La. Admin. Code tit. 10 § XIII-1203

Current through Register Vol. 50, No. 11, November 20, 2024

Section XIII-1203 - Dealers and Salesmen

A.Dealers and Salesmen - i ncludes the following actions:

1. engaging in a pattern of unreasonable and unjustifiable delays in the delivery of securities purchased by any customer or in the payment upon request of free credit balances reflecting completed transactions of any customer;

2. inducing trading in a customer's account which is excessive in size or frequency in view of the financial resources and character of the account;

3. recommending to a customer the purchase, sale or exchange of a security without reasonable grounds to believe that the transaction or recommendation is suitable for the customer based upon reasonable inquiry concerning the customer's investment objectives, financial situation and needs and other relevant information known by the dealer;

4. executing a transaction on behalf of a customer without authorization to do so;

5. exercising discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price, or both, for the execution of orders;

6. executing a transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account;

7. failing to segregate customers' free securities or securities held in safekeeping;

8. hypothecating a customer's securities without having a lien thereon unless the dealer secures from the customer a properly executed written consent promptly after the initial transaction, except as permitted by rules of the Securities and Exchange Commission;

9. entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security or receiving an unreasonable commission or profit;

10. failing to furnish to a customer purchasing securities in an offering, no later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which together include information set forth in the final prospectus;

11. charging unreasonable and inequitable fees for services performed, including miscellaneous services such as collection of monies due for principal, dividends or interest, exchange or transfer of securities, appraisals, safekeeping or custody of securities and other services related to its securities business;

12. offering to buy from or sell to a person a security at a stated price unless the dealer or salesman is prepared to purchase or sell the security at such price and under the conditions that are stated at the time of the offer to buy or sell;

13. representing that a security is being offered to a customer at the market'' or a price relevant to the market price unless the dealer or salesman knows or has reasonable grounds to believe that a market for the security exists other than that made, created or controlled by the dealer, or by a person for whom the dealer is acting, or by a person with whom the dealer is associated in the distribution, or by a person controlled by, controlling or under common control with the dealer;

14. effecting a transaction in, or inducing the purchase or sale of, a security by means of a manipulative, deceptive or fraudulent device, practice, plan, program, design or contrivance, which may include:

a. effecting a transaction in a security which involves no change in the beneficial ownership thereof;

b. entering an order for the purchase or sale of a security with the knowledge that an order of substantially the same size, at substantially the same time, and substantially the same price, for the sale of the security, has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security. Nothing in this subsection prohibits a dealer from entering bona fide agency cross transactions for its customers;

c. effecting, along or with one or more other persons, a series of transactions in a security creating actual or apparent active trading in the security or raising or depressing the price of the security, for the purpose of inducing the purchase or sale of the security by others;

15. guaranteeing a customer against loss in a securities account of the customer or in a securities transaction effected with or for the customer;

16. publishing or circulating, or causing to be published or circulated, a notice, circular, advertisement, newspaper article, investment service or communication of any kind which purports to report a transaction as a purchase or sale of a security unless the dealer or salesman believes that the transaction was a bona fide purchase or sale of the security; or which purports to quote the bid price or asked price for a security, unless the dealer believes that the quotation represents a bona fide bid for, or offer of, the security;

17. using an advertising or sales presentation in such a fashion as to be deceptive or misleading;

18. failing to disclose that the dealer is controlled by, controlling, affiliated with, or under common control with the issuer of a security before entering into a contract with or for a customer for the purchase or sale of the security. If the disclosure is not made in writing, it shall be supplemented by the giving or sending of written disclosure at or before the completion of the transaction;

19. failing to make a bona fide public offering of all of the securities allotted to a dealer for distribution, whether acquired as an underwriter, a selling group member or from a member participating in the distribution as an underwriter or selling group member;

20. failure or refusal to furnish a customer, upon reasonable request, information to which he is entitled, or to respond to a formal written request or complaint;

21. failing to comply with an applicable provision of the Rules of Fair Practice of the Financial Industry Regulatory Authority or an applicable fair practice or ethical standard promulgated by the Securities and Exchange Commission or by a self-regulatory organization approved by the Securities and Exchange Commission;

22. engaging in the practice of lending or borrowing money or securities from a customer, or acting as a custodian for money, securities or an executed stock power of a customer without proper authority to do so;

23. effecting securities transactions not recorded on the regular books or records of the dealer, unless the transactions are authorized in writing by the dealer prior to execution of the transaction;

24. establishing or maintaining an account containing fictitious information in order to execute transactions which would otherwise be prohibited;

25. sharing directly or indirectly in profits or losses in the account of a customer without the written authorization of the customer;

26. dividing or otherwise splitting a salesman's commissions, profits or other compensation from the purchase or sale of securities with a person not also registered as a salesman for the same dealer, or for a dealer under direct or indirect common control.

La. Admin. Code tit. 10, § XIII-1203

Promulgated by the Office of the Governor, Office of Financial Institutions, LR 38:3169 (December 2012).

AUTHORITY NOTE: Promulgated in accordance with R.S. 51:704(A)(10).