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§ 1-404. Prohibited advisory activities

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 70 P.S. SecuritiesEffective: August 11, 2014

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 70 P.S. Securities (Refs & Annos)
Chapter 1.5. Pennsylvania Securities Act of 1972 (Refs & Annos)
Part IV. Fraudulent and Prohibited Practices (Refs & Annos)
Effective: August 11, 2014
70 P.S. § 1-404
§ 1-404. Prohibited advisory activities
Currentness
(a) It is unlawful for any person who receives, directly or indirectly, any consideration from another person for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, in this State:
(1) To employ any device, scheme, or artifice to defraud the other person.
(2) To engage in any transaction, act, practice, or course of business which operates as a fraud or deceit upon any other person.
(3) Acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or, acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of the transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker-dealer if such broker-dealer is not acting as an investment adviser in relation to such transaction.
(4) To engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative.
(5) To fail to disclose to the board of school directors of a public school district or to a municipal pension plan or system in this Commonwealth the compensation that such person will give, directly or indirectly, to another person in connection with either obtaining the board of school directors or municipal pension plan or system as an advisory client or advising the board of school directors or municipal pension plan or system as to any transaction involving the purchase or sale of a security with respect to an investment of public school district funds pursuant to section 440.1 of the act of March 10, 1949 (P.L. 30, No. 14),1 known as the “Public School Code of 1949,” and 53 Pa.C.S. Pt. VII Subpt. B2 (relating to indebtedness and borrowing) or investment of funds of the municipal pension plan or system.
(6) To represent that he is an investment counsel or to use the name “investment counsel” as descriptive of his business unless a substantial part of his business consists of rendering investment advisory services on the basis of the individual needs of his clients.
(7) Unless the person is registered as a broker-dealer under this act, to take and have custody of any securities or funds of any client if he fails to meet such requirements therefor as may be prescribed by the department by regulation.
(b) In the solicitation of advisory clients, it is unlawful for any person to make any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
(c) The prohibitions of this section shall apply to federally covered advisers and other persons excluded from the definition of investment adviser under section 102(j)(i) through (viii), (x) and (xi)3 only to the extent that the prohibited conduct involves fraud or deceit.

Credits

1972, Dec. 5, P.L. 1280, No. 284, § 404, effective Jan. 1, 1973. Amended 1998, Nov. 24, P.L. 829, No. 109, § 18, effective in 60 days; 2004, Nov. 23, P.L. 924, No. 128, § 2, effective Jan. 24, 2005; 2014, June 10, P.L. 678, No. 52, § 16, effective in 60 days [Aug. 11, 2014].

Footnotes

1
24 P.S. § 4-440.1.
2
53 Pa.C.S.A. § 8001 et seq.
3
70 P.S. § 1-102.
70 P.S. § 1-404, PA ST 70 P.S. § 1-404
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
End of Document