PRINTER'S NO. 649
No. 547 Session of 2003
INTRODUCED BY GANNON, HASAY, JAMES, BOYES, BLAUM, BROWNE, HANNA, HARPER, HUTCHINSON, LEWIS, MANDERINO, NICKOL, PALLONE, STETLER, TURZAI, WALKO AND GEIST, MARCH 3, 2003
REFERRED TO COMMITTEE ON COMMERCE, MARCH 3, 2003
AN ACT 1 Amending the act of December 5, 1972 (P.L.1280, No.284), 2 entitled "An act relating to securities; prohibiting 3 fraudulent practices in relation thereto; requiring the 4 registration of broker-dealers, agents, investment advisers, 5 and securities; and making uniform the law with reference 6 thereto," providing for assessments. 7 The General Assembly of the Commonwealth of Pennsylvania 8 hereby enacts as follows: 9 Section 1. Section 602.1(c)(1) of the act of December 5, 10 1972 (P.L.1280, No.284), known as the Pennsylvania Securities 11 Act of 1972, amended July 4, 2002 (P.L.721, No.108), is amended 12 to read: 13 Section 602.1. Assessments.--* * * 14 (c) After giving notice and opportunity for a hearing, the 15 commission may issue an order accompanied by written findings of 16 fact and conclusions of law which imposes an administrative 17 assessment in the amounts provided in paragraph (1) against a 18 broker-dealer, agent, investment adviser or investment adviser 19 representative registered under section 301 or an affiliate of
1 any broker-dealer or investment adviser where the commission 2 determines that the person willfully has violated this act or a 3 rule or order of the commission under this act or has engaged in 4 dishonest or unethical practices in the securities business; has 5 taken unfair advantage of a customer; or has failed reasonably 6 to supervise its agents or employes or against any other person 7 if the commission determines that the person wilfully violated 8 section 301, 401, 404, 406 through 409 or 512(d) or a cease and 9 desist order issued by the commission under section 606(c.1). 10 (1) The commission, in issuing an order under this 11 subsection, may impose the administrative assessments set forth 12 below. Each act or omission that provides a basis for issuing an 13 order under this subsection shall constitute a separate 14 violation. 15 (i) In issuing an order against any broker-dealer, agent, 16 investment adviser or investment adviser representative 17 registered under section 301 or an affiliate of any broker- 18 dealer or investment adviser, the commission may impose [an] a 19 maximum administrative assessment of up to [fifty] one hundred 20 thousand dollars [($50,000)] ($100,000) for [a single violation 21 or up to five hundred thousand dollars ($500,000) for multiple 22 violations in a single proceeding or a series of related 23 proceedings.] each act or omission that constitutes a violation 24 of the act or rule or order issued under section 301. If any of 25 the victims of the person's violative conduct were individuals 26 aged 60 or more, the commission also may impose a special 27 administrative assessment in addition to the foregoing amounts 28 of up to fifty thousand dollars ($50,000). 29 (ii) In issuing an order against a person for wilful 30 violation of section 401(a) or (c), 404, 406, 408, 409 or 512(d) 20030H0547B0649 - 2 -
1 or for wilful violation of a cease and desist order issued under 2 section 606(c.1), the commission may impose [an] a maximum 3 administrative assessment of up to [fifty] one hundred thousand 4 dollars [($50,000)] ($100,000) for [a single violation or up to 5 three hundred thousand dollars ($300,000) for multiple 6 violations in a single proceeding or a series of related 7 proceedings.] each act or omission that constitutes a violation 8 of any of those sections. In addition to the foregoing 9 assessment, the commission also may impose a special 10 administrative assessment of up to fifty thousand dollars 11 ($50,000) for each of the provisions described as follows that 12 the commission determines are applicable: 13 (A) The person, within seven years prior to the commission 14 taking action under this subsection, was the subject of: a 15 criminal felony conviction; an injunction issued by any court of 16 competent jurisdiction; or an order of the Securities and 17 Exchange Commission, the Commodity Futures Trading Commission, 18 the securities, banking or insurance regulator of another state, 19 a Federal banking regulator or the securities, banking or 20 insurance regulatory authority of another country which found 21 that the person wilfully had violated any provision of the 22 Federal or state securities, banking, insurance, or commodities 23 laws or the securities, commodities, insurance or banking laws 24 of another country. 25 (B) The person's violative conduct involved individuals aged 26 60 or more. 27 (C) The person's violative conduct involved use of the 28 Internet or boiler room tactics which included, without 29 limitation, use of any high-pressure sales tactics designed to 30 create an artificially short time period for which the person 20030H0547B0649 - 3 -
