409.4-411. Postregistration requirements.
Postregistration requirements.
409.4-411. (a) Subject to Section 15(h) of the Securities Exchange Actof 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment AdvisersAct of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued underthis act may establish minimum financial requirements for broker-dealersregistered or required to be registered under this act and investment advisersregistered or required to be registered under this act.
(b) Subject to Section 15(h) of the Securities Exchange Act of 1934 (15U.S.C. Section 78o(h)) or Section 222(b) of the Investment Advisers Act of1940 (15 U.S.C. Section 80b-22), a broker-dealer registered or required to beregistered under this act and an investment adviser registered or required tobe registered under this act shall file such financial reports as are requiredby a rule adopted or order issued under this act. If the informationcontained in a record filed under this subsection is or becomes inaccurate orincomplete in a material respect, the registrant shall promptly file acorrecting amendment.
(c) Subject to Section 15(h) of the Securities Exchange Act of 1934 (15U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940(15 U.S.C. Section 80b-22):
(1) A broker-dealer registered or required to be registered under thisact and an investment adviser registered or required to be registered underthis act shall make and maintain the accounts, correspondence, memoranda,papers, books, and other records required by rule adopted or order issuedunder this act;
(2) Broker-dealer records required to be maintained under paragraph (1)may be maintained in any form of data storage acceptable under Section 17(a)of the Securities Exchange Act of 1934 (15 U.S.C. Section 78q(a)) if they arereadily accessible to the commissioner; and
(3) Investment adviser records required to be maintained under paragraph(1) may be maintained in any form of data storage required by rule adopted ororder issued under this act.
(d) The records of a broker-dealer registered or required to beregistered under this act and of an investment adviser registered or requiredto be registered under this act are subject to such reasonable periodic,special, or other audits or inspections by a representative of thecommissioner, within or without this state, as the commissioner considersnecessary or appropriate in the public interest and for the protection ofinvestors. An audit or inspection may be made at any time and without priornotice. The commissioner may copy, and remove for audit or inspection copiesof, all records the commissioner reasonably considers necessary or appropriateto conduct the audit or inspection. The commissioner may assess a reasonablecharge for conducting an audit or inspection under this subsection.
(e) Subject to Section 15(h) of the Securities Exchange Act of 1934 (15U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940(15 U.S.C. Section 80b-22), a rule adopted or order issued under this act mayrequire a broker-dealer or investment adviser that has custody of ordiscretionary authority over funds or securities of a customer or client toobtain insurance or post a bond or other satisfactory form of security in anamount not to exceed twenty-five thousand dollars. The commissioner maydetermine the requirements of the insurance, bond, or other satisfactory formof security. Insurance or a bond or other satisfactory form of security maynot be required of a broker-dealer registered under this act whose net capitalexceeds, or of an investment adviser registered under this act whose minimumfinancial requirements exceed, the amounts required by rule or order underthis act. The insurance, bond, or other satisfactory form of security mustpermit an action by a person to enforce any liability on the insurance, bond,or other satisfactory form of security if instituted within the timelimitations in section 409.5-509(j)(2).
(f) Subject to Section 15(h) of the Securities Exchange Act of 1934 (15U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940(15 U.S.C. Section 80b-22), an agent may not have custody of funds orsecurities of a customer except under the supervision of a broker-dealer andan investment adviser representative may not have custody of funds orsecurities of a client except under the supervision of an investment adviseror a federal covered investment adviser. A rule adopted or order issued underthis act may prohibit, limit, or impose conditions on a broker-dealerregarding custody of funds or securities of a customer and on an investmentadviser regarding custody of securities or funds of a client.
(g) With respect to an investment adviser registered or required to beregistered under this act, a rule adopted or order issued under this act mayrequire that information or other record be furnished or disseminated toclients or prospective clients in this state as necessary or appropriate inthe public interest and for the protection of investors and advisory clients.
(h) A rule adopted or order issued under this act may require anindividual registered under section 409.4-402 or 409.4-404 to participate in acontinuing education program approved by the Securities and ExchangeCommission and administered by a self-regulatory organization or, in theabsence of such a program, a rule adopted or order issued under this act mayrequire continuing education for an individual registered under section409.4-404.
(L. 2003 H.B. 380)Effective 9-01-03