Alaska Administrative Code
Title 3 - Commerce, Community, and Economic Development
Part 1 - Banking, Securities, Small Loans and Corporations
Chapter 08 - Securities
Article 1 - Registration, Notice, and Regulation of Broker-Dealers, Agents, State Investment Advisers, and Federal Covered Advisers, and Investment Adviser Representatives
3 AAC 08.029 - Custody of client funds or securities by state investment advisers
Universal Citation: 3 AK Admin Code 08.029
Current through February 24, 2025
(a) A state investment adviser may not take custody of client funds or securities unless
(1) the state investment adviser notifies the
administrator in writing that the state investment adviser has or may have
custody; notification may be given on SEC Form ADV;
(2) the securities of each client are
segregated, marked to identify the particular client having the beneficial
interest in the security, and held in safekeeping in a place reasonably free
from risk of destruction or other loss;
(3) all client funds are deposited in one or
more bank accounts that contain only client funds, and
(A) each account is maintained in the name of
the state investment adviser as agent or trustee for the clients; and
(B) the state investment adviser maintains a
separate record for each account that shows the name and address of the bank
where the account is maintained, the dates and amounts of deposits to and
withdrawals from the account, and the exact amount of each client's beneficial
interest in the account;
(4) the state investment adviser, immediately
after accepting custody of funds or securities from a client, notifies the
client in writing of the place and the manner in which the funds and securities
will be maintained, and thereafter immediately notifies the client in writing
of any changes in the place or the manner in which the funds or securities are
maintained;
(5) the state
investment adviser, at the end of every three months, sends each client an
itemized statement showing the funds and securities in the state investment
adviser's custody and each debit, credit, and transaction in the client's
account during the period; and
(6)
at least once every calendar year,
(A) an
independent certified public accountant or public accountant
(i) verifies all client funds and securities
by actual examination at a time chosen by the accountant without prior notice
to the state investment adviser; and
(ii) issues a report stating that the
accountant has made an examination of all client funds and securities and
describing the nature and extent of the examination; and
(B) the report prepared under (A)(ii) of this
paragraph is filed with the administrator promptly after each
examination.
(b) This section does not apply to a state investment adviser also registered as a broker-dealer under 15 U.S.C. 78 o (sec. 15 of the Securities Exchange Act of 1934) if the broker-dealer is
(1) subject to and in compliance with 17
C.F.R. 240.15 c 3 - 1 (Net Capital Requirements for Brokers or Dealers);
or
(2) a member of an exchange
whose members are exempt from 17 C.F.R. 240.15c3 - 1, as provided in 17 C.F.R.
240.15c3 - 1(b), and the broker-dealer is in compliance with all rules and
settled practices of the exchange imposing requirements with respect to
financial responsibility and the segregation of funds or securities carried for
the account of customers.
Authority:AS 45.55.020
AS 45.55.040
AS 45.55.050
AS 45.55.060
AS 45.55.950
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