Nev. Admin. Code § 90.Sec. 13 - NEW
1.
An investment adviser who is registered or required to be registered under the
Investment Advisers Act of 1940 shall maintain the following, which are true,
accurate and current:
(a) A journal which
includes:
(1) Each cash receipt and
disbursement record; and
(2) Any
other record of original entry forming the basis of an entry in any
ledger;
(b) A ledger or
similar record, whether general or auxiliary, which reflects asset, liability,
reserve, capital, income and expense accounts;
(c) A memorandum of each:
(1) Order given by the investment adviser for
the purchase or sale of a security, including, without limitation, an order
entered pursuant to the discretionary power of the investment
adviser;
(2) Instruction received
by the investment adviser from a client concerning the purchase, sale, receipt
or delivery of a particular security; and
(3) Modification or cancellation of any order
or instruction described in subparagraph (1) or (2);
(d) Any checkbook, bank statement, cancelled
check or cash reconciliation of the investment adviser;
(e) Any bill or statement, or a copy thereof,
whether paid or unpaid, which relates to the investment advising business of
the investment adviser;
(f) Any
trial balance, internal audit working paper relating to the business of the
investment adviser and any of the following financial statements:
(1) A balance sheet prepared in accordance
with generally accepted accounting principles;
(2) An income statement;
(3) A cash flow statement; or
(4) A net worth computation, as
applicable;
(g) Except as
otherwise provided in subsection 3, originals of all written communications
received by the investment adviser and copies of all written communications
sent by the investment adviser relating to:
(1) Each recommendation made or proposed to
be made and advice given or proposed to be given;
(2) Each receipt, disbursement or delivery of
funds or securities; and
(3) The
placing or execution of each order to purchase or sell any security;
(h) A list or other record of each
account of the investment adviser that identifies any account in which the
investment adviser is vested with a discretionary power for a fund, security or
transaction of a client;
(i) A copy
of any power of attorney or like document which evidences the granting of
discretionary authority to the investment adviser by a client;
(j) A physical copy of:
(1) Each agreement entered into by the
investment adviser with a client; and
(2) Any other written agreement relating to
the business of the investment adviser;
(k) A file containing a copy of each notice,
circular, advertisement, newspaper article, investment letter, bulletin or
other communication, including, without limitation, electronic media, that the
investment adviser circulates or distributes, whether directly or indirectly,
to two or more persons not connected with the business of the investment
adviser. If the document recommends the purchase or sale of a specific security
and does not state the reasons for the recommendation, the file must contain a
memorandum indicating the reasons for the recommendation by the investment
adviser;
(l) A copy of each written
statement and an amendment or revision thereof, given or sent to a client or
prospective client who subsequently became a client of the investment adviser,
and a record of the dates that the statement, amendment or revision was given,
or offered to be given, to the client or prospective client;
(m) For each client obtained by the
investment adviser by means of a solicitor to whom a cash fee was paid by the
investment adviser:
(1) Evidence of a written
agreement where the adviser is a party and which is related to the payment of
the fee;
(2) A signed and dated
acknowledgment evidencing the receipt by the client of the investment
disclosure statement and the written disclosure statement of the solicitor;
and
(3) A copy of the written
disclosure statement of the solicitor;
(n) A record of each account, book, internal
working paper or any other document that is necessary to form the basis for, or
demonstrate, the calculation of the performance or rate of return of each
managed account or securities recommendation in any notice, circular,
advertisement, newspaper article, investment letter, bulletin or other
communication, including, without limitation, electronic media, that the
investment adviser circulates or distributes, whether directly or indirectly,
to two or more persons not related to the investment advising business of the
investment adviser;
(o) A file
containing a copy of each written communication received or sent by the
investment adviser relating to:
(1) Litigation
involving the investment adviser or a representative or employee of the
investment adviser; and
(2) Any
written complaint of a client or customer of the investment adviser;
(p) Any written information
concerning a client that is the basis for making a recommendation or providing
