Pennsylvania Code Title 64 - SECURITIES
Pennsylvania Code Title 64 is dedicated entirely to SECURITIES. This comprehensive set of regulations governs the issuance, sale, and trading of securities within Pennsylvania, as well as the registration and conduct of individuals and firms involved in the securities industry.
The primary statutory authority for these regulations is the Pennsylvania Securities Act of 1972. The regulations in Title 64 are enforced by the Pennsylvania Department of Banking and Securities (DoBS), which, since 2012, is the merged entity of the former Department of Banking and the Pennsylvania Securities Commission.
The main purpose of Title 64 is to:
Protect Investors: This is the paramount goal. The regulations aim to shield Pennsylvania residents from fraudulent, unfair, and deceptive practices in the offer and sale of securities.
Ensure Fair and Transparent Markets: By establishing clear rules for how securities are offered and sold, and how market participants must conduct themselves.
Regulate Securities Offerings: Mandate the registration of securities offered for sale in Pennsylvania unless an exemption applies. This often involves disclosure requirements to ensure investors receive adequate information to make informed decisions.
License and Oversee Securities Professionals: Require the registration of broker-dealers, agents (salespersons), investment advisers, and investment adviser representatives who conduct business in Pennsylvania. This includes setting qualifications, ethical standards, and record-keeping requirements.
Prevent Fraudulent and Prohibited Practices: Define and prohibit various types of securities fraud, manipulation, and other illegal activities.
Provide for Enforcement: Outline the powers of the DoBS to investigate violations, bring enforcement actions, and impose penalties (fines, cease-and-desist orders, license suspensions/revocations) against those who violate the securities laws and regulations.
Key Areas and Divisions within Pennsylvania Code Title 64:
While the organization may evolve, Title 64 typically covers:
Part I - Reserved and Renumbered: Many of the original regulations were renumbered or transferred, indicating a restructuring over time.
General Provisions and Definitions: Clarifying terms used throughout the title, such as what constitutes a "security," "offer," "sale," "broker-dealer," "investment adviser," and "agent."
Registration of Securities:
Registration Requirements: When securities offerings must be registered with the DoBS.
Exemptions from Registration: Specific types of securities or transactions that are exempt from the full registration process (e.g., certain small offerings, sales to institutional investors, or securities already regulated at the federal level under the National Securities Markets Improvement Act of 1996 - NSMIA).
Notice Filings: For federally covered securities, which are exempt from state registration but may still require notice filings and fees.
Disclosure Requirements: What information must be provided to prospective investors (e.g., through prospectuses or offering circulars).
Registration of Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives:
Licensing Procedures: Application processes, examination requirements (e.g., FINRA exams), and continuing education.
Capital and Bonding Requirements: Financial solvency requirements for firms.
Supervision Requirements: Rules for firms to supervise their agents and representatives.
Record-Keeping: Mandates for maintaining specific books and records.
Ethical Conduct and Prohibited Practices: Rules against churning, unsuitable recommendations, misrepresentation, and other unethical or fraudulent activities.
Fraudulent and Prohibited Practices: Detailed descriptions of actions considered illegal under the Pennsylvania Securities Act and related regulations, including material misrepresentations or omissions.
Enforcement and Administration:
Investigation Procedures: How DoBS investigates alleged violations.
Administrative Hearings and Orders: Procedures for formal hearings and the issuance of cease-and-desist orders, civil penalties, and other sanctions.
Rescission Offers: Rules related to offering to buy back securities sold in violation of the Act.
Fees: Various fees for registrations, filings, and examinations.
In essence, Pennsylvania Code Title 64 is the detailed regulatory framework that underpins the state's efforts to regulate its capital markets, protect investors, and maintain integrity in the securities industry.
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