Utah Admin. Code 164-1-4

Current through Bulletin No. 2024-21, November 1, 2024

Section R164-1-4 - Fraudulent Acts

The following acts constitute fraudulent acts and practices and violate the anti-fraud provisions of Subsection 61-1-1(3):

(1) effecting a transaction with a customer in any security at an unreasonable price or at a price not reasonably related to the current market price of the security;

(2) receiving an unreasonable commission or profit;

(3) contradicting or negating the importance of information contained in a prospectus or other offering materials with intent to deceive or mislead;

(4) using advertising or sales presentations in a deceptive or misleading manner;

(5) leading a customer to believe that the licensee is in possession of material, non-public information which would impact the value of a security whether or not the licensee is in possession of the material non-public information;

(6) making contradictory recommendations to different customers of similar investment objective for some to sell and others to purchase the same security, at or about the same time, when not justified by the particular circumstance of each customer;

(7) failing to make a bona fide public offering of any securities allotted to the licensee for distribution by, among other things:

(a) transferring securities to a customer, another broker-dealer or a fictitious account with the understanding that those securities will be returned to the licensee or the licensee's nominee; or

(b) parking or withholding securities;

(8) in connection with the solicitation of a purchase of a designated security which is not an exempt transaction :

(a) failing to disclose to a customer the bid and ask price, at which a transaction is effected with individual, retail customers, of the designated security as well as its spread in both percentage and dollar amounts at the time of solicitation and on the trade confirmation documents;

(b) failing to advise a customer, both at the time of solicitation and on the confirmation, of any compensation related to a specific securities transaction to be paid to the licensee, including commissions, sales charges, or concessions;

(c) failing, to disclose, both at the time of solicitation and on the confirmation, the licensee's firm's short inventory position of more than 5%, or the firm's long inventory position of more than 10%, of the issued and outstanding shares of that class of securities of the issuer, if:

(i) the firm is a market-maker at the time of the solicitation, and

(ii) the transaction is a principal transaction;

(d) conducting or participating in sales contests in a particular designated security;

(e) failing to include with the confirmation, in a form satisfactory to the division, a written explanation of the bid and ask price;

(f) failing or refusing to execute sell orders from a customer from whom the licensee or the licensee's firm solicited the purchase of the designated security in a principal transaction;

(g) soliciting a secondary market transaction when there has not been a bona fide distribution in the primary market;

(h) engaging in a pattern of compensating an agent in different amounts for effecting sales and purchases in the same designated security; or

(9) effecting transactions in, or inducing the purchase or sale of any security by any manipulative, deceptive or other fraudulent device or contrivance, including the use of boiler room tactics or use of fictitious or nominee accounts.

Utah Admin. Code R164-1-4

Adopted by Utah State Bulletin Number 2022-07, effective 3/11/2022