 |
Utah Administrative Code (Current through November 1, 2019) |
 |
R628. Money, Management Council |
|
|
R628-16. Certification as a Dealer |
| R628-16-1. Authority |
|
Latest version.
|
|
This rule is issued pursuant to Sections 51-7-3(1) and 51-7-18. |
| R628-16-2. Scope |
|
Latest version.
|
|
This rule establishes the criteria applicable to all broker-dealers and agents for certification by the Director of the Securities Division of the Department of Commerce (the "Director") as eligible to conduct investment transactions under the State Money Management Act. It further establishes the application contents and procedures, and the procedures for termination and reinstatement of certification. |
| R628-16-3. Purpose |
|
Latest version.
|
|
This rule establishes a uniform standard to evaluate the financial condition and the standing of a broker-dealer to determine if investment transactions with public treasurers by broker-dealers would expose public funds to undue risk. |
| R628-16-4. Definitions |
|
Latest version.
|
|
The following terms are defined in Section 51-7-3 of the State Money Management Act, and when used in this rule, have the same meaning as in the Act: A. "Certified dealer"; B. "Council"; C. "Director"; and D. "Public treasurer". The following terms are defined in Section 61-1-13 of the Utah Uniform Securities Act, and when used in this rule, have the same meaning as in that Act: A. "Agent". |
| R628-16-5. General Rule |
|
Latest version.
|
|
No public treasurer may conduct any investment transaction through a broker-dealer or any agent representing a broker-dealer unless that broker-dealer has been certified by the Director as eligible to conduct investment transactions with public treasurers. |
| R628-16-6. Application to Become a Certified Dealer |
|
Latest version.
|
|
A. Any broker-dealer wishing to become a certified dealer under the State Money Management Act must submit an application to the Utah Securities Division. B. The application must include: (1) Primary Reporting Dealers: Proof of status as a primary reporting dealer, including proof of recognition by the Federal Reserve Bank, if applicant is a primary reporting dealer. (2) Office Address: The address of the applicant's principal office. Broker-dealers who are not primary reporting dealers must have and maintain an office and a resident principal in Utah; the application shall include the address of the Utah office and the identity of the resident principal. (3) Broker-Dealer Registration: Proof of registration with the Division under its laws and rules, effective as of the date of the application, of the following: (a) the broker-dealer; (b) its resident principal (if one is required); and (c) any agents of a firm doing business in the state of Utah. (4) Corporate Authority: A Certificate of Good Standing, obtained from the state in which the applicant is incorporated. An applicant who is a foreign corporation also must submit a copy of its Certificate of Authority to do business in Utah, obtained from the Corporations Division of the Department of Commerce (hereinafter the "Corporations Division"). (5) Financial Statements: With respect to applicants who are not primary reporting dealers, financial statements, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, indicating that the applicant has, as of its most recent fiscal year end: (a) Net Capital: Minimum net capital, as calculated under rule 15c3-1 of the General Rules and Regulations under the Securities and Exchange Act of 1934 (the Uniform Net Capital Rule), of at least 5% of the applicant's aggregate debt balances, as defined in the rule, and; (b) Total Capital: Total capital as follows: (i) of at least $10 million or; (ii) of at least $25 million, calculated on a consolidated basis, with respect to an applicant which is a wholly-owned subsidiary. (6) Government Securities Act Registration: Proof of the firm's registration under the Government Securities Act of 1986 (100 Stat 3208). (7) Account Documents: Copies of all agreements, contracts, or other documents that the applicant requires or intends to require to be signed by the public treasurer to open or maintain an account. These documents must meet the following requirements: (a) The Director shall not certify any applicant who requires, or proposes to require, that any dispute arising out of transactions between the applicant and the public treasurer must be submitted to arbitration. The applicant must provide copies of agreements signed or to be signed, which allow the public treasurer to select the forum and method for dispute resolution, whether that forum be arbitration, mediation or litigation in any state or federal court. (b) Any customer agreement shall provide that suit may be litigated in a Utah court, and that Utah law shall apply in settling disputes, where relevant. (8) Knowledge of Money Management Act: A notarized statement, signed by a principal and by any agent who has any contact with a public treasurer or its account, that the agent is familiar with the authorized investments as enumerated in Section 51-7-11(3) and the rules of the Council, and with the investment objectives of the public treasurer, as set forth in Section 51-7-17(1). (9) Fee: A non-refundable fee as described in Section 51-7-18.3(2), payable to the Division. |
| R628-16-7. Certification |
|
Latest version.
