New Mexico Administrative Code
Title 12 - TRADE, COMMERCE AND BANKING
Chapter 11 - SECURITIES
Part 6 - INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES RECORDS
Section 12.11.6.9 - RECORDKEEPING REQUIREMENTS CONTINUED
Universal Citation: 12 NM Admin Code 12.11.6.9
Current through Register Vol. 35, No. 18, September 24, 2024
A. Record of the investment adviser's securities transactions required pursuant to Paragraph (3) of Subsection A of 12.11.6.8 NMAC.
(1) The investment
adviser shall prepare a memorandum setting forth:
(a) each order given by the investment
adviser for the purchase or sale of any security;
(b) any instruction received by the
investment adviser from the client concerning the purchase, sale, receipt or
delivery of a particular security; and
(c) any modification or cancellation of any
such order or instruction.
(2) The memorandum shall:
(a) show the terms and conditions of the
order, instruction, modification or cancellation;
(b) identify the person connected with the
investment adviser who recommended the transaction to the client and who placed
the order;
(c) show the account for
which entered, the date of entry and the bank or broker-dealer by or through
which executed where appropriate; and
(d) identify orders entered pursuant to the
exercise of discretionary power.
B. Records of the investment adviser's written communications required pursuant to Paragraph (7) of Subsection A of 12.11.6.8 NMAC.
(1) The investment
adviser shall keep originals of all written communications received and copies
of all written communications sent by the investment adviser relating to:
(a) any recommendation made or proposed to be
made and any advice given or proposed to be given;
(b) any receipt, disbursement or delivery of
funds or securities; and
(c) the
placing or execution of any order to purchase or sell any security.
(2) The investment adviser shall
not be required to keep any unsolicited market letters and other similar
communications or general public distribution not prepared by or for the
investment adviser.
(3) If the
investment adviser sends any notice, circular, or other advertisement offering
any report, analysis, publication or other investment advisory service to more
than ten 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. However, if the
notice, circular or advertisement is distributed to persons named on any list,
the investment adviser shall retain, with a copy of the notice, circular or
advertisement, a memorandum describing the list and its source.
C. Records of transactions in securities in which the investment adviser or an affiliated person has a beneficial ownership interest required pursuant to Paragraph (12) of Subsection A of 12.11.6.8 NMAC.
(1) For the
purposes of this subsection, the following definitions apply:
(a) "affiliated person" with
respect to another person means any person directly or indirectly controlling,
controlled by, or under common control with the other person; any officer,
director or partner of the other person; or any spouse or relative, by blood or
marriage, of the other person;
(b)
"control" means the power to direct or influence the management or
policies of a company through the ownership of voting securities by contract or
otherwise; any person who owns beneficially, either directly or through one or
more controlled companies, more than 25 percent of the voting securities of a
company shall be presumed to control such company; and
(c) "primarily engaged in a business or
businesses other than advising investment advisory clients" means an
investment adviser that, for each of its most recent three fiscal years or for
the period of time since organization, whichever is less, derived, on an
unconsolidated basis, more than fifty percent of its total sales and revenues
and its income or loss before income taxes and extraordinary items from such
other business or businesses.
(2) The investment adviser shall keep a
record of every transaction in a security in which the investment adviser, and
any person described in Paragraphs (3) or (4) of this subsection, whichever is
applicable, has, or by reason of any transaction acquires, any direct or
indirect beneficial ownership of such security.
(3) For all investment advisers except those
that are primarily engaged in a business or businesses other than advising
investment advisory clients, records of transactions shall include records of
the transactions of:
(a) any partner, officer
or director of the investment adviser;
(b) any employee who participates in any way
in the determination of which recommendations are made;
(c) any employee who, in connection with his
duties, obtains any information concerning which securities are being
recommended prior to the effective dissemination of the recommendations;
and
(d) any person in a control
relationship to the investment adviser, any affiliated person of a controlling
person and any affiliated person of any affiliated person, who obtains
information concerning securities recommendation being made by the investment
advisor prior to the effective dissemination of the recommendations.
(4) For all investment advisers
that are primarily engaged in a business or businesses other than advising
investment advisory clients, records of transactions shall include records of
the transactions of:
(a) any partner, officer,
and director or employee of the investment advisor who participates in any way
in the determination of which recommendations are made, or who, in connection
with his functions or duties, obtains any information concerning which
securities are being recommended prior to the effective dissemination of the
recommendations; and
(b) any person
in a control relationship to the investment adviser, any affiliated person of a
controlling person and any affiliated person of any affiliated person who
obtains information concerning securities recommendations being made by the
investment adviser prior to the effective dissemination of the recommendations
or of information concerning the recommendations.
(5) The investment adviser shall record each
transaction no later than ten days after the end of the calendar quarter in
which the transaction was effected.
(6) The investment adviser is not required to
keep records of transactions:
(a) effected in
any account over which neither the investment adviser nor any person described
in Paragraphs (3) or (4) of this subsection has any direct or indirect
influence or control; and
(b) in
securities which are direct obligations of the United States.
(7) The record shall state:
(a) the title and amount of the security
involved;
(b) the date and nature
of the transaction, such as purchase, sale or other disposition; and
(c) the name of the broker-dealer or bank
with or through which the transaction was effected.
(8) An investment adviser shall not be deemed
to have violated the provisions of this subsection because of the failure to
record securities transactions of any person described in Paragraphs (3) and
(4) of this subsection if the investment adviser establishes that it instituted
adequate procedures and used reasonable diligence to obtain promptly reports of
all transactions required to be recorded.
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