Wyo. Code R. 002-0017-4
Effective Date: 01/11/1996 to 07/01/1997
Rule Type: Superceded Rules & Regulations
Reference Number: 002.0017.4.01111996
Section 1. Initial Registration. An applicant seeking broker-dealer registration in Wyoming:
(a) Shall amend page 2, item #2 of the Form BD with the CRD reflecting the applicant's desire to register in Wyoming. Amending the applicant's Form BD with the CRD is necessary so the appropriate registration fee, set by W.S. §17-4-104 (b), may be collected from the applicant's account at CRD and be paid to the Secretary of State. CRD shall, upon processing of the amended Form BD, change the firm's status reflected on the CRD system to 'no status' indicating the applicant's registration fees have been made available to the Secretary of State and an application may be considered. The Secretary of State may reasonably rely on the 'no status' designation on CRD to mean the applicant's registration fee has been paid and the application may be processed. The Secretary of State may return any application materials received if the applicant's status on the CRD does not reflect 'no status.'
(b) Shall make initial application for broker-dealer registration with the Secretary of State, as required in W.S. §17-4-104, using the Application for Broker-Dealer Registration, Form BD.
(i) The initial application Form BD shall be completed according to its instructions, and all schedules applicable to the application shall be attached;
(ii) An initial application shall have original notarized signatures, as required by instructions to the Form BD;
(iii) The facing page of the Form BD shall be dated within thirty days of submission to the Secretary of State. Dating page one of the Form BD in the execution section shall reflect all information in the initial application or amendment, and the schedules attached thereto, are accurate and complete as of that date as specified by instructions to the execution section of Form BD, page one;
(c) Shall supply their last annual audited financial statement prepared by an independent certified public accountant pursuant to W.S. §17-4-105 (b).
(i) If a recently formed broker-dealer does not have an audited financial statement, an unaudited financial statement may be substituted if it has been signed and verified by the president of the corporation, the chief financial officer, an officer of the general partner or by the proprietor;
(ii) The unaudited financial statement shall contain a compilation of net capital figured according to net capital regulations contained in federal laws and regulations, 17 CFR 240.15c3-1;
(iii) The unaudited statement shall be current within forty-five (45) days of the date of submission. The Secretary of State may require an amended financial statement if the Secretary of State believes any of the information contained is materially inaccurate or if the financial statement becomes dated during the registration process;
(d) Shall supplement the audited financial statement with the latest SEC Form X-17a-5 (Focus Report Part IIA) required to be filed with the NASD and/or the SEC. An applicant may instead submit a signed and verified unaudited financial statement current within forty five (45) days of submission which contains a statement of net capital compliance computed in accordance with 17 CFR 240.15c3-1 if the applicant does not report using the FOCUS Part IIA.
(e) Shall be registered with or be a member in good standing with the SEC and the NASD prior to submission of an initial application for broker-dealer registration. The Secretary of State may return an application if the applicant is not a member of the NASD in good standing or in the case of a bank, a member of a national securities exchange.
(a) If the Secretary of State so requires, a broker-dealer applicant shall provide the following:
(i) Surety bond.
(ii) A list of registered principals or supervisory persons.
(iii) An affidavit of compliance with the Wyoming Uniform Securities Act prior to registration. The applicant may be required to answer questions under oath, including, but not be limited to: registration compliance, violations of securities laws in former affiliations, supervisory procedures and compliance and/or dishonest or unethical practices.
(iv) Copies or written documentation regarding any violation or alleged violation of securities laws, criminal statutes, rules of fair practice of any SRO, or civil law suit relating to securities business conduct for any broker-dealer, officer of a broker-dealer, partner, agent or control affiliate of the broker-dealer seeking registration with the Secretary of State, whether the conduct occurred while the person was affiliated with the applicant or not. Failure to provide information as requested may be construed as a willful failure to comply with any provision of the Act or of a rule, in an action to deny the application.
(b) When registering a broker-dealer, the Secretary of State may:
(i) Return, without further examination, any broker-dealer application which is not complete and/or correct in any material respect or which omits any schedule or which has not been properly completed according to the rules in Section 1 of this chapter.
(ii) Accept application materials by facsimile transmission (FAX), providing that an original Form BD is received by the Secretary of State within ten (10) days.
(iii) May accept an initial application pursuant to this section and delay the effectiveness of the registration until January 1 at the request of the applicant provided the application remains current and all other applicable provisions of this section are met.
(c) An applicant's registration is effective from the date it is approved through December 31 unless earlier withdrawn by the registrant or revoked by the Secretary of State under W.S. §17-4-106.
Section 3. General Broker-Dealer Requirements. All broker-dealers registered with the Secretary of State and their officers, directors, control persons, or agents:
(a) Shall maintain at least the minimum net capital specified by 17 CFR 240.15c3-1. The Secretary of State shall accept the same net capital as required by the SEC or the NASD, but may require a different net capital if deemed necessary in the public interest.