|
|
A. Initial Certification: The initial application for certification must be received on or before the last day of the month for approval at the following month's council meeting. B. Date of Effectiveness: All certifications shall be effective upon approval by the council. C. Expiration; Renewal: All certifications not otherwise terminated shall expire on June 30 of each year, unless renewed. Renewal applications must be received on or before April 30 of each year. |
| R628-16-8. Renewal of Application |
|
Latest version.
|
|
A. Certified dealers wishing to keep their status as certified dealers must reapply annually, on or before April 30 of each year, for recertification to be effective July 1 of each year. B. The renewal application must contain all of the documents and meet all of the requirements as set forth above with respect to initial applications. C. The renewal application must be accompanied by an annual renewal fee as described in Section 51-7-18.3(2). |
| R628-16-9. Post Certification Requirements |
|
Latest version.
|
|
Certified dealers are required to notify the Division of any changes to any items or information contained in the original application within 20 calendar days of the change. The notification shall provide copies, where necessary, of relevant documents. |
| R628-16-10. Notification of Certification |
|
Latest version.
|
|
The Director shall provide a list of certified broker-dealers and agents to the Money Management Council at least semiannually. The Council shall mail this list to each public treasurer. |
| R628-16-11. Grounds for Suspension or Termination of Status as a Certified Dealer |
|
Latest version.
|
|
Any one of the following constitutes grounds for suspension or termination of status as a certified dealer: A. Termination of the dealer's status as a primary reporting dealer if the dealer gained certification as a primary reporting dealer. B. Denial, suspension or revocation of the dealer's registration under the Government Securities Act, or by the Division, or by any other state's securities agency. C. Failure to maintain a principal office operated by a resident registered principal in this state, if applicable. D. Failure to maintain registration with the Utah Securities Division by the firm or any of its agents having any contact with a public treasurer. E. Failure to remain in good standing in Utah with the Corporations Division, or to maintain a certificate of authority, as applicable. F. Failure to submit within 10 days of the due date the required financial statements, or failure to maintain the required minimum net capital and total capital. G. Requiring the public treasurer to sign any documents, contracts, or agreements which require that disputes be submitted to mandatory arbitration. H. The sale, offer to sell, or any solicitation of a public treasurer by an agent or by a resident principal, where applicable, who is not certified. I. Failure to pay the annual renewal fee. J. Making any false statement or filing any false report with the Division. K. Failure to file amended reports as required in section R628-16-9. L. The sale, offer to sell, or any solicitation of a public treasurer, by the certified dealer or any of its employees or agents, of any instrument or in any manner not authorized by the Money Management Act or rules of the Council. M. Failure to respond to requests for information from the Division or the Council within 15 days after receipt of a request for information. N. Failure to maintain registration under the federal Government Securities Act. O. Engaging in a dishonest or unethical practice in connection with any investment transaction with a public treasurer. "Dishonest or unethical practice" includes, those acts and practices enumerated in Rule R164-6-1g. |
| R628-16-12. Procedures for Suspension or Termination and Reinstatement of Status |
|
Latest version.
|
|
A. Where it appears to the Division or to the Council that grounds may exist to suspend a certified dealer or terminate status as a certified dealer, the Council shall proceed under the Utah Administrative Procedures Act, Chapter 4, Title 63G. B. All proceedings to suspend a certified dealer or to terminate status as a certified dealer are designated as informal proceedings under the Utah Administrative Procedures Act. C. In any hearings held, the Chair of the Council shall be the presiding officer, and that person may act as the hearing officer, or may designate another person from the Council or the Division to be the hearing officer. At the election of the presiding officer, other members of the Council may issue recommendations to the hearing officer after the close of the hearing. D. The Notice of Agency Action, or any petition filed in connection with it, required under the Utah Administrative Procedures Act, shall include a statement of the grounds for termination, and the remedies required to cure the violation. E. After the date of service of the Notice of Agency Action, the certified dealer and its agents shall not conduct any investment transaction with any public treasurer if so ordered by the Money Management Council. The order issued by the hearing officer at the conclusion of the proceedings shall lift this prohibition if the order allows the certified dealer to keep its status as a certified dealer. |