17-12a412.Denial, revocation, suspension,
withdrawal, restriction, condition or limitation of registration.
(a) Disciplinary conditions-applicants. An order
issued under this act 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 if the
administrator finds that the order is in the public interest and
that there is a ground for discipline under subsection (d) against
the applicant or, if the applicant is a broker-dealer or investment
adviser, against any partner, officer, director, person having a
similar status or performing similar functions, or person directly
or indirectly controlling the broker-dealer or investment adviser.
(b) Disciplinary conditions -- registrants. An order issued
under this act may revoke, suspend, condition, or limit the
registration of a registrant if the administrator finds that the
order is in the public interest and that there is a ground for
discipline under subsection (d) against the registrant or, if the
registrant is a broker-dealer or investment adviser, against any
partner, officer, or director, any person having a similar status
or performing similar functions, or any person directly or
indirectly controlling the broker-dealer or investment adviser. However, the
administrator:
(1) May not institute a revocation or suspension proceeding
under this subsection based on an order issued by another state that
is reported to the administrator or designee later than one year
after the date of the order on which it is based; and
(2) under subsection (d)(5)(A) and (B), may not issue an order on
the basis of an order under the state 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) Disciplinary penalties -- registrants. If the
administrator
finds that the order is in the public interest and that there is a
ground for discipline under subsection (d)(1) through (6), (8), (9),
(10), (12) or (13) against a registrant or, if the registrant is a
broker-dealer or investment adviser, against any partner, officer,
or director, any person having similar functions, or any person
directly or indirectly controlling the broker-dealer or investment
adviser, then the administrator may enter an order against the
registrant containing one or more of the following sanctions or
remedies:
(1) A censure;
(2) a bar or suspension from association with a broker-dealer
or investment adviser registered in this state;
(3) a civil penalty up to $25,000 for each
violation. If any person is
found to have
violated any provision of this act, and such violation is committed against
elder or disabled persons, as defined in K.S.A. 50-676, and amendments thereto,
in addition to any civil penalty otherwise provided by law, the administrator
may impose an additional penalty not to exceed $15,000 for each such violation.
The total penalty against a person shall not exceed $1,000,000;
(4) an order requiring the registrant to pay restitution for
any loss or disgorge any profits arising from a violation,
including, in the administrator's discretion, the assessment of
interest from the date of the violation at the rate provided for interest on
judgments by K.S.A. 16-204, and amendments thereto;
(5) an order charging the registrant with the actual cost of
an investigation or proceeding; or
(6) an order requiring the registrant to cease and desist from
any action that constitutes a ground for discipline, or to take
other action necessary or appropriate to comply with this act.
(d) Grounds for discipline. 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 act or the predecessor act within the previous 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) willfully violated or willfully failed to comply with this
act or the predecessor act or a rule adopted or order issued under
this act or the predecessor act within the previous 10 years;
(3) has been convicted of a felony or within the previous 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 of competent
jurisdiction in an action instituted by the administrator under this
act 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 by 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 by 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 the registration of an insurance agent; or
(F) a depository institution regulator suspending or barring
a person from the depository institution business;
(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 administrator may not
enter an order against an applicant or registrant under this
paragraph without a finding of insolvency as to the applicant or
registrant;
(8) refuses to allow or otherwise impedes the administrator
from conducting an audit or inspection under K.S.A. 17-12a411(d),
and
amendments thereto, refuses access to a registrant's office to conduct an audit
or inspection under K.S.A. 17-12a411(d), and amendments
thereto, fails to keep or maintain sufficient records to permit an
audit disclosing the condition of the registrant's business, or
fails willfully and without cause to comply with a request for
information by the administrator or person designated by the
administrator in conducting investigations or examinations under
this act;
(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 act
or the predecessor act or a rule adopted or order issued under this
act or the predecessor act within the previous 10 years;
(10) has not paid the proper filing fee within 30 days after
having been notified by the administrator of a deficiency, but the
administrator shall vacate an order under this paragraph when the
deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous 10 years:
(A) By a court of competent 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 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 paragraph if the individual has
successfully completed all examinations required by subsection (e).
The administrator may require an applicant for registration under
K.S.A. 17-12a402 or 17-12a404, and amendments thereto, who has not
been
registered in a state within the two years preceding the filing of
an application in this state to successfully complete an
examination; or
(15) lacks sufficient character or reputation to warrant the public
trust.
