1997 Minnesota Statutes

     80A.07 Denial, suspension, and revocation of licenses. 

    Subdivision 1.  The commissioner may by order deny, 
 suspend, or revoke any license or may censure the licensee, if 
 the commissioner finds (a) that the order is in the public 
 interest and (b) that the applicant or licensee or, in the case 
 of a broker-dealer or investment adviser, any partner, officer, 
 or director, any person occupying a similar status or performing 
 similar functions, or any person directly or indirectly 
 controlling the broker-dealer or investment adviser: 

    (1) has filed an application for license 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 willfully violated or failed to comply with any 
 provision of this chapter or a predecessor law or any provision 
 of the Securities Act of 1933, the Securities Exchange Act of 
 1934, the Investment Advisers Act of 1940, the Investment 
 Company Act of 1940, the Commodity Exchange Act, or any rule or 
 order under any of these statutes, of which that person has 
 notice and is subject; 

    (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 from 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 a license as a broker-dealer, agent or 
 investment adviser; 

    (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 or license as a broker-dealer, agent, or investment 
 adviser, or is the subject of an order of the securities and 
 exchange commission suspending or expelling that person from a 
 national securities exchange or association registered under the 
 Securities Exchange Act of 1934, or is the subject of a United 
 States post office fraud order.  The commissioner may not 
 institute a revocation or suspension proceeding under this 
 clause more than one year from the date of the order relied on, 
 and may not enter an order under this clause on the basis of an 
 order under another state law unless the order was based on 
 facts which would currently constitute a ground for an order 
 under this section; 

    (7) has engaged in dishonest or fraudulent practices in the 
 securities business; 

    (8) has failed to maintain the minimum net capital or to 
 comply with the limitation on aggregate indebtedness which the 
 commissioner by rule prescribes; 

    (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, investment 
 adviser representatives, or employees to assure their compliance 
 with this chapter; 

    (11) has failed to pay the proper filing fee, but the 
 commissioner shall vacate the order when the deficiency has been 
 corrected; 

    (12) has offered or sold securities in this state through 
 any unlicensed agent; 

    (13) has made any material misrepresentation to the 
 commissioner, or upon request reasonably made by the 
 commissioner, has withheld or concealed information from, or 
 refused to furnish information to, the commissioner; 

    (14) has failed to reasonably supervise agents, investment 
 adviser representatives, or employees if that person has assumed 
 or has been designated to carry out the supervisory procedures 
 of the broker-dealer or investment adviser; or 

    (15) has failed, within 20 business days after receiving 
 written instructions from a customer, to do any of the following:

    (a) transfer or deliver securities that have been 
 purchased; 

    (b) transfer or deliver any free credit balances reflecting 
 completed transactions; or 

    (c) transfer or deliver a customer's account securities 
 positions and balances to another broker-dealer. 

 This clause shall not serve as a basis for denial, suspension, 
 or revocation of a broker-dealer's or agent's license if:  (i) 
 the transfer or delivery is between broker-dealers and meets the 
 rules and requirements established by the New York Stock 
 Exchange with regard to the transfer or delivery; or (ii) the 
 delivery of securities to a customer cannot be accomplished 
 within 20 business days, and the broker-dealer or agent has 
 notified the customer in writing of the inability to deliver the 
 securities and the reasons for the nondelivery within 20 
 business days of receiving the customer's written instructions.  

    Subd. 1a.    Investment adviser representatives.  The 
 commissioner, by order, shall censure or place limitations on 
 the activities of any investment adviser representative or 
 person seeking to become an investment adviser representative, 
 or suspend or bar any person from being an investment adviser 
 representative, if the commissioner finds, after notice and 
 opportunity for hearing, that the censure, placing of 
 limitations, suspension, or bar is in the public interest and 
 that the person has committed or omitted any act or omission 
 enumerated in subdivision 1.  It shall be unlawful for any 
 person as to whom an order suspending or barring that person 
 from being an investment adviser representative is in effect 
 willfully to become, or to be, associated with an investment 
 adviser without the consent of the commissioner, and it shall be 
 unlawful for any investment adviser to permit this person to 
 become, or remain, an investment adviser representative without 
 the consent of the commissioner, if the investment adviser knew, 
 or in the exercise of reasonable care, should have known of the 
 order.  

    Subd. 2.  The commissioner may not institute a suspension 
 or revocation proceeding solely on the basis of a fact or 
 transaction known to the commissioner when the initial license 
 was issued unless the proceeding is instituted within the next 
 30 days after the issuance of the initial license. 

    Subd. 3.  The commissioner may issue an order requiring a 
 licensee or an applicant for a license to show cause why the 
 license should not be revoked or the application denied.  The 
 order shall be calculated to give reasonable notice of the time 
 and place for hearing thereon, and shall state the reasons for 
 the entry of the order.  The commissioner may by order summarily 
 suspend a license, or in the case of an investment adviser 
 representative or person seeking to become an investment adviser 
 representative, summarily suspend or bar that person from acting 
 in that capacity, pending final determination of any order to 
 show cause.  If a license is suspended pending final 
 determination of an order to show cause, a hearing on the merits 
 shall be held within 30 days of the issuance of the order of 
 suspension.  All hearings shall be conducted in accordance with 
 the provisions of chapter 14.  After the hearing, the 
 commissioner shall enter an order making a disposition of the 
 matter as the facts require.  If the licensee or applicant fails 
 to appear at a hearing of which that person has been duly 
 notified, the person shall be deemed in default and the 
 proceeding may be determined against that person upon 
 consideration of the order to show cause, the allegations of 
 which may be deemed to be true.  The commissioner may adopt 
 rules of procedure concerning all proceedings conducted pursuant 
 to this subdivision. 

    Subd. 4.  If the commissioner finds that any licensee or 
 applicant is no longer in existence or has ceased to do business 
 as a broker-dealer, agent or investment adviser, or is subject 
 to an adjudication of mental incompetence or to the control of a 
 committee, conservator or guardian, or cannot be located after 
 reasonable search, the commissioner may by order revoke the 
 license or deny the application. 

    Subd. 5.  Withdrawal from the status of a licensed 
 broker-dealer, agent or investment adviser becomes effective 30 
 days after receipt of an application to withdraw or within such 
 shorter period as the commissioner determines unless a 
 revocation or suspension proceeding is pending when the 
 application is filed or a proceeding to revoke or suspend or to 
 impose conditions upon the withdrawal is instituted within 30 
 days after the application is filed. If a proceeding is pending 
 or instituted, withdrawal becomes effective at such time and 
 upon such conditions as the commissioner by order determines.  
 If no proceeding is pending or instituted and withdrawal 
 automatically becomes effective, the commissioner may institute 
 a revocation or suspension proceeding under subdivision 1, 
 clause (b) within two years after withdrawal became effective 
 and enter a revocation or suspension order as of the last date 
 on which the license was in effect. 

    HIST: 1973 c 451 s 7; 1977 c 33 s 1; 1981 c 140 s 3; 1982 c 
 424 s 130; 1983 c 284 s 4-6; 1986 c 444; 1987 c 336 s 10; 1995 c 
 11 s 1