State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_78C > GS_78C-19

§ 78C‑19.  Denial,revocation, suspension, bar, censure, cancellation, and withdrawal ofregistration.

(a)        The Administratormay by order deny, suspend or revoke any registration, or bar or censure anyregistrant or any officer, director, partner or person occupying a similarstatus or performing similar functions for a registrant, from employment with aregistered investment adviser, or restrict or limit a registrant as to anyfunction or activity of the business for which registration is required in thisState if he finds:

(1)        That the order is inthe public interest and;

(2)        That the applicantor registrant or, in the case of an investment adviser, any partner, officer ordirector, any person occupying a similar status or performing similarfunctions, or any person directly or indirectly controlling the investmentadviser;

a.         Has filed anapplication for registration which as of its effective date, or as of any dateafter filing in the case of an order denying effectiveness, was incomplete inany material respect or contained any statement which was, in light of thecircumstances under which it was made, false or misleading with respect to anymaterial fact;

b.         Has willfullyviolated or willfully failed to comply with any provision of this Chapter orChapter 78A or any rule or order under this Chapter or Chapter 78A;

c.         Has been convicted,within the past 10 years, of any misdemeanor involving a security or thefinancial services business, or any aspect of the securities business, or thefinancial services business, or any felony;

d.         Is permanently ortemporarily enjoined by any court of competent jurisdiction from engaging in orcontinuing any conduct or practice involving any aspect of the securities orfinancial services business;

e.         Is the subject of anorder of the Administrator denying, suspending, barring, revoking, restrictingor limiting registration as a dealer, salesman, investment adviser orinvestment adviser representative;

f.          Is the subject ofan adjudication or determination within the past five years by a securities,commodities or other financial services regulatory agency or an administratorof such laws of another state or a court of competent jurisdiction that theperson has violated the Securities Act of 1933, the Securities Exchange Act of1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940or the Commodity Exchange Act, or the securities or commodities law of anyother state or any other financial services regulatory laws as theAdministrator may designate by rule;

g.         Has engaged indishonest or unethical practices in the securities or financial servicesbusiness;

h.         Is insolvent, eitherin the sense that his liabilities exceed his assets or in the sense that hecannot meet his obligations as they mature; but the Administrator may not enteran order against an investment adviser under this clause without a finding ofinsolvency as to the investment adviser;

i.          Is not qualified onthe basis of such factors as training, experience, and knowledge of thesecurities business, except as otherwise provided in subsection (b) of thissection;

j.          Has failedreasonably to supervise his salesmen or employees if he is a dealer or hisinvestment adviser representatives or employees if he is an investment adviserto assure their compliance with this Chapter; or

k.         Has failed to paythe proper filing fee; but the Administrator may enter only a denial orderunder this clause, and he shall vacate any such order when the deficiency hasbeen corrected.

The Administrator may notinstitute a suspension or revocation proceeding on the basis of a fact ortransaction known to him when registration became effective unless theproceeding is instituted within the next 120 days.

(b)        The followingprovisions govern the application of G.S. 78C‑19(a)(2)i:

(1)        The Administratormay not enter an order against an investment adviser on the basis of the lackof qualification of any person other than (i) the investment adviser himself ifhe is an individual or (ii) an investment adviser representative.

(2)        The Administratormay not enter an order solely on the basis of lack of experience if theapplicant or registrant is qualified by training or knowledge or both.

(3)        The Administratorshall consider that an investment adviser representative who will work underthe supervision of a registered investment adviser need not have the samequalifications as an investment adviser.

(4)        The Administratorshall consider that an investment adviser or investment adviser representativeis not necessarily qualified solely on the basis of experience as a dealer orsalesman.

(5)        The Administratormay by rule provide for an examination, including an examination developed orapproved by an organization of securities administrators, which examination maybe written or oral or both, to be taken by any class of or all applicants. TheAdministrator may by rule or order waive the examination requirement as to aperson or class of persons if the Administrator determines that the examinationis not necessary for the protection of advisory clients.

(c)        The Administratormay by order summarily postpone or suspend registration pending finaldetermination of any proceeding under this section. Upon the entry of theorder, the Administrator shall promptly notify the applicant or registrant, aswell as the employer or prospective employer if the applicant or registrant isan investment adviser representative, that it has been entered and of thereasons therefor and that within 20 days after the receipt of a written requestthe matter will be scheduled for hearing in accordance with Chapter 150B of theGeneral Statutes. If no request for a hearing, other responsive pleading, orsubmission is received by the Administrator within 30 business days of receiptof service of notice of the order upon the applicant or registrant and nohearing is ordered by the Administrator, the order shall become final andremain in effect unless it is modified or vacated by the Administrator. If ahearing is requested or ordered, the Administrator, after notice of andopportunity for hearing, may modify or vacate the order or extend it untilfinal determination.

(d)        If theAdministrator finds that any registrant or applicant for registration is nolonger in existence or has ceased to do business as an investment adviser orinvestment adviser representative, or is subject to an adjudication of mentalincompetence or to the control of a committee, conservator, or guardian, orcannot be located after reasonable search, the Administrator may by ordercancel the registration or application.

(e)        Withdrawal fromregistration as an investment adviser or investment adviser representativebecomes effective 90 days after receipt of an application to withdraw or withinsuch shorter period of time as the Administrator may determine, unless arevocation or suspension proceeding is pending when the application is filed ora proceeding to revoke or suspend or to impose conditions upon the withdrawalis instituted within 90 days after the application is filed. If a proceeding ispending or instituted, withdrawal becomes effective at such time and upon suchconditions as the Administrator by order determines. If no proceeding ispending or instituted and withdrawal automatically becomes effective, theAdministrator may nevertheless institute a revocation or suspension proceedingunder G.S. 78C‑19(a)(2)b within one year after withdrawal becameeffective and enter a revocation or suspension order as of the last date onwhich registration was effective.

(f)         No order may beentered under any part of this section except the first sentence of subsection(c) of this section without (i) appropriate prior notice to the applicant orregistrant (as well as the employer or prospective employer if the applicant orregistrant is an investment adviser representative), (ii) opportunity forhearing, and (iii) written findings of fact and conclusions of law. (1987 (Reg. Sess., 1988), c.1098, s. 1; 1997‑462, s. 7; 2001‑126, s. 5.)