15 U.S.C. § 687f: Unlawful acts and omissions…

Summary

If a licensed company breaks the rules, anyone who ordered, caused, helped, or took part in that wrongdoing is also treated as having broken the rules. Officers, directors, employees, agents, or other managers must not do or fail to do things that break their duty to the company. If their bad act or failure causes the company to lose money or puts it in immediate danger of loss or other harm, that is illegal. No one may become or keep serving as an officer, director, employee, agent, or other manager of a licensee without written permission from the Administration if they have been convicted of a felony or any crime involving dishonesty or breach of trust, or if a court has found them liable for fraud or breach of trust or has permanently or temporarily ordered them stopped for those acts.

Title 15, §687f

Commerce and Trade, Source: USLM XML via OLRC

(a)Violation by licensee deemed violation by persons participating

Wherever a licensee violates any provision of this chapter or regulation issued thereunder by reason of its failure to comply with the terms thereof or by reason of its engaging in any act or practice which constitutes or will constitute a violation thereof, such violation shall be deemed to be also a violation and an unlawful act on the part of any person who, directly or indirectly, authorizes, orders, participates in, or causes, brings about, counsels, aids, or abets in the commission of any acts, practices, or transactions which constitute or will constitute, in whole or in part, such violation.

(b)Breach of fiduciary duty

It shall be unlawful for any officer, director, employee, agent, or other participant in the management or conduct of the affairs of a licensee to engage in any act or practice, or to omit any act, in breach of his fiduciary duty as such officer, director, employee, agent, or participant, if, as a result thereof, the licensee has suffered or is in imminent danger of suffering financial loss or other damage.

(c)Disqualification of officers and employees for dishonesty, fraud, or breach of trust

Except with the written consent of the Administration, it shall be unlawful—

(1)for any person hereafter to take office as an officer, director, or employee of a licensee, or to become an agent or participant in the conduct of the affairs or management of a licensee, if—

(A)he has been convicted of a felony, or any other criminal offense involving dishonesty or breach of trust, or

(B)he has been found civilly liable in damages, or has been permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust; or

(2)for any person to continue to serve in any of the above-described capacities, if—

(A)he is hereafter convicted of a felony, or any other criminal offense involving dishonesty or breach of trust, or

(B)he is hereafter found civilly liable in damages, or is permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust.

§687f Unlawful Acts and Omissions by Officers, Directors, Employees, or Agents

Summary

Title 15, §687f

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