C.R.S. Section 11-51-410
Denial, suspension, or revocation

(1)

The securities commissioner may by order deny an application for a license, suspend or revoke a license, censure a licensed person, limit or impose conditions on the securities activities that a licensed person may conduct in this state, and bar a person from association with any licensed broker-dealer, investment adviser, or federal covered adviser in the conduct of its business in this state in such capacities and for such period as the order specifies. These sanctions may be imposed only if the securities commissioner makes a finding, in addition to the findings required by section 11-51-704 (2), that the applicant or licensed person or, in the case of a broker-dealer or investment adviser, a partner, officer, director, person occupying a similar status or performing similar functions, or person directly or indirectly controlling the broker-dealer or investment adviser:

(a)

Has filed an application for a license with the securities commissioner that, as of the effective date of the license or as of any date after filing in the case of an order denying effectiveness, was false or misleading as a result of an untrue statement of a material fact or an omission to state a material fact, unless the applicant sustains the burden of proof that the applicant did not know and in the exercise of reasonable care could not have known of the untruth or omission;

(b)

Has willfully violated or willfully failed to comply with any provision of this article or any rule or order under this article, except any rule that is subject to the additional findings required by paragraph (g) of this subsection (1);

(c)

Within the past ten years, has entered a plea of guilty or nolo contendere to, or has been convicted of, any felony, any misdemeanor involving a breach of fiduciary duty or fraud, or any misdemeanor in connection with a purchase or sale of a security;

(d)

Is subject to a temporary or permanent injunction issued by a court of competent jurisdiction in an action instituted by the securities commissioner, the securities agency or administrator of another state or a foreign jurisdiction, the securities and exchange commission, or the commodity futures trading commission, for violating any securities registration or broker-dealer, investment adviser, federal covered adviser, or similar license requirement in any federal, state, or foreign law or for engaging in fraudulent conduct;

(e)

Is currently the subject of an order of the securities commissioner denying, suspending, or revoking the person’s license as a broker-dealer, investment adviser, sales representative, or investment adviser representative or barring the person from association with any licensed broker-dealer, investment adviser, or federal covered adviser;

(f)

Is currently the subject of any of the following orders issued within the past five years:

(I)

An order by the securities agency or administrator of another state or a foreign jurisdiction, entered after notice and opportunity for hearing and based upon fraudulent conduct, denying or revoking the person’s license as a broker-dealer, investment adviser, sales representative, or investment adviser representative, or the substantial equivalent of those terms, or suspending or barring the right of the person to be associated with a broker-dealer, investment adviser, or federal covered adviser;

(II)

An order by the securities and exchange commission, entered after notice and opportunity for hearing, denying, suspending, or revoking the person’s registration as a broker-dealer under the federal “Securities Exchange Act of 1934” or as an investment adviser under the federal “Investment Advisers Act of 1940” or suspending or barring the right of the person to be associated with a broker-dealer or investment adviser;

(III)

An order by the commodity futures trading commission, entered after notice and opportunity for hearing, denying, suspending, or revoking registration under the federal “Commodity Exchange Act”; or

(IV)

A suspension or expulsion from membership in or association with a member of a self-regulatory organization;

(g)

Has willfully engaged in a course of conduct involving the violation of one or more rules made by the securities commissioner that prohibit unfair and dishonest dealings by a broker-dealer or sales representative, including any rule that may be made to define conduct prohibited by section 11-51-501, if each such rule is based upon a finding, in addition to the findings required by section 11-51-704 (2), which finding itself must be based on information provided by broker-dealers and sales representatives at a hearing on the proposed rule, that licensed broker-dealers and sales representatives who will be required to comply with the rule generally agree that the conduct prohibited by the rule does not meet prevailing standards of fair and honest dealing within the securities industry and that it is reasonable to expect the rule will prevent or deter such conduct;

(h)