(e) Examinations. A rule adopted or order issued under this
act 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 act may waive, in whole or
in part, an examination as to an individual and a rule adopted under
this act may waive, in whole or in part, an examination as to a
class of individuals if the administrator determines that the
examination is not necessary or appropriate in the public interest
and for the protection of investors.
(f) Summary process. In accordance with the Kansas
administrative procedures act, the administrator may use summary or
emergency proceedings to suspend or deny an application; restrict,
condition, limit, or suspend a registration; or censure, bar, or
impose a civil penalty or cease and desist order on a registrant
before final determination of an administrative proceeding. If a
hearing is not requested and none is ordered by the administrator
within 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 administrator, 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) Procedural requirements. (1) An order issued may not be
issued under this section, except under subsection (f), without:
(A) Appropriate notice to the applicant or registrant;
(B) opportunity for hearing; and
(C) findings of fact and conclusions of law in a record.
(2) Proceedings under this subsection shall be conducted in
accordance with the Kansas administrative procedures act.
(h) Control person liability. A person that controls, directly or
indirectly, a person not in compliance with this section may be
disciplined by order of the administrator 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) Limit on investigation or proceeding. The administrator may
not institute a proceeding under subsection (a), (b), or (c) based
solely on material facts actually known by the administrator unless
an investigation or the proceeding is instituted within one year
after the administrator actually acquires knowledge of the material
facts.
History: L. 2004, ch. 154, § 29;
L. 2006, ch. 47, § 6; July 1.
17-12a412.Denial, revocation, suspension,
withdrawal, restriction, condition or limitation of registration.
(a) Disciplinary conditions-applicants. An order
issued under this act 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 if the
administrator finds that the order is in the public interest and
that there is a ground for discipline under subsection (d) against
the applicant or, if the applicant is a broker-dealer or investment
adviser, against any partner, officer, director, person having a
similar status or performing similar functions, or person directly
or indirectly controlling the broker-dealer or investment adviser.
(b) Disciplinary conditions -- registrants. An order issued
under this act may revoke, suspend, condition, or limit the
registration of a registrant if the administrator finds that the
order is in the public interest and that there is a ground for
discipline under subsection (d) against the registrant or, if the
registrant is a broker-dealer or investment adviser, against any
partner, officer, or director, any person having a similar status
or performing similar functions, or any person directly or
indirectly controlling the broker-dealer or investment adviser. However, the
administrator:
(1) May not institute a revocation or suspension proceeding
under this subsection based on an order issued by another state that
is reported to the administrator or designee later than one year
after the date of the order on which it is based; and
(2) under subsection (d)(5)(A) and (B), may not issue an order on
the basis of an order under the state 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) Disciplinary penalties -- registrants. If the
administrator
finds that the order is in the public interest and that there is a
ground for discipline under subsection (d)(1) through (6), (8), (9),
(10), (12) or (13) against a registrant or, if the registrant is a
broker-dealer or investment adviser, against any partner, officer,
or director, any person having similar functions, or any person
directly or indirectly controlling the broker-dealer or investment
adviser, then the administrator may enter an order against the
registrant containing one or more of the following sanctions or
remedies:
(1) A censure;
(2) a bar or suspension from association with a broker-dealer
or investment adviser registered in this state;
(3) a civil penalty up to $25,000 for each
violation. If any person is
found to have
violated any provision of this act, and such violation is committed against
elder or disabled persons, as defined in K.S.A. 50-676, and amendments thereto,
in addition to any civil penalty otherwise provided by law, the administrator
may impose an additional penalty not to exceed $15,000 for each such violation.
The total penalty against a person shall not exceed $1,000,000;
(4) an order requiring the registrant to pay restitution for
any loss or disgorge any profits arising from a violation,
including, in the administrator's discretion, the assessment of
interest from the date of the violation at the rate provided for interest on
judgments by K.S.A. 16-204, and amendments thereto;
(5) an order charging the registrant with the actual cost of
an investigation or proceeding; or
(6) an order requiring the registrant to cease and desist from
any action that constitutes a ground for discipline, or to take
other action necessary or appropriate to comply with this act.
