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Alaska Statutes.

Title 45. Trade and Commerce

Chapter 55. Alaska Securities Act

Section 25. Fraudulent, Dishonest, and Unethical Business Practices of Broker-Dealers and Agents.

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AS 45.55.025. Fraudulent, Dishonest, and Unethical Business Practices of Broker-Dealers and Agents.

A broker-dealer and an agent shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business. The acts and practices that are contrary to those standards and principles, that constitute dishonest or unethical practices in the securities business under AS 45.55.060 (a), and that are grounds for imposition of administrative fines, censure, denial, suspension, revocation of a registration, or other appropriate disciplinary action include

(1) engaging in a pattern of unreasonable and unjustifiable delays in the delivery of securities purchased by the broker-dealer's customers or in the payment upon request of free credit balances reflecting completed transactions of the broker-dealer's customers;

(2) inducing in a customer's account trading that is excessive in size or frequency in view of the financial resources and character of the account;

(3) recommending to a customer the purchase, sale, or exchange of a security without reasonable grounds to believe that the transaction or recommendation is suitable for the customer based on reasonable inquiry concerning the customer's investment objectives, financial situation, and needs, and other relevant information known by the broker-dealer or agent;

(4) executing a transaction on behalf of a customer without authorization to execute the transaction;

(5) exercising discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer unless the discretionary power relates solely to the time or price for the execution of orders;

(6) executing a transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account;

(7) failing to segregate a customer's free securities or securities held in safekeeping;

(8) hypothecating a customer's securities without having a lien on the securities unless the broker-dealer or agent receives from the customer a properly executed written consent promptly after the initial transaction, except as permitted by the rules of the United States Securities and Exchange Commission;

(9) entering into a transaction with or for a customer at a price not reasonably related to the current market price of the securities or receiving an unreasonable commission or profit;

(10) failing to furnish to a customer purchasing securities in a registered offering a final or preliminary prospectus no later than the date of confirmation of the transaction and, if the prospectus is preliminary, failing to furnish a final prospectus within a reasonable time after the effective date of the offering;

(11) charging unreasonable or inequitable fees for services performed, including fees for miscellaneous services, such as the collection of money due for principal, dividends, or interest, the exchange or transfer of securities, appraisals, safekeeping, the custody of securities, and other services related to the broker-dealer's securities business;

(12) offering to buy from or sell to a person a security at a stated price unless the broker-dealer is prepared to purchase or sell at that price and under the conditions that are stated at the time of the offer to buy or sell;

(13) representing that a security is being offered to a customer at market price or at a price relevant to the market price unless the broker-dealer or agent knows or has reasonable grounds to believe that a market for the security exists other than that made, created, or controlled by

(A) the broker-dealer;

(B) a person for whom the broker-dealer is acting or with whom the broker-dealer is associated in the distribution of the security; or

(C) a person controlled by, controlling, or under common control with the broker-dealer;

(14) effecting a transaction in, or inducing the purchase or sale of, a security by means of a manipulative, deceptive, or fraudulent device, practice, plan, program, design, or contrivance, including

(A) effecting a transaction in a security that does not involve a change in the beneficial ownership;

(B) entering an order for the purchase or sale of a security with the knowledge that another order of substantially the same price for the sale of the same security has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security; nothing in this subparagraph prohibits a broker-dealer from entering a bona fide agency cross transaction for its customers as long as the cross transaction is noted on the confirmation and monthly account statements;

(C) effecting alone or with one or more other persons a series of transactions in a security creating actual or apparent active trading in the security or raising or depressing the price of the security for the purpose of inducing the purchase or sale of the security by others;

(15) guaranteeing a customer against risk or loss in a securities account of the customer carried by the broker-dealer or in a securities transaction effected by the broker-dealer or agent with or for the customer;

(16) publishing or circulating or causing to be published or circulated a notice, a circular, an advertisement, a newspaper article, an investment service, or a communication of any kind that purports to

(A) report a transaction as a purchase or sale of a security unless the broker-dealer or agent believes that the transaction described was a bona fide purchase or sale of the security; or

(B) quote the bid price or asked price for a security unless the broker-dealer believes that the quotation represents a bona fide bid for, or offer of, the security;

(17) making a written or oral advertising or sales presentation that is in any manner deceptive or misleading, including

(A) distributing nonfactual data or material, or making a presentation that is based on conjecture or unfounded or unrealistic claims or assertions, in a brochure, flyer, or other display by words, pictures, graphs, or other method designed to supplement, detract from, supersede, or defeat the purpose or effect of a prospectus or disclosure;

(B) using supplementary material in connection with the offer of a particular security if the information in the material is not consistent with or adequately supported by the prospectus or is not filed as part of the registration statement;

(C) using supplementary material not authorized by the issuer in connection with the offer of a particular security when a prospectus or other offering document required to be delivered in connection with the offer specifically states that supplementary material is not authorized;

(18) failing to disclose that the broker-dealer or agent is affiliated with the issuer of a security before entering into a contract with or for a customer for the purchase or sale of the security and, if the disclosure is made orally, failing to provide to the customer written disclosure before the completion of the transaction;

(19) failing to make a bona fide offering of all of the securities allotted to a broker-dealer for distribution, whether acquired as an underwriter or a selling group member or from an underwriting or a selling group member participating in the distribution as an underwriter or selling group member;

(20) failing or refusing to furnish to a customer, upon reasonable request, information to which the person is entitled or failing or refusing to respond to a formal written request, demand, or complaint;

(21) being found by a court or an administrative proceeding of competent jurisdiction to have violated the anti-fraud or registration provisions of federal securities laws or of the securities law of a state;

(22) marking an order ticket or confirmation as unsolicited when, in fact, the transaction was solicited;

(23) in connection with the solicitation of a sale or purchase of an over-the-counter non-NASDAQ security, failing to provide promptly the most current prospectus or the most recent periodic report filed under 15 U.S.C. 78m (Securities Exchange Act of 1934), when requested to do so by a customer;

(24) failing to provide to a customer for a month in which activity has occurred in a customer's account, but in no event less than every three months, a statement of account that contains a value for each over-the-counter non-NASDAQ equity security based on the closing market bid on a certain date; this paragraph applies only if the broker-dealer has been a market maker in that security at any time during the month in which the monthly or quarterly statement is issued;

(25) failing to maintain lists of persons who have informed the broker-dealer that the persons do not want to be solicited;

(26) conducting business by telephone at unreasonable times;

(27) failing to disclose to a person purchasing shares of an investment company on the premises of an insured depository institution that the investment is not covered by the Federal Deposit Insurance Corporation; or

(28) failing to comply with an applicable provision of the Conduct Rules of the National Association of Securities Dealers, Inc., or applicable fair practices or ethical standards adopted by the United States Securities and Exchange Commission or by a self-regulatory organization approved by the United States Securities and Exchange Commission.