10 Pa. Code § 303.012 - Investment adviser registration procedure
(a) An applicant for initial registration as
an investment adviser shall complete a Uniform Application for Investment
Adviser Registration (Form ADV), or a successor form.
(b) The applicant shall complete and file
with the Department or with IARD:
(1) Form
ADV.
(2) The filing fee required
under section 602(d.1) of the act (70 P.S. §
1-602(d.1)).
(3) The compliance assessment in section
602.1(a)(4) of the act (70 P.S. §
1-602.1(a)(4)).
(4) Any exhibits required under this
section.
(c) Except as
set forth in subsection (j), an applicant having custody of client funds or
securities or requiring payment of advisory fees 6 months or more in advance
and in excess of $1,200 per client shall file all of the following:
(1) An audited balance sheet of the applicant
prepared in accordance with generally accepted accounting principles which is
as of the end of the applicant's most recent fiscal year.
(2) An audit report containing an unqualified
opinion of an independent certified public accountant within which the
accountant shall submit, as a supplementary opinion, comments based on the
audit as to the:
(i) Material inadequacies
found to exist in the accounting system.
(ii) Internal accounting controls.
(iii) Procedures for safeguarding securities
and funds with an indication of corrective action taken or proposed.
(3) A subsequent balance sheet, if
the balance sheet required under paragraph (1) is of a date more than 45 days
before the filing date of the application:
(i)
The subsequent balance sheet must be:
(A)
Prepared in accordance with generally accepted accounting principles.
(B) Dated as of a date within 45 days of the
filing date of the application.
(ii) The subsequent balance sheet may be
unaudited and prepared by management of the applicant.
(d) The balance sheet required
under subsection (c) does not need to be filed if the investment adviser has
custody of client funds or securities solely as a result of either of the
following:
(1) The investment adviser receives
fees directly deducted from clients' funds or securities in compliance with
§
303.042(a)(3)(i)
(relating to investment adviser capital requirements).
(2) The investment adviser serves as a
general partner, manager of a limited liability company or occupies a similar
status or performs a similar function which gives the investment adviser or its
supervised person legal ownership or access to client funds or securities, if
the investment adviser is in compliance with §
303.042(a)(3)(ii).
(e)
Except as set forth in subsection (j), an applicant that has discretionary
authority over client funds or securities, but not custody, shall file all of
the following:
(1) A balance sheet prepared in
accordance with generally accepted accounting principles which is as of the end
of the applicant's most recent fiscal year.
(2) A subsequent balance sheet prepared in
accordance with generally accepted accounting principles and dated within 45
days of the filing date if the balance sheet required under paragraph (1) is
dated more than 45 days before the filing date of the application.
(f) The balance sheets required
under subsection (e)(1) and (2):
(1) May be
unaudited and prepared by management of the applicant.
(2) Must contain a representation by the
applicant that the balance sheet is true and accurate.
(g) Except as set forth in subsection (j), an
applicant whose proposed activities do not come within subsection (c) or (e)
does not need to file a statement of financial condition.
(h) As part of the requirements relating to
the statements of financial condition set forth in subsections (c) and (e), the
Department may require the following:
(1) A
list of the securities reflected in the statement of financial condition of the
applicant valued at the market.
(2)
A description of material contractual commitments of the applicant not
otherwise reflected in the statement of financial condition.
(3) An affirmative statement by the applicant
that its liabilities which have not been incurred in the course of business as
an investment adviser are not greater than the applicant's assets not used in
its investment adviser business if the applicant is a sole proprietor, whose
statement of financial condition includes only those assets and liabilities
used in the applicant's investment adviser business.
(i) An investment adviser registered under
the act shall take steps necessary to ensure that material information
contained in its Form ADV and exhibits remains current and accurate. If a
material statement made in Form ADV and exhibits becomes incorrect or
inaccurate the investment adviser shall file with the Department an amendment
on Form ADV within 30 days of the occurrence of the event which requires the
filing of the amendment.
(j) An
applicant that maintains its principal place of business in a state other than
this Commonwealth does not need to comply with subsections (c) and (e) if the
applicant:
(1) Is registered as an investment
adviser in the state in which it maintains its principal place of
business.
(2) Is in compliance with
the financial reporting requirements of the state in which it maintains its
principal place of business.
(3)
Has not taken custody of the assets of any client residing in this Commonwealth
at any time during the preceding 12-month period.
Notes
The provisions of this § 303.012 amended under sections 303(a)-(e), 304(b) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. §§ 1-303(a)-(e), 1-304(b) and 1-609(a)); section 202.C of the Department of Banking and Securities Code (71 P.S. § 733-202.C); and section 9(b) of the Takeover Disclosure Law (70 P.S. § 79(b)).
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