Current through Register 2024 Notice Reg. No. 38, September 20, 2024
The procedures set forth in this section are applicable to
broker-dealers licensed pursuant to subdivisions (a) and (b) of Section
25211 of the Code.
(a) Upon employment of an individual as an
agent, a broker-dealer shall (1) obtain a properly executed application for
registration, on the Uniform Application for Securities Industry Registration,
or Transfer Form ("Form U4"), (2) obtain for its records, evidence that such
agent meets the qualification requirements of Section
260.217 of these rules, and (3)
ascertain (by investigation) the character, business reputation and experience
of any individual, prior to executing any transaction on behalf of the
broker-dealer. Evidence of compliance with Section
260.217 and investigation of the
agent, shall be maintained as a part of the records of the broker-dealer as
required by Sections
260.241 of these rules.
(b) A broker-dealer who registers its agents
with Financial Industry Regulatory Authority, Inc. ("FINRA"), shall:
(1) Upon the employment of an individual as
an agent, file the Form U4, through the Central Registration Depository (the
"CRD") of FINRA in accordance with its procedures, and pay, for transmission to
the Commissioner, the fees prescribed by Section
260.608.2(a) of
these rules. The filing of Form U4 with the CRD does not constitute an
automatic "approval" through the CRD. Broker-dealers should not consider an
agent "registration" through the CRD approved until approved by the
Commissioner and the approval has been received through the CRD. If requested
by the Commissioner, additional information, documentation or details
pertaining to the Form U4 or properly executed fingerprint information of the
agent must be filed directly with the Commissioner within 15 days from the date
of the request. In accordance with Section
250.16, the Form U4 may be
abandoned if the Commissioner does not receive the requested information within
the time prescribed. The Commissioner shall "reject" through the CRD an
abandoned Form U4.
(2) An agent
registered through the CRD may comply with the requirements of this subsection
through participation in the "Relicensing" program (the Relicensing program was
formerly known as "Temporary Agent Transfer" or "TAT") adopted by the North
American Securities Administrators Association ("NASAA"), provided that the
agent is eligible and qualifies for registration through the Relicensing
program and the broker-dealer has complied will all of the requirements of the
Relicensing program with respect to the agent in a timely manner. Agent CRD
registration through the Relicensing program shall not waive any rights of the
Commissioner to proceed in any disciplinary proceeding or sanction provided for
under the Code.
(3) File an
amendment to the Form U4 through the CRD within 30 days when there are any
changes to the information contained in the original Form U4. If the Form U4 is
being amended due to a disciplinary occurrence, a copy of the amendment shall
be filed with the Commissioner upon request.
(4) Within 30 days after the termination of
an individual as an agent, file the Uniform Termination Notice for Securities
Industry Registration Form ("Form U5") through the CRD. The Form U5 shall
clearly state the reason(s) for termination. However, if an agent has been
terminated for cause, the Form U5 shall, upon request, be filed directly with
the Commissioner.
A broker-dealer shall be responsible for the acts,
practices, and conduct of an agent in connection with the purchase or sale of
securities until such time as they have been properly terminated and the Form
U5 has been filed with the CRD of FINRA.
(c) A broker-dealer who is not subject to the
provisions of subsection (b) shall:
(1) Upon
the employment of an individual as an agent, file the Form U4 with the
Commissioner. The filing of Form U4, with the Commissioner, does not constitute
an automatic approval. Broker-dealers should not consider an agent registration
approved until such approval has been received from this Department. If
requested by the Commissioner, additional documentation or details pertaining
to the Form U4 must be filed directly with the Commissioner within 15 days from
the date of the request. In accordance with Section
250.16, the Form U4 may be
abandoned if the Commissioner does not receive the requested information within
the time prescribed.
(2) File an
amendment to the Form U4 with the Commissioner within 30 days, when there are
any changes to the information (including information relating to a
disciplinary action) contained in the original Form U4.
(3) Within 30 days after the termination of
employment of an individual as an agent, file the Form U5 with the
Commissioner. The Form U5 shall clearly state the reason(s) for termination. A
broker-dealer shall be responsible for the acts, practices, and conduct of an
agent in connection with the purchase or sale of securities until such time as
they have been properly terminated and the Form U5 has been filed with the
Commissioner.
(4) If the
fingerprints of an individual employed as an agent are not on file with the
Commissioner, such broker-dealer shall file with the Form U4 required under
subsection (c)(1), fingerprint information pursuant to California Penal Code
Section
11077.1 for
such individual. Information about whether an individual's fingerprints are on
file with the Commissioner may be obtained from any office of the
Commissioner.
(d) The
following notices required by state and federal law are hereby incorporated as
part of any uniform form:
NOTICES REQUIRED UNDER STATE AND FEDERAL LAW
INFORMATION PRACTICES ACT OF 1977 (California Civil Code Section
1798.17)
(a) The Department of Business Oversight of
the State of California, Securities Regulation Division, is requesting the
information specified in the application for registration, qualification, a
certificate or a license.
(b) The
Chief Administrative Officer, the Department of Business Oversight, 1515 K
Street, Suite 200, Sacramento, CA 95814, telephone (916) 445-5541, is
responsible for the system of records and shall, upon request, inform
individuals regarding the location of the Department of Business Oversight's
records and the categories of persons who use the information in the
records.