(i) The Secretary of State may take action against the registration of broker-dealer whose net capital falls below the level specified by 17 CFR 240.15c3-1 to protect the public;
(ii) Any broker-dealer whose net capital falls below the level specified by 17 CFR 240.15c3-1 shall immediately notify the Secretary of State of the deficiency;
(iii) Any broker-dealer which has notified the Secretary of State of its net capital deficiency shall provide notice of the date it regains net capital compliance;
(b) Shall preserve for a period of not less than three years, such records, accounts, correspondence, books, memoranda, and other documents as required under Reg. § 240.17a-3 and 17a-4 by the Securities and Exchange Commission (SEC) in its regulations; the National Association of Securities Dealers (NASD) in its Rules of Fair Practice Article III, Section 21 and by any regulations applicable to members of a securities exchange.
(c) Following initial registration approval, shall file amendments to Form BD with the CRD system, not with the Secretary of State. Broker-dealer registrants shall amend their Form BD whenever the information on file with the CRD becomes inaccurate, but not later than 30 days following any material change.
(d) Shall remain in good standing as a member of the NASD and/or as a member of a securities exchange if a bank. The Secretary of State may summarily suspend any broker-dealer registration if that broker-dealer is not registered in good standing as a member of the NASD or a securities exchange if a bank.
Section 4. Renewal. The following procedures are used to renew registration of broker-dealers as provided for in W.S. §17-4-103 and 104.
(a) Each broker-dealer registered in Wyoming which desires to renew its registration shall follow the renewal procedures established by the CRD in November and December of each year.
(b) Renewal fees for broker-dealers shall be that amount set by W.S. §17-4-104(b) and shall be paid from the broker-dealer's CRD account to the Secretary of State pursuant to the procedures prescribed by CRD.
(c) If renewal fees are not paid on or before the cut-off date established by the CRD, a broker-dealer's registration may be revoked on January 1 or thereafter and the firm's agents shall be terminated on the same date by Order for willful failure to comply with any provision of the Act or rules following notice, opportunity for hearing, and written findings of fact and conclusions of law.
(i) Notice, as contemplated in this section, shall be given by the Secretary of State via a letter to the broker-dealer's last known address advising the broker-dealer of its failure to renew and need for immediate compliance;
(ii) To the extent the broker-dealer cannot be located, mailing a copy of any Order Canceling Broker-Dealer Registration to the broker-dealer's last known address shall be deemed sufficient notice and service by the Secretary of State;
(d) Broker-dealers which do not participate in CRD renewal by the CRD cut-off date, but which contact the Secretary of State and deliver the appropriate renewal fees for the broker-dealer and agents before a final Order of revocation is entered, shall have their registration renewed for another year subject to payment of an administrative penalty pursuant to W.S. §17-4-124 in an amount not to exceed two hundred dollars ($200) for failure to comply with the Act and Rules.
(e) Not later than sixty (60) days following a registered broker-dealer's end of fiscal year, an annual audited financial statement with a statement of net capital computed in accordance with 17 CFR 240.15c3-1 shall be filed with the Secretary of State.
(i) Broker-dealers which change their fiscal year end shall notify the Secretary of State immediately after the fiscal year end change occurs.
(ii) A broker-dealer may request and the Secretary of State may grant an extension of time to a broker-dealer whose audited financial statement submission will be delayed.
(iii) The Secretary of State may suspend a broker-dealer, by Order, opportunity for hearing and written findings of fact and conclusions of law, for failure to file its annual audited financial statement within 60 days following its end of fiscal year or within such reasonable extension of time as granted by the Secretary of State.
(f) Renewal of a broker-dealer registration is good from January 1 to December 31 of any year unless terminated by the broker-dealer or revoked by the Secretary of State pursuant to W.S. §17-4-106.
(a) A broker-dealer desiring to end its registration in Wyoming:
(i) Shall submit an executed Form BDW to the CRD showing its desire for termination in Wyoming.
Section 6. Conduct. Each broker-dealer shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. Acts and practices, including but not limited to the following, are considered contrary to such standards and may constitute dishonest or unethical practices as found in W.S. §17-4-106(a)(ii)(G) or other listed grounds for denial, suspension or revocation of registration, monetary penalty or such other action authorized by statute.
(a) Engaging in a pattern of unreasonable and unjustifiable delays in the delivery of securities purchased by any of its customers and/or in the payment upon request of free credit balances reflecting completed transactions of any of its customers.
(b) Inducing trading in a customer's account which is excessive in size or frequency in view of the financial resources and character of the account. Excessive size or frequency may be established by reviewing size of any purchase as a percentage of client income and/or net worth, turnover rates, cost of trading expressed as a percentage of account equity or other measures of account activity.
