Fraud

Any act, practice, or course of business that is manipulative or deceptive may be considered fraud. This includes misrepresenting and omitting material facts. Fraud is deemed such a tremendous violation that all persons are prohibited from engaging in fraudulent activity in connection with securities offers and transactions under the Uniform Securities Act. This means that even persons that don’t need to register under the Act, such as federal covered advisers and out-of-state broker-dealers who only deal with institutional clients, can still have action taken against them by a state administrator if they engage in fraud in connection with a securities offer or transaction in that state.

Certain activities have been explicitly declared to be fraudulent for investment advisers:

1. Using advertising that does not comply with the standards set forth by the Investment Advisers Act of 1940

2. Taking custody