12901. Member Surcharge
(a) Member Surcharge
(1) A surcharge in the amount indicated in the schedule below will be assessed against each member that:
(A) Files a claim, counterclaim, cross claim, or third party claim under the Code;
(B) Is named as a respondent in a claim, counterclaim, cross claim, or third party claim filed and served under the Code; or
(C) Employed, at the time the dispute arose, an associated person who is named as a respondent in a claim, counterclaim, cross claim, or third party claim filed and served under the Code.

12904. Awards
(g) Explained Decisions
(1) This paragraph (g) applies only when all parties jointly request an explained decision.
(2) An explained decision is a fact-based award stating the general reason(s) for the arbitrators’ decision. Inclusion of legal authorities and damage calculations is not required.
(3) Parties must make any request for an explained decision no later than the time for the prehearing exchange of documents and witness lists under Rule 12514(d).
(4) The chairperson of the panel will be responsible for writing the explained decision.
(5) The chairperson will receive an additional honorarium of $400 for writing the explained decision, as required by this paragraph (g).
(6) This paragraph (g) will not apply to simplified cases decided without a hearing under Rule 12800 or to default cases conducted under Rule 12801.

13104. Effect of Arbitration on FINRA Regulatory Activities; Arbitrator Referral During or at Conclusion of Case
(a) Submitting a dispute to arbitration under the Code does not limit or preclude any right, action or determination by FINRA that it would otherwise be authorized to adopt, administer or enforce.
(b) During the pendency of an arbitration, any arbitrator may refer to the Director any matter or conduct that has come to the arbitrator’s attention during a hearing, which the arbitrator has reason to believe poses a serious threat, whether ongoing or imminent, that is likely to harm investors unless immediate action is taken. Arbitrators should not make referrals during the pendency of arbitration based solely on allegations in the statement of claim, counterclaim, cross-claim, or third party claim. If a case is nearing completion, the arbitrator should wait until the case concludes to make the referral if, in the arbitrator’s judgment, investor protection will not be materially compromised by this delay.
(c) If any arbitrator refers a matter or conducts for investigation under paragraph (b) of this rule, the Director will disclose the act of making the referral to the parties. A party may request that the referring arbitrator(s) recuse themselves, as provided in the Code, no later than three days after the Director notifies the parties of the referral. If a party does not make the recusal request within the prescribed timeframe, the party forfeits the right to request recusal of the referring arbitrator(s).
(d) The Director will evaluate the arbitrator referral to determine whether to transmit it to other divisions of FINRA. Only the Director shall have the authority to act under this paragraph (d).
(e) At the conclusion of an arbitration, any arbitrator may refer to FINRA for investigation any matter or conduct that has come to the arbitrator’s attention during and in connection with the arbitration, either from the record of the proceeding or from material or communications related to the arbitration, which the arbitrator has reason to believe may constitute a violation of the rules of FINRA, the federal securities laws, or other applicable rules or laws.

Fraudulent securities transactions may result in criminal charges. For fraud to occur, it is not enough for a person to provide misleading or false information during a securities transaction. The activity is not considered fraudulent unless the person deliberately acted in a manner designed to mislead.

Applicants must provide complete and accurate information when registering with the Administrator. A registration fee must accompany the application. Different registration fees may apply for broker-dealers, agents, investment advisers, and investment adviser representatives. These fees vary by state. If the Administrator identifies no issues with the application, the requested license will be granted at noon on the thirtieth day.

One way that Administrators protect investors is by scrutinizing the registration statement for a security before allowing the security to be registered in the state. When evaluating the security’s registration statement, the Administrator will consider all of the promotional materials that the security’s issuer plans to use. The Administrator will also consider any pertinent facts relating to the registration and/or offering of the security in other jurisdictions. Finally, the Administrator will evaluate the contractual relationship between the issuer of the security and the underwriters for the security and agreements between the underwriters

Many securities issued by persons that are subject to alternative governance or regulation are exempt from registration with the state Administrator. These state-exempt securities include securities issued and/or guaranteed by a bank, savings institution, trust company, savings and loan, building and loan, credit union, or an international bank. These also include securities issued and/or guaranteed by an insurance company to finance a debt.

Transactions for such securities handled by an agent are considered exempt if the transaction in question is a transaction between non-issuers, as long as the security in question has been in the possession of the public (not the issuer) for a minimum of ninety days.

I. Performs only clerical or ministerial acts
IV. performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services

If a broker-dealer or investment adviser is registered in one state, it may conduct business with its clients that are residents of that state even when those clients are traveling outside of the state.

This provision of the Uniform Securities Act enables broker-dealers and investment advisers to provide continual service to their client base while their clients travel outside of their home state. Without this provision, broker-dealers and investment advisers would have to be registered in every state their clients may visit.

The Administrator under the Uniform Securities Act is the administrative agency, government official, or appointed representative that is responsible for handling the administration and enforcement of the Uniform Securities Act in a particular jurisdiction.

The precise information required for registration is determined by the Administrator for the state. Required information may include the type and location of the desired business, the requesting party’s proposed means of doing business, current qualifications, previous performance history, any negative rulings relating to securities (whether ruling is civil or criminal in nature), and financial history.

