article may require continuing
education for an individual registered under section 4 of this chapter.
(i) Subject to section 11.5 of this chapter, the commissioner may
annually select as many as twenty-five percent (25%) of all Indiana
home and branch offices of registered broker-dealers for completion
of compliance reports. Subject to section 11.5 of this chapter, each
broker-dealer office that is selected shall file its compliance report
according to rules adopted by the commissioner under this article not
later than forty-five (45) days after being notified of selection under
this subsection. No charges or other examination fees may be
assessed against a registered broker-dealer as a result of the
examination of a compliance report filed under this subsection unless
the examination results in an investigation or examination made
under IC 23-19-6-2(a). As added by P.L.27-2007, SEC.23. Amended by P.L.149-2009,
SEC.1; P.L.156-2009, SEC.22; P.L.1-2010, SEC.94.
IC 23-19-4-11.5 Prohibit selection of broker-dealer for completion of compliance
report in consecutive years; prohibit selection of certain offices
Sec. 11.5. (a) As used in this section, "office of supervisory
jurisdiction" has the meaning set forth in the National Association of
Securities Dealers Conduct Rule 3010(g) (as in effect on January 1,
2009).
(b) A broker-dealer registered or required to be registered under
this article may not be selected for completion of a compliance report
under section 11(i) of this chapter in consecutive years unless the
commissioner has reason to believe that the broker-dealer has
committed a violation of this article.
(c) The commissioner may not select for completion of a
compliance report under section 11(i) of this chapter any office that:
(1) reports to an office of supervisory jurisdiction located
within Indiana;
(2) reflects the address of the office of supervisory jurisdiction
described in subdivision (1) on all of the office's business cards,
stationery, advertisements, and other communications to the
public; and
(3) is included in the definition of branch office under the
National Association of Securities Dealers Conduct Rule
3010(g) because the office:
(A) handles funds or securities as described under the
National Association of Securities Dealers Conduct Rule
3010(g)(2)(A)(ii)(c); or
(B) uses the residential address on all business cards,
stationery, advertisements, or other communications to the
public under the National Association of Securities Dealers
Conduct Rule 3010(g)(2)(A)(ii)(d). As added by P.L.149-2009, SEC.2.
IC 23-19-4-12 Denial, condition, revocation, suspension, or limitation of
registration; censure, bar, or civil penalty for violation; grounds;
examination; procedure
Sec. 12. (a) If the commissioner finds that the order is in the
public interest and subsection (d) authorizes the action, an order
issued under this article may deny an application, or may condition
or limit registration, of an applicant to be a broker-dealer, agent,
investment adviser, or investment adviser representative and, if the
applicant is a broker-dealer or investment adviser, of a partner,
officer, director, or person having a similar status or performing
similar functions, or a person directly or indirectly in control of the
broker-dealer or investment adviser.
(b) If the commissioner finds that the order is in the public interest
and subsection (d) authorizes the action, an order issued under this
article may revoke, suspend, condition, or limit the registration of a
registrant and, if the registrant is a broker-dealer or investment
adviser, of a partner, officer, director, or person having a similar
status or performing similar functions, or a person directly or
indirectly in control of the broker-dealer or investment adviser.
However, the commissioner may not:
(1) institute a revocation or suspension proceeding under this
subsection based on an order issued under a law of another state
that is reported to the commissioner or a designee of the
commissioner more than one (1) year after the date of the order
on which it is based; or
(2) under subsection (d)(5)(A) and (d)(5)(B), issue an order on
the basis of an order issued under the securities act of another
state unless the other order was based on conduct for which
subsection (d) would authorize the action had the conduct
occurred in this state.
(c) If the commissioner finds that the order is in the public interest
and subsection (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(8),
(d)(9), (d)(10), (d)(12), or (d)(13) authorizes the action, an order
under this article may censure, impose a bar, or impose a civil
penalty in an amount not to exceed a maximum of ten thousand
dollars ($10,000) per violation on a registrant, and, if the registrant
is a broker-dealer or investment adviser, a partner, officer, director,
or person having a similar status or performing similar functions, or
a person directly or indirectly in control of the broker-dealer or
investment adviser.
(d) A person may be disciplined under subsections (a) through (c)
if the person:
(1) has filed an application for registration in this state under
this article or the predecessor act within the previous ten (10)
years, which, as of the effective date of registration or as of any
date after filing in the case of an order denying effectiveness,
was incomplete in any material respect or contained a statement
that, in light of the circumstances under which it was made, was
false or misleading with respect to a material fact;
(2) knowingly violated or knowingly failed to comply with this
article or the predecessor act or a rule adopted or order issued
under this article or the predecessor act within the previous ten
(10) years;
(3) has been convicted of a felony or within the previous ten
(10) years has been convicted of a misdemeanor involving a
security, a commodity future or option contract, or an aspect of
a business involving securities, commodities, investments,
franchises, insurance, banking, or finance;
(4) is enjoined or restrained by a court with jurisdiction in an
action instituted by the commissioner under this article or the
predecessor act, a state, the Securities and Exchange
Commission, or the United States from engaging in or
continuing an act, practice, or course of business involving an
aspect of a business involving securities, commodities,
investments, franchises, insurance, banking, or finance;
(5) is the subject of an order, issued after notice and opportunity
for hearing, by:
(A) the securities, depository institution, insurance, or other
financial services regulator of a state or by the Securities and
Exchange Commission or other federal agency denying,
revoking, barring, or suspending registration as a
broker-dealer, agent, investment adviser, federal covered
investment adviser, or investment adviser representative;
(B) the securities regulator of a state or the Securities and
Exchange Commission against a broker-dealer, agent,
investment adviser, investment adviser representative, or
federal covered investment adviser;
(C) the Securities and Exchange Commission or a
self-regulatory organization suspending or expelling the
registrant from membership in the self-regulatory
organization;
(D) a court adjudicating a United States Postal Service fraud
order;
(E) the insurance regulator of a state denying, suspending, or
revoking registration as an insurance agent;
(F) a depository institution regulator suspending or barring
the person from the depository institution business; or
(G) any state regulatory body or organization governing real
estate brokers or sales persons denying, suspending, or
revoking a person's registration or license in the real estate
industry;
(6) is the subject of an adjudication or determination, after
notice and opportunity for hearing, by the Securities and
Exchange Commission, the Commodity Futures Trading
Commission, the Federal Trade Commission, a federal
depository institution regulator, or a depository institution,
insurance, or other financial services regulator of a state that the
person willfully violated 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 securities or commodities law of
a state, or a federal or state law under which a business
involving investments, franchises, insurance, banking, or
finance is regulated;
(7) is insolvent, either because the person's liabilities exceed the
person's assets or because the person cannot meet the person's
obligations as they mature, but the commissioner may not enter
an order against an applicant or registrant under this subdivision
without a finding of insolvency as to the applicant or registrant;
(8) refuses to allow or otherwise impedes the commissioner
from conducting an audit or inspection under section 11(d) of
this chapter or refuses access to a registrant's office to conduct
an audit or inspection under section 11(d) of this chapter;
(9) has failed to reasonably supervise an agent, investment
adviser representative, or other individual, if the agent,
investment adviser representative, or other individual was
subject to the person's supervision and committed a violation of
this article or the predecessor act or a rule adopted or order
issued under this article or the predecessor act within the
previous ten (10) years;
(10) has not paid the proper filing fee within thirty (30) days
after having been notified by the commissioner of a deficiency,
but the commissioner shall vacate an order under this
subdivision when the deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous ten (10) years:
(A) by a court with jurisdiction to have willfully violated the
laws of a foreign jurisdiction under which the business of
securities, commodities, investment, franchises, insurance,
banking, or finance is regulated;
(B) to have been the subject of an order of a securities
regulator of a foreign jurisdiction denying, revoking, or
suspending the right to engage in the business of securities
as a broker-dealer, agent, investment adviser, investment
adviser representative, or similar person; or
(C) to have been suspended or expelled from membership by
or participation in a securities exchange or securities
association operating under the securities laws of a foreign
jurisdiction;
(12) is the subject of a cease and desist order issued by the
Securities and Exchange Commission or issued under the
securities, commodities, investment, franchise, banking,
finance, or insurance laws of a state;
(13) has engaged in dishonest or unethical practices in the
securities, commodities, investment, franchise, banking,
finance, or insurance business within the previous ten (10)
years;
(14) is not qualified on the basis of factors such as training,
experience, and knowledge of the securities business. However,
in the case of an application by an agent for a broker-dealer that
is a member of a self-regulatory organization or by an
individual for registration as an investment adviser
representative, a denial order may not be based on this
subdivision if the individual has successfully completed all
examinations required by subsection (e). The commissioner
may require an applicant for registration under section 2 or 4 of
this chapter who has not been registered in a state within the
two (2) years preceding the filing of an application in this state
to successfully complete an examination; or
(15) is on the most recent tax warrant list supplied to the
commissioner by the department of state revenue.
(e) A rule adopted or order issued under this article may require
that an examination, including an examination developed or
approved by an organization of securities regulators, be successfully
completed by a class of individuals or all individuals. An order
issued under this article may waive, in whole or in part, an
examination as to an individual and a rule adopted under this article
may waive, in whole or in part, an examination as to a class of
individuals if the commissioner determines that the examination is
not necessary or appropriate in the public interest and for the
protection of investors.
(f) The commissioner may suspend or deny an application
summarily; restrict, condition, limit, or suspend a registration; or
censure, bar, or impose a civil penalty on a registrant before final
determination of an administrative proceeding. Upon the issuance of
an order, the commissioner shall promptly notify each person subject
to the order that the order has been issued, the reasons for the action,
and that within fifteen (15) days after the receipt of a request in a
record from the person the matter will be scheduled for a hearing. If
a hearing is not requested and none is ordered by the commissioner
within thirty (30) days after the date of service of the order, the order
becomes final by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend the order until final determination.
(g) An order may not be issued under this section, except under
subsection (f), without:
(1) appropriate notice to the applicant or registrant;
(2) opportunity for hearing; and
(3) findings of fact and conclusions of law in a record.
