§485-15 Denial, revocation, or suspension of dealers', investment advisers', salespersons', and investment adviser representatives' registration; suspension during investigation, etc. Upon the finding of errors in a registration statement or the filing of complaints by consumers or by any government agency, the commissioner may conduct an investigation of the applicant or registrant and the commissioner may deny an application for registration, revoke or suspend any registration, or limit or impose conditions on the securities activities that a registrant may conduct in this State, if after reasonable notice and a hearing the commissioner determines that the applicant or registrant:
(1) Has filed an application for registration which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
(2) Has violated or failed to comply with any provision of this chapter or any rule or order under this chapter;
(3) Has been convicted, within the past ten years, of any misdemeanor involving a security or any aspect of the securities business, or any felony;
(4) Is permanently or temporarily enjoined by any court of competent jurisdiction for engaging in or continuing any conduct or practice involving any aspect of the securities business;
(5) Is the subject of an order of the commissioner denying, suspending, or revoking registration as a dealer, investment adviser, salesperson, or investment adviser representative;
(6) Is the subject of an order entered within the past five years by the securities administrator of any other state or by the Securities and Exchange Commission denying or revoking registration as a dealer, investment adviser, salesperson, or investment adviser representative, or the substantial equivalent of those terms as defined in this chapter, or is the subject of an order of the Securities and Exchange Commission suspending or expelling the applicant or registrant from a national securities exchange or national securities association registered under the Securities Exchange Act of 1934, or is the subject of a United States Post Office fraud order; but:
(A) The commissioner may not institute a revocation or suspension proceeding under this paragraph more than one year from the date of the order relied on; and
(B) The commissioner may not enter an order under this paragraph on the basis of an order under another law of this State unless that order was based on facts which would currently constitute a ground for an order under this section;
(7) Has engaged or is about to engage in fraudulent, dishonest, or unethical practices in the securities business;
(8) Is insolvent, either in the sense that liabilities exceed assets or in the sense that the dealer, investment adviser, salesperson, or investment adviser representative cannot meet obligations as they mature; but the commissioner may not enter an order against a dealer or investment adviser under this paragraph without a finding of insolvency as to the dealer or investment adviser;
(9) Is not qualified on the basis of such factors as training, experience, and knowledge of the securities business;
(10) Has failed reasonably to supervise agents, if a dealer or an agent of a dealer with supervisory responsibilities, or employees, if an investment adviser or an employee of an investment adviser with supervisory responsibilities; for the purposes of this paragraph no person shall be deemed to have failed reasonably to supervise any person if there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violations by such other person, and such person has reasonably discharged the duties and obligations incumbent upon the person by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with; or
(11) Has demonstrated unworthiness to transact the business of dealer, investment adviser, salesperson, or investment adviser representative.
In cases of charges against a salesperson or investment adviser representative notice thereof shall also be given the dealer or investment adviser employing such salesperson or investment adviser representative. Pending the hearing, the commissioner may order the suspension of the dealer's, investment adviser's, salesperson's, or investment adviser representative's registration; provided the order states the cause for the suspension.
Until the entry of a final order the suspension of the dealer's or investment adviser's registration, though binding upon the persons notified thereof, shall be deemed confidential, and shall not be published, unless it appears that the order of suspension has been violated after notice.
In the event the commissioner determines to refuse or revoke a registration as provided in this section, the commissioner shall enter a final order with the commissioner's findings on the register of dealers, investment advisers, salespersons, and investment adviser representatives; and suspension or revocation of the registration of a dealer or investment adviser shall also suspend or revoke the registration of all the dealer's or investment adviser's salespersons or investment adviser representatives.
It shall be sufficient cause for refusal or cancellation of registration in case of a partnership or corporation or any unincorporated association, if any member of a partnership or any officer or director of the corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, investment adviser, salesperson, or investment adviser representative. [L 1957, c 314, pt of §1; Supp, §199-12; HRS §485-15; am L 1984, c 281, §3; am L 1985, c 286, §3; gen ch 1985; am L 1986, c 240, §5; am L 1992, c 14, §1; am L 2000, c 149, §6]
Cross References
Administrative agency hearings, see chapter 91.