61-1-3 - Licensing of broker-dealers, agents, and investment advisers.
61-1-3. Licensing of broker-dealers, agents, and investment advisers.
(1) It is unlawful for a person to transact business in this state as a broker-dealer or agentunless the person is licensed under this chapter.
(2) (a) It is unlawful for a broker-dealer or issuer to employ or engage an agent unless theagent is licensed. The license of an agent is not effective during any period when the agent is notassociated with:
(i) a particular broker-dealer licensed under this chapter; or
(ii) a particular issuer.
(b) When an agent begins or terminates an association with a broker-dealer or issuer, orbegins or terminates activities as an agent, the agent and the broker-dealer or issuer shallpromptly notify the division.
(c) An agent who terminates an association with a broker-dealer or issuer is considered tobe unlicensed until the day on which the division:
(i) approves the agent's association with a different broker-dealer or issuer; and
(ii) notifies the agent of the division's approval of the association.
(d) (i) It is unlawful for a broker-dealer or an issuer engaged, directly or indirectly, inoffering, offering to purchase, purchasing, or selling a security in this state, to employ orassociate with an individual to engage in an activity related to a securities transaction in this stateif:
(A) (I) the license of the individual is suspended or revoked; or
(II) the individual is barred from employment or association with a broker-dealer, anissuer, or a state or federal covered investment adviser; and
(B) the suspension, revocation, or bar described in Subsection (2)(d)(i)(A) is by an order:
(I) under this chapter;
(II) of the Securities and Exchange Commission;
(III) of a self-regulatory organization; or
(IV) of a securities administrator of a state other than Utah.
(ii) A broker-dealer or issuer does not violate this Subsection (2)(d) if the broker-dealeror issuer did not know and in the exercise of reasonable care could not have known, of thesuspension, revocation, or bar.
(iii) An order under this chapter may modify or waive, in whole or in part, theapplication of Subsection (2)(d)(i) to a broker-dealer or issuer.
(3) It is unlawful for a person to transact business in this state as an investment adviser oras an investment adviser representative unless:
(a) the person is licensed under this chapter;
(b) the person's only clients in this state are:
(i) one or more of the following whether acting for itself or as a trustee with investmentcontrol:
(A) an investment company as defined in the Investment Company Act of 1940;
(B) another investment adviser;
(C) a federal covered adviser;
(D) a broker-dealer;
(E) a depository institution;
(F) a trust company;
(G) an insurance company;
(H) an employee benefit plan with assets of not less than $1,000,000; or
(I) a governmental agency or instrumentality; or
(ii) other institutional investors as are designated by rule or order of the director; or
(c) the person has no place of business in this state and during the preceding 12-monthperiod has had not more than five clients, other than those specified in Subsection (3)(b), who areresidents of this state.
(4) (a) It is unlawful for:
(i) a person required to be licensed as an investment adviser under this chapter to employan investment adviser representative unless the investment adviser representative is licensedunder this chapter, except that the license of an investment adviser representative is not effectiveduring any period when the person is not employed by an investment adviser licensed under thischapter;
(ii) a federal covered adviser to employ, supervise, or associate with an investmentadviser representative having a place of business located in this state, unless the investmentadviser representative is:
(A) licensed under this chapter; or
(B) exempt from licensing; or
(iii) an investment adviser, directly or indirectly, to employ or associate with anindividual to engage in an activity related to providing investment advice in this state if:
(A) (I) the license of the individual is suspended or revoked; or
(II) the individual is barred from employment or association with a state or federalcovered investment adviser, broker-dealer, or issuer; and
(B) the suspension, revocation, or bar is by an order:
(I) under this chapter;
(II) of the Securities and Exchange Commission;
(III) a self-regulatory organization; or
(IV) a securities administrator of a state other than Utah.
(b) (i) An investment adviser does not violate Subsection (4)(a)(iii) if the investmentadviser did not know, and in the exercise of reasonable care could not have known, of thesuspension, revocation, or bar.
(ii) An order under this chapter may waive, in whole or in part, the application ofSubsection (4)(a)(iii) to an investment adviser.
(c) When an investment adviser representative required to be licensed under this chapterbegins or terminates employment with an investment adviser, the investment adviser shallpromptly notify the division.
(d) An investment adviser representative who terminates association with an investmentadviser is considered unlicensed until the day on which the division:
(i) approves the investment adviser representative's association with a differentinvestment adviser; and
(ii) notifies the investment adviser representative of the division's approval of theassociation.
(5) Except with respect to an investment adviser whose only clients are those describedunder Subsections (3)(b) or (3)(c), it is unlawful for a federal covered adviser to conduct advisorybusiness in this state unless the person complies with Section 61-1-4.
Amended by Chapter 351, 2009 General Session