Current through Register Vol. 46, No. 12, March 20, 2024
(a) A single client
or a single person for purposes of section 359-eee(a)(5) shall mean
(1) a natural person, and:
(i) Any minor child of the natural
person;
(ii) Any relative, spouse,
or relative of the spouse of the natural person who has the same principal
residence;
(iii) All accounts of
which the natural person and/or the persons referred to in this paragraph
(a)(1) are the only primary beneficiaries; and
(iv) All trusts of which the natural person
and/or the persons referred to in this paragraph (a)(1) are the only primary
beneficiaries;
(2)
(i) A corporation, general partnership,
limited partnership, limited liability company, trust (other than a trust
referred to in subparagraph (a) (1) (iv) of this section), or other legal
organization (any of which are referred to hereinafter as a "legal
organization") that receives investment advice based on its investment
objectives rather than the individual investment objectives of its
shareholders, partners, limited partners, members or beneficiaries (any of
which are referred to hereinafter as an "owner"); and
(ii) Two (2) or more legal organizations
referred to in subparagraph (a) (2) (i) of this section that have identical
owners.
(3) Special
rules. For purposes of this section:
(i) An
owner must be counted as a client if the investment adviser provides investment
advisory services to the owner separate and apart from the investment advisory
services provided to the legal organization, provided, however, that the
determination that an owner is a client will not affect the applicability of
this section with regard to any other owner.
(ii) An owner need not be counted as a client
of an investment adviser solely because the investment adviser, on behalf of
the legal organization, offers, promotes, or sells interests in the legal
organization to the owner, or reports periodically to the owners as a group
solely with respect to the performance of, or plans for, the legal
organization's assets or similar matters;
(iii) A limited partnership or limited
liability company is a client of any general partner, managing member or other
person acting as investment adviser to the partnership or limited liability
company; and
(iv) Any person for
whom an investment adviser provides investment advisory services without
compensation need not be counted as a client.
(b) Federally covered investment adviser
means a person who is registered under section 203 of the Investment Advisers
Act of 1940, 15 U.S.C. § 80(B) et seq.
(c) Financial institution shall mean:
(1) a bank as defined under General Business
Law § 359-e; or
(2) credit
union, or similar institution that is organized or chartered under the laws of
a State or of the United States, authorized to receive deposits, and supervised
and examined by an official or agency of a State or the United States if its
deposits or share accounts are insured by the Federal Deposit Insurance
Corporation, the National Credit Union Share Insurance Fund, or a successor
authorized by federal law. The term does not include:
(A) an insurance company or other
organization primarily engaged in the business of insurance;
(B) a Morris Plan bank; or
(C) an industrial loan company.
(d) General distribution
shall mean a distribution to more than five (5) persons in this State at any
one time.
(e) Institutional buyer
shall mean any of the following, whether acting for itself or for others in a
fiduciary capacity:
(1) a depository
institution or international banking institution;
(2) an insurance company;
(3) a separate account of an insurance
company;
(4) an investment company
as defined in the Investment Company Act of 1940 (
15 U.S.C.A. §
80a-3 );
(5) a broker-dealer registered under the
Securities Exchange Act of 1934;
(6) an employee pension, profit-sharing, or
benefit plan if the plan has total assets in excess of $ 10,000,000 or its
investment decisions are made by a named fiduciary, as defined in the Employee
Retirement Income Security Act of 1974 (ERISA) (
29 U.S.C. §
1102(a) ), that is a
broker-dealer registered under the Securities Exchange Act of 1934, an
investment adviser registered or exempt from registration under the Investment
Advisers Act of 1940, an investment adviser registered under this Act, a
depository institution, or an insurance company;
(7) a plan established and maintained by a
State, a political subdivision of a State, or an agency or instrumentality of a
State or a political subdivision of a State for the benefit of its employees,
if the plan has total assets in excess of $ 10,000,000 or its investment
decisions are made by a duly designated public official or by a named
fiduciary, as defined in ERISA (
29 U.S.C. §
1102(a) ), that is a
broker-dealer registered under the Securities Exchange Act of 1934, an
investment adviser registered or exempt from registration under the Investment
Advisers Act of 1940, an investment adviser registered under this Act, a
depository institution, or an insurance company;
(8) a trust, if it has total assets in excess
of $ 10,000,000, its trustee is a depository institution, and its participants
are exclusively members of plans of the types identified in subparagraph (6) or
(7) of this subdivision, regardless of size of assets, except a trust that
includes as participants self-directed individual retirement accounts or
similar self-directed plans;
(9) an
organization described in section 501(c)(3) of the Internal Revenue Code (
26 U.S.C.
§
501(c)(3) ), a
corporation, Massachusetts or similar business trust, limited liability
company, or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $ 10,000,000;
(10) a small business investment company
licensed by the Small Business Administration under section 301 (c) of the
Small Business Investment Act of 1958 (
15
U.S.C. section 681(c) ) with
total assets in excess of $ 10,000,000;
(11) a private business development company
as defined in section 202(a)(22) of the Investment Advisers Act of 1940 (
15
U.S.C. section 80b-2(a)(22)
) with total assets in excess of $ 10,000,000;
(12) a federally covered investment adviser
acting for its own account;
(13) a
qualified institutional buyer as defined in Rule 144A(a)(1) (
17
C.F.R. 230.144A(a)(1) )
other than Rule 144A(a)(1)(H) (
17
C.F.R. 230.144A(a)(1)(H) ),
adopted under the Securities Act of 1933;
(14) a major United States institutional
investor as defined in Rule 15a-6(b)(4)(i) ( 17 C.F.R. 240.15a- 6(b)(4)(i) )
adopted under the Securities Exchange Act of 1934;
(f) Investment adviser shall mean any person
who, for compensation, engages in the business of advising members of the
public, either directly or through publications or writings within or from the
State of New York, as to the value of securities or as to the advisability of
investing in, purchasing, or selling or holding securities, or who, for
compensation and as a part of a regular business issues or promulgates analyses
or reports concerning securities to members of the public within or from the
State of New York.
(g) Investment
adviser representative shall mean a natural person who represents:
(1) an investment adviser or solicitor in
performing any of the acts that define an investment adviser under GBL §
359-eee(1)(a) or,
(2) a federally
covered investment adviser from a place of business in the State and who
satisfies the requirements of Rule 203A-3 (
17
CFR §
275.203A-3 ) adopted under the
Investment Advisers Act of 1940.
(h)
Investment supervisory service shall mean any person giving
continuous advice as to the investment of funds on the basis of individual
needs of each client.
(i) Person
shall mean a natural person, corporation, company, partnership, trust or
association.
(j) Principal shall
mean and include every person or entity directly or indirectly controlling an
investment adviser or solicitor. Principals are subject to the same
registration and examination requirements of investment adviser representatives
under this part.
(k) Solicitor
shall mean a person who as part of a regular business, engages in the business
of providing investment advice to the limited extent that such person receives
compensation for introducing a prospective investor or investors to an
investment adviser or a federally covered investment adviser, unless such
person would be excluded from the definition of investment adviser under an
enumerated exception under GBL § 359-eee(1)(a) or §
11.13 of
this part. Solicitors are subject to the same registration and examination
requirements as investment advisers, and principals and representatives of
solicitors are subject to the same registration and examination requirements as
investment adviser representatives, under this part.
(l) Supervisor shall mean a natural person
who directly supervises one or more natural persons associated with an
investment adviser in their capacity as investment adviser
representatives.