(h) A person that controls, directly or indirectly, a person not in
compliance with this section may be disciplined by order of the
commissioner under subsections (a) through (c) to the same extent as
the noncomplying person, unless the controlling person did not
know, and in the exercise of reasonable care could not have known,
of the existence of conduct that is a ground for discipline under this
section.
(i) The commissioner may not institute a proceeding under
subsection (a), (b), or (c) based solely on material facts actually
known by the commissioner unless an investigation or the proceeding
is instituted within one (1) year after the commissioner actually
acquires knowledge of the material facts.
(j) All fines and penalties collected under this section shall be
deposited into the securities division enforcement account as
established by IC 23-19-6-1(f). As added by P.L.27-2007, SEC.23.
IC 23-19-4
Chapter 4. Broker-Dealers, Agents, Investment Advisers,
Investment Adviser Representatives, and Federal Covered
Investment Advisers
IC 23-19-4-1 Broker-dealer registration; exemptions; restrictions on
employment or association; foreign transactions
Sec. 1. (a) It is unlawful for a person to transact business in this
state as a broker-dealer unless the person is registered under this
article as a broker-dealer or is exempt from registration as a
broker-dealer under subsection (b) or (d).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A broker-dealer without a place of business in this state if its
only transactions effected in this state are with:
(A) the issuer of the securities involved in the transactions;
(B) a broker-dealer registered as a broker-dealer under this
article or not required to be registered as a broker-dealer
under this article;
(C) an institutional investor;
(D) a nonaffiliated federal covered investment adviser with
investments under management in excess of one hundred
million dollars ($100,000,000) acting for the account of
others under discretionary authority in a signed record;
(E) a bona fide preexisting customer whose principal place
of residence is not in this state, and the person is registered
as a broker-dealer under the Securities Exchange Act of
1934 or not required to be registered under the Securities
Exchange Act of 1934 and is registered under the securities
act of the state in which the customer maintains a principal
place of residence;
(F) a bona fide preexisting customer whose principal place
of residence is in this state but who was not present in this
state when the customer relationship was established, if:
(i) the broker-dealer is registered under the Securities
Exchange Act of 1934 or not required to be registered
under the Securities Exchange Act of 1934 and is
registered under the securities laws of the state in which
the customer relationship was established and where the
customer had maintained a principal place of residence;
and
(ii) within forty-five (45) days after the customer's first
transaction in this state, the person files an application for
registration as a broker-dealer in this state and a further
transaction is not effected more than seventy-five (75)
days after the date on which the application is filed, or, if
earlier, the date on which the commissioner notifies the
person that the commissioner has denied the application
for registration or has stayed the pendency of the
application for good cause;
(G) not more than three (3) customers in this state during the
previous twelve (12) months, in addition to those customers
specified in clauses (A) through (F) and under clause (H), if
the broker-dealer is registered under the Securities Exchange
Act of 1934 or not required to be registered under the
Securities Exchange Act of 1934 and is registered under the
securities act of the state in which the broker-dealer has its
principal place of business; and
(H) any other person exempted by rule adopted or order
issued under this article.
(2) A person that deals solely in United States government
securities and is supervised as a dealer in government securities
by the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or the Office of Thrift Supervision.
(c) It is unlawful for a broker-dealer, or for an issuer engaged in
offering, offering to purchase, purchasing, or selling securities in this
state, directly or indirectly, to employ or associate with an individual
to engage in an activity related to securities transactions in this state
if the registration of the individual is suspended or revoked or the
individual is barred from employment or association with a
broker-dealer, an issuer, an investment adviser, or a federal covered
investment adviser by an order of the commissioner under this
article, the Securities and Exchange Commission, or a self-regulatory
organization. A broker-dealer or issuer does not violate this
subsection if the broker-dealer or issuer did not know and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from a broker-dealer or issuer and
for good cause, an order under this article may modify or waive, in
whole or in part, the application of the prohibitions of this subsection
to the broker-dealer.
(d) A rule adopted or order issued under this article may permit:
(1) a broker-dealer that is registered in Canada or another
foreign jurisdiction and that does not have a place of business
in this state to effect transactions in securities with or for, or
attempt to effect the purchase or sale of any securities by:
(A) an individual from Canada or another foreign
jurisdiction who is temporarily present in this state and with
whom the broker-dealer had a bona fide customer
relationship before the individual entered the United States;
(B) an individual from Canada or another foreign
jurisdiction who is present in this state and whose
transactions are in a self-directed tax advantaged retirement
plan of which the individual is the holder or contributor in
that foreign jurisdiction; or
(C) an individual who is present in this state, with whom the
broker-dealer customer relationship arose while the
individual was temporarily or permanently resident in
Canada or the other foreign jurisdiction; and
(2) an agent who represents a broker-dealer that is exempt under
this subsection to effect transactions in securities or attempt to
effect the purchase or sale of securities in this state as permitted
for a broker-dealer described in subdivision (1). As added by P.L.27-2007, SEC.23.
IC 23-19-4-2 Agent registration; exemptions; restrictions on employment or
association; restrictions if no affiliation
Sec. 2. (a) It is unlawful for an individual to transact business in
this state as an agent unless the individual is registered under this
article as an agent or is exempt from registration as an agent under
subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who represents a broker-dealer in effecting
transactions in this state limited to those described in Section
15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(h)(2)).
(2) An individual who represents a broker-dealer that is exempt
under section 1(b) or 1(d) of this chapter.
(3) An individual who represents an issuer with respect to an
offer or sale of the issuer's own securities or those of the issuer's
parent or any of the issuer's subsidiaries, and who is not
compensated in connection with the individual's participation
by the payment of commissions or other remuneration based,
directly or indirectly, on transactions in those securities.
(4) An individual who represents an issuer and who effects
transactions in the issuer's securities exempted by IC 23-19-2-2,
other than IC 23-19-2-2(11) and IC 23-19-2-2(14).
(5) An individual who represents an issuer that effects
transactions solely in federal covered securities of the issuer,
but an individual who effects transactions in a federal covered
security under Section 18(b)(3) or 18(b)(4)(D) of the Securities
Act of 1933 (15 U.S.C. 77r(b)(3) or 77r(b)(4)(D)) is not exempt
if the individual is compensated in connection with the agent's
participation by the payment of commissions or other
remuneration based, directly or indirectly, on transactions in
those securities.
(6) An individual who represents a broker-dealer registered in
this state under section 1(a) of this chapter or exempt from
registration under section 1(b) of this chapter in the offer and
sale of securities for an account of a nonaffiliated federal
covered investment adviser with investments under
management in excess of one hundred million dollars
($100,000,000) acting for the account of others under
discretionary authority in a signed record.
(7) An individual who represents an issuer in connection with
the purchase of the issuer's own securities.
(8) An individual who represents an issuer and who restricts
participation to performing clerical or ministerial acts.
(9) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an agent is effective only while the agent
is employed by or associated with a broker-dealer registered under
this article or an issuer that is offering, selling, or purchasing its
securities in this state.
(d) It is unlawful for a broker-dealer, or an issuer engaged in
offering, selling, or purchasing securities in this state, to employ or
associate with an agent who transacts business in this state on behalf
of broker-dealers or issuers unless the agent is registered under
subsection (a) or exempt from registration under subsection (b).
(e) An individual may not act as an agent for more than one (1)
broker-dealer or one (1) issuer at a time, unless the broker-dealer or
the issuer for which the agent acts are affiliated by direct or indirect
common control or are authorized by rule or order under this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-3 Investment adviser registration; exemptions; restrictions on
employment or association
Sec. 3. (a) It is unlawful for a person to transact business in this
state as an investment adviser unless the person is registered under
this article as an investment adviser or is exempt from registration as
an investment adviser under subsection (b).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A person without a place of business in this state that is
registered under the securities act of the state in which the
person has its principal place of business if its only clients in
this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, or broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state if the investment adviser is
registered under the securities act of the state in which the
clients maintain principal places of residence; or
(D) any other client exempted by rule adopted or order
issued under this article.
(2) A person without a place of business in this state if the
person has had, during the preceding twelve (12) months, not
more than five (5) clients that are resident in this state in
addition to those specified under subdivision (1).
(3) Any other person exempted by rule adopted or order issued
under this article.
(c) It is unlawful for an investment adviser, directly or indirectly,
to employ or associate with an individual to engage in an activity
related to investment advice in this state if the registration of the
individual is suspended or revoked or the individual is barred from
employment or association with an investment adviser, federal
covered investment adviser, or broker-dealer by an order under this
article, the Securities and Exchange Commission, or a self-regulatory
organization, unless the investment adviser did not know, and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from the investment adviser and for
good cause, the commissioner, by order, may waive, in whole or in
part, the application of the prohibitions of this subsection to the
investment adviser.
(d) It is unlawful for an investment adviser to employ or associate
with an individual required to be registered under this article as an
investment adviser representative who transacts business in this state
on behalf of the investment adviser unless the individual is registered
under section 4(a) of this chapter or is exempt from registration
under section 4(b) of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-4-4 Investment adviser representative registration; exemptions;
restrictions on conducting business; referrals
Sec. 4. (a) It is unlawful for an individual to transact business in
this state as an investment adviser representative unless the
individual is registered under this article as an investment adviser
representative or is exempt from registration as an investment adviser
representative under subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who is employed by or associated with an
investment adviser that is exempt from registration under
section 3(b) of this chapter or a federal covered investment
adviser that is excluded from the notice filing requirements of
section 5 of this chapter.
(2) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an investment adviser representative is not
effective while the investment adviser representative is not employed
by or associated with an investment adviser registered under this
article or a federal covered investment adviser that has made or is
required to make a notice filing under section 5 of this chapter.
(d) An individual may transact business as an investment adviser
representative for more than one (1) investment adviser or federal
covered investment adviser unless a rule adopted or order issued
under this article prohibits or limits an individual from acting as an
investment adviser representative for more than one (1) investment
adviser or federal covered investment adviser.