Obtaining proper authorization is an absolute must for broker-dealers. Broker- dealers may not act unless they have first obtained appropriate client authorization. Before a broker-dealer may initiate any securities transaction on behalf of a client, the broker-dealer must first secure the proper authorization for the transaction from the client. This requirement applies for all client securities transactions including, but not necessarily limited to, the purchase, sale, or exchange of securities. Broker-dealers may not act without their client’s permission even if the broker-dealer believes the action would be in the client’s best interest.

A legal person may be an individual or an entity such as a legal partnership, an estate, or a corporation. Whether a legal person is an individual or an entity, all legal persons have a number of characteristics in common. These include:
• Legal persons can enter into contracts with other legal persons.
• Legal persons may engage in business transactions.
• Legal persons, whether an individual or an entity, can be charged with and found guilty of criminal activity.
• Legal persons can be sued and may face civil litigation.
• Legal persons may be required to pay damages if found to be at fault in a civil suit.
• In some instances, both an entity and an individual associated with that entity could be found guilty of the same or associated crimes.

The amount of the bond required is generally dependent upon the amount of authority the investment adviser will have over its clients’ funds. If a client grants discretionary authority to an investment adviser to manage the client’s accounts, a bond of $10,000 is normally required.

Each person desiring to obtain registration as a broker-dealer, investment adviser, agent, or investment adviser representative from a state Administrator in order to conduct business in a given state must first meet all of the requirements for the desired registration. In order to register, the applicant must submit a completed application to the Administrator. The applicant must also render the designated payment amount required for the type of license requested. In addition to the application and associated fees, the applicant must post any bonds that have been required by the state Administrator. If the Administrator requires an examination for registration, the applicant must complete all of the required examination successfully. If examinations are required, the format may be oral and/or written. Finally, the applicant must provide consent to service of process to the Administrator.

The National Securities Markets Improvements Act of 1996 is generally referred to by its acronym, NSMIA. The NSMIA established a division of responsibility between state regulators and federal regulators. Under the provisions of the NSMIA, the responsibility for regulating certain investment advisers and securities falls to the Securities and Exchange Commission (SEC). An investment adviser that falls under the jurisdiction of the SEC is referred to as a federal covered adviser and is not subject to investor adviser regulation by the Administrator of the Uniform Securities Act.

Exempt insurance company securities include any insurance company-offered stocks and/or bonds, but do not include insurance policies that do not constitute securities. Exempt securities also include securities issued by a utility or company that is government by the Interstate Commerce Commission or the Public Utility Holding Company Act of 1935, including railroad securities, common carrier securities, public utilities, and public utility holding company securities.

If a registered person transacts business fraudulently, he is subject to the criminal provisions of the Uniform Securities Act (USA).

A canceled registration is not grounds for a future denial, suspension, or revocation of registration and does not carry a penalty

Non-issuer initiated securities transactions may qualify for exempt status based upon the issuer’s own reporting requirements or the type of security in question.

Securities transactions that are initiated by named fiduciaries are exempt and are designed to ease the process for parties seeking to liquidate holdings in certain circumstances, including the death of the original owner, government seizure of property, and bankruptcy.

Transactions in which issuers transfer securities to their own underwriters are exempt. Offerings made to existing security holders may qualify as exempt transactions. Transactions in which a secured bond security is backed by either a deed of trust or a real mortgage qualify as exempt transactions as long as the whole deed of trust or real mortgage is offered with the bond as a package deal. Transactions that consist of an offer to rescind a previous, improper security transaction are considered exempt. Finally, transactions that consist of an offer to sell (or the sale of) a security to a person that resides outside of the state, and who is not present in the state, are exempt transactions.

An isolated non-issuer transaction is a securities transaction that occurs infrequently and is unassisted by investment professionals.

The registrant must then submit a filing fee required by the Administrator. The Administrator may also, at his or her discretion, require ongoing reports to be filed to keep information about the issue current, require new or unusual offerings to be held in escrow, and dictate the security be sold on a special subscription form to be filed with the Administrator.

The Uniform Securities Act (USA) gives the state securities Administrator the power to make, amend, and rescind securities rules and orders.

Investment advisers and broker-dealers must establish safeguards to protect their clients’ nonpublic information from inadvertent disclosure, as well as establish processes that ensure the safe disposal of any client credit information they possess. Furthermore, investment advisers and broker-dealers must provide written notice of the practices they have established to protect client confidentiality to all of its individual customers.

The BSA is federal legislation that targets broker-dealers and financial dealers that may be aiding clients attempting to launder money, evade taxes, or engage in other criminal behavior.

Failure to comply with the provisions of the Employee Retirement Income Security Act may result in court actions, financial remedies, and/or ordered sanctions.

Other federally covered securities include securities issued by a municipal or other government issuer located outside the state where the securities are offered; securities that are only offered to the issuer’s existing securities owners where no commissions (or other form of compensation) applies to the solicitation of the exchange of security; and securities offered by an issuer that is registered (or that has filed a registration statement) under the Investment Company Act of 1940