Article 81p. 81

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

and to comply with, and to enforce compliance by its

members and persons associated with its members, with

the provisions of this Code, the rules and regulations

thereunder, and the rules of the association.

(b) The rules of the association, notwithstanding

anything in the Corporation Code to the contrary, provide

the following:

(1)

Qualifications

and

the

disqualifications

on

membership of the association;

(2) A fair representation of its members to serve on

the

board

of

directors

of

the

association

and

the

administration of its affairs, and that any natural person

associated with a juridical entity that is a member shall

also be deemed to be a member for this purpose;

(3) The president of the association and at least two

(2) independent directors as members of the board of

directors of the association;

(4) Equitable allocation of reasonable dues, fees, and

other charges among members and other persons using

any facility or system which the association operates or

controls;

(5) The prevention of fraudulent and manipulative

acts and practices to protect the insuring public and the

promotion of just and equitable principles of business;

(6)

Members

and

persons

associated

with

its

members

subject

to

discipline

for

violation

of

any

provision

of

this

Code,

the

rules

or

regulations

thereunder, or the rules of the association;

(7) Fair procedure for the disciplining of members

and persons associated with members; and

(8) The prohibition or limitation of access to services

offered by the association or a member thereof.

SECTION

432.

A self-regulatory organization may

examine and verify the qualifications of an applicant to

become

a

member

in

accordance

with

procedures

established by the rules of the association.

A self-regulatory organization shall deny membership

or condition the membership of an entity, if it does not

meet the standards of financial responsibility, operational

capability, training, experience, or competence that are

prescribed

by

the

rules

of

the

association;

or

has

engaged, and there is a reasonable likelihood it will again

engage, in acts or practices inconsistent with just and

equitable principles of fair trade.

A self-regulatory organization may deny membership

to an entity not engaged in a type of business in which

the rules of the association require members to be

engaged.

SECTION 433. Upon the filing of an application for

registration as a self-regulatory organization under this

title, the Commissioner shall have ninety (90) days within

which

to

either

grant

registration

or

institute

a

proceeding to determine whether registration should be

denied. In the event proceedings are instituted, the

Commissioner shall have two hundred seventy (270) days

within which to conclude such proceedings at which

time he shall, by order, grant or deny such registration.

SECTION 434. Every self-regulatory organization shall

comply with the provisions of this Code, the rules and

regulations thereunder, and its own rules, and enforce

compliance

therewith

by

its

members,

persons

associated

with

its

members

or

its

participants,

notwithstanding any provision of the Corporation Code to

the contrary.

SECTION 435. Each self-regulatory organization shall

submit

to

the

Commissioner for prior approval any

proposed rule or amendment thereto, together with a

concise

statement

of

the

reason

and effect of the

proposed amendment.

Within sixty (60) days after submission of a proposed

amendment, the Commissioner shall, by order, approve

the proposed amendment. Otherwise, the same may be

made effective by the self-regulatory organization.

In the event of an emergency requiring action for the

protection

of

the

insuring

public,

a

self-regulatory

organization may put a proposed amendment into effect

summarily: Provided, however , That a copy of the same

shall be immediately submitted to the Commissioner.

The

Commissioner

is

further

authorized,

if after

making appropriate request in writing to a self-regulatory

organization that such organization effect on its own

behalf specified changes in its rules and practices and,

after due notice and hearing, it determines that such

changes have not been effected, and that such changes

are necessary, by rule or regulation or by order, may alter,

abrogate or supplement the rules of such self-regulatory

organization insofar as necessary or appropriate to effect

such changes in respect of such matters as:

(a)

Safeguards

in

respect

of

the

financial

responsibility

of

members

and

adequate

provision

against the evasion of financial responsibility through the

use of corporate forms or special partnerships;

(b) The supervision of market practices;

(c)

The

manner, method and place of soliciting

business;

(d) The fixing of reasonable rates of fees, interest,

listing and other charges, but not rates of commission;

and self-regulatory organization; and

(e)

The

supervision,

auditing

and disciplining of

members.

In

addition

to

the

general

powers

of

the

Commissioner over the entities under supervision, the

Commissioner,

after

due

notice

and

hearing,

is

authorized, in the public interest and to protect the

insuring public:

(1) To suspend for a period not exceeding twelve (12)

months or to revoke the registration of a self-regulatory

organization, or to censure or impose limitations on the

activities, functions and operations of such self-regulatory

organization,

if

the

Commission

finds

that

such

a

self-regulatory organization has willfully violated or is

unable to comply with any provision of this Code or of the

rules and regulations thereunder, or its own rules, or has

failed to enforce compliance therewith by a member of,

person associated with a member, or a participant in

such self-regulatory organization;

(2) To expel from a self-regulatory organization any

member thereof or any participant therein who is found

to have willfully violated any provision of this Code or

suspend for a period not exceeding twelve (12) months for

violation of any provision of this Code or any other law

administered

by

the

Commission,

or

the

rules and

regulations thereunder, or effected, directly or indirectly,

any transaction for any person who, such member or

participant had reason to believe, was violating in respect

of such transaction any of such provisions; and

(3) To remove from office or censure any officer or

director of a self-regulatory organization if it finds that

such officer or director has violated any provision of this

Code, any other law administered by the Commissioner,

the rules or regulations thereunder and the rules of such

self-regulatory organization, or has abused his authority,

or without reasonable justification or excuse has failed to

enforce compliance with any of such provisions.

SECTION 436. (a) A self-regulatory organization is

authorized to discipline a member of or participant in

such

self-regulatory

organization,

or

any

person

associated with a member, including suspending or

expelling such member or participant, or suspending or

barring

such

person

from

being

associated

with

a

member, if engaged in acts or practices inconsistent with

just and equitable principles of fairness or in willful

violation of any provision of this Code, any other law

administered by the Commission, the rules or regulations

thereunder,

or

the

rules

of

the

self-regulatory

organization.

In

any

disciplinary

proceeding

by

a

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