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Statutory Disqualification
Practical Law Glossary Item 2-600-4114 (Approx. 3 pages)
Glossary
Statutory Disqualification
Under Exchange Act Section 3(a)(39), an encumbrance of a person, including a broker-dealer, who has engaged in certain types of misconduct, to SRO membership or participation or association with a broker-dealer. A person becomes subject to a statutory disqualification if the person:
- Is enjoined temporarily or permanently from violating the securities laws by a court of competent jurisdiction.
- Has been convicted of any felony or certain misdemeanors within the last ten years.
Under Investment Advisers Act Section 203(e), the SEC may deny an application for registration as an investment adviser if the adviser or any “person associated with the adviser:”
- Makes false or misleading statements in its registration application
- Has within the past 10 years been convicted of a felony.
- Has been convicted by a court or found by the SEC to have violated a securities-related statute or rule.
- Has been the subject of a securities-related injunction, or similar legal action.