Haw. Code R. § 16-38-36 - Registration; financial requirements

(a) Every registered investment adviser shall file an annual report within ninety days following the end of the investment adviser's fiscal year as follows:

(1) An adviser that maintains its principal place of business in this State shall file a balance sheet certified by an independent public accountant in conformance with generally accepted accounting principles; provided that if an adviser does not have custody or discretionary authority over client funds, the adviser shall file financial statements verified by the adviser. Any statement which does not adequately reflect the applicant's true financial picture shall not be accepted;

(2) An adviser that maintains its principal place of business in a state other than this State shall file with the commissioner a copy of the most recent financial report or statement, if any, that the adviser has filed with the securities commissioner in the state in which it maintains its principal place of business. An adviser that maintains its principal place of business in a state other than this State but that is not registered in the State in which it maintains its principal place of business or is not in compliance with that state's financial reporting requirements, if any, shall be required to file with the commissioner a balance sheet that complies with the requirements of paragraph (1).

(b) Except as otherwise provided in subsection (d), each registered investment adviser shall have at all times a minimum net worth of not less than $5,000. As used in this section and section 485-14(q), HRS, "net worth" shall mean the difference between total assets and total liabilities or indebtedness, computed in accordance with the following:

(1) Securities owned shall be adjusted to market value;

(2) Value of real estate shall be attested to by qualified and disinterested persons; and

(3) Property in joint ownership shall be limited to the applicant's interest therein.

(c) To ensure the investment adviser's compliance with section 485-14(q), HRS, and this section, the commissioner may require the investment adviser to provide to the commissioner, upon request, that the value of unsecured notes, accounts receivable, or advanced commissions due from a salesperson, officer, director, partner, or affiliate be substantiated by an opinion of a bank, finance company, or other lending institution satisfactory to the commissioner.

(d) The provisions of subsections (b) and (c) shall not apply to an investment adviser that maintains its principal place of business in a state other than this State provided that that investment adviser is registered in the state where it maintains its principal place of business and is in compliance with such state's net worth or net capital requirements, if any.

Notes

Haw. Code R. § 16-38-36

[Eff and comp 10/12/85; am and comp 4/14/03] (Auth: HRS § 485-2) (Imp: HRS § 485-14)