Utah Administrative Code
Topic - Commerce
Title R164 - Securities
Rule R164-4 - Licensing Requirements
Section R164-4-2 - Investment Adviser and Investment Adviser Representative Licensing Requirements
Universal Citation: UT Admin Code R 164-4-2
Current through Bulletin 2024-06, March 15, 2024
(A) Authority and Purpose
(1) The Division enacts
this rule under authority granted by Sections
61-1-4,
61-1-5,
61-1-6, and
61-1-24.
(2) This rule sets forth the procedure and
requirements to license as an investment adviser and investment adviser
representative.
(B) Definitions
(1) "CRD" means the Central
Registration Depository.
(2)
"Designated Official" means a person that is a partner, officer, director, sole
proprietor, or a person occupying a similar status or performing similar
functions in an investment adviser firm.
(3) "Division" means the Division of
Securities, Utah Department of Commerce.
(4) "Fee" means any remuneration received,
directly or indirectly, for investment advice given or investment advisory
services rendered, including, among other things, charges for a publication
which includes investment advice and commissions paid or received when
securities are purchased or sold as a result of investment advice given or
investment advisory services rendered. License fees referred to in this rule
are not included.
(5) "IARD" means
the Investment Adviser Registration Depository.
(6) "Investment advice" or "investment
advisory services" means advice given or services rendered concerning the value
of securities or as to the advisability of investing in, or purchasing or
selling securities.
(7) "NASAA"
means the North American Securities Administrators Association, Inc.
(8) "FINRA" means the Financial Industry
Regulatory Authority, formerly known as NASD.
(9) "SEC" means the United States Securities
and Exchange Commission.
(10)
"SIPC" means the Securities Investor Protection Corporation.
(C) Investment adviser and investment adviser representative licensing requirements
(1) Investment adviser licensing
requirements. To license as an investment adviser, applicant must submit the
following:
(1)(a) To the IARD:
(1)(a)(i) SEC Form ADV - Uniform Application
for Investment Adviser Registration, Parts 1 and 2, including applicant's
audited balance sheet if required under item 18 of Form ADV Part 2;
and
(1)(a)(ii) a license fee as
specified in the Division's fee schedule. (This fee includes the fee for one
designated official.)
(1)(b) To the CRD:
(1)(b)(i) FINRA Form U-4 - Uniform
Application for Securities Industry Registration or Transfer for applicant's
designated official; and
(1)(b)(ii)
proof that applicant's designated official has passed the Series 65 or both the
Series 66 Exam and Series 7 Exam.
(1)(c) To the Division:
(1)(c)(i) a notification:
(aa) identifying the applicant's designated
official; and
(bb) indicating
whether the applicant will have either custody of or discretionary authority
over client funds or securities.
(1)(c)(ii) If the applicant will have custody
of or discretionary authority over client funds or securities, the applicant
must provide Division Form 4-5BIA - Indemnity Bond of Investment Adviser or
documents containing the information provided on Division Form 4-5BIA, or,
alternatively, proof of membership in SIPC.
(2) Investment Adviser Representative
Licensing Requirