Current through February 27, 2024
1.
If an investment adviser is licensed or required to be licensed pursuant to
NRS
90.330 and the investment adviser has custody
of client funds or securities, the investment adviser must maintain a minimum
net worth of $35,000 unless the investment adviser has custody of the funds and
securities solely as a result of:
(a) A direct
fee deduction; or
(b) Advising a
pooled investment vehicle.
2. An investment adviser who is licensed or
required to be licensed pursuant to
NRS
90.330 and who has discretionary authority
over client funds or securities but does not have custody of client funds or
securities shall maintain a minimum net worth of $10,000.
3. An investment adviser who is licensed or
required to be licensed pursuant to
NRS
90.330 and who accepts prepayment of more
than $500 per client 6 or more months in advance shall maintain a positive net
worth.
4. If the net worth of an
investment adviser falls below the minimum standards established by this
section, the investment adviser must:
(a)
Notify the Administrator not more than 1 business day after the occurrence of
the event; and
(b) File a report
with the Administrator, not more than 1 business day after the notification
described in paragraph (a), which must include, without limitation:
(1) A trial balance of all ledger
accounts;
(2) A statement of all
client funds or securities which are not segregated;
(3) A computation of the aggregate amount of
client ledger debit balances; and
(4) A statement of the number of client
accounts.
5.
The Administrator may require an investment adviser to submit a current
appraisal in order to establish the worth of any asset.
6. Nothing in this section shall be construed
to relieve an investment adviser from any requirement of the state of its
principal place of business relating to minimum net worth.
7. As used in this section:
(a) "Custody" has the meaning ascribed to it
in section 7.
(b) "Discretion" does
not include an investment adviser placing a trade order with a broker-dealer
pursuant to a third-party trading agreement if:
(1) The investment adviser has executed a
separate investment adviser contract exclusively with its client which
acknowledges that a third-party trading agreement will be executed to allow the
investment adviser to effect securities transactions for the client in the
broker-dealer account of the client;
(2) The investment adviser contract
specifically states that the client does not grant discretionary authority to
the investment adviser and the investment adviser does not exercise any
discretion with respect to the account of the client; and
(3) A third-party trading agreement is
executed between the client and the broker-dealer which specifically limits the
authority of the investment adviser in the broker-dealer account of the client
to the placement of trade orders and the deduction of investment adviser
fees.
(c) "Net worth"
means an excess of assets over liabilities as determined by generally accepted
accounting principles. As used in this paragraph, the term "assets" does not
include:
(1) Prepaid expenses, unless the item
is properly classified as an asset under generally accepted accounting
principles;
(2) Deferred
charges;
(3) Goodwill;
(4) Franchise rights;
(5) Organization expenses;
(6) Patents;
(7) Copyrights;
(8) Marketing rights;
(9) Unamortized debt discounts and
expenses;
(10) Homes;
(11) Home furnishings;
(12) Automobiles;
(13) Advances or loans to a stockholder or
officer in a corporation or a partner in a partnership;
(14) Any other assets of intangible nature;
and
(15) Any other personal items
of an individual that are not readily marketable.
Added
to NAC by Sec'y of State by
R018-21A,
eff. 6/2/2023
NRS
90.390,
90.750