In the case of a broker-dealer who is not registered under the federal “Securities Exchange Act of 1934”, is not in compliance with of section 11-51-407 (4);

(i)

Has failed reasonably to supervise, with a view to preventing violations of this article, another person who is subject to the person’s supervision and who commits such a violation, but for the purpose of this paragraph (i) no person shall be deemed to have failed to supervise another person if there existed established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person and such person reasonably discharged the duties and obligations incumbent upon such person by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with;

(j)

Has ceased to do business as a broker-dealer, investment adviser, sales representative, or investment adviser representative;

(k)

Has offered or sold to a public entity in the state of Colorado a financial instrument that such person knew or should have known does not qualify for sale to the public entity under section 24-75-601.1, C.R.S.;

(l)

In the case of an investment adviser or investment adviser representative, willfully has:

(I)

Failed to provide a client with a written disclosure statement as required pursuant to section 11-51-409.5; or

(II)

Engaged in conduct contrary to one or more rules wherein the securities commissioner prohibits dishonest or unethical conduct in connection with providing investment advisory services. This subparagraph (II) applies to an investment adviser representative employed by or affiliated with a federal covered adviser only to the extent permitted under the federal “National Securities Markets Improvement Act of 1996”. In the interests of uniformity, any rules promulgated pursuant to this subparagraph (II) shall be coordinated and consistent with the regulation of federal covered advisers by the securities and exchange commission under the federal “Investment Advisers Act of 1940” and the rules promulgated pursuant to that act, and with the rules of other states regarding such conduct by investment advisers and investment adviser representatives, unless the securities commissioner makes the specific finding that to do so would be contrary to the public interest, the protection of investors and advisory clients in this state, and the purposes of this article.

(m)

After notice and opportunity for a hearing, has been found within the previous ten years:

(I)

By a court with jurisdiction, to have wilfully violated the laws of a foreign jurisdiction under which the business of securities, commodities, investment, franchises, insurance, banking, or finance is regulated;

(II)

To have been the subject of an order of a securities regulator of a foreign jurisdiction denying, revoking, or suspending the right to engage in the business of securities as a broker-dealer, agent, sales representative, investment adviser, investment adviser representative, or similar person; or

(III)

To have been suspended or expelled from membership or participation in a securities exchange or securities association operating under the securities laws of a foreign jurisdiction; or

(n)

Intentionally left blank —Ed.

(I)

Is not qualified because of training, experience, or knowledge of the securities business; except that in the case of an applicant who is a sales representative for a broker-dealer that is a member of a self-regulatory organization or for an individual as an investment adviser representative, a denial order may not be based on this paragraph (n) if the applicant has successfully completed all examinations required by this article.

(II)

The securities commissioner may require an applicant for a license pursuant to section 11-51-403, who has not been registered or licensed in any state within the two years preceding the filing of an application in this state, to successfully complete an examination.

(2)

The securities commissioner may not begin a proceeding under this section against any person more than ninety days after a license has been issued to that person on the basis of a fact or transaction which the person shows was known to the securities commissioner when the license was issued or when any prior license of the same class was issued to that person if such prior license was not revoked on the basis, in whole or in part, of such fact or transaction.

(3)

For good cause shown the securities commissioner may waive or modify an order previously made under this section as it applies to any person with the consent of that person.

(4)

The securities commissioner may suspend the license of a licensee pursuant to a summary order issued under section 11-51-606 (4) and such order shall be valid pending a final determination in any proceeding brought pursuant to this section subject to any modification made to such order under section 11-51-606 (4)(c).

(5)

Where a person is an applicant for a license, or is licensed by the securities commissioner in more than one capacity, or both, and one or more grounds for sanction as set forth in subsection (1) of this section as they may apply to one application, license, or association with a broker-dealer, investment adviser, or federal covered adviser has been established either by findings of fact and conclusions of law or alleged before the securities commissioner on stipulation, the securities commissioner may impose one or more of such sanctions not only regarding the application, license, or association giving rise to the matter, but also upon any other application, license, or association under this section if the securities commissioner makes the additional findings that to do so is necessary and appropriate in the public interest and for the protection of investors.