(e) It is unlawful for an individual acting as an investment adviser
representative, directly or indirectly, to conduct business in this state
on behalf of an investment adviser or a federal covered investment
adviser if the registration of the individual as an investment adviser
representative is suspended or revoked or the individual is barred
from employment or association with an investment adviser or a
federal covered investment adviser by an order under this article, the
Securities and Exchange Commission, or a self-regulatory
organization. Upon request from a federal covered investment
adviser and for good cause, the commissioner, by order issued, may
waive, in whole or in part, the application of the requirements of this
subsection to the federal covered investment adviser.
(f) An investment adviser registered under this article, a federal
covered investment adviser that has filed a notice under section 5 of
this chapter, or a broker-dealer registered under this article is not
required to employ or associate with an individual as an investment
adviser representative if the only compensation paid to the individual
for a referral of investment advisory clients is paid to an investment
adviser registered under this article, a federal covered investment
adviser who has filed a notice under section 5 of this chapter, or a
broker-dealer registered under this article with which the individual
is employed or associated as an investment adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-5 Federal covered investment adviser requirements; exemptions;
filing
Sec. 5. (a) Except with respect to a federal covered investment
adviser described in subsection (b), it is unlawful for a federal
covered investment adviser to transact business in this state as a
federal covered investment adviser unless the federal covered
investment adviser complies with subsection (c).
(b) The following federal covered investment advisers are not
required to comply with subsection (c):
(1) A federal covered investment adviser without a place of
business in this state if its only clients in this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, and broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state; or
(D) other clients specified by rule adopted or order issued
under this article.
(2) A federal covered investment adviser without a place of
business in this state if the person has had, during the preceding
twelve (12) months, not more than five (5) clients that are
resident in this state in addition to those specified under
subdivision (1).
(3) Any other person excluded by rule adopted or order issued
under this article.
(c) A person acting as a federal covered investment adviser, not
excluded under subsection (b), shall file a notice, a consent to service
of process complying with IC 23-19-6-11, and such records as have
been filed with the Securities and Exchange Commission under the
Investment Advisers Act of 1940 required by rule adopted or order
issued under this article and pay the fees specified in section 10(e)
of this chapter.
(d) The notice under subsection (c) becomes effective upon its
filing. As added by P.L.27-2007, SEC.23.
IC 23-19-4-6 Application for initial registration; requirements; amendments;
national criminal history background check for investment adviser
representative; effective date; renewal; conditions and waivers
Sec. 6. (a) A person shall register as a broker-dealer, agent,
investment adviser, or investment adviser representative by filing an
application and a consent to service of process complying with
IC 23-19-6-11, and paying the fee specified in section 10 of this
chapter and any reasonable fees charged by the designee of the
commissioner for processing the filing. The application must contain:
(1) the information or record required for the filing of a uniform
application; and
(2) upon request by the commissioner, any other financial or
other information or record that the commissioner determines
is appropriate.
(b) If the information or record contained in an application filed
under subsection (a) is or becomes inaccurate or incomplete in a
material respect, the registrant shall promptly file a correcting
amendment.
(c) At the time of application for an initial registration as an
investment adviser representative under this article, the
commissioner shall require each applicant to submit fingerprints for
a national criminal history background check (as defined in
IC 10-13-3-12) by the Federal Bureau of Investigation, for use by the
commissioner in determining whether the applicant should be denied
registration under this chapter for any reason set forth in section
12(d) of this chapter. The applicant shall pay any fees or costs
associated with the fingerprints and background check required
under this subsection.
(d) If an order is not in effect and a proceeding is not pending
under section 12 of this chapter, registration becomes effective at
noon on the forty-fifth day after a completed application is filed,
unless the registration is denied. A rule adopted or order issued under
this article may set an earlier effective date or may defer the effective
date until noon on the forty-fifth day after the filing of any
amendment completing the application.
(e) A registration is effective until midnight on December 31 of
the year for which the application for registration is filed. Unless an
order is in effect under section 12 of this chapter, a registration may
be automatically renewed each year by filing such records as are
required by rule adopted or order issued under this article, by paying
the fee specified in section 10 of this chapter, and by paying costs
charged by the designee of the commissioner for processing the
filings.
(f) A rule adopted or order issued under this article may impose
other conditions, not inconsistent with the National Securities
Markets Improvement Act of 1996. An order issued under this article
may waive, in whole or in part, specific requirements in connection
with registration as are in the public interest and for the protection of
investors. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.9.
IC 23-19-4-7 Succession; organization change; name change; change of control
Sec. 7. (a) A broker-dealer or investment adviser may succeed to
the current registration of another broker-dealer or investment
adviser or a notice filing of a federal covered investment adviser, and
a federal covered investment adviser may succeed to the current
registration of an investment adviser or notice filing of another
federal covered investment adviser, by filing as a successor an
application for registration under section 1 or 3 of this chapter or a
notice under section 5 of this chapter for the unexpired portion of the
current registration or notice filing.
(b) A broker-dealer or investment adviser that changes its form of
organization or state of incorporation or organization may continue
its registration by filing an amendment to its registration if the
change does not involve a material change in its financial condition
or management. The amendment becomes effective when filed or on
a date designated by the registrant in its filing. The new organization
is a successor to the original registrant for the purposes of this
article. If there is a material change in financial condition or
management, the broker-dealer or investment adviser shall file a new
application for registration. A predecessor registered under this
article shall stop conducting its securities business other than
winding down transactions and shall file for withdrawal of
broker-dealer or investment adviser registration within forty-five (45)
days after filing its amendment to effect succession.
(c) A broker-dealer or investment adviser that changes its name
may continue its registration by filing an amendment to its
registration. The amendment becomes effective when filed or on a
date designated by the registrant.
(d) A change of control of a broker-dealer or investment adviser
may be made in accordance with a rule adopted or order issued under
this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-8 Termination notice; transfer of employment or association;
temporary registration; prevention or suspension of transfer;
cancellation or termination of registration; reinstatement
Sec. 8. (a) If an agent registered under this article terminates
employment by or association with a broker-dealer or issuer, or if an
investment adviser representative registered under this article
terminates employment by or association with an investment adviser
or federal covered investment adviser, or if either registrant
terminates activities that require registration as an agent or
investment adviser representative, the broker-dealer, issuer,
investment adviser, or federal covered investment adviser shall
promptly file a notice of termination. If the registrant learns that the
broker-dealer, issuer, investment adviser, or federal covered
investment adviser has not filed the notice, the registrant may do so.
(b) If an agent registered under this article terminates employment
by or association with a broker-dealer registered under this article
and begins employment by or association with another broker-dealer
registered under this article, or if an investment adviser
representative registered under this article terminates employment by
or association with an investment adviser registered under this article
or a federal covered investment adviser that has filed a notice under
section 5 of this chapter and begins employment by or association
with another investment adviser registered under this article or a
federal covered investment adviser that has filed a notice under
section 5 of this chapter, then upon the filing by or on behalf of the
registrant, within thirty (30) days after the termination, of an
application for registration that complies with the requirement of
section 6(a) of this chapter and payment of the filing fee required
under section 10 of this chapter, the registration of the agent or
investment adviser representative is:
(1) immediately effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record does not contain a new or amended disciplinary
disclosure within the previous twelve (12) months; or
(2) temporarily effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record contains a new or amended disciplinary disclosure
within the preceding twelve (12) months.
(c) The commissioner may withdraw a temporary registration if
there are or were grounds for discipline as specified in section 12 of
this chapter and the commissioner does so within thirty (30) days
after the filing of the application. If the commissioner does not
withdraw the temporary registration within the thirty (30) day period,
registration becomes automatically effective on the thirty-first day
after filing.
(d) The commissioner may prevent or suspend the effectiveness
of a transfer of an agent or investment adviser representative under
subsection (b)(1) or (b)(2) based on the public interest and the
protection of investors. The commissioner, by order, may also extend
a temporary registration to permit further time to review the
qualifications of an applicant.
(e) If the commissioner determines that a registrant or applicant
for registration is no longer in existence or has ceased to act as a
broker-dealer, agent, investment adviser, or investment adviser
representative, or is the subject of an adjudication of incapacity or is
subject to the control of a committee, conservator, or guardian, or
cannot reasonably be located, a rule adopted or order issued under
this article may require the registration be canceled or terminated or
the application denied. The commissioner may reinstate a canceled
or terminated registration, with or without hearing, and may make the
registration retroactive. As added by P.L.27-2007, SEC.23.
IC 23-19-4-9 Withdrawal of registration
Sec. 9. Withdrawal of registration by a broker-dealer, agent,
investment adviser, or investment adviser representative becomes
effective sixty (60) days after the filing of the application to
withdraw or within any shorter period as provided by rule adopted or
order issued under this article unless a revocation or suspension
proceeding is pending when the application is filed. If a proceeding
is pending, withdrawal becomes effective when and upon such
conditions as required by rule adopted or order issued under this
article. The commissioner may institute a revocation or suspension
proceeding under section 12 of this chapter within one (1) year after
the withdrawal became effective automatically and issue a revocation
or suspension order as of the last date on which registration was
effective if a proceeding is not pending. As added by P.L.27-2007, SEC.23.
IC 23-19-4-10 Fees; transmittal of fee; exception
Sec. 10. (a) A person shall pay a fee of two hundred fifty dollars
($250) when initially filing an application for registration as a
broker-dealer and a fee of one hundred twenty-five dollars ($125)
when filing a renewal of registration as a broker-dealer. If the filing
results in a denial or withdrawal, the commissioner shall retain all of
the fee.
(b) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an agent, a fee of twenty-five
dollars ($25) when filing a renewal of registration as an agent, and
a fee of twenty-five dollars ($25) when filing for a change of
registration as an agent. If the filing results in a denial or withdrawal,
the commissioner shall retain all of the fee.
(c) A person shall pay a fee of one hundred dollars ($100) when
filing an application for registration as an investment adviser and a
fee of fifty dollars ($50) when filing a renewal of registration as an
investment adviser. If the filing results in a denial or withdrawal, the
commissioner shall retain all of the fee.