1 being solicited is pressured to make an investment decision or 2 overcome the person's reluctance to commit to the investment 3 being offered, use of scripts designed to allay any objections 4 or concerns expressed by the person being solicited or making 5 repeated telephone calls or sending multiple e-mail messages to 6 the same person pressuring the person to make an immediate 7 investment decision. 8 (iii) In issuing an order against a person for wilful 9 violation of section 401(b) or 407, the commission may impose an 10 administrative assessment of up to [twenty-five thousand dollars 11 ($25,000)] fifty thousand dollars ($50,000) for each of the 12 criteria described in subclause (ii)(A) and (C) that the 13 commission determines are applicable. No assessment shall be 14 imposed under this subclause if the person is subject to an 15 administrative assessment imposed under any other provision of 16 this subsection. 17 (iv) In issuing an order against a person, other than a 18 federally covered adviser, for wilful violation of section 301, 19 the commission may impose the following administrative 20 assessments [unless the person is subject to] which may be in 21 addition to an administrative assessment imposed under any other 22 provision of this subsection [or the public proceeding to which 23 the assessment relates was instituted prior to the date of 24 enactment of this subclause]: 25 (A) For a person who at the time of the wilful violation was 26 not registered under section 301, was not registered as a broker 27 or dealer with the United States Securities and Exchange 28 Commission under the Securities Exchange Act of 1934 (48 Stat. 29 881, 15 U.S.C. § 78a et seq.) and was not a member of a national 30 securities association registered under that act, the commission 20030H0547B0649 - 4 -
1 may impose [an] a maximum administrative assessment of up to 2 fifty thousand dollars ($50,000) for [a single violation or up 3 to two hundred fifty thousand dollars ($250,000) for multiple 4 violations in a single proceeding or series of related 5 proceedings] each act or omission which constitutes a violation 6 of section 301. 7 (B) For a person (not an individual) that at the time of the 8 wilful violation was not registered under section 301 but was 9 registered as a broker or dealer with the United States 10 Securities and Exchange Commission under the Securities Exchange 11 Act of 1934 and was a member of a national securities 12 association registered under that act, the commission may impose 13 [an] a maximum administrative assessment of up to fifty thousand 14 dollars ($50,000) for [a single violation or up to three hundred 15 thousand dollars ($300,000) for multiple violations in a single 16 proceeding or series of related proceedings] each act or 17 omission which constitutes a violation of section 301. An 18 assessment imposed under this subclause shall be in addition to 19 any liability a person may have under an order issued under 20 section 514. 21 (v) In issuing an order for wilful violation of section 22 301(c.1)(1)(ii) against a person that is a federally covered 23 adviser, the commission may impose the following administrative 24 assessments: 25 (A) Up to one hundred thousand dollars ($100,000) if the 26 number of investment adviser representatives involved in the 27 violation was less than five. 28 (B) Up to two hundred thousand dollars ($200,000) if the 29 number of investment adviser representatives involved in the 30 violation was five or more. 20030H0547B0649 - 5 -
1 (vi) In issuing an order for a wilful violation of section 2 301(f) against a person that is a federally covered adviser, the 3 commission may impose an administrative assessment of two 4 thousand dollars ($2,000). 5 * * * 6 Section 2. This act shall take effect in 60 days. A6L70DMS/20030H0547B0649 - 6 -