Source: Section 11-51-410 — Denial, suspension, or revocation, (accessed Dec. 24, 2024).

11‑51‑101
Short title and purpose 11‑51‑102
Scope of article 11‑51‑201
Definitions 11‑51‑201.5
Investment adviser registration depository - definition 11‑51‑202
References to federal statutes 11‑51‑301
Requirement for registration of securities 11‑51‑302
General registration provisions 11‑51‑303
Registration by coordination 11‑51‑304
Registration by qualification 11‑51‑304.5
Notice filing - investment companies 11‑51‑305
Filing of sales literature 11‑51‑306
Denial, suspension, or revocation of registration 11‑51‑307
Exempt securities 11‑51‑308
Exempt transactions 11‑51‑308.5
Crowdfunding - intrastate offering of securities - online intermediaries - rules - fees - short title - legislative declaration 11‑51‑308.7
Colorado digital token act - legislative declaration - exemptions - definitions - rules 11‑51‑309
Discretionary exemptions 11‑51‑310
Denial or revocation of exemptions 11‑51‑311
Coordination of exemptions 11‑51‑401
Licensing and notice filing requirements 11‑51‑402
Exempt broker-dealers, sales representatives - sanctions - exempt investment advisers and investment adviser representatives 11‑51‑403
Application for license - notice filing requirements 11‑51‑404
License and notice fees 11‑51‑405
Examinations and alternate qualifications 11‑51‑406
General provisions 11‑51‑407
Operating requirements 11‑51‑408
Licensing of successor firms 11‑51‑409
Access to records 11‑51‑409.5
Mandatory disclosure - investment advisers and investment adviser representatives 11‑51‑410
Denial, suspension, or revocation 11‑51‑411
Abandonment of license 11‑51‑412
Withdrawal 11‑51‑501
Fraud and other prohibited conduct 11‑51‑502
Misleading filings 11‑51‑503
Unlawful representation concerning a license, registration, or exemption 11‑51‑601
Investigations - subpoenas 11‑51‑602
Enforcement by injunction 11‑51‑603
Criminal penalties 11‑51‑603.5
Concurrent enforcement by attorney general - legislative declaration 11‑51‑604
Civil liabilities 11‑51‑605
Burden of proof 11‑51‑606
Conduct of proceedings - cease-and-desist orders - consent orders - summary orders - issued by securities commissioner - rules 11‑51‑607
Judicial review of orders 11‑51‑701
Division of securities - creation - powers and duties 11‑51‑702.5
Securities board - creation - duties - repeal 11‑51‑703
Administration of article 11‑51‑704
Rules, forms, and orders 11‑51‑705
Interpretive opinions 11‑51‑706
Consent to service of process 11‑51‑707
Collection of fees - division of securities cash fund created 11‑51‑708
Administrative files 11‑51‑801
Effective date of article 11‑51‑802
Savings provisions 11‑51‑803
Repeal of article 11‑51‑901
Short title 11‑51‑902
General powers of securities commissioner 11‑51‑903
Interests in local government investment pool trust fund 11‑51‑904
Requirement for registration of local government investment pools 11‑51‑905
General registration requirements 11‑51‑906
Reports to securities commissioner 11‑51‑907
Access to records 11‑51‑908
Confidentiality of information 11‑51‑1001
Short title 11‑51‑1002
Definitions 11‑51‑1003
Governmental disclosures - immunity 11‑51‑1004
Third-party disclosures - immunity 11‑51‑1005
Delaying disbursements - immunity 11‑51‑1006
Immunity for nondisclosure 11‑51‑1007
Records 11‑51‑1008
Multiple duties to report
Green check means up to date. Up to date

Current through Fall 2024

§ 11-51-410’s source at