(d) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an investment adviser
representative, a fee of twenty-five dollars ($25) when filing a
renewal of registration as an investment adviser representative, and
a fee of twenty-five dollars ($25) when filing a change of registration
as an investment adviser representative. If the filing results in a
denial or withdrawal, the commissioner shall retain all of the fee.
(e) A federal covered investment adviser required to file a notice
under section 5 of this chapter shall pay an initial fee of fifty dollars
($50) and an annual notice fee of fifty dollars ($50).
(f) A person required to pay a filing or notice fee under this
section may transmit the fee through or to a designee as a rule or
order provides under this article.
(g) An investment adviser representative who is registered as an
agent under section 2 of this chapter and who represents a person that
is both registered as a broker-dealer under section 1 of this chapter
and registered as an investment adviser under section 3 of this
chapter or required as a federal covered investment adviser to make
a notice filing under section 5 of this chapter is not required to pay
an initial or annual registration fee for registration as an investment
adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-11 Minimum financial requirements; financial reports; amendment;
records; audits or inspections; insurance or posting bond;
supervision; continuing education; compliance reports
Sec. 11. (a) Subject to Section 15(h) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order
issued under this article may establish minimum financial
requirements for broker-dealers registered or required to be
registered under this article and investment advisers registered or
required to be registered under this article.
(b) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222(b) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a(b)), a broker-dealer
registered or required to be registered under this article and an
investment adviser registered or required to be registered under this
article shall file such financial reports as are required by a rule
adopted or order issued under this article. If the information
contained in a record filed under this subsection is or becomes
inaccurate or incomplete in a material respect, the registrant shall
promptly file a correcting amendment.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a):
(1) a broker-dealer registered or required to be registered under
this article and an investment adviser registered or required to
be registered under this article shall make and maintain the
accounts, correspondence, memoranda, papers, books, and other
records required by rule adopted or order issued under this
article;
(2) broker-dealer records required to be maintained under
subdivision (1) may be maintained in any form of data storage
acceptable under Section 17(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78q(a)) if they are readily accessible to the
commissioner; and
(3) investment adviser records required to be maintained under
subdivision (1) may be maintained in any form of data storage
required by rule adopted or order issued under this article.
(d) The records of a broker-dealer registered or required to be
registered under this article and of an investment adviser registered
or required to be registered under this article are subject to such
reasonable periodic, special, or other audits or inspections by a
representative of the commissioner, within or outside this state, as
the commissioner considers necessary or appropriate in the public
interest and for the protection of investors. An audit or inspection
may be made at any time and without prior notice. The commissioner
may copy, and remove for audit or inspection copies of, all records
the commissioner reasonably considers necessary or appropriate to
conduct the audit or inspection. The commissioner may assess a
reasonable charge for conducting an audit or inspection under this
subsection.
(e) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order issued
under this article may require a broker-dealer or investment adviser
that has custody of or discretionary authority over funds or securities
of a customer or client to obtain insurance or post a bond or other
satisfactory form of security in an amount not to exceed fifty
thousand dollars ($50,000). The commissioner may determine the
requirements of the insurance, bond, or other satisfactory form of
security. Insurance or a bond or other satisfactory form of security
may not be required of a broker-dealer registered under this article
whose net capital exceeds, or of an investment adviser registered
under this article whose minimum financial requirements exceed, the
amounts required by rule or order under this article. The insurance,
bond, or other satisfactory form of security must permit an action by
a person to enforce any liability on the insurance, bond, or other
satisfactory form of security if instituted within the time limitations
in IC 23-19-5-9(g).
(f) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), an agent may not have custody of
funds or securities of a customer except under the supervision of a
broker-dealer and an investment adviser representative may not have
custody of funds or securities of a client except under the supervision
of an investment adviser or a federal covered investment adviser. A
rule adopted or order issued under this article may prohibit, limit, or
impose conditions on a broker-dealer regarding custody of funds or
securities of a customer and on an investment adviser regarding
custody of securities or funds of a client.
(g) With respect to an investment adviser registered or required to
be registered under this article, a rule adopted or order issued under
this article may require that information or other records be furnished
or disseminated to clients or prospective clients in this state as
necessary or appropriate in the public interest and for the protection
of investors and advisory clients.
(h) A rule adopted or order issued under this article may require
an individual registered under section 2 or 4 of this chapter to
participate in a continuing education program approved by the
Securities and Exchange Commission and administered by a
self-regulatory organization or, in the absence of such a program, a
rule adopted or order issued under this article may require continuing
education for an individual registered under section 4 of this chapter.
(i) Subject to section 11.5 of this chapter, the commissioner may
annually select as many as twenty-five percent (25%) of all Indiana
home and branch offices of registered broker-dealers for completion
of compliance reports. Subject to section 11.5 of this chapter, each
broker-dealer office that is selected shall file its compliance report
according to rules adopted by the commissioner under this article not
later than forty-five (45) days after being notified of selection under
this subsection. No charges or other examination fees may be
assessed against a registered broker-dealer as a result of the
examination of a compliance report filed under this subsection unless
the examination results in an investigation or examination made
under IC 23-19-6-2(a). As added by P.L.27-2007, SEC.23. Amended by P.L.149-2009,
SEC.1; P.L.156-2009, SEC.22; P.L.1-2010, SEC.94.
IC 23-19-4-11.5 Prohibit selection of broker-dealer for completion of compliance
report in consecutive years; prohibit selection of certain offices
Sec. 11.5. (a) As used in this section, "office of supervisory
jurisdiction" has the meaning set forth in the National Association of
Securities Dealers Conduct Rule 3010(g) (as in effect on January 1,
2009).
(b) A broker-dealer registered or required to be registered under
this article may not be selected for completion of a compliance report
under section 11(i) of this chapter in consecutive years unless the
commissioner has reason to believe that the broker-dealer has
committed a violation of this article.
(c) The commissioner may not select for completion of a
compliance report under section 11(i) of this chapter any office that:
(1) reports to an office of supervisory jurisdiction located
within Indiana;
(2) reflects the address of the office of supervisory jurisdiction
described in subdivision (1) on all of the office's business cards,
stationery, advertisements, and other communications to the
public; and
(3) is included in the definition of branch office under the
National Association of Securities Dealers Conduct Rule
3010(g) because the office:
(A) handles funds or securities as described under the
National Association of Securities Dealers Conduct Rule
3010(g)(2)(A)(ii)(c); or
(B) uses the residential address on all business cards,
stationery, advertisements, or other communications to the
public under the National Association of Securities Dealers
Conduct Rule 3010(g)(2)(A)(ii)(d). As added by P.L.149-2009, SEC.2.
IC 23-19-4-12 Denial, condition, revocation, suspension, or limitation of
registration; censure, bar, or civil penalty for violation; grounds;
examination; procedure
Sec. 12. (a) If the commissioner finds that the order is in the
public interest and subsection (d) authorizes the action, an order
issued under this article may deny an application, or may condition
or limit registration, of an applicant to be a broker-dealer, agent,
investment adviser, or investment adviser representative and, if the
applicant is a broker-dealer or investment adviser, of a partner,
officer, director, or person having a similar status or performing
similar functions, or a person directly or indirectly in control of the
broker-dealer or investment adviser.
(b) If the commissioner finds that the order is in the public interest
and subsection (d) authorizes the action, an order issued under this
article may revoke, suspend, condition, or limit the registration of a
registrant and, if the registrant is a broker-dealer or investment
adviser, of a partner, officer, director, or person having a similar
status or performing similar functions, or a person directly or
indirectly in control of the broker-dealer or investment adviser.
However, the commissioner may not:
(1) institute a revocation or suspension proceeding under this
subsection based on an order issued under a law of another state
that is reported to the commissioner or a designee of the
commissioner more than one (1) year after the date of the order
on which it is based; or
(2) under subsection (d)(5)(A) and (d)(5)(B), issue an order on
the basis of an order issued under the securities act of another
state unless the other order was based on conduct for which
subsection (d) would authorize the action had the conduct
occurred in this state.
(c) If the commissioner finds that the order is in the public interest
and subsection (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(8),
(d)(9), (d)(10), (d)(12), or (d)(13) authorizes the action, an order
under this article may censure, impose a bar, or impose a civil
penalty in an amount not to exceed a maximum of ten thousand
dollars ($10,000) per violation on a registrant, and, if the registrant
is a broker-dealer or investment adviser, a partner, officer, director,
or person having a similar status or performing similar functions, or
a person directly or indirectly in control of the broker-dealer or
investment adviser.
