Administrative Orders

The State Administrator has authority to issue various administrative orders affecting the registration status of securities professionals. Understanding the different types of orders and when each applies is essential for the Series 63 exam.

Types of Administrative Orders

The Administrator can issue four main types of orders affecting registration:

Denial of Registration

The Administrator may deny an application for registration if the applicant:

• Has been convicted of a securities-related felony within the past 10 years
• Has been convicted of any felony involving dishonesty within the past 10 years
• Is subject to an order from another securities regulator
• Has engaged in dishonest or unethical practices
• Is not qualified by training, experience, or knowledge
• Is insolvent (for broker-dealers and investment advisers)
• Has willfully violated the USA or rules

Exam Tip: The Administrator can deny registration for lack of qualification due to insufficient training, experience, or knowledge—but not for lack of experience alone.

Suspension of Registration

Suspension temporarily halts a registration. The person cannot conduct securities business during the suspension period.

Grounds for Suspension

• Same grounds as denial
• Failure to pay required fees
• Failure to comply with conditions of registration
• Violation of the USA or rules

Duration

Suspensions may be for a specified period or until conditions are met (e.g., payment of fees, completion of training).

Revocation of Registration

Revocation permanently terminates a registration. This is the most severe administrative action.

Grounds for Revocation

• Same grounds as denial and suspension
• Particularly serious or repeated violations
• Failure to comply with a prior order
• Conviction of a felony during the registration period

Cancellation of Registration

Cancellation differs from the other orders—it is used for administrative reasons, not as punishment.

Grounds for Cancellation

Key Point: Cancellation is NOT a punitive action. It simply terminates a registration that is no longer needed or valid. No hearing is required.

Withdrawal from Registration

A registered person may voluntarily withdraw from registration by filing a proper application. However:

• Withdrawal becomes effective 30 days after filing (unless earlier date granted)
• The Administrator may delay withdrawal if proceedings are pending
• Withdrawal does not prevent future disciplinary action

The "Public Interest" Requirement

Before issuing a denial, suspension, or revocation, the Administrator must find that taking the action is in the public interest. This prevents arbitrary or capricious enforcement.

Hearing Requirements

Orders Requiring Notice and Opportunity for Hearing

The Administrator must provide prior notice and opportunity for a hearing before:

• Denial of registration
• Suspension of registration
• Revocation of registration

Procedure

No Hearing Required

The Administrator may take certain actions without prior notice or hearing:

• Cancellation of registration
• Stop orders for securities registration
• Summary suspension (in emergencies, with immediate post-order hearing rights)

Grounds for Action (Summary)

Appeals

A person aggrieved by an Administrator's order may appeal:

• Appeal must be filed within 60 days of the order
• Appeal goes to the appropriate court
• The order may be stayed pending appeal
• Court reviews whether the Administrator acted properly

Key Takeaways

• Denial, suspension, and revocation require notice and opportunity for hearing
• Cancellation is administrative (not punitive) and requires no hearing
• Grounds include felonies, unethical practices, lack of qualification, and regulatory orders
• Administrator must find action is in the "public interest"
• Hearings must be held within 15 days of request
• Appeals must be filed within 60 days of the order
• Withdrawal becomes effective 30 days after filing