710 IAC 4-9-8 - Supervision of investment adviser representatives and employees

Authority: IC 23-19-6-5

Affected: IC 23-19

Sec. 8.

(a) Every investment adviser registered or required to be registered under IC 23-19 shall exercise diligent supervision over the investment advisory activities of its investment adviser representatives and employees. Each investment adviser representative and other office employees shall be subject to the supervision of a designated supervisor.

(b) Written procedures, a copy of which shall be kept in each business office, shall be maintained and enforced and shall set forth the standards and procedures adopted to comply with IC 23-19 and this rule, including, but not limited to, the following:

(1) Administrative review and written approval of all new client accounts.

(2) Periodic examination of client accounts to detect and prevent irregularities or abuse.

(3) Prompt administrative review of all customer complaints.

(4) Prompt administrative review of correspondence pertaining to the solicitation and execution of any securities transactions effected on behalf of clients.

(5) The review and written approval, by the designated supervisor, of the delegation by any client of discretionary investment authority with respect to his or her account, and the frequent, periodic examination of all the discretionary accounts to prevent irregularities or abuses.

(c) Each office location shall be periodically inspected by the investment adviser to assure that the written procedures are enforced.

(d) It shall be the responsibility of each investment adviser to ascertain that investment adviser representatives have been properly registered prior to rendering investment advice and that proof of registration is immediately accessible prior to rendering the advice.

(e) It shall be the responsibility of each investment adviser and their supervisory personnel to ensure that all employees are properly trained regarding the disclosure requirements and the:

(1) administrative;

(2) civil; and

(3) criminal;

liability provisions of IC 23-19.

(f) For the purposes of this section, no person shall be deemed to have failed to diligently supervise any other person if as follows:

(1) There have been established procedures, and a system for applying the procedures, that would reasonably be expected to prevent and detect, insofar as practicable, any violation by the other persons.

(2) The person has reasonably discharged the duties and obligations incumbent upon him or her by reason of the procedures and without reasonable cause to believe that the procedures were not being complied with.

Notes

710 IAC 4-9-8

Securities Division; 710 IAC 4-9-8; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA Readopted filed 5/12/2016, 1:47 p.m.: 20160608-IR-710160136RFA Readopted filed 11/30/2022, 4:01 p.m.: 20221228-IR-710220301RFA