KRS 286.4-490: Reasons for adverse action or cease -and-desist order -- Locations at

which adverse action applies -- Eligibility if license revoked -- Effect of adverse

action -- Complaint -- Relief -- Civil penalty.

(1) For the purposes of this section, "ad verse action" means the suspension of,

revocation of, conditioning or restricting of, or refusal to issue or renew a license or

acceptance of the surrender of a license in lieu of a revocation or suspension.

(2) The commissioner may take adverse action aga inst a licensee, applicant, or person

in control of a licensee or applicant, or issue a cease-and-desist order to one of those

persons, if the commissioner finds, after a thorough investigation, that the person:

(a) Has failed to open an office within one hundred twenty (120) days from the

date a license is granted unless good cause is shown;

(b) Has committed fraud or made a misrepresentation of material fact;

(c) Does not meet, has failed to comply with, or has violated any provisions of

this subtitle, or any administrative regulation or order of the commissioner

issued under the subtitle;

(d) Has made a false statement of material fact in the application for a license or

failed to give a truthful reply to a question in the application;

(e) Has demonstrated incompetence or untrustworthiness to act as a licensee;

(f) Is unfit, through lack of financial responsibility or experience, to conduct the

business of a licensee;

(g) Does not conduct business in accordance with the law or conducts business by

a method that includes activities that are illegal where performed;

(h) Is insolvent;

(i) Is the subject of an active administrative cease -and-desist order or similar

order, or a permanent or temporary injunction of any court of competent

jurisdiction entered unde r any other federal or state law applicable to the

financial services industry;

(j) Has made or caused to be made to the commissioner a false representation of

material fact or has suppressed or withheld from the commissioner

information that the applicant or licensee possesses and which, if submitted,

would have rendered the applicant or licensee ineligible to be licensed under

this subtitle;

(k) Has refused to permit a lawful examination or investigation by the

commissioner, or has refused or failed, with in a reasonable time, to furnish to

the commissioner any information or records, or make any report, that may be

required under this subtitle;

(l) Has been convicted of a felony;

(m) Has been convicted of any misdemeanor o f which an essential element is

fraud, breach of trust, or dishonesty;

(n) Has had any license, registration, or claim of exemption related to the

financial services industry denied, revoked, suspended, conditioned, restricted,

or probated under the laws o f this state, or has surrendered, withdrawn, or

terminated any license, registration, or claim of exemption issued or

registration granted by this state under threat of administrative action;

(o) Has knowingly employed or contracted with a person who has f ailed to obtain

any necessary license or registration related to the financial services industry

or has had a license, registration, or claim of exemption related to the financial

services industry denied, revoked, suspended, conditioned, restricted, or

probated in this state or another jurisdiction;

(p) Has failed to pay any fee required under this subtitle;

(q) Has failed to comply with an administrative or court order imposing child

support obligations;

(r) Has failed to pay state income taxes or comply with any administrative or

court order directing the payment of state income tax;

(s) Has filed for an adjudication of bankruptcy, reorganization, arrangement, or

other relief under the United States Bankruptcy Code, 11 U.S.C. secs. 101 to

110, within the last ten (10) years;

(t) Has suspended payment of its obligations or has made an assignment for the

benefit of its creditors;

(u) Has violated any of the recordkeeping and reporting requirements of the

United States government, including 31 U.S.C. secs. 5311 to 5332; or

(v) No longer meets the requirements of this subtitle to hold a license.

(3) If the reason for adverse action taken by the commissioner at any one location is

generally applicable to all locations operated by a licensee, the commissioner may

apply the adverse action to all licenses issued to a licensee.

(4) Any person, or person in control of a licensee, who has had a license revoked by the

commissioner shall not be eligible to apply for a license under this subtitle or to

serve as a person in control of a licensee until after expiration of two (2) years from

the date a final order of revocation is entered by the commissioner. A person whose

license has been revoked twice shall be deemed permanently revoked and shall not

be eligible for a lice nse, or to serve as a person in control of a licensee, under this

subtitle.

(5) A person, or person in control of a licensee, against whose license adverse action

has been taken under this section shall not:

(a) Participate in any business for which a lice nse is required under this subtitle;

or

(b) Engage in any business activity on the premises where a licensee is

conducting its business without prior written approval of the commissioner.

(6) (a) Adverse action taken against a license, or the expiration of a license, shall not

abrogate or modify:

1. The civil or criminal liability of a licensee for acts committed prior to

the surrender or expiration; or

2. The obligation of any preexisting contract between a licensee and a

customer.

(b) The surrender or exp iration of a license shall not affect a proceeding to

suspend or revoke a license.

(7) (a) If the commissioner has reason to believe from evidence satisfactory to the

commissioner that a person has violated, or is about to violate, a provision in

this subt itle, the commissioner may file a complaint in the Franklin Circuit

Court, or any court of competent jurisdiction, for temporary or permanent

relief against any person.

(b) The court shall have jurisdiction over the proceeding and shall have the power

to enter an order or judgment awarding preliminary or final injunctive relief

and any other relief that the court deems proper.

(c) Any person who violates a temporary restraining order or injunction issued by

the court, in addition to being held in contempt o f court, may be assessed a

civil penalty under KRS 286.4-990 by the court.