7 Tex. Admin. Code § 116.5 - Minimum Records
(a) Records to be made by
investment advisers. Persons registered as investment advisers whose principal place of business is located in another state shall maintain records
at least in accordance with the minimum record-keeping requirements of that state. Persons registered as investment advisers whose principal place of
business is located in Texas shall make and keep current the following minimum records or the equivalent thereof:
(1) A journal or journals, including cash receipts and disbursements records, and any other records of original
entry forming the basis of entries in any ledger.
(2) General and auxiliary ledgers, (or other comparable
records) reflecting asset, liability, reserve capital, income and expense accounts.
(3) A memorandum of
each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser from the
client concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or
instruction. Such memoranda shall show the terms and conditions of the order, instruction, modification or cancellation; shall identify the person
connected with the investment adviser who recommended the transaction to the client and the person who placed such order; and shall show the account
for which entered, the date of entry, and the bank, broker, or dealer by or through whom executed where appropriate. Orders entered pursuant to the
exercise of discretionary power shall be so designated.
(4) A list or other record of all accounts in
which the investment adviser is vested with any discretionary power with respect to funds, securities, or transactions of any client.
(5) A copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin, or other
communication recommending the purchase or sale of a specific security, which the investment adviser circulates or distributes, directly or
indirectly, to 10 or more persons (other than investment supervisory clients or persons connected with such investment adviser), and if such notice,
circular, advertisement, newspaper article, investment letter, bulletin, or other communication does not state the reasons for such recommendation, a
memorandum of the investment adviser indicating the reasons therefor.
(6) In the case of any client
receiving investment supervisory or management service, to the extent that the information is reasonably available to or obtainable by the investment
adviser, records showing separately for that client:
(A) the client's current position in any security;
and
(B) all securities purchased and sold and the date, amount, and price of each purchase and
sale.
(7) In the case of an investment adviser who has custody or possession of the funds or
securities of any client:
(A) a journal or other record showing all purchases, sales, receipts and deliveries of
securities (including certificate numbers) for such accounts and other debits and credits to such accounts;
(B) a separate ledger account for each such client showing all purchases, sales, receipts, and deliveries of
securities, the date and price of each such purchase and sale, and all debits and credits;
(C) copies of
confirmations of all transactions effected by or for the account of any such client; and
(D) a record for
each security in which any client has a position, which record shall show the name of each such client having any interest in each security, the
amount or interest of each such client, and the location of each such security.
(8) A record of
every transaction in a security in which the investment adviser or any investment adviser representative has, or by reason of such transaction
acquires any direct or indirect beneficial ownership, except:
(A) transactions effected in any account over which
neither the investment adviser nor any investment adviser representative has any direct or indirect influence or control; and
(B) transactions in securities which are direct obligations of the United States. Such record shall state the title
and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale, or other acquisition or disposition); the price at
which it was effected; and the name of the broker, dealer, or bank with or through whom the transaction was effected. A transaction shall be recorded
not later than 10 days after the end of the calendar quarter in which the transaction was effected.
(9) For each client, a record listing the client's:
(A) birth year;
(B) employment status, including occupation;
(C) annual
income;
(D) net worth, excluding the value of the client's primary residence;
(E) investment objectives; and
(F) risk tolerance.
(10) For accounts in existence on the effective date of this section, the investment adviser must obtain the
information required in paragraph (9) of this subsection within one year of January 1, 2012, and thereafter must update this information for each
client at intervals not greater than 36 months.
(11) The internal control report that an investment
adviser is required to obtain or receive from its related person, pursuant to §116.17(b)(6)(B).
(12)
A memorandum describing the basis upon which the investment adviser has determined that the presumption that any related person is not operationally
independent under §116.17(a)(7) has been overcome.
(13) a file containing all the information
required to be retained pursuant to SEC Rule 204-2(a)(11) (17 CFR §
275.204-2(a)(11), as amended).
(b) Records
to be preserved by investment advisers.
(1) Persons registered as investment advisers in Texas shall preserve all
records required pursuant to subsection (a) of this section for a period of not less than five years from the end of the fiscal year during which the
last entry was made on such record, the first two years in an easily accessible place.
(2) Persons
registered as investment advisers in Texas shall preserve for a period of not less than three years from the end of the fiscal year during which the
last entry was made on such record, the first two years in an easily accessible place:
(A) all checkbooks, bank
statements, cancelled checks, and cash reconciliations of the investment adviser;
(B) all bills or
statements (or copies thereof) paid or unpaid, relating to the business of the investment adviser as such;
(C) all trial balances, financial statements, and internal audit working papers relating to the business of such
investment adviser;
(D) originals of all written communications received and copies of all written
communications sent by such investment adviser relating to:
(i) any recommendation made or proposed to be made and
any advice given or proposed to be given;
(ii) any receipt, disbursement, or delivery of funds or
securities; or
(iii) the placing or execution of any order to purchase or sell any security. Provided,
however, that the investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public
distribution not prepared by or for the investment adviser, and that if the investment adviser sends any notice, circular, or other advertisement
offering any report, analysis, publication, or other investment advisory service to more than 10 persons, the investment adviser shall not be
required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular, or advertisement is
distributed to persons named on any list, the investment adviser shall retain with the copy of such notice, circular, or advertisement a memorandum
describing the list and the source thereof;
(E) all powers of attorney and other evidences of
the granting of any discretionary authority by any client to the investment adviser or copies thereof;
(F) all written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise
relating to the business of such investment adviser as such; and
(G) all complaints received from
investment clients, and all documents relating to such complaints.
(3) Persons registered as
investment advisers in Texas shall preserve for at least three years after the termination of the enterprise partnership articles and any amendments
thereto, articles of incorporation, certificates of formation,charters, minute books, and stock certificate books of the investment adviser and of
any predecessor.
(4) If a person ceases to be registered as an investment adviser in Texas, such person
shall, for the remainder of the time period specified in this section, continue to preserve the records required in this section.
(5) The records required to be maintained and preserved pursuant to this section may be immediately produced or
reproduced on microfilm or other photograph and may be maintained and preserved for the required time in that form, provided that such microfilms or
other photographs are arranged and indexed in such a manner as to permit the immediate location of any particular document, and that such microfilms
or other photographs are at all times available for examination by representatives of the Securities Commissioner together with facilities for
immediate, easily readable projection of the microfilm or other photograph and for the production of easily readable facsimile
enlargements.
(c) The records required to be maintained pursuant to this section may be
maintained by any electronic storage media available so long as such records are available for immediate and complete access by representatives of
the Securities Commissioner. Any electronic storage media must preserve the records exclusively in a non-rewriteable, non-erasable format; verify
automatically the quality and accuracy of the storage media recording process; serialize the original and, if applicable, duplicate units of storage
media, and time-date for the required period of retention the information placed on such electronic storage media; and have the capacity to download
indexes and records preserved on electronic storage media to an acceptable medium. In the event that a records retention system commingles records
required to be kept under this section with records not required to be kept, representatives of the Securities Commissioner may review all commingled
records.
(d) The Securities Commissioner has a right to review all records maintained by registered
investment advisers regardless of whether such records are required to be maintained under any specific applicable rule provision.
Notes
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