Current through Register Vol. 35, No. 18, September 24, 2024
A.
Recordkeeping requirements for all
investment advisers. Every investment adviser registered or required to
be registered under the New Mexico Uniform Securities Act shall make and keep
true, accurate and current the following books, ledgers and records:
(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 record of
the investment adviser's securities transactions in accordance with the
requirements of Subsection A of 12.11.6.9 NMAC;
(4) all checkbooks, bank statements, canceled
checks and cash reconciliations of the investment adviser;
(5) all bills or statements, or copies of
bills or statements, paid or unpaid, relating to the investment adviser's
business as an investment adviser;
(6) all trial balances, financial statements
prepared in accordance with generally accepted accounting principles and
internal audit working papers relating to the investment adviser's business as
an investment adviser; for purposes of this paragraph, "financial statements"
shall mean a balance sheet prepared in accordance with generally accepted
accounting principles, an income statement, a cash flow statement and a net
worth computation, if applicable, as required by 12.11.5.23 NMAC;
(7) records of the investment adviser's
written communications in accordance with the requirements of Subsection B of
12.11.6.9 NMAC;
(8) a list or other
record of all accounts which identifies the accounts in which the investment
adviser is vested with any discretionary power with respect to the funds,
securities or transactions of any client;
(9) a copy of all powers of attorney and
other evidence of the granting of any discretionary authority by any client to
the investment adviser;
(10) a copy
in writing of each agreement entered into by the investment adviser with any
client and all other written agreements otherwise relating to the investment
adviser's business as an investment adviser;
(11) a file containing a copy of each notice,
circular, advertisement, newspaper article, investment letter, bulletin or
other communication including by electronic media that the investment adviser
circulates or distributes, directly or indirectly, to two or more persons,
other than persons connected with the investment adviser; if the notice,
circular, advertisement, newspaper article, investment letter, bulletin or
other communication including by electronic media recommends the purchase or
sale of a specific security and does not state the reasons for the
recommendation, the investment adviser shall retain a memorandum documenting
its reasons for the recommendation;
(12) records of transactions in securities in
which the investment adviser or an affiliated person has a beneficial ownership
interest in accordance with the requirements of Subsection C of 12.11.6.9
NMAC;
(13) a copy of each written
statement and each amendment or revision, given or sent to any client or
prospective client of the investment adviser in accordance with the provisions
of 12.11.5.12 NMAC, and a record of the dates that each written statement and
each amendment or revision was given or offered to be given to any client or
prospective client who subsequently becomes a client;
(14) all accounts, books, internal working
papers and any other records or documents that are necessary to form the basis
for or demonstrate the calculation of the performance or rate of return of all
managed accounts or securities recommendations in any notice, circular,
advertisement, newspaper article, investment letter, bulletin or other
communication including but not limited to distribution by print and electronic
media that the investment adviser circulates or distributes, directly or
indirectly, to two or more persons, other than persons employed by or
contracted with the investment adviser; however, with respect to the
performance of managed accounts, the retention of all account statements, if
they reflect all debits, credits and other transactions in a client's account
for the period of the statement and all worksheets necessary to demonstrate the
calculation of the performance or rate of return of all managed accounts, shall
be deemed to satisfy the requirements of this paragraph;
(15) a file containing a copy of all written
communications received or sent regarding any litigation involving the
investment adviser or any investment adviser representative or employee and
regarding any written customer or client complaint;
(16) written information about each
investment advisory client that is the basis for making any recommendation or
providing any investment advice to such client;
(17) written procedures to supervise the
activities of employees and investment adviser representatives that are
reasonably designed to achieve compliance with applicable securities laws and
regulations;
(18) a file containing
a copy of each document, other than any notices of general dissemination, that
was filed with or received from any state or federal agency or self-regulatory
organization and that pertains to the registrant or its investment adviser
representatives; the file shall at a minimum contain applications, amendments,
renewal filings, correspondence and any other applicable state, federal agency
or self-regulatory organization documents issued or received by the registrant
or its investment adviser representatives; and
(19) a record of the investment adviser's
privacy policies, all privacy notices sent to consumers or customers and the
date such notices were sent.
B.
Additional recordkeeping
requirements for investment advisers that have custody of client securities or
funds. If an investment adviser subject to Subsection A of 12.11.6.8
NMAC has custody or possession of securities or funds of any client, the
records required to be made and retained pursuant to Subsection A of this
section shall include:
(1) a journal or other
record showing all purchases, sales, receipts and deliveries of securities,
including certificate numbers, for all accounts and all other debits and
credits to the accounts;
(2) a
separate ledger account for each client showing all purchases, sales, receipts
and deliveries of securities, the date and price of each purchase and sale, and
all debits and credits;
(3) copies
of confirmations of all transactions effected by or for the account of any
client; and
(4) a record for each
security in which any client has a position, which record shall show the name
of each client having any interest in each security, the amount or interest of
each client and the location of each security.
