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2006 Utah Code - 61-1-5 — Postlicensing provisions.
61-1-5. Postlicensing provisions.
(1) (a) Every licensed broker-dealer and investment adviser shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the division by rule prescribes, except as provided in:
(i) Section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer; and
(ii) Section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser.
(b) All required records regarding an investment adviser shall be preserved for the period as the division prescribes by rule or order.
(2) (a) Every licensed broker-dealer shall, within 24 hours after demand, furnish to any customer or principal for whom the broker-dealer has executed any order for the purchase or sale of any securities, either for immediate or future delivery, a written statement showing:
(i) the time when the securities were bought and sold;
(ii) the place where the securities were bought and sold; and
(iii) the price at which the securities were bought and sold.
(b) With respect to investment advisers, the division may require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients.
(c) To the extent determined by the director, information furnished to clients or prospective clients of an investment adviser who would be in compliance with the Investment Advisers Act of 1940 and the rules under the Investment Advisers Act of 1940 may be considered to satisfy this requirement.
(d) (i) A licensed broker-dealer is subject to this Subsection (2)(d) if:
(A) the licensed broker-dealer is selling or purchasing for:
(I) a customer; or
(II) its own account;
(B) a trade fails to settle by delivery of securities of like kind and quality;
(C) the trade is in a threshold security of an issuer:
(I) domiciled in this state; or
(II) with its principal office located in this state; and
(D) the failure to settle described in this Subsection (2)(d) occurs on or after October 1, 2006.
(ii) If the conditions of Subsection (2)(d)(i) are met, the licensed broker-dealer shall notify the division:
(A) within 24 hours of the failure to settle;
(B) in writing or by a means that the division shall specify by rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act; and
(C) of:
(I) the name of the company whose shares were the subject of the settlement failure;
(II) the date of the trade that failed to settle;
(III) the amount of the shares not delivered to settle the trade; and
(IV) (Aa) in the case of a selling broker-dealer, the identity of the broker-dealer's customer account or broker-dealer account for which the sell transaction is executed; or
(Bb) in the case of a broker-dealer purchasing the securities, the identity of the account that failed to deliver the security in settlement of the trade.
(iii) The division shall make the information disclosed under Subsection (2)(d)(ii) available to the public.
(iv) (A) Subject to Subsection (2)(d)(iv)(C), a broker-dealer who materially fails to provide the notice required by Subsection (2)(d)(ii) is liable to the company whose securities were the subject of the settlement failure in the amount of:
(I) if the failure is for at least one business day but not more than five business days, $10,000 for each business day the broker-dealer fails to provide the required notice; or
(II) if the failure is for six or more business days, the greater of:
(Aa) $10,000 for each business day; or
(Bb) the sum of the sales price for each securities share in the subject trade that has not been delivered in settlement.
(B) Subject to Subsection (2)(d)(iv)(C), the company described in this Subsection (2)(d)(iv) may sue at law or in equity to enforce the payment of:
(I) the amount described in Subsection (2)(d)(iv)(A);
(II) interest at 12% per year from the day on which the broker-dealer fails to provide the notice required by Subsection (2)(d)(ii);
(III) costs; and
(IV) reasonable attorney's fees.
(C) The court in an action brought under this Subsection (2)(d)(iv) may waive the amounts owed under this Subsection (2)(d)(iv), upon a showing by the licensed broker-dealer who is subject to this Subsection (2)(d) or any person listed in Subsection (2)(d)(v) of reasonable cause including for any exception provided in Regulation SHO, 17 C.F.R. 242.200 et seq.
(v) Each of the following is liable jointly and severally with and to the same extent as a broker-dealer is liable under Subsection (2)(d)(iv):
(A) a principal of the broker-dealer;
(B) a person who directly or indirectly controls the broker-dealer;
(C) a partner, officer, or director of the broker-dealer;
(D) a person occupying a similar status or performing a similar function to a partner, officer, or director of the broker-dealer; and
(E) an employee of the broker-dealer who:
(I) has a duty to assure the filing of the notice required by Subsection (2)(d)(ii); and
(II) recklessly fails in that duty.