(d) A person may be disciplined under subsections (a) through (c)
if the person:
(1) has filed an application for registration in this state under
this article or the predecessor act within the previous ten (10)
years, which, as of the effective date of registration or as of any
date after filing in the case of an order denying effectiveness,
was incomplete in any material respect or contained a statement
that, in light of the circumstances under which it was made, was
false or misleading with respect to a material fact;
(2) knowingly violated or knowingly failed to comply with this
article or the predecessor act or a rule adopted or order issued
under this article or the predecessor act within the previous ten
(10) years;
(3) has been convicted of a felony or within the previous ten
(10) years has been convicted of a misdemeanor involving a
security, a commodity future or option contract, or an aspect of
a business involving securities, commodities, investments,
franchises, insurance, banking, or finance;
(4) is enjoined or restrained by a court with jurisdiction in an
action instituted by the commissioner under this article or the
predecessor act, a state, the Securities and Exchange
Commission, or the United States from engaging in or
continuing an act, practice, or course of business involving an
aspect of a business involving securities, commodities,
investments, franchises, insurance, banking, or finance;
(5) is the subject of an order, issued after notice and opportunity
for hearing, by:
(A) the securities, depository institution, insurance, or other
financial services regulator of a state or by the Securities and
Exchange Commission or other federal agency denying,
revoking, barring, or suspending registration as a
broker-dealer, agent, investment adviser, federal covered
investment adviser, or investment adviser representative;
(B) the securities regulator of a state or the Securities and
Exchange Commission against a broker-dealer, agent,
investment adviser, investment adviser representative, or
federal covered investment adviser;
(C) the Securities and Exchange Commission or a
self-regulatory organization suspending or expelling the
registrant from membership in the self-regulatory
organization;
(D) a court adjudicating a United States Postal Service fraud
order;
(E) the insurance regulator of a state denying, suspending, or
revoking registration as an insurance agent;
(F) a depository institution regulator suspending or barring
the person from the depository institution business; or
(G) any state regulatory body or organization governing real
estate brokers or sales persons denying, suspending, or
revoking a person's registration or license in the real estate
industry;
(6) is the subject of an adjudication or determination, after
notice and opportunity for hearing, by the Securities and
Exchange Commission, the Commodity Futures Trading
Commission, the Federal Trade Commission, a federal
depository institution regulator, or a depository institution,
insurance, or other financial services regulator of a state that the
person willfully violated 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 securities or commodities law of
a state, or a federal or state law under which a business
involving investments, franchises, insurance, banking, or
finance is regulated;
(7) is insolvent, either because the person's liabilities exceed the
person's assets or because the person cannot meet the person's
obligations as they mature, but the commissioner may not enter
an order against an applicant or registrant under this subdivision
without a finding of insolvency as to the applicant or registrant;
(8) refuses to allow or otherwise impedes the commissioner
from conducting an audit or inspection under section 11(d) of
this chapter or refuses access to a registrant's office to conduct
an audit or inspection under section 11(d) of this chapter;
(9) has failed to reasonably supervise an agent, investment
adviser representative, or other individual, if the agent,
investment adviser representative, or other individual was
subject to the person's supervision and committed a violation of
this article or the predecessor act or a rule adopted or order
issued under this article or the predecessor act within the
previous ten (10) years;
(10) has not paid the proper filing fee within thirty (30) days
after having been notified by the commissioner of a deficiency,
but the commissioner shall vacate an order under this
subdivision when the deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous ten (10) years:
(A) by a court with jurisdiction to have willfully violated the
laws of a foreign jurisdiction under which the business of
securities, commodities, investment, franchises, insurance,
banking, or finance is regulated;
(B) to have been the subject of an order of a securities
regulator of a foreign jurisdiction denying, revoking, or
suspending the right to engage in the business of securities
as a broker-dealer, agent, investment adviser, investment
adviser representative, or similar person; or
(C) to have been suspended or expelled from membership by
or participation in a securities exchange or securities
association operating under the securities laws of a foreign
jurisdiction;
(12) is the subject of a cease and desist order issued by the
Securities and Exchange Commission or issued under the
securities, commodities, investment, franchise, banking,
finance, or insurance laws of a state;
(13) has engaged in dishonest or unethical practices in the
securities, commodities, investment, franchise, banking,
finance, or insurance business within the previous ten (10)
years;
(14) is not qualified on the basis of factors such as training,
experience, and knowledge of the securities business. However,
in the case of an application by an agent for a broker-dealer that
is a member of a self-regulatory organization or by an
individual for registration as an investment adviser
representative, a denial order may not be based on this
subdivision if the individual has successfully completed all
examinations required by subsection (e). The commissioner
may require an applicant for registration under section 2 or 4 of
this chapter who has not been registered in a state within the
two (2) years preceding the filing of an application in this state
to successfully complete an examination; or
(15) is on the most recent tax warrant list supplied to the
commissioner by the department of state revenue.
(e) A rule adopted or order issued under this article may require
that an examination, including an examination developed or
approved by an organization of securities regulators, be successfully
completed by a class of individuals or all individuals. An order
issued under this article may waive, in whole or in part, an
examination as to an individual and a rule adopted under this article
may waive, in whole or in part, an examination as to a class of
individuals if the commissioner determines that the examination is
not necessary or appropriate in the public interest and for the
protection of investors.
(f) The commissioner may suspend or deny an application
summarily; restrict, condition, limit, or suspend a registration; or
censure, bar, or impose a civil penalty on a registrant before final
determination of an administrative proceeding. Upon the issuance of
an order, the commissioner shall promptly notify each person subject
to the order that the order has been issued, the reasons for the action,
and that within fifteen (15) days after the receipt of a request in a
record from the person the matter will be scheduled for a hearing. If
a hearing is not requested and none is ordered by the commissioner
within thirty (30) days after the date of service of the order, the order
becomes final by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend the order until final determination.
(g) An order may not be issued under this section, except under
subsection (f), without:
(1) appropriate notice to the applicant or registrant;
(2) opportunity for hearing; and
(3) findings of fact and conclusions of law in a record.
(h) A person that controls, directly or indirectly, a person not in
compliance with this section may be disciplined by order of the
commissioner under subsections (a) through (c) to the same extent as
the noncomplying person, unless the controlling person did not
know, and in the exercise of reasonable care could not have known,
of the existence of conduct that is a ground for discipline under this
section.
(i) The commissioner may not institute a proceeding under
subsection (a), (b), or (c) based solely on material facts actually
known by the commissioner unless an investigation or the proceeding
is instituted within one (1) year after the commissioner actually
acquires knowledge of the material facts.
(j) All fines and penalties collected under this section shall be
deposited into the securities division enforcement account as
established by IC 23-19-6-1(f). As added by P.L.27-2007, SEC.23.
IC 23-19-4
Chapter 4. Broker-Dealers, Agents, Investment Advisers,
Investment Adviser Representatives, and Federal Covered
Investment Advisers
IC 23-19-4-1 Broker-dealer registration; exemptions; restrictions on
employment or association; foreign transactions
Sec. 1. (a) It is unlawful for a person to transact business in this
state as a broker-dealer unless the person is registered under this
article as a broker-dealer or is exempt from registration as a
broker-dealer under subsection (b) or (d).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A broker-dealer without a place of business in this state if its
only transactions effected in this state are with:
(A) the issuer of the securities involved in the transactions;
(B) a broker-dealer registered as a broker-dealer under this
article or not required to be registered as a broker-dealer
under this article;
(C) an institutional investor;
(D) a nonaffiliated federal covered investment adviser with
investments under management in excess of one hundred
million dollars ($100,000,000) acting for the account of
others under discretionary authority in a signed record;
(E) a bona fide preexisting customer whose principal place
of residence is not in this state, and the person is registered
as a broker-dealer under the Securities Exchange Act of
1934 or not required to be registered under the Securities
Exchange Act of 1934 and is registered under the securities
act of the state in which the customer maintains a principal
place of residence;
(F) a bona fide preexisting customer whose principal place
of residence is in this state but who was not present in this
state when the customer relationship was established, if:
(i) the broker-dealer is registered under the Securities
Exchange Act of 1934 or not required to be registered
under the Securities Exchange Act of 1934 and is
registered under the securities laws of the state in which
the customer relationship was established and where the
customer had maintained a principal place of residence;
and
(ii) within forty-five (45) days after the customer's first
transaction in this state, the person files an application for
registration as a broker-dealer in this state and a further
transaction is not effected more than seventy-five (75)
days after the date on which the application is filed, or, if
earlier, the date on which the commissioner notifies the
person that the commissioner has denied the application
for registration or has stayed the pendency of the
application for good cause;
(G) not more than three (3) customers in this state during the
previous twelve (12) months, in addition to those customers
specified in clauses (A) through (F) and under clause (H), if
the broker-dealer is registered under the Securities Exchange
Act of 1934 or not required to be registered under the
Securities Exchange Act of 1934 and is registered under the
securities act of the state in which the broker-dealer has its
principal place of business; and
(H) any other person exempted by rule adopted or order
issued under this article.
(2) A person that deals solely in United States government
securities and is supervised as a dealer in government securities
by the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or the Office of Thrift Supervision.
(c) It is unlawful for a broker-dealer, or for an issuer engaged in
offering, offering to purchase, purchasing, or selling securities in this
state, directly or indirectly, to employ or associate with an individual
to engage in an activity related to securities transactions in this state
if the registration of the individual is suspended or revoked or the
individual is barred from employment or association with a
broker-dealer, an issuer, an investment adviser, or a federal covered
investment adviser by an order of the commissioner under this
article, the Securities and Exchange Commission, or a self-regulatory
organization. A broker-dealer or issuer does not violate this
subsection if the broker-dealer or issuer did not know and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from a broker-dealer or issuer and
for good cause, an order under this article may modify or waive, in
whole or in part, the application of the prohibitions of this subsection
to the broker-dealer.
(d) A rule adopted or order issued under this article may permit:
(1) a broker-dealer that is registered in Canada or another
foreign jurisdiction and that does not have a place of business
in this state to effect transactions in securities with or for, or
attempt to effect the purchase or sale of any securities by:
(A) an individual from Canada or another foreign
jurisdiction who is temporarily present in this state and with
whom the broker-dealer had a bona fide customer
relationship before the individual entered the United States;
(B) an individual from Canada or another foreign
jurisdiction who is present in this state and whose
transactions are in a self-directed tax advantaged retirement
plan of which the individual is the holder or contributor in
that foreign jurisdiction; or
(C) an individual who is present in this state, with whom the
broker-dealer customer relationship arose while the
individual was temporarily or permanently resident in
Canada or the other foreign jurisdiction; and
(2) an agent who represents a broker-dealer that is exempt under
this subsection to effect transactions in securities or attempt to
effect the purchase or sale of securities in this state as permitted
for a broker-dealer described in subdivision (1). As added by P.L.27-2007, SEC.23.
IC 23-19-4-2 Agent registration; exemptions; restrictions on employment or
association; restrictions if no affiliation
Sec. 2. (a) It is unlawful for an individual to transact business in
this state as an agent unless the individual is registered under this
article as an agent or is exempt from registration as an agent under
subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who represents a broker-dealer in effecting
transactions in this state limited to those described in Section
15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(h)(2)).
(2) An individual who represents a broker-dealer that is exempt
under section 1(b) or 1(d) of this chapter.
(3) An individual who represents an issuer with respect to an
offer or sale of the issuer's own securities or those of the issuer's
parent or any of the issuer's subsidiaries, and who is not
compensated in connection with the individual's participation
by the payment of commissions or other remuneration based,
directly or indirectly, on transactions in those securities.
(4) An individual who represents an issuer and who effects
transactions in the issuer's securities exempted by IC 23-19-2-2,
other than IC 23-19-2-2(11) and IC 23-19-2-2(14).