(d) Grounds for discipline. 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 act or the predecessor act within the previous 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) willfully violated or willfully failed to comply with this
act or the predecessor act or a rule adopted or order issued under
this act or the predecessor act within the previous 10 years;
(3) has been convicted of a felony or within the previous 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 of competent
jurisdiction in an action instituted by the administrator under this
act 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 by 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 by 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 the registration of an insurance agent; or
(F) a depository institution regulator suspending or barring
a person from the depository institution business;
(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 administrator may not
enter an order against an applicant or registrant under this
paragraph without a finding of insolvency as to the applicant or
registrant;
(8) refuses to allow or otherwise impedes the administrator
from conducting an audit or inspection under K.S.A. 17-12a411(d),
and
amendments thereto, refuses access to a registrant's office to conduct an audit
or inspection under K.S.A. 17-12a411(d), and amendments
thereto, fails to keep or maintain sufficient records to permit an
audit disclosing the condition of the registrant's business, or
fails willfully and without cause to comply with a request for
information by the administrator or person designated by the
administrator in conducting investigations or examinations under
this act;
(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 act
or the predecessor act or a rule adopted or order issued under this
act or the predecessor act within the previous 10 years;
(10) has not paid the proper filing fee within 30 days after
having been notified by the administrator of a deficiency, but the
administrator shall vacate an order under this paragraph when the
deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous 10 years:
(A) By a court of competent 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 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 paragraph if the individual has
successfully completed all examinations required by subsection (e).
The administrator may require an applicant for registration under
K.S.A. 17-12a402 or 17-12a404, and amendments thereto, who has not
been
registered in a state within the two years preceding the filing of
an application in this state to successfully complete an
examination; or
(15) lacks sufficient character or reputation to warrant the public
trust.
(e) Examinations. A rule adopted or order issued under this
act 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 act may waive, in whole or
in part, an examination as to an individual and a rule adopted under
this act may waive, in whole or in part, an examination as to a
class of individuals if the administrator determines that the
examination is not necessary or appropriate in the public interest
and for the protection of investors.
(f) Summary process. In accordance with the Kansas
administrative procedures act, the administrator may use summary or
emergency proceedings to suspend or deny an application; restrict,
condition, limit, or suspend a registration; or censure, bar, or
impose a civil penalty or cease and desist order on a registrant
before final determination of an administrative proceeding. If a
hearing is not requested and none is ordered by the administrator
within 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 administrator, 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) Procedural requirements. (1) An order issued may not be
issued under this section, except under subsection (f), without:
(A) Appropriate notice to the applicant or registrant;
(B) opportunity for hearing; and
(C) findings of fact and conclusions of law in a record.
(2) Proceedings under this subsection shall be conducted in
accordance with the Kansas administrative procedures act.
(h) Control person liability. A person that controls, directly or
indirectly, a person not in compliance with this section may be
disciplined by order of the administrator 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) Limit on investigation or proceeding. The administrator may
not institute a proceeding under subsection (a), (b), or (c) based
solely on material facts actually known by the administrator unless
an investigation or the proceeding is instituted within one year
after the administrator actually acquires knowledge of the material
facts.
History: L. 2004, ch. 154, § 29;
L. 2006, ch. 47, § 6; July 1.
17-12a412.Denial, revocation, suspension,
withdrawal, restriction, condition or limitation of registration.
(a) Disciplinary conditions-applicants. An order
issued under this act 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 if the
administrator finds that the order is in the public interest and
that there is a ground for discipline under subsection (d) against
the applicant or, if the applicant is a broker-dealer or investment
adviser, against any partner, officer, director, person having a
similar status or performing similar functions, or person directly
or indirectly controlling the broker-dealer or investment adviser.
(b) Disciplinary conditions -- registrants. An order issued
under this act may revoke, suspend, condition, or limit the
registration of a registrant if the administrator finds that the
order is in the public interest and that there is a ground for
discipline under subsection (d) against the registrant or, if the
registrant is a broker-dealer or investment adviser, against any
partner, officer, or director, any person having a similar status
or performing similar functions, or any person directly or
indirectly controlling the broker-dealer or investment adviser. However, the
administrator:
(1) May not institute a revocation or suspension proceeding
under this subsection based on an order issued by another state that
is reported to the administrator or designee later than one year
after the date of the order on which it is based; and
(2) under subsection (d)(5)(A) and (B), may not issue an order on
the basis of an order under the state 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) Disciplinary penalties -- registrants. If the
administrator
finds that the order is in the public interest and that there is a
ground for discipline under subsection (d)(1) through (6), (8), (9),
(10), (12) or (13) against a registrant or, if the registrant is a
broker-dealer or investment adviser, against any partner, officer,
or director, any person having similar functions, or any person
directly or indirectly controlling the broker-dealer or investment
adviser, then the administrator may enter an order against the
registrant containing one or more of the following sanctions or
remedies:
(1) A censure;
(2) a bar or suspension from association with a broker-dealer
or investment adviser registered in this state;
(3) a civil penalty up to $25,000 for each
violation. If any person is
found to have
violated any provision of this act, and such violation is committed against
elder or disabled persons, as defined in K.S.A. 50-676, and amendments thereto,
in addition to any civil penalty otherwise provided by law, the administrator
may impose an additional penalty not to exceed $15,000 for each such violation.
