Ala. Admin. Code r. 830-X-3-.18

Current through Register Vol. 42, No. 6, March 29, 2024

Section 830-X-3-.18 - "Twisting" Or "Churning" Prohibited

(1) No dealer, investment adviser, agent or investment adviser representative, or officer, partner, director, or agent of any thereof, shall effect or induce or attempt to induce any transaction in any insurance or securities portfolio of a prospective investor or customer for the purpose of sale or purchase of securities, mutual funds or insurance, or any other investment, by "twisting" or "churning." "Twisting" and "churning" are prohibited and shall be grounds for revocation, suspension, denial, censure, bar, administrative assessment, fine or any other penalty that may be imposed by the Commission.

(2) "Twisting" shall mean the making of any false or misleading representation pertaining to, or any incomplete or fraudulent comparison with respect to, any life insurance policy, insurer, security, mutual fund, or other investment or issuer for the purpose of inducing or tending to induce any person to cash in or convert any security or to lapse, forfeit, surrender or terminate any life insurance policy and substitute any security therefor.

(3) "Churning" shall mean any action of a dealer, investment adviser, agent or investment adviser representative, or officer, partner, director or agent of any thereof, acting in its own interest and against the interest of its customer, which effects or induces transactions in the customer's account which are excessive in size and frequency in the light of the nature of the account and the financial resources and investment needs and objectives of the customer.

Author:

Ala. Admin. Code r. 830-X-3-.18

Filed September 30, 1982. Readopted: Filed November 9, 1983. Amended: Filed September 28, 1990.

Formerly Rule No. 830-X-3-.08.

Statutory Authority:Code of Ala. 1975, § 8-6-23.