(5) An individual who represents an issuer that effects
transactions solely in federal covered securities of the issuer,
but an individual who effects transactions in a federal covered
security under Section 18(b)(3) or 18(b)(4)(D) of the Securities
Act of 1933 (15 U.S.C. 77r(b)(3) or 77r(b)(4)(D)) is not exempt
if the individual is compensated in connection with the agent's
participation by the payment of commissions or other
remuneration based, directly or indirectly, on transactions in
those securities.
(6) An individual who represents a broker-dealer registered in
this state under section 1(a) of this chapter or exempt from
registration under section 1(b) of this chapter in the offer and
sale of securities for an account of a nonaffiliated federal
covered investment adviser with investments under
management in excess of one hundred million dollars
($100,000,000) acting for the account of others under
discretionary authority in a signed record.
(7) An individual who represents an issuer in connection with
the purchase of the issuer's own securities.
(8) An individual who represents an issuer and who restricts
participation to performing clerical or ministerial acts.
(9) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an agent is effective only while the agent
is employed by or associated with a broker-dealer registered under
this article or an issuer that is offering, selling, or purchasing its
securities in this state.
(d) It is unlawful for a broker-dealer, or an issuer engaged in
offering, selling, or purchasing securities in this state, to employ or
associate with an agent who transacts business in this state on behalf
of broker-dealers or issuers unless the agent is registered under
subsection (a) or exempt from registration under subsection (b).
(e) An individual may not act as an agent for more than one (1)
broker-dealer or one (1) issuer at a time, unless the broker-dealer or
the issuer for which the agent acts are affiliated by direct or indirect
common control or are authorized by rule or order under this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-3 Investment adviser registration; exemptions; restrictions on
employment or association
Sec. 3. (a) It is unlawful for a person to transact business in this
state as an investment adviser unless the person is registered under
this article as an investment adviser or is exempt from registration as
an investment adviser under subsection (b).
(b) The following persons are exempt from the registration
requirement of subsection (a):
(1) A person without a place of business in this state that is
registered under the securities act of the state in which the
person has its principal place of business if its only clients in
this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, or broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state if the investment adviser is
registered under the securities act of the state in which the
clients maintain principal places of residence; or
(D) any other client exempted by rule adopted or order
issued under this article.
(2) A person without a place of business in this state if the
person has had, during the preceding twelve (12) months, not
more than five (5) clients that are resident in this state in
addition to those specified under subdivision (1).
(3) Any other person exempted by rule adopted or order issued
under this article.
(c) It is unlawful for an investment adviser, directly or indirectly,
to employ or associate with an individual to engage in an activity
related to investment advice in this state if the registration of the
individual is suspended or revoked or the individual is barred from
employment or association with an investment adviser, federal
covered investment adviser, or broker-dealer by an order under this
article, the Securities and Exchange Commission, or a self-regulatory
organization, unless the investment adviser did not know, and in the
exercise of reasonable care could not have known, of the suspension,
revocation, or bar. Upon request from the investment adviser and for
good cause, the commissioner, by order, may waive, in whole or in
part, the application of the prohibitions of this subsection to the
investment adviser.
(d) It is unlawful for an investment adviser to employ or associate
with an individual required to be registered under this article as an
investment adviser representative who transacts business in this state
on behalf of the investment adviser unless the individual is registered
under section 4(a) of this chapter or is exempt from registration
under section 4(b) of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-4-4 Investment adviser representative registration; exemptions;
restrictions on conducting business; referrals
Sec. 4. (a) It is unlawful for an individual to transact business in
this state as an investment adviser representative unless the
individual is registered under this article as an investment adviser
representative or is exempt from registration as an investment adviser
representative under subsection (b).
(b) The following individuals are exempt from the registration
requirement of subsection (a):
(1) An individual who is employed by or associated with an
investment adviser that is exempt from registration under
section 3(b) of this chapter or a federal covered investment
adviser that is excluded from the notice filing requirements of
section 5 of this chapter.
(2) Any other individual exempted by rule adopted or order
issued under this article.
(c) The registration of an investment adviser representative is not
effective while the investment adviser representative is not employed
by or associated with an investment adviser registered under this
article or a federal covered investment adviser that has made or is
required to make a notice filing under section 5 of this chapter.
(d) An individual may transact business as an investment adviser
representative for more than one (1) investment adviser or federal
covered investment adviser unless a rule adopted or order issued
under this article prohibits or limits an individual from acting as an
investment adviser representative for more than one (1) investment
adviser or federal covered investment adviser.
(e) It is unlawful for an individual acting as an investment adviser
representative, directly or indirectly, to conduct business in this state
on behalf of an investment adviser or a federal covered investment
adviser if the registration of the individual as an investment adviser
representative is suspended or revoked or the individual is barred
from employment or association with an investment adviser or a
federal covered investment adviser by an order under this article, the
Securities and Exchange Commission, or a self-regulatory
organization. Upon request from a federal covered investment
adviser and for good cause, the commissioner, by order issued, may
waive, in whole or in part, the application of the requirements of this
subsection to the federal covered investment adviser.
(f) An investment adviser registered under this article, a federal
covered investment adviser that has filed a notice under section 5 of
this chapter, or a broker-dealer registered under this article is not
required to employ or associate with an individual as an investment
adviser representative if the only compensation paid to the individual
for a referral of investment advisory clients is paid to an investment
adviser registered under this article, a federal covered investment
adviser who has filed a notice under section 5 of this chapter, or a
broker-dealer registered under this article with which the individual
is employed or associated as an investment adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-5 Federal covered investment adviser requirements; exemptions;
filing
Sec. 5. (a) Except with respect to a federal covered investment
adviser described in subsection (b), it is unlawful for a federal
covered investment adviser to transact business in this state as a
federal covered investment adviser unless the federal covered
investment adviser complies with subsection (c).
(b) The following federal covered investment advisers are not
required to comply with subsection (c):
(1) A federal covered investment adviser without a place of
business in this state if its only clients in this state are:
(A) federal covered investment advisers, investment advisers
registered under this article, and broker-dealers registered
under this article;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of
residence are not in this state; or
(D) other clients specified by rule adopted or order issued
under this article.
(2) A federal covered investment adviser without a place of
business in this state if the person has had, during the preceding
twelve (12) months, not more than five (5) clients that are
resident in this state in addition to those specified under
subdivision (1).
(3) Any other person excluded by rule adopted or order issued
under this article.
(c) A person acting as a federal covered investment adviser, not
excluded under subsection (b), shall file a notice, a consent to service
of process complying with IC 23-19-6-11, and such records as have
been filed with the Securities and Exchange Commission under the
Investment Advisers Act of 1940 required by rule adopted or order
issued under this article and pay the fees specified in section 10(e)
of this chapter.
(d) The notice under subsection (c) becomes effective upon its
filing. As added by P.L.27-2007, SEC.23.
IC 23-19-4-6 Application for initial registration; requirements; amendments;
national criminal history background check for investment adviser
representative; effective date; renewal; conditions and waivers
Sec. 6. (a) A person shall register as a broker-dealer, agent,
investment adviser, or investment adviser representative by filing an
application and a consent to service of process complying with
IC 23-19-6-11, and paying the fee specified in section 10 of this
chapter and any reasonable fees charged by the designee of the
commissioner for processing the filing. The application must contain:
(1) the information or record required for the filing of a uniform
application; and
(2) upon request by the commissioner, any other financial or
other information or record that the commissioner determines
is appropriate.
(b) If the information or record contained in an application filed
under subsection (a) is or becomes inaccurate or incomplete in a
material respect, the registrant shall promptly file a correcting
amendment.
(c) At the time of application for an initial registration as an
investment adviser representative under this article, the
commissioner shall require each applicant to submit fingerprints for
a national criminal history background check (as defined in
IC 10-13-3-12) by the Federal Bureau of Investigation, for use by the
commissioner in determining whether the applicant should be denied
registration under this chapter for any reason set forth in section
12(d) of this chapter. The applicant shall pay any fees or costs
associated with the fingerprints and background check required
under this subsection.
(d) If an order is not in effect and a proceeding is not pending
under section 12 of this chapter, registration becomes effective at
noon on the forty-fifth day after a completed application is filed,
unless the registration is denied. A rule adopted or order issued under
this article may set an earlier effective date or may defer the effective
date until noon on the forty-fifth day after the filing of any
amendment completing the application.
(e) A registration is effective until midnight on December 31 of
the year for which the application for registration is filed. Unless an
order is in effect under section 12 of this chapter, a registration may
be automatically renewed each year by filing such records as are
required by rule adopted or order issued under this article, by paying
the fee specified in section 10 of this chapter, and by paying costs
charged by the designee of the commissioner for processing the
filings.
(f) A rule adopted or order issued under this article may impose
other conditions, not inconsistent with the National Securities
Markets Improvement Act of 1996. An order issued under this article
may waive, in whole or in part, specific requirements in connection
with registration as are in the public interest and for the protection of
investors. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.9.
IC 23-19-4-7 Succession; organization change; name change; change of control
Sec. 7. (a) A broker-dealer or investment adviser may succeed to
the current registration of another broker-dealer or investment
adviser or a notice filing of a federal covered investment adviser, and
a federal covered investment adviser may succeed to the current
registration of an investment adviser or notice filing of another
federal covered investment adviser, by filing as a successor an
application for registration under section 1 or 3 of this chapter or a
notice under section 5 of this chapter for the unexpired portion of the
current registration or notice filing.
(b) A broker-dealer or investment adviser that changes its form of
organization or state of incorporation or organization may continue
its registration by filing an amendment to its registration if the
change does not involve a material change in its financial condition
or management. The amendment becomes effective when filed or on
a date designated by the registrant in its filing. The new organization
is a successor to the original registrant for the purposes of this
article. If there is a material change in financial condition or
management, the broker-dealer or investment adviser shall file a new
application for registration. A predecessor registered under this
article shall stop conducting its securities business other than
winding down transactions and shall file for withdrawal of
broker-dealer or investment adviser registration within forty-five (45)
days after filing its amendment to effect succession.
