# Corporations and Associations (GCA)

## Title 11. Maryland Securities Act

### Subtitle 3. Fraudulent and Other Prohibited Practices

#### Section 11-301

It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly to:

(1) Employ any device, scheme, or artifice to defraud;

(2) Make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or

(3) Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on any person.

#### Section 11-302

(a) It is unlawful for any person who receives, directly or indirectly, any consideration from another person for advising the other person as to the value of securities or their purchase or sale, or for acting as an investment adviser or representative under Sec. 11-101(i) and (j) of this title, whether through the issuance of analyses, reports, or otherwise, to:

  (1) Employ any device, scheme, or artifice to defraud the other person;

  (2) Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit on the other person;

  (3) Engage in dishonest or unethical practices; or

  (4) When acting as principal for the person's own account knowingly sell any security to or purchase any security from a client, or when acting in an agency capacity for a person other than such client knowingly effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which the person is acting and obtaining the consent of the client to such transaction.

(b) The prohibitions of subsection (a)(4) of this section do not apply to any transaction with a customer of a broker-dealer if the broker-dealer is not acting as an investment adviser in relation to the transaction or to transactions by a federal covered adviser who is otherwise subject to the limitations on principal trades under the federal securities laws.

(c) In the solicitation of or in dealings with advisory clients, it is unlawful for any person willfully to make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.

(d)

  (1) The Commissioner by rule or order may require that certain information be furnished or disseminated by investment advisers as appropriate in the public interest or for the protection of investors and advisory clients.

  (2) To the extent determined by the Commissioner in the Commissioner's discretion, information furnished to clients or prospective clients of an investment adviser that would be in compliance with the disclosure requirements of the Investment Advisers Act of 1940 and the rules thereunder may be used in whole or partial satisfaction of this requirement.

(e)

  (1) Except as permitted by rule or order of the Commissioner, it is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract, unless it provides in writing that:

    (i) The investment adviser shall not be compensated on the basis of a share of capital gains on or capital appreciation of the funds or any portion of the funds of the client;

    (ii) An assignment of the contract may not be made by the investment adviser without the consent of the other party to the contract; and

    (iii) The investment adviser, if a partnership, shall notify the other party to the contract of any change in the membership of the partnership within a reasonable time after the change.

  (2) Paragraph (1)(i) of this subsection does not prohibit an investment advisory contract which provides for compensation based on the total value of a fund averaged over a definite period or as of definite dates or taken as of a definite date.

  (3) "Assignment", as used in paragraph (1)(ii) of this subsection, includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor or of controlling block of the assignor's outstanding voting securities by a security holder of the assignor, but, if the investment adviser is a partnership, an assignment of an investment advisory contract is not considered to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one or more members who, after admission, will be only a minority of the members and will have only a minority interest in the business.

(f) It is unlawful for any investment adviser to take or have custody of any securities or funds of any client if:

  (1) The Commissioner by rule prohibits custody; or

  (2) In the absence of a rule, the investment adviser fails to notify the Commissioner that he has or may have custody.

(g) The Commissioner by rule or order may adopt exemptions from subsections (a)(4), and (e)(1)(i), (ii), and (iii) of this section, where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.

#### Section 11-303

It is unlawful for any person to make or cause to be made, in any document filed with the Commissioner or in any proceeding under this title, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.

#### Section 11-304

(a)

  (1) Neither the fact that an application for registration under Subtitle 4 of this title or a registration statement or notice filing under Subtitle 5 of this title has been filed, nor the fact that a person or security is effectively registered constitutes a finding by the Commissioner that any document filed under this title is true, complete, and not misleading.

  (2) Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the Commissioner has passed in any way on the merits or qualifications of, or has recommended or given approval to, any person, security, or transaction.

(b) It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with subsection (a) of this section.

#### Section 11-305

(a) It is unlawful for any person to use a senior or retiree credential or designation in a way that is or would be misleading in connection with:

  (1) The offer, sale, or purchase of securities;

  (2) Receiving, directly or indirectly, any consideration from another person for advising the other person as to the value of securities or their purchase or sale; or

  (3) Acting as a broker-dealer, agent, investment adviser, or investment adviser representative.

(b) The Commissioner by rule or order shall define what constitutes a misleading use of a senior or retiree credential or designation for purposes of subsection (a) of this section.

(c) A violation of a rule or order adopted under subsection (b) of this section also constitutes a dishonest or unethical practice for purposes of Sec. 11-302(a)(3) of this subtitle and Sec. 11-412(a)(7) of this title.

(d) The Commissioner by rule or order may provide exemptions from subsections (a) and (c) of this section, where such exemptions are consistent with the public interest and within the purposes fairly intended by the policy and provisions of this title.

(e) This section does not limit any powers of the Commissioner granted under this title.

#### Section 11-306

A person who engages in the business of effecting transactions in securities for the account of others or for the person's own account or who acts as a broker-dealer or agent may not engage in dishonest or unethical practices in the securities or investment advisory business.

#### Section 11-307

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Eligible adult" means an individual who resides in the State and is:

    (i) At least 65 years old; or

    (ii) A vulnerable adult.