C.
Additional recordkeeping
requirements for investment advisers that render investment management
services. Every investment adviser subject to Subsection A of this
section that renders any investment supervisory or management service to any
client shall, with respect to the portfolio being supervised or managed and to
the extent that the information is reasonably available to or obtainable by the
investment adviser, make and keep true, accurate and current:
(1) records showing separately for each
client the securities purchased and sold, and the date, amount and price of
each purchase and sale; and
(2)
information from which the investment adviser can promptly furnish the name of
each client and the current amount or interest of the client for each security
in which any client has a current position.
D.
Client codes or
designations. Any books or records required by this section may be
maintained by the investment adviser in such manner that the identity of any
client to whom the investment adviser renders investment supervisory services
is indicated by numerical or alphabetical code or some similar
designation.
E.
Manner of
record preservation. Every investment adviser subject to Subsection A of
this section shall preserve the following records in the manner prescribed:
(1) all books and records required to be made
under the provisions of Subsections A and B and Paragraph (1) of Subsection C
of this section, except for books and records required to be made under the
provisions of Paragraphs (11) and (14) of Subsection A of this section, shall
be maintained and preserved in an easily accessible place for a period of not
less than six years from the end of the fiscal year during which the last entry
was made on record, the first two years of which shall be in the principal
office of the investment adviser;
(2) partnership articles and any amendments,
articles of incorporation, charters, minute books and stock certificate books
of the investment adviser and of any predecessor shall be maintained in the
principal office of the investment adviser and preserved until at least six
years after termination of the enterprise;
(3) books and records required to be made
under the provisions of Paragraphs (11) and (14) of Subsection A of this
section shall be maintained and preserved in an easily accessible place for a
period of not less than six years, the first two years of which shall be in the
principal office of the investment adviser, from the end of the fiscal year
during which the investment adviser last published or otherwise disseminated,
directly or indirectly, the notice, circular, advertisement, newspaper article,
investment letter, bulletin or other communication including by print and
electronic media;
F.
Notwithstanding other recordkeeping requirements of this section, the following
records or copies shall be required to be maintained at the business location
of the investment adviser from which the customer or client is being provided
or has been provided with investment advisory services:
(1) records required to be preserved under
Paragraphs (3), (7) through (10), (13), and (15) through (17) of Subsection A
and Subsections B and C of this section inclusive; and
(2) records or copies required under the
provision of Paragraphs (11) and (14) of Subsection A of this section which
records or related records identify the name of the investment adviser
representative providing investment advice from that business location, its
business locations' physical address, mailing address, electronic mailing
address and telephone number.
G. The records shall be maintained for the
period described in Paragraphs (1), (2) and (3) of Subsection E of this
section.
H.
Preservation of
records upon cessation. An investment adviser subject to Subsection A of
this section, before ceasing to conduct or discontinuing business as an
investment adviser, shall arrange for and be responsible for the preservation
of the books and records required to be maintained and preserved under this
section for the remainder of the period specified in this section and shall
notify the administrator in writing of the exact address where the books and
records will be maintained during the period.
I.
Preservation of records by
alternative media.
(1) The records
required to be maintained and preserved pursuant to this subsection may be
immediately produced by any form of data storage, as provided below, and
maintained and preserved for the required time by an investment adviser on:
(a) micrographic media, including microfilm,
microfiche or any similar medium; or
(b) electronic storage media, including any
digital storage medium or system that meets the terms of this
subsection.
(2) The
investment adviser must:
(a) arrange and index
the records in a way that permits easy location, access and retrieval of any
particular record;
(b) provide
promptly any of the following that the administrator may request:
(i) a legible, true and complete copy of the
record in the medium and format in which it is stored;
(ii) a legible, true and complete printout of
the record; and
(iii) means to
access, view and print the records.
(c) store separately, for the time required
for preservation of the original record, a duplicate copy of the record on any
medium allowed by this subsection.
(3) In the case of records on electronic
storage media, the investment adviser may maintain and preserve records which,
in the ordinary course of the investment adviser's business, are created by the
investment adviser on electronic media or are received by the investment
adviser solely on electronic media or by electronic data transmission. The
investment adviser must establish and maintain procedures to:
(a) maintain and preserve the records so as
to reasonably safeguard them from loss, alteration or destruction;
(b) limit access to the records to properly
authorized personnel and the administrator, including examiners and other
representatives; and
(c) reasonably
ensure that any reproduction of a non-electronic original record on electronic
storage media is complete, true and legible when retrieved.
