Current through Register Vol. 48, No. 12, March 22, 2024
a) Except as provided in subsection (d) of
this Section, every investment adviser registered by the Secretary of State
shall keep the books and records set out in this Section unless otherwise
designated by the Secretary of State:
1)
ledgers (or other records) reflecting all assets and liabilities, income and
expense, and capital accounts;
2) a
record showing all payments received, including date of receipt, purpose and
from whom received, and all disbursements, including date paid, purpose and to
whom made;
3) a record showing all
receivables and payables;
4)
records showing separately for each client the securities purchased or sold,
and, to the extent it has been made available to the investment adviser, the
date and amount of and price at which such purchases or sales were executed. If
available to the investment adviser, this record should also show the name of
the security dealer who handled the transaction;
5) records showing separately all securities
acquired by the clients of the investment adviser and indicating thereon the
proper identification of this individual account, the date, amount and price at
which such securities were purchased or sold by or for each client; or, in the
alternative, a record showing all securities (other than securities enumerated
in Section 3.A of the Act) bought or sold by or for the accounts of all clients
of the investment adviser in each month, the total number of shares or
principal amount of each security bought or sold and the lowest and highest
price at which purchases or sales were made during the month;
6) copies of dealer's confirmations of all
transactions placed by the investment adviser for any account, and the other
dealer's confirmations as may be supplied to the investment adviser by a client
or dealer;
7) a list showing all
accounts in which the investment adviser is vested with discretionary power,
unless the records required by subsections (a)(4) and (5) of this Section are
maintained in such manner as to disclose which are discretionary accounts,
provided that the provisions of subsections (a)(4) and (5) of this Section
shall not apply:
A) to any securities with
respect to which the investment adviser renders no services of a supervisory or
other nature; or
B) to any
securities or transactions which a client declines to disclose to the
investment adviser;
and provided further that the provisions of subsections
(a)(4), (5), (6) and (7) above shall not apply to the accounts of any
investment adviser where the services consist solely of the distribution of
written or printed publications on a subscription basis.
b) Additional Records
1) Every investment adviser registered by the
Secretary of State shall preserve for a period of not less than 3 years, the
first 2 years in an easily accessible place, all records required by subsection
(a) of this Section and the following additional records:
A) all check books, bank statements,
cancelled checks and cash reconciliations;
B) all bills or statements (or copies
thereof), paid or unpaid, relating to the business of such investment
adviser;
C) originals of all
communications received and copies of all communications sent by such
investment adviser relating to the business of the investment
adviser;
D) all power of attorneys
and other evidence of the granting of any discretionary authority in any
account, and copies of resolutions empowering an agent to act on behalf of any
client;
E) all written agreements
(or copies thereof), entered into by an investment adviser relating to the
business of the investment adviser, including agreements with respect to any
account, which agreements shall set forth the fees to be charged and the manner
of computation and method of payment thereof.
2) For a period of not less than 3 years
after the closing of any client's account, all required records relating to
such account shall be preserved by every registered investment
adviser.
3) Every registered
investment adviser shall preserve, during the life of the enterprise and of any
successor enterprise, all partnership agreements, certificates or articles, or,
in the case of a corporation, all articles of incorporation or charter, minute
books and stock certificate books.
4) After a record or other document has been
preserved for 2 years, a photograph thereof on film may be substituted for the
balance of the required time.
c) Any records required by this Section may
be maintained:
1) in such manner that the
identity of any client or clients to whom a registered investment adviser
renders investment supervisory service is indicated by numerical, alphabetical,
code or similar designations, or
2)
in duplicate with one set of the records having the identity of any client or
clients to whom a registered investment adviser renders investment supervisory
service deleted or indicated by numerical, alphabetical, code or similar
designation, as may be appropriate to the record required.
d) This Section shall not apply to any
investment adviser that is registered or licensed as such in the state in which
it maintains its principal place of business and is in compliance with the
applicable books and records requirements of the state in which it maintains
its principal place of business.