(c) A broker-dealer or investment adviser that changes its name
may continue its registration by filing an amendment to its
registration. The amendment becomes effective when filed or on a
date designated by the registrant.
(d) A change of control of a broker-dealer or investment adviser
may be made in accordance with a rule adopted or order issued under
this article. As added by P.L.27-2007, SEC.23.
IC 23-19-4-8 Termination notice; transfer of employment or association;
temporary registration; prevention or suspension of transfer;
cancellation or termination of registration; reinstatement
Sec. 8. (a) If an agent registered under this article terminates
employment by or association with a broker-dealer or issuer, or if an
investment adviser representative registered under this article
terminates employment by or association with an investment adviser
or federal covered investment adviser, or if either registrant
terminates activities that require registration as an agent or
investment adviser representative, the broker-dealer, issuer,
investment adviser, or federal covered investment adviser shall
promptly file a notice of termination. If the registrant learns that the
broker-dealer, issuer, investment adviser, or federal covered
investment adviser has not filed the notice, the registrant may do so.
(b) If an agent registered under this article terminates employment
by or association with a broker-dealer registered under this article
and begins employment by or association with another broker-dealer
registered under this article, or if an investment adviser
representative registered under this article terminates employment by
or association with an investment adviser registered under this article
or a federal covered investment adviser that has filed a notice under
section 5 of this chapter and begins employment by or association
with another investment adviser registered under this article or a
federal covered investment adviser that has filed a notice under
section 5 of this chapter, then upon the filing by or on behalf of the
registrant, within thirty (30) days after the termination, of an
application for registration that complies with the requirement of
section 6(a) of this chapter and payment of the filing fee required
under section 10 of this chapter, the registration of the agent or
investment adviser representative is:
(1) immediately effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record does not contain a new or amended disciplinary
disclosure within the previous twelve (12) months; or
(2) temporarily effective as of the date of the completed filing,
if the agent's Central Registration Depository record or
successor record or the investment adviser representative's
Investment Adviser Registration Depository record or successor
record contains a new or amended disciplinary disclosure
within the preceding twelve (12) months.
(c) The commissioner may withdraw a temporary registration if
there are or were grounds for discipline as specified in section 12 of
this chapter and the commissioner does so within thirty (30) days
after the filing of the application. If the commissioner does not
withdraw the temporary registration within the thirty (30) day period,
registration becomes automatically effective on the thirty-first day
after filing.
(d) The commissioner may prevent or suspend the effectiveness
of a transfer of an agent or investment adviser representative under
subsection (b)(1) or (b)(2) based on the public interest and the
protection of investors. The commissioner, by order, may also extend
a temporary registration to permit further time to review the
qualifications of an applicant.
(e) If the commissioner determines that a registrant or applicant
for registration is no longer in existence or has ceased to act as a
broker-dealer, agent, investment adviser, or investment adviser
representative, or is the subject of an adjudication of incapacity or is
subject to the control of a committee, conservator, or guardian, or
cannot reasonably be located, a rule adopted or order issued under
this article may require the registration be canceled or terminated or
the application denied. The commissioner may reinstate a canceled
or terminated registration, with or without hearing, and may make the
registration retroactive. As added by P.L.27-2007, SEC.23.
IC 23-19-4-9 Withdrawal of registration
Sec. 9. Withdrawal of registration by a broker-dealer, agent,
investment adviser, or investment adviser representative becomes
effective sixty (60) days after the filing of the application to
withdraw or within any shorter period as provided by rule adopted or
order issued under this article unless a revocation or suspension
proceeding is pending when the application is filed. If a proceeding
is pending, withdrawal becomes effective when and upon such
conditions as required by rule adopted or order issued under this
article. The commissioner may institute a revocation or suspension
proceeding under section 12 of this chapter within one (1) year after
the withdrawal became effective automatically and issue a revocation
or suspension order as of the last date on which registration was
effective if a proceeding is not pending. As added by P.L.27-2007, SEC.23.
IC 23-19-4-10 Fees; transmittal of fee; exception
Sec. 10. (a) A person shall pay a fee of two hundred fifty dollars
($250) when initially filing an application for registration as a
broker-dealer and a fee of one hundred twenty-five dollars ($125)
when filing a renewal of registration as a broker-dealer. If the filing
results in a denial or withdrawal, the commissioner shall retain all of
the fee.
(b) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an agent, a fee of twenty-five
dollars ($25) when filing a renewal of registration as an agent, and
a fee of twenty-five dollars ($25) when filing for a change of
registration as an agent. If the filing results in a denial or withdrawal,
the commissioner shall retain all of the fee.
(c) A person shall pay a fee of one hundred dollars ($100) when
filing an application for registration as an investment adviser and a
fee of fifty dollars ($50) when filing a renewal of registration as an
investment adviser. If the filing results in a denial or withdrawal, the
commissioner shall retain all of the fee.
(d) The fee for an individual is twenty-five dollars ($25) when
filing an application for registration as an investment adviser
representative, a fee of twenty-five dollars ($25) when filing a
renewal of registration as an investment adviser representative, and
a fee of twenty-five dollars ($25) when filing a change of registration
as an investment adviser representative. If the filing results in a
denial or withdrawal, the commissioner shall retain all of the fee.
(e) A federal covered investment adviser required to file a notice
under section 5 of this chapter shall pay an initial fee of fifty dollars
($50) and an annual notice fee of fifty dollars ($50).
(f) A person required to pay a filing or notice fee under this
section may transmit the fee through or to a designee as a rule or
order provides under this article.
(g) An investment adviser representative who is registered as an
agent under section 2 of this chapter and who represents a person that
is both registered as a broker-dealer under section 1 of this chapter
and registered as an investment adviser under section 3 of this
chapter or required as a federal covered investment adviser to make
a notice filing under section 5 of this chapter is not required to pay
an initial or annual registration fee for registration as an investment
adviser representative. As added by P.L.27-2007, SEC.23.
IC 23-19-4-11 Minimum financial requirements; financial reports; amendment;
records; audits or inspections; insurance or posting bond;
supervision; continuing education; compliance reports
Sec. 11. (a) Subject to Section 15(h) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order
issued under this article may establish minimum financial
requirements for broker-dealers registered or required to be
registered under this article and investment advisers registered or
required to be registered under this article.
(b) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222(b) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a(b)), a broker-dealer
registered or required to be registered under this article and an
investment adviser registered or required to be registered under this
article shall file such financial reports as are required by a rule
adopted or order issued under this article. If the information
contained in a record filed under this subsection is or becomes
inaccurate or incomplete in a material respect, the registrant shall
promptly file a correcting amendment.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a):
(1) a broker-dealer registered or required to be registered under
this article and an investment adviser registered or required to
be registered under this article shall make and maintain the
accounts, correspondence, memoranda, papers, books, and other
records required by rule adopted or order issued under this
article;
(2) broker-dealer records required to be maintained under
subdivision (1) may be maintained in any form of data storage
acceptable under Section 17(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78q(a)) if they are readily accessible to the
commissioner; and
(3) investment adviser records required to be maintained under
subdivision (1) may be maintained in any form of data storage
required by rule adopted or order issued under this article.
(d) The records of a broker-dealer registered or required to be
registered under this article and of an investment adviser registered
or required to be registered under this article are subject to such
reasonable periodic, special, or other audits or inspections by a
representative of the commissioner, within or outside this state, as
the commissioner considers necessary or appropriate in the public
interest and for the protection of investors. An audit or inspection
may be made at any time and without prior notice. The commissioner
may copy, and remove for audit or inspection copies of, all records
the commissioner reasonably considers necessary or appropriate to
conduct the audit or inspection. The commissioner may assess a
reasonable charge for conducting an audit or inspection under this
subsection.
(e) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), a rule adopted or order issued
under this article may require a broker-dealer or investment adviser
that has custody of or discretionary authority over funds or securities
of a customer or client to obtain insurance or post a bond or other
satisfactory form of security in an amount not to exceed fifty
thousand dollars ($50,000). The commissioner may determine the
requirements of the insurance, bond, or other satisfactory form of
security. Insurance or a bond or other satisfactory form of security
may not be required of a broker-dealer registered under this article
whose net capital exceeds, or of an investment adviser registered
under this article whose minimum financial requirements exceed, the
amounts required by rule or order under this article. The insurance,
bond, or other satisfactory form of security must permit an action by
a person to enforce any liability on the insurance, bond, or other
satisfactory form of security if instituted within the time limitations
in IC 23-19-5-9(g).
(f) Subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) or Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), an agent may not have custody of
funds or securities of a customer except under the supervision of a
broker-dealer and an investment adviser representative may not have
custody of funds or securities of a client except under the supervision
of an investment adviser or a federal covered investment adviser. A
rule adopted or order issued under this article may prohibit, limit, or
impose conditions on a broker-dealer regarding custody of funds or
securities of a customer and on an investment adviser regarding
custody of securities or funds of a client.
(g) With respect to an investment adviser registered or required to
be registered under this article, a rule adopted or order issued under
this article may require that information or other records be furnished
or disseminated to clients or prospective clients in this state as
necessary or appropriate in the public interest and for the protection
of investors and advisory clients.
(h) A rule adopted or order issued under this article may require
an individual registered under section 2 or 4 of this chapter to
participate in a continuing education program approved by the
Securities and Exchange Commission and administered by a
self-regulatory organization or, in the absence of such a program, a
rule adopted or order issued under this article may require continuing
education for an individual registered under section 4 of this chapter.
(i) Subject to section 11.5 of this chapter, the commissioner may
annually select as many as twenty-five percent (25%) of all Indiana
home and branch offices of registered broker-dealers for completion
of compliance reports. Subject to section 11.5 of this chapter, each
broker-dealer office that is selected shall file its compliance report
according to rules adopted by the commissioner under this article not
later than forty-five (45) days after being notified of selection under
this subsection. No charges or other examination fees may be
assessed against a registered broker-dealer as a result of the
examination of a compliance report filed under this subsection unless
the examination results in an investigation or examination made
under IC 23-19-6-2(a). As added by P.L.27-2007, SEC.23. Amended by P.L.149-2009,
SEC.1; P.L.156-2009, SEC.22; P.L.1-2010, SEC.94.
