KRS 292.337: Grounds for denial, suspension, limitation, or revocation of registration

and for disciplinary action -- Summary order -- Emergency hearing -- Order

in accordance with KRS Chapter 13B.

(1) The commissioner may deny, refuse to renew, suspend, or revoke the registration of

any broker-dealer, agent, investment adviser, or investment adviser representative.

The commissioner may bar, censure, or place on probation any registrant or any

officer, director, partner, or person occupying a similar status or perf orming similar

functions for a registrant, or restrict, condition, or limit a registrant as to any

function or activity of the business for which registration is required in this state.

The commissioner may take any of the foregoing actions for any reason set forth in

subsection (2) of this section.

(2) For actions taken in subsection (1) of this section, the commissioner shall find that

it is in the public interest and further find that the applicant or registrant or, in the

case of a broker -dealer, or inv estment adviser, any partner, officer, or director, any

person occupying a similar status or performing similar functions, or any person

directly or indirectly controlling the broker-dealer or investment adviser:

(a) Has filed an application for registrati on under this chapter which, as of its

effective date, or as of any date after filing in the case of an order denying

effectiveness, was incomplete in any material respect or contained any

statement which was, in the light of the circumstances under which it was

made, false or misleading with respect to any material fact;

(b) Has violated or failed to comply with this chapter or any administrative

regulation promulgated or order issued under this chapter or a predecessor

law;

(c) Has been convicted of, or has pending against him or her, a felony;

(d) Has been convicted within the past ten (10) years of, or has pending against

him or her, any misdemeanor involving a security or any aspect of the

securities business;

(e) Is permanently or temporarily enjoined by any court of competent jurisdiction

from engaging in or continuing any conduct or practice involving any aspect

of the securities business;

(f) Is the subject of an order of the commissioner denying, suspending, or

revoking registration as a broker -dealer, agent, investment adviser, or

investment adviser representative;

(g) Is the subject of any of the following orders that are currently effective and

were issued within the last five (5) years:

1. An order by any securities administrator, entered after n otice and

opportunity for hearing, denying, suspending, limiting, or revoking the

person's license as a broker -dealer, agent, investment adviser, or

investment adviser representative or the substantial equivalent of those

terms;

2. An order of a self -regulatory organization finding a violation of federal

law or a rule of the self-regulatory organization;

3. A United States Postal Service fraud order;

4. A cease and desist or other administrative order entered after notice and

opportunity for hearing by the commissioner, or any other securities

administrator or the United States Commodity Futures Trading

Commission; or

5. An order by the United States Comm odity Futures Trading Commission

denying, suspending, or revoking registration under the Commodity

Exchange Act, 7 U.S.C. secs. 1 et seq.;

(h) Has engaged in dishonest or unethical practices in the securities, commodities,

investment, franchise, banking, f inance, or insurance business within the

previous ten (10) years;

(i) Is insolvent;

(j) Is not qualified on the basis of such factors as training, experience, or

knowledge of the securities business. However, an order against an individual

shall not be bas ed on this paragraph if the individual has passed all

examinations required as a condition of registration;

(k) Has reasonably failed to supervise an agent, investment adviser representative,

or other individual, if the agent, investment adviser representa tive, or other

individual was subject to the person's supervision and, within the previous ten

(10) years, committed a violation of this chapter or administrative regulation

promulgated or order issued under this chapter;

(l) Has failed to pay a fee required under this chapter within thirty (30) days after

having received written notice from the commissioner of the failure to pay the

required fee. The commissioner shall vacate an order issued under this

subsection if the fee is paid within thirty (30) days of the date of the order;

(m) Has violated the law of any jurisdiction governing or regulating any aspect of

the business of securities or banking, or, within the past five (5) years, has

been the subject of an action of any securities regulator denying, r evoking, or

suspending the right to engage in the business of securities as a broker -dealer,

agent, investment adviser, or investment adviser representative or is the

subject of an action of any securities exchange or self -regulatory organization

operating under the authority of a securities regulator suspending or expelling

the person from membership in the exchange or self -regulatory organization;

or

(n) Refuses to allow or otherwise impedes an examination under this chapter or

refuses access to a registrant's office to conduct an examination.

(3) The commissioner may not institute a proceeding under this section based solely on

a fact or transaction known to him or her when a registration became effective,

unless the proceeding is instituted within sixty (60) days after the effective date of

the registration.

(4) The commissioner may by order summarily restrict, condition, limit, or suspend a

registration, or censure or bar a registrant before final determination of an

administrative proceeding under this section. A summary order issued under this

subsection shall only be based upon a finding by the commissioner that such action

is in the public interest and that there is substantial evidence of a violation of law

that constitutes an immediate danger to the public health, safety, or welfare. One (1)

or more of the grounds listed in subsection (2) of this section shall be considered for

a summary order. Any person aggrieved by an order of the commissioner under this

section may file with the office an application for an emergency hearing pursuant to

KRS 13B.125 within thirty (30) days of the date of the order. The commissioner

shall comply with KRS 13B.125 when entering a summary order. The

commissioner may modify, stay, extend, or vacate the summary order iss ued under

this subsection.

(5) The commissioner shall not issue an order under this section, except under

subsection (4) of this section, without appropriate notice to the applicant or

registrant, opportunity for a hearing, and written findings of fact and conclusions of

law in accordance with KRS Chapter 13B.