(vi) An action may not be maintained to enforce any liability under Subsection (2)(d)(iv) or (v) unless it is brought before the sooner of the expiration of:
(A) four years after the day on which the broker-dealer fails to provide the notice required by Subsection (2)(d)(ii); or
(B) two years after the day on which the company bringing the enforcement action discovers the facts constituting the violation of Subsection (2)(d)(ii).
(vii) The rights and remedies provided in this Subsection (2)(d) are in addition to any other rights or remedies that may exist at law or in equity.
(viii) With regard to any enforcement action the division may take to enforce this Subsection (2)(d), the division may waive any penalty or amounts owed upon a showing by the licensed broker-dealer who is subject to this Subsection (2)(d) or any person listed in Subsection (2)(d)(v) of reasonable cause including for any exception provided in Regulation SHO, 17 C.F.R. 242.200 et seq.
(3) Every licensed broker-dealer and investment adviser shall file financial reports as the division by rule prescribes, except as provided in:
(a) Section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer; and
(b) Section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser.
(4) If the information contained in any document filed with the division is or becomes inaccurate or incomplete in any material respect, the licensee or federal covered adviser shall promptly file a correcting amendment if the document is filed with respect to a licensee, or when such amendment is required to be filed with the Securities and Exchange Commission if the document is filed with respect to a federal covered adviser, unless notification of the correction has been given under Section 61-1-3.
(5) (a) All the records referred to in Subsection (1) are subject at any time or from time to time to reasonable periodic, special, or other examinations by representatives of the division, within or without this state, as the division considers necessary or appropriate in the public interest or for the protection of investors.
(b) For the purpose of avoiding unnecessary duplication of examination, the division may cooperate with:
(i) the securities administrators of other states;
(ii) the Securities and Exchange Commission; and
(iii) national securities exchanges or national securities associations registered under the Securities Exchange Act of 1934.
(1) (a) Every licensed broker-dealer and investment adviser shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the division by rule prescribes, except as provided in:
(i) Section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer; and
(ii) Section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser.
(b) All required records regarding an investment adviser shall be preserved for the period as the division prescribes by rule or order.
(2) (a) Every licensed broker-dealer shall, within 24 hours after demand, furnish to any customer or principal for whom the broker-dealer has executed any order for the purchase or sale of any securities, either for immediate or future delivery, a written statement showing:
(i) the time when the securities were bought and sold;
(ii) the place where the securities were bought and sold; and
(iii) the price at which the securities were bought and sold.
(b) With respect to investment advisers, the division may require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients.
(c) To the extent determined by the director, information furnished to clients or prospective clients of an investment adviser who would be in compliance with the Investment Advisers Act of 1940 and the rules under the Investment Advisers Act of 1940 may be considered to satisfy this requirement.
(d) (i) A licensed broker-dealer is subject to this Subsection (2)(d) if:
(A) the licensed broker-dealer is selling or purchasing for:
(I) a customer; or
(II) its own account;
(B) a trade fails to settle by delivery of securities of like kind and quality;
(C) the trade is in a threshold security of an issuer:
(I) domiciled in this state; or
(II) with its principal office located in this state; and
(D) the failure to settle described in this Subsection (2)(d) occurs on or after October 1, 2006.
(ii) If the conditions of Subsection (2)(d)(i) are met, the licensed broker-dealer shall notify the division:
(A) within 24 hours of the failure to settle;
(B) in writing or by a means that the division shall specify by rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act; and
(C) of:
(I) the name of the company whose shares were the subject of the settlement failure;
(II) the date of the trade that failed to settle;
(III) the amount of the shares not delivered to settle the trade; and
(IV) (Aa) in the case of a selling broker-dealer, the identity of the broker-dealer's customer account or broker-dealer account for which the sell transaction is executed; or
(Bb) in the case of a broker-dealer purchasing the securities, the identity of the account that failed to deliver the security in settlement of the trade.
(iii) The division shall make the information disclosed under Subsection (2)(d)(ii) available to the public.
(iv) (A) Subject to Subsection (2)(d)(iv)(C), a broker-dealer who materially fails to provide the notice required by Subsection (2)(d)(ii) is liable to the company whose securities were the subject of the settlement failure in the amount of:
(I) if the failure is for at least one business day but not more than five business days, $10,000 for each business day the broker-dealer fails to provide the required notice; or
(II) if the failure is for six or more business days, the greater of:
(Aa) $10,000 for each business day; or
(Bb) the sum of the sales price for each securities share in the subject trade that has not been delivered in settlement.
(B) Subject to Subsection (2)(d)(iv)(C), the company described in this Subsection (2)(d)(iv) may sue at law or in equity to enforce the payment of:
(I) the amount described in Subsection (2)(d)(iv)(A);
(II) interest at 12% per year from the day on which the broker-dealer fails to provide the notice required by Subsection (2)(d)(ii);
(III) costs; and
(IV) reasonable attorney's fees.
(C) The court in an action brought under this Subsection (2)(d)(iv) may waive the amounts owed under this Subsection (2)(d)(iv), upon a showing by the licensed broker-dealer who is subject to this Subsection (2)(d) or any person listed in Subsection (2)(d)(v) of reasonable cause including for any exception provided in Regulation SHO, 17 C.F.R. 242.200 et seq.
(v) Each of the following is liable jointly and severally with and to the same extent as a broker-dealer is liable under Subsection (2)(d)(iv):
(A) a principal of the broker-dealer;
(B) a person who directly or indirectly controls the broker-dealer;
(C) a partner, officer, or director of the broker-dealer;
(D) a person occupying a similar status or performing a similar function to a partner, officer, or director of the broker-dealer; and
(E) an employee of the broker-dealer who:
(I) has a duty to assure the filing of the notice required by Subsection (2)(d)(ii); and
(II) recklessly fails in that duty.
(vi) An action may not be maintained to enforce any liability under Subsection (2)(d)(iv) or (v) unless it is brought before the sooner of the expiration of:
(A) four years after the day on which the broker-dealer fails to provide the notice required by Subsection (2)(d)(ii); or
(B) two years after the day on which the company bringing the enforcement action discovers the facts constituting the violation of Subsection (2)(d)(ii).
(vii) The rights and remedies provided in this Subsection (2)(d) are in addition to any other rights or remedies that may exist at law or in equity.
(viii) With regard to any enforcement action the division may take to enforce this Subsection (2)(d), the division may waive any penalty or amounts owed upon a showing by the licensed broker-dealer who is subject to this Subsection (2)(d) or any person listed in Subsection (2)(d)(v) of reasonable cause including for any exception provided in Regulation SHO, 17 C.F.R. 242.200 et seq.
(3) Every licensed broker-dealer and investment adviser shall file financial reports as the division by rule prescribes, except as provided in:
(a) Section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer; and
(b) Section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser.
(4) If the information contained in any document filed with the division is or becomes inaccurate or incomplete in any material respect, the licensee or federal covered adviser shall promptly file a correcting amendment if the document is filed with respect to a licensee, or when such amendment is required to be filed with the Securities and Exchange Commission if the document is filed with respect to a federal covered adviser, unless notification of the correction has been given under Section 61-1-3.
(5) (a) All the records referred to in Subsection (1) are subject at any time or from time to time to reasonable periodic, special, or other examinations by representatives of the division, within or without this state, as the division considers necessary or appropriate in the public interest or for the protection of investors.
(b) For the purpose of avoiding unnecessary duplication of examination, the division may cooperate with:
(i) the securities administrators of other states;
(ii) the Securities and Exchange Commission; and
(iii) national securities exchanges or national securities associations registered under the Securities Exchange Act of 1934.
Amended by Chapter 4, 2006 Special Session 3
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