[485A-411] Postregistration requirements. (a) Subject to section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) or section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-22), a rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter.

(b) Subject to section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) or section 222(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-22), a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file such financial reports as are required by a rule adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

(c) Subject to section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) or section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-22):

(1) A broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall make and maintain for a period of three years after the close of the calendar or fiscal year to which they pertain, the accounts, correspondence, memoranda, papers, books, and other records required by rule adopted or order issued under this chapter;

(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. 78q(a)) if they are readily 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 or order issued under this chapter.

(d) The records of a broker-dealer registered or required to be registered under this chapter and of an investment adviser registered or required to be registered under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the commissioner, within or without this State, as the commissioner considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The commissioner may copy, and remove for audit or inspection copies of, all records the commissioner reasonably considers necessary or appropriate to conduct the audit or inspection. The commissioner may assess a reasonable charge for conducting an audit or inspection under this subsection.

(e) Subject to section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) or section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-22), a rule adopted or order issued under this chapter may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security. The commissioner may determine the requirements of the insurance, bond, or other satisfactory form of security. The insurance, bond, or other satisfactory form of security shall permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in section 485A-509(j)(2).

(f) Subject to section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) or section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-22), an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer and an investment adviser representative may not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser. A rule adopted or order issued under this chapter may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer, and on an investment adviser regarding custody of securities or funds of a client.

(g) Except as otherwise provided in this subsection, the commissioner may by rule adopted or order issued under this chapter require a minimum capital requirement for registered broker-dealers, which shall not be less than $5,000 in the case of broker-dealers, and prescribe a ratio between net capital and aggregate indebtedness; provided that this subsection shall not apply to any broker-dealer that is registered under the Securities Exchange Act of 1934. The commissioner may by rule adopted or order issued under this chapter require a net worth requirement which shall not be less than $5,000 for investment advisers; provided that this subsection shall not apply to any investment adviser that maintains its principal place of business in a state other than this State, and the investment adviser is registered in the state where it maintains its principal place of business and is in compliance with that state's net worth or net capital requirements, if any.

(h) With respect to an investment adviser registered or required to be registered under this chapter, a rule adopted or order issued under this chapter may require that information or records be furnished or disseminated to clients or prospective clients in this State as necessary or appropriate in the public interest and for the protection of investors and advisory clients.

(i) A rule adopted or order issued under this chapter may require an individual registered under sections 485A-402 or 485A-404 to participate in a continuing education program approved by the Securities and Exchange Commission and administered by a self-regulatory organization or, in the absence of such a program, a rule adopted or order issued under this chapter may require continuing education for an individual registered under section 485A-404. [L 2006, c 229, pt of 1]

 

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