any investment advice to the client;
(q) Any written procedure reasonably designed
to achieve compliance with a security law or regulation;
(r) A file containing a copy of each
application, amendment, renewal filing or other correspondence, other than a
notice of general dissemination relating to a registrant or an advisory
representative of the investment adviser, as defined in section 14, that was
filed with or received from any state or federal agency or regulatory
organization;
(s) A copy of the
following documents which must include original signatures of the appropriate
signatory of the investment adviser and the representative of the investment
adviser:
(1) Each Uniform Application for
Securities Industry Registration or Transfer (Form U-4); and
(2) Each amendment to Disclosure Reporting
Pages (DRP U-4), which must be made available for inspection upon
request;
(t) If the
investment adviser inadvertently held or obtained a security or fund of a
client and returned the security or fund to the client within 3 business days,
or forwarded a third-party check within 24 hours, a ledger or other listing
relating to the inadvertent custody, which must include, without limitation:
(1) The issuer;
(2) The type of security and
series;
(3) The date of
issue;
(4) For debt instruments,
the denomination, interest rate and maturity date;
(5) The certificate number, including,
without limitation, the alphabetical prefix or suffix;
(6) The name in which the security or fund is
registered;
(7) The date the
security or fund was obtained or given to the investment adviser;
(8) The date the security, fund or
third-party check was sent to the client or sender;
(9) The form of delivery to the client or
sender or a copy of the form of delivery; and
(10) The mail confirmation number, if
applicable, or any confirmation by the client or sender of the return of the
fund or security; and
(u)
If an investment adviser obtains possession of securities that are acquired
from an issuer in a transaction or chain of transactions not involving a public
offering in compliance with the provisions of section 7:
(1) A record showing the name, address and
phone number of the issuer or current transfer agent, and other applicable
contract information pertaining to the party responsible for recording client
interests in the securities; and
(2) A copy of any legend, shareholder
agreement or other agreement showing that the securities are transferable only
with the prior consent of the issuer or holder of the outstanding securities of
the issuer.
2.
The memorandum described in paragraph (c) of subsection 1 must, as applicable:
(a) Show the terms and conditions of the
order, instruction, modification or cancellation;
(b) Identify the person connected with the
investment adviser who recommended the transaction to the client and the person
who placed the order; and
(c) Show
the account for which the order was entered, the date of entry and the broker
dealer or bank with or through whom the transaction was effected, where
appropriate.
3. For the
purposes of paragraph (g) of subsection 1:
(a)
If a notice, circular or other advertisement was sent by an investment adviser
who offered a report, analysis, publication or other investment advisory
service to more than 10 persons, the investment adviser is not required to keep
a record of the names and addresses of the persons to whom the notice, circular
or other advertisement was sent, unless the notice, circular or advertisement
was distributed to persons named on any list relating to a requirement for
recordkeeping, in which case the investment adviser must retain with the copy
of the notice, circular or advertisement a memorandum describing the list and
its source.
(b) "Communication"
does not include an unsolicited marketing letter or other similar communication
of general public distribution not prepared by or for the investment
adviser.
4. The documents
described in paragraph (m) of subsection 1 must be in compliance with the
Investment Advisers Act of 1940.
5.
As used in this section:
(a) "Discretionary
power" does not include discretion as to the price at which or the time when a
transaction is or is to be effected, if, before an order is given by an
investment adviser, the client directed or approved the purchase or sale of a
definite amount of the particular security.
(b) "Performance of managed accounts" means
the retention of each:
(1) Account statement,
if the statement reflects all debits, credits and other transactions in the
account of the client for the period of the statement; and
(2) Worksheet necessary to demonstrate the
calculation of the performance or rate of return of each account.
(c) "Solicitor" means any person
or entity who, for compensation, acts as an agent of an investment adviser in
referring potential clients.
Notes
NRS 90.390, 90.750
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