N.M. Code R. § 12.11.4.15

Current through Register Vol. 35, No. 11, June 11, 2024

Section 12.11.4.15 - PROHIBITED BUSINESS PRACTICES BY BROKER-DEALERS

The following are deemed to be unethical and dishonest conduct or practices by a broker-dealer under Section 58-13C-412 C(13) NMSA 1978 without limiting those terms to the practices specified herein:

A. causing any unreasonable delay in the delivery of securities purchased by any of its customers, 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;

C. recommending to a customer the purchase, sale or exchange of any securities without reasonable grounds to believe that the recommendation is suitable for the customer on the basis of information furnished by the customer after reasonable inquiry concerning the customer's investment objectives, financial situation and needs, and any other information known by the broker-dealer;

D. executing a transaction on behalf of a customer without authority to do so;

E. executing a transaction for the account of a customer upon instruction from a third party without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price for the execution of orders, or both;

F. 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 or price for the execution of orders, or both;

G. extending, arranging for, or participating in arranging for credit to a customer in violation of the Securities Exchange Act of 1934 or the regulations of the Federal Reserve Board;

H. executing any transaction in a margin account without obtaining from its customer a written margin agreement not later than 15 calendar days after the initial transaction in the account;

I. failing to segregate customers' free securities or securities in safekeeping;

J. hypothecating a customer's securities without having a lien thereon unless written consent of the customer is first obtained, except as permitted by rules of the SEC;

K. charging its customer an unreasonable commission or service charge in any transaction executed as agent for the customer;

L. entering into a transaction for its own account with a customer with an unreasonable markup or markdown;

M. entering into a transaction for its own account with a customer in which a commission is charged;

N. entering into a transaction with or for a customer at a price not reasonably related to the current market price;

O. executing orders for the purchase by a customer of securities not registered or exempted unless the transaction is exempted under the New Mexico Uniform Securities Act;

P. representing itself as a financial or investment planner, consultant, or adviser, when the representation does not accurately describe the nature of the services offered, the qualifications of the person offering the services and the method of compensation for the services;

Q. violating any material rule of any securities exchange or national securities association of which it is a member with respect to any customer, transaction or business in this state;

R. failing to furnish to a customer purchasing securities in an offering, not 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;

S. introducing customer transactions on a "fully disclosed" basis to another broker-dealer that is not registered under the New Mexico Uniform Securities Act;

T. recommending to a customer that the customer engage the services of an investment adviser that is not registered under the New Mexico Uniform Securities Act or the Investment Advisers Act of 1940; and

U. using in a misleading manner any term or abbreviation that states or implies that a person has special expertise, certification, or training in financial planning, including but not limited to, the misleading use of a senior-specific certification or designation as set forth in 12.11.17 NMAC.

N.M. Code R. § 12.11.4.15

12.11.4.15 NMAC - Rp, 12.11.4.15 NMAC, 1-1-2010