IC 23-19-4-11.5 Prohibit selection of broker-dealer for completion of compliance
report in consecutive years; prohibit selection of certain offices
Sec. 11.5. (a) As used in this section, "office of supervisory
jurisdiction" has the meaning set forth in the National Association of
Securities Dealers Conduct Rule 3010(g) (as in effect on January 1,
2009).
(b) A broker-dealer registered or required to be registered under
this article may not be selected for completion of a compliance report
under section 11(i) of this chapter in consecutive years unless the
commissioner has reason to believe that the broker-dealer has
committed a violation of this article.
(c) The commissioner may not select for completion of a
compliance report under section 11(i) of this chapter any office that:
(1) reports to an office of supervisory jurisdiction located
within Indiana;
(2) reflects the address of the office of supervisory jurisdiction
described in subdivision (1) on all of the office's business cards,
stationery, advertisements, and other communications to the
public; and
(3) is included in the definition of branch office under the
National Association of Securities Dealers Conduct Rule
3010(g) because the office:
(A) handles funds or securities as described under the
National Association of Securities Dealers Conduct Rule
3010(g)(2)(A)(ii)(c); or
(B) uses the residential address on all business cards,
stationery, advertisements, or other communications to the
public under the National Association of Securities Dealers
Conduct Rule 3010(g)(2)(A)(ii)(d). As added by P.L.149-2009, SEC.2.
IC 23-19-4-12 Denial, condition, revocation, suspension, or limitation of
registration; censure, bar, or civil penalty for violation; grounds;
examination; procedure
Sec. 12. (a) If the commissioner finds that the order is in the
public interest and subsection (d) authorizes the action, an order
issued under this article may deny an application, or may condition
or limit registration, of an applicant to be a broker-dealer, agent,
investment adviser, or investment adviser representative and, if the
applicant is a broker-dealer or investment adviser, of a partner,
officer, director, or person having a similar status or performing
similar functions, or a person directly or indirectly in control of the
broker-dealer or investment adviser.
(b) If the commissioner finds that the order is in the public interest
and subsection (d) authorizes the action, an order issued under this
article may revoke, suspend, condition, or limit the registration of a
registrant and, if the registrant is a broker-dealer or investment
adviser, of a partner, officer, director, or person having a similar
status or performing similar functions, or a person directly or
indirectly in control of the broker-dealer or investment adviser.
However, the commissioner may not:
(1) institute a revocation or suspension proceeding under this
subsection based on an order issued under a law of another state
that is reported to the commissioner or a designee of the
commissioner more than one (1) year after the date of the order
on which it is based; or
(2) under subsection (d)(5)(A) and (d)(5)(B), issue an order on
the basis of an order issued under the securities act of another
state unless the other order was based on conduct for which
subsection (d) would authorize the action had the conduct
occurred in this state.
(c) If the commissioner finds that the order is in the public interest
and subsection (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(8),
(d)(9), (d)(10), (d)(12), or (d)(13) authorizes the action, an order
under this article may censure, impose a bar, or impose a civil
penalty in an amount not to exceed a maximum of ten thousand
dollars ($10,000) per violation on a registrant, and, if the registrant
is a broker-dealer or investment adviser, a partner, officer, director,
or person having a similar status or performing similar functions, or
a person directly or indirectly in control of the broker-dealer or
investment adviser.
(d) A person may be disciplined under subsections (a) through (c)
if the person:
(1) has filed an application for registration in this state under
this article or the predecessor act within the previous ten (10)
years, which, as of the effective date of registration or as of any
date after filing in the case of an order denying effectiveness,
was incomplete in any material respect or contained a statement
that, in light of the circumstances under which it was made, was
false or misleading with respect to a material fact;
(2) knowingly violated or knowingly failed to comply with this
article or the predecessor act or a rule adopted or order issued
under this article or the predecessor act within the previous ten
(10) years;
(3) has been convicted of a felony or within the previous ten
(10) years has been convicted of a misdemeanor involving a
security, a commodity future or option contract, or an aspect of
a business involving securities, commodities, investments,
franchises, insurance, banking, or finance;
(4) is enjoined or restrained by a court with jurisdiction in an
action instituted by the commissioner under this article or the
predecessor act, a state, the Securities and Exchange
Commission, or the United States from engaging in or
continuing an act, practice, or course of business involving an
aspect of a business involving securities, commodities,
investments, franchises, insurance, banking, or finance;
(5) is the subject of an order, issued after notice and opportunity
for hearing, by:
(A) the securities, depository institution, insurance, or other
financial services regulator of a state or by the Securities and
Exchange Commission or other federal agency denying,
revoking, barring, or suspending registration as a
broker-dealer, agent, investment adviser, federal covered
investment adviser, or investment adviser representative;
(B) the securities regulator of a state or the Securities and
Exchange Commission against a broker-dealer, agent,
investment adviser, investment adviser representative, or
federal covered investment adviser;
(C) the Securities and Exchange Commission or a
self-regulatory organization suspending or expelling the
registrant from membership in the self-regulatory
organization;
(D) a court adjudicating a United States Postal Service fraud
order;
(E) the insurance regulator of a state denying, suspending, or
revoking registration as an insurance agent;
(F) a depository institution regulator suspending or barring
the person from the depository institution business; or
(G) any state regulatory body or organization governing real
estate brokers or sales persons denying, suspending, or
revoking a person's registration or license in the real estate
industry;
(6) is the subject of an adjudication or determination, after
notice and opportunity for hearing, by the Securities and
Exchange Commission, the Commodity Futures Trading
Commission, the Federal Trade Commission, a federal
depository institution regulator, or a depository institution,
insurance, or other financial services regulator of a state that the
person willfully violated 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 securities or commodities law of
a state, or a federal or state law under which a business
involving investments, franchises, insurance, banking, or
finance is regulated;
(7) is insolvent, either because the person's liabilities exceed the
person's assets or because the person cannot meet the person's
obligations as they mature, but the commissioner may not enter
an order against an applicant or registrant under this subdivision
without a finding of insolvency as to the applicant or registrant;
(8) refuses to allow or otherwise impedes the commissioner
from conducting an audit or inspection under section 11(d) of
this chapter or refuses access to a registrant's office to conduct
an audit or inspection under section 11(d) of this chapter;
(9) has failed to reasonably supervise an agent, investment
adviser representative, or other individual, if the agent,
investment adviser representative, or other individual was
subject to the person's supervision and committed a violation of
this article or the predecessor act or a rule adopted or order
issued under this article or the predecessor act within the
previous ten (10) years;
(10) has not paid the proper filing fee within thirty (30) days
after having been notified by the commissioner of a deficiency,
but the commissioner shall vacate an order under this
subdivision when the deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous ten (10) years:
(A) by a court with jurisdiction to have willfully violated the
laws of a foreign jurisdiction under which the business of
securities, commodities, investment, franchises, insurance,
banking, or finance is regulated;
(B) to have been the subject of an order of a securities
regulator of a foreign jurisdiction denying, revoking, or
suspending the right to engage in the business of securities
as a broker-dealer, agent, investment adviser, investment
adviser representative, or similar person; or
(C) to have been suspended or expelled from membership by
or participation in a securities exchange or securities
association operating under the securities laws of a foreign
jurisdiction;
(12) is the subject of a cease and desist order issued by the
Securities and Exchange Commission or issued under the
securities, commodities, investment, franchise, banking,
finance, or insurance laws of a state;
(13) has engaged in dishonest or unethical practices in the
securities, commodities, investment, franchise, banking,
finance, or insurance business within the previous ten (10)
years;
(14) is not qualified on the basis of factors such as training,
experience, and knowledge of the securities business. However,
in the case of an application by an agent for a broker-dealer that
is a member of a self-regulatory organization or by an
individual for registration as an investment adviser
representative, a denial order may not be based on this
subdivision if the individual has successfully completed all
examinations required by subsection (e). The commissioner
may require an applicant for registration under section 2 or 4 of
this chapter who has not been registered in a state within the
two (2) years preceding the filing of an application in this state
to successfully complete an examination; or
(15) is on the most recent tax warrant list supplied to the
commissioner by the department of state revenue.
(e) A rule adopted or order issued under this article may require
that an examination, including an examination developed or
approved by an organization of securities regulators, be successfully
completed by a class of individuals or all individuals. An order
issued under this article may waive, in whole or in part, an
examination as to an individual and a rule adopted under this article
may waive, in whole or in part, an examination as to a class of
individuals if the commissioner determines that the examination is
not necessary or appropriate in the public interest and for the
protection of investors.
(f) The commissioner may suspend or deny an application
summarily; restrict, condition, limit, or suspend a registration; or
censure, bar, or impose a civil penalty on a registrant before final
determination of an administrative proceeding. Upon the issuance of
an order, the commissioner shall promptly notify each person subject
to the order that the order has been issued, the reasons for the action,
and that within fifteen (15) days after the receipt of a request in a
record from the person the matter will be scheduled for a hearing. If
a hearing is not requested and none is ordered by the commissioner
within thirty (30) days after the date of service of the order, the order
becomes final by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend the order until final determination.
(g) An order may not be issued under this section, except under
subsection (f), without:
(1) appropriate notice to the applicant or registrant;
(2) opportunity for hearing; and
(3) findings of fact and conclusions of law in a record.
(h) A person that controls, directly or indirectly, a person not in
compliance with this section may be disciplined by order of the
commissioner under subsections (a) through (c) to the same extent as
the noncomplying person, unless the controlling person did not
know, and in the exercise of reasonable care could not have known,
of the existence of conduct that is a ground for discipline under this
section.
(i) The commissioner may not institute a proceeding under
subsection (a), (b), or (c) based solely on material facts actually
known by the commissioner unless an investigation or the proceeding
is instituted within one (1) year after the commissioner actually
acquires knowledge of the material facts.
(j) All fines and penalties collected under this section shall be
deposited into the securities division enforcement account as
established by IC 23-19-6-1(f). As added by P.L.27-2007, SEC.23.