(c) The records are
maintained pursuant to the Corporate Securities Law of 1968 (Corporations Code
Section
25000,
et seq.).
(d) The submission of all
items of information is mandatory unless otherwise noted. The Department of
Business Oversight is required to collect from all applicants social security
numbers under Family Code Section
17520, and
social security numbers or federal taxpayer identification numbers under
Business and Professions Code Section
494.5.
The Privacy Act of 1974 prohibits a state agency from denying an individual any
right, benefit or privilege provided by law because of the individual's refusal
to disclose the individual's social security account number.
(e) Failure to provide all or any part of the
information requested may preclude the Department of Business Oversight from
approving the application.
(f) The
principal purposes within the Department of Business Oversight for which the
information is to be used are to determine whether (1) a license,
qualification, registration, certificate or other authority should be accepted,
granted, approved, denied, revoked or limited in any way; (2) business entities
or individuals licensed or otherwise regulated by the Department of Business
Oversight are conducting themselves in accordance with applicable laws; and/or
(3) laws administered by the Department of Business Oversight are being or have
been violated and whether administrative action, civil action, or referral to
appropriate federal, state or local law enforcement or regulatory agencies, or
to a self-regulatory organization, as authorized by law, is
appropriate.
(g) Any known or
foreseeable disclosures of the information pursuant to subdivision (e) or (f)
of Civil Code Section
1798.24 may
include transfers to other federal, state, or local law enforcement or
regulatory agencies, or to a self-regulatory organization, as authorized by
law.
(h) Subject to certain
exceptions or exemptions, the Information Practices Act grants an individual a
right of access to personal information concerning the requesting individual
that is maintained by the Department of Business Oversight.
FEDERAL PRIVACY ACT OF 1974 (Public Law
93-579)
In accordance with Section
7 of the Privacy Act of 1974
(found at 5 U.S.C. §
552a note (Disclosure of Social Security
Number)), the following is information on whether the disclosure of a social
security account number is voluntary or mandatory, by what statutory or other
authority such number is solicited, and what uses will be made of it.
(1) The Department of Business Oversight is
required to collect from all applicants social security numbers under Family
Code Section
17520, and
social security numbers or federal taxpayer identification numbers under
Business and Professions Code Section
494.5.
The Privacy Act of 1974 prohibits a state agency from denying an individual any
right, benefit or privilege provided by law because of the individual's refusal
to disclose the individual's social security account number.
(2) A social security account number or
federal taxpayer identification number is solicited pursuant to one or more of
the following authorities: Sections
25210,
25211,
25230,
25230.1,
25231,
and
25241 of
the Corporations Code; Sections
260.210,
260.211,
260.211.1,
260.231,
260.231.2,
260.236.1, and
260.236.2 of Title 10, California
Code of Regulations; Section
17520 of the
Family Code; and Section
494.5
of the Business and Professions Code.
(3) For all persons disclosing a social
security account number or federal taxpayer identification number, the number
is used to match the information to the names on the list provided by the
Department of Child Support Services under Family Code Section
17520, and the
lists of tax delinquencies provided by the State Board of Equalization and the
Franchise Tax Board under Business and Professions Code Section
494.5.
The social security number may be used, in addition to other information
provided, to conduct a background investigation of the individual by the
Department of Justice's Identification and Information Branch or by other
federal, state or local law enforcement agencies, or a self-regulatory
organization, as authorized by law. The social security number may also be used
to respond to requests for this number made by child support
agencies.
NOTICES REGARDING TAXPAYER INFORMATION
(4) The State Board of Equalization and the
Franchise Tax board are authorized to share taxpayer information with the
Department of Business Oversight and in the event the state tax obligation is
not paid by a certificate holder after a certificate is issued, the Department
of Business Oversight may be required to suspend the
certificate.
1. New
section filed 11-29-79 as an emergency; designated effective 1-1-80.
Certificate of Compliance included (Register 79, No. 48).
2.
Amendment filed 3-16-84; designated effective 3-26-84 pursuant to Government
Code section
11346.2(d)
(Register 84, No. 11).
3. Amendment filed 4-23-90; operative 5-23-90
(Register 90, No. 20).
4. Amendment of section and NOTE filed
6-1-98; operative 6-1-98 pursuant to Government Code section
11343.4(d)
(Register 98, No. 23).
5. Amendment of subsection (b)(1), new
subsection (b)(2), subsection renumbering, and amendment of newly designated
subsection (b)(4) filed 1-23-2001; operative 1-23-2001 pursuant to Government
Code section
11343.4(c)
(Register 2001, No. 4).
6. Change without regulatory effect amending
subsections (b)-(b)(1), (b)(4), (c)(1) and (c)(4) and amending NOTE filed
11-23-2005 pursuant to section
100, title 1, California Code of
Regulations (Register 2005, No. 47).
7. Amendment of section and
NOTE filed 9-24-2009; operative 10-24-2009 (Register 2009, No.
39).
8. New subsection (d) and amendment of NOTE filed 1-7-2014;
operative 1-7-2014 pursuant to Government Code section
11343.4(b)(3)
(Register 2014, No. 2).
Note: Authority cited: Section
25610,
Corporations Code. Reference: Sections
31
and
494.5,
Business and Professions Code; Sections
25210,
25213,
25213.3,
25217
and
25612.3,
Corporations Code; and Section
11077.1, Penal
Code.