The total penalty against a person shall not exceed $1,000,000;
(4) an order requiring the registrant to pay restitution for
any loss or disgorge any profits arising from a violation,
including, in the administrator's discretion, the assessment of
interest from the date of the violation at the rate provided for interest on
judgments by K.S.A. 16-204, and amendments thereto;
(5) an order charging the registrant with the actual cost of
an investigation or proceeding; or
(6) an order requiring the registrant to cease and desist from
any action that constitutes a ground for discipline, or to take
other action necessary or appropriate to comply with this act.
(d) Grounds for discipline. 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 act or the predecessor act within the previous 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) willfully violated or willfully failed to comply with this
act or the predecessor act or a rule adopted or order issued under
this act or the predecessor act within the previous 10 years;
(3) has been convicted of a felony or within the previous 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 of competent
jurisdiction in an action instituted by the administrator under this
act 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 by 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 by 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 the registration of an insurance agent; or
(F) a depository institution regulator suspending or barring
a person from the depository institution business;
(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 administrator may not
enter an order against an applicant or registrant under this
paragraph without a finding of insolvency as to the applicant or
registrant;
(8) refuses to allow or otherwise impedes the administrator
from conducting an audit or inspection under K.S.A. 17-12a411(d),
and
amendments thereto, refuses access to a registrant's office to conduct an audit
or inspection under K.S.A. 17-12a411(d), and amendments
thereto, fails to keep or maintain sufficient records to permit an
audit disclosing the condition of the registrant's business, or
fails willfully and without cause to comply with a request for
information by the administrator or person designated by the
administrator in conducting investigations or examinations under
this act;
(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 act
or the predecessor act or a rule adopted or order issued under this
act or the predecessor act within the previous 10 years;
(10) has not paid the proper filing fee within 30 days after
having been notified by the administrator of a deficiency, but the
administrator shall vacate an order under this paragraph when the
deficiency is corrected;
(11) after notice and opportunity for a hearing, has been found
within the previous 10 years:
(A) By a court of competent 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 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 paragraph if the individual has
successfully completed all examinations required by subsection (e).
The administrator may require an applicant for registration under
K.S.A. 17-12a402 or 17-12a404, and amendments thereto, who has not
been
registered in a state within the two years preceding the filing of
an application in this state to successfully complete an
examination; or
(15) lacks sufficient character or reputation to warrant the public
trust.
(e) Examinations. A rule adopted or order issued under this
act 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 act may waive, in whole or
in part, an examination as to an individual and a rule adopted under
this act may waive, in whole or in part, an examination as to a
class of individuals if the administrator determines that the
examination is not necessary or appropriate in the public interest
and for the protection of investors.
(f) Summary process. In accordance with the Kansas
administrative procedures act, the administrator may use summary or
emergency proceedings to suspend or deny an application; restrict,
condition, limit, or suspend a registration; or censure, bar, or
impose a civil penalty or cease and desist order on a registrant
before final determination of an administrative proceeding. If a
hearing is not requested and none is ordered by the administrator
within 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 administrator, 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) Procedural requirements. (1) An order issued may not be
issued under this section, except under subsection (f), without:
(A) Appropriate notice to the applicant or registrant;
(B) opportunity for hearing; and
(C) findings of fact and conclusions of law in a record.
(2) Proceedings under this subsection shall be conducted in
accordance with the Kansas administrative procedures act.
(h) Control person liability. A person that controls, directly or
indirectly, a person not in compliance with this section may be
disciplined by order of the administrator 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) Limit on investigation or proceeding. The administrator may
not institute a proceeding under subsection (a), (b), or (c) based
solely on material facts actually known by the administrator unless
an investigation or the proceeding is instituted within one year
after the administrator actually acquires knowledge of the material
facts.
History: L. 2004, ch. 154, § 29;
L. 2006, ch. 47, § 6; July 1.