(c) Recommending to a customer the purchase, sale or exchange of any security without reasonable grounds to believe that such transaction or recommendation is suitable for the customer based upon reasonable inquiry concerning the customer's investment objectives, financial situation and needs, and any other relevant information known by the broker-dealer.
(d) Executing a transaction on behalf of a customer without authorization to do so.
(e) Exercising any discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time and/or price for the execution of orders.
(f) Executing any transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account.
(g) Failing to segregate customers' securities held in safekeeping.
(h) Hypothecating a customer's securities without having a lien thereon unless the broker-dealer secures from the customer a properly executed written consent promptly after the initial transaction, except as permitted by Rules of the Securities and Exchange Commission.
(i) Entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security or receiving an unreasonable commission or profit.
(j) Failing to furnish to a customer purchasing securities in an offering, no later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which together include all information set forth in the final prospectus.
(k) Charging unreasonable and inequitable fees for services performed, including miscellaneous services such as collection of monies due for principal, dividends or interest, exchange or transfer of securities, appraisals safekeeping, or custody of securities and other services related to its securities business.
(l) Offering to buy from or sell to any person any security at a stated price unless such broker-dealer is prepared to purchase or sell, as the case may be, at such price and under such conditions as are stated at the time of such offer to buy or sell.
(m) Representing that a security is being offered to a customer 'at the market' or a price relevant to the market price unless such broker-dealer knows or has reasonable grounds to believe that a market for such security exists other than that made, created or controlled by such broker-dealer, or by any person for whom he is acting or with whom he is associated in such distribution, or any person controlled by, controlling or under common control with such broker-dealer.
(n) Effecting any transaction in, or inducing the purchase or sale of, any security by means of any manipulative, deceptive or fraudulent device, practice, plan, program, design, or contrivance, which may include but not be limited to:
(i) Effecting any transaction in a security which involves no change in the beneficial ownership thereof;
(ii) Entering an order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security; provided, however, nothing in this subsection shall prohibit a broker-dealer from entering bona fide agency cross transactions for its customers;
(iii) Effecting, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in such security or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others;
(o) Guaranteeing a customer against loss in any securities account of such customer carried by the broker-dealer or in any securities transaction effected by the broker-dealer with or for such customer.
(p) Publishing or circulating, or causing to be published or circulated, any notice, circular, advertisement, newspaper article, investment service, or communication of any kind which purports to report any transaction as a purchase or sale of any security unless such broker-dealer believes that such transaction was a bona fide purchase or sale of such security; or which purposes to quote the bid price or asked price for any security, unless such broker-dealer believes that such quotation represents a bona fide bid for, or offer of, such security;
(q) Using any advertising or sales presentation in such a fashion as to be deceptive or misleading. An example of such practice would be a distribution of any nonfactual data, material or presentation based on conjecture, unfounded or unrealistic claims, or assertions in any brochure, flyer, or display by words, pictures, graphs or otherwise designed to supplement, detract from, supersede or defeat the purpose or effect of any prospectus or disclosure.
(r) Failing to disclose that the broker-dealer is controlled by, controlling, affiliated with or under common control with the issuer of any security before entering into any contract with or for a customer for the purchase or sale of such security, the existence of such control to such customer, and if such disclosure is not made in writing, it shall be supplemented by the giving or sending of written disclosure at or before the completion of the transaction.
(s) Failing to make a bona fide public offering of all of the securities allotted to a broker-dealer for distribution, whether acquired as an underwriter, a selling group member, or from a member participating in the distribution as an underwriter or selling group member.
(t) Failure or refusal to furnish a customer, upon reasonable request, information to which he is entitled, or to respond to a formal written request or complaint.
(u) Failure to supervise its agents to prevent violation of any provision of the Federal and/or state Securities Acts. Supervision means active day-to-day review of customer account records for items such as, but not limited to, compliance with suitability of transactions and securities in light of the client's age, knowledge and trading history, volume of trades, and items such as licensing, margin, and mark-up regulations.
(v) Failure to comply with NASD Rules of Fair Practice, standards the Secretary of State deems vital to effective regulation of the securities industry.
(w) Failure to maintain high standards of disclosure in advertisements or in sales literature intended for use in communicating with the public. The Secretary of State shall, to the extent possible, keep uniform the enforcement of W.S. §17-4-115 with Federal regulations and NASD Rules by requiring record keeping and compliance commensurate with that found in NASD Rules of Fair Practice Article III, Section 35. Of particular concern is publication in advertisements of percentage rates of return that lack full disclosure pertaining to historical returns not being predictors of future performance; clear identification of the percentage rate as current yield, yield to maturity, coupon rate, dividend rate or total return; and identification of the applicable time period involved.
(x) Engage in any security transaction, offer of a security, sale of a security or course of conduct which would violate any Federal Securities Act or Regulation, Rule of any National Securities Exchange or registered securities association.