61-1-4 - Licensing and notice filing procedure. - Utah Statutes

61-1-4. Licensing and notice filing procedure.
(1) (a) A broker-dealer, agent, investment adviser, or investment adviser representativeshall obtain an initial or renewal license by filing with the division or its designee an applicationtogether with a consent to service of process under Section 61-1-26.
(b) (i) The application shall contain the applicant's Social Security number and whateverinformation the division by rule requires concerning such matters as:
(A) the applicant's form and place of organization;
(B) the applicant's proposed method of doing business;
(C) (I) the qualifications and business history of the applicant; and
(II) in the case of a broker-dealer or investment adviser, the qualifications and businesshistory of any partner, officer, or director, any person occupying a similar status or performingsimilar functions, or any person directly or indirectly controlling the broker-dealer or investmentadviser;
(D) whether the applicant has been subject to:
(I) an injunction, administrative order, or misdemeanor conviction involving a security orany aspect of the securities business; or
(II) a felony conviction; and
(E) the applicant's financial condition and history.
(ii) An applicant's Social Security number is a private record under Subsection63G-2-302(1)(h).
(c) The division may, by rule or order, require an applicant for an initial license topublish an announcement of the application in one or more specified newspapers published inthis state.
(d) A license or notice filing of a broker-dealer, agent, investment adviser, or investmentadviser representative expires on December 31 of each year.
(e) (i) If no denial order is in effect and no proceeding is pending under Section 61-1-6, alicense becomes effective at noon of the 30th day after an application is filed.
(ii) The division may by rule or order specify an earlier effective date and may by orderdefer the effective date until noon of the 30th day after the filing of any amendment.
(iii) Licensing of a broker-dealer automatically constitutes licensing of only one partner,officer, director, or a person occupying a similar status or performing similar functions as alicensed agent of the broker-dealer.
(iv) Licensing of an investment adviser automatically constitutes licensing of only onepartner, officer, director, or a person occupying a similar status or performing similar functions.
(v) (A) For purposes of the activities of a licensee in this state, during the time periodthat a broker-dealer or investment adviser is licensed in this state:
(I) the broker-dealer shall maintain a principal; and
(II) the investment adviser shall maintain a designated official.
(B) The division may by rule made in accordance with Title 63G, Chapter 3, UtahAdministrative Rulemaking Act, provide a process for a person to identify for the division:
(I) a principal or designated official at the time a license is issued; and
(II) a different principal or designated official if:
(Aa) a broker-dealer changes its principal; or
(Bb) an investment adviser changes its designated official.
(C) A principal or designated official identified in Subsection (1)(e)(v)(A) is not required

to be separately licensed with the division.
(2) Except with respect to a federal covered adviser whose only clients are thosedescribed in Subsection 61-1-3(3)(b) or (c), a federal covered adviser shall file with the division,before acting as a federal covered adviser in this state, a notice filing consisting of the documentsfiled with the Securities and Exchange Commission as the division by rule or order may require.
(3) (a) An applicant for an initial or renewal license as a broker-dealer or agent shall paya reasonable filing fee as determined under Section 61-1-18.4.
(b) An applicant for an initial or renewal license as an investment adviser or investmentadviser representative who is subject to licensing under this chapter shall pay a reasonable filingfee as determined under Section 61-1-18.4.
(c) A person acting as a federal covered adviser in this state shall pay an initial andrenewal notice filing fee as determined under Section 61-1-18.4.
(d) If the license or renewal is not granted or the application is withdrawn, the divisionshall retain the fee.
(4) A licensed broker-dealer or investment adviser may file an application for licensingof a successor for the unexpired portion of the year. There shall be no filing fee.
(5) The division may by rule or order:
(a) require a minimum capital for a licensed broker-dealer, subject to the limitations ofSection 15 of the Securities Exchange Act of 1934; and
(b) establish minimum financial requirements for an investment adviser:
(i) subject to the limitations of Section 222 of the Investment Advisers Act of 1940; and
(ii) which may include different requirements for an investment adviser who maintainscustody of or has discretionary authority over client funds or securities and an investment adviserwho does not.
(6) (a) The division may by rule or order require a licensed broker-dealer or investmentadviser who has custody of or discretionary authority over client funds or securities to post one ormore bonds in amounts and under conditions as the division may prescribe, subject to thelimitations of Section 15 of the Securities Exchange Act of 1934 for a broker-dealer, and Section222 of the Investment Advisers Act of 1940 for an investment adviser.
(b) An appropriate deposit of cash or securities may be accepted in lieu of a requiredbond.
(c) A bond may not be required of a licensee whose net capital, or in the case of aninvestment adviser whose minimum financial requirements, which may be defined by rule,exceeds the amounts required by the division.
(d) A bond shall provide for suit on the bond by a person who has a cause of action underSection 61-1-22 and, if the division by rule or order requires, by any person who has a cause ofaction not arising under this chapter.
(e) A bond shall provide that a suit may not be maintained to enforce liability on thebond unless brought before the earlier of:
(i) the expiration of five years after the act or transaction constituting the violation; or
(ii) the expiration of two years after the discovery by the plaintiff of the facts constitutingthe violation.

Amended by Chapter 351, 2009 General Session