  (3) "Financial exploitation" means:

    (i) The wrongful or unauthorized taking, withholding, appropriation, or use of money, assets, or property of an eligible adult; or

    (ii) An act or omission by a person, including through the use of a power of attorney, guardianship, or conservatorship of an eligible adult, to:

      (1) Obtain control, through deception, intimidation, or undue influence, over the eligible adult's money, assets, or property in order to deprive the eligible adult of the ownership, use, benefit, or possession of the money, assets, or property; or

      (2) Convert money, assets, or property of the eligible adult in order to deprive the eligible adult of the ownership, use, benefit, or possession of the money, assets, or property.

  (4) "Law enforcement agency" means a State, county, or municipal police department, bureau, or agency.

  (5) "Local department" has the meaning stated in Sec. 14-101 of the Family Law Article.

  (6) "Qualified individual" means an agent, an investment adviser representative, or a person who serves in a supervisory, compliance, or legal capacity for a broker-dealer or an investment adviser.

  (7) "Vulnerable adult" has the meaning stated in Sec. 14-101 of the Family Law Article.

(b)

  (1) A broker-dealer, an investment adviser, or a qualified individual that reasonably believes that an eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation:

    (i) Shall notify:

      (1) The Commissioner; and

      (2) A local department under Sec. 14-302 of the Family Law Article; and

    (ii) May notify a third party designated by the eligible adult and any other third party permitted under State or federal laws or regulations, or the rules of a self-regulatory organization, if the third party is not suspected of financial exploitation, abuse, neglect, or other exploitation of the eligible adult.

  (2) The notice required under paragraph (1)(i) of this subsection shall be given:

    (i) Within 5 days after the broker-dealer, investment adviser, or qualified individual develops the reasonable belief that the eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation; or

    (ii) Immediately on confirmation that the eligible adult has been, is currently, or will be the subject of financial exploitation or attempted financial exploitation if the confirmation is made before the 5-day period specified in item (i) of this paragraph expires.

  (3) This subsection may not be construed to require more than one notification under paragraph (1)(i) of this subsection for each occurrence.

(c)

  (1) A broker-dealer or an investment adviser may delay a disbursement from an account of an eligible adult or an account on which an eligible adult is a beneficiary if:

    (i) The broker-dealer, the investment adviser, or a qualified individual reasonably believes, after initiating an internal review of the requested disbursement and any suspected financial exploitation, that the requested disbursement may result in the financial exploitation of an eligible adult; and

    (ii) The broker-dealer, the investment adviser, or a qualified individual:

      (1) Within 2 business days after the requested disbursement:

      (A) Subject to paragraph (2) of this subsection, provides written notice of the reason for the delay to all parties authorized to transact business on the account; and

      (B) Notifies the Commissioner and the local department under Sec. 14-302 of the Family Law Article; and

      (2) Continues an internal review of the suspected financial exploitation of the eligible adult.

  (2) The broker-dealer, investment adviser, or qualified individual:

    (i) May not provide the written notice required under paragraph (1) of this subsection to a party the broker-dealer, investment adviser, or qualified individual reasonably believes or suspects is engaging in or attempting to engage in the financial exploitation of the eligible adult; and

    (ii) Shall provide, on request, a status report of the internal review required under paragraph (1) of this subsection to the Commissioner and the local department.

(d)

  (1) A delay of a disbursement authorized under this section shall expire:

    (i) On a determination by the broker-dealer or investment adviser that the disbursement will not result in the financial exploitation of the eligible adult; or

    (ii) Subject to paragraph (2) of this subsection, 15 business days after the date of the disbursement request.

  (2)

    (i) The Commissioner or the local department may request the delay of a disbursement for up to 25 business days after the date of the disbursement request.

    (ii) If a request is made under this paragraph, the delay shall continue for 25 business days after the date of the disbursement request unless the Commissioner, the local department, or a court of competent jurisdiction enters an order that terminates or extends the delay.

(e)

  (1) A broker-dealer, an investment adviser, or a qualified individual that in good faith and exercising reasonable care provides notice under subsection (b) of this section shall have immunity from any administrative or civil liability that might otherwise arise from the notice.

  (2) A broker-dealer or an investment adviser that in good faith and exercising reasonable care delays a disbursement under subsection (c) of this section shall have immunity from any administrative or civil liability that might otherwise arise from the delay.

(f)

  (1) A broker-dealer or an investment adviser shall provide access to or copies of records that are relevant to the suspected financial exploitation of an eligible adult:

    (i) As part of the referral to the Commissioner and a local department under subsection (c) of this section; or

    (ii) At the request of the Commissioner, a local department, or a law enforcement agency.

  (2) The records under paragraph (1) of this subsection may include historical records and records that relate to the most recent transactions that may demonstrate the financial exploitation of an eligible adult.

  (3) A record made available under this subsection is not a public record under Title 4 of the General Provisions Article.

  (4) This subsection may not be interpreted to limit the authority of the Commissioner to access or examine the books or records of a broker-dealer or an investment adviser.

---

Md. Code Ann., Corps. & Ass'ns (as displayed at mgaleg.maryland.gov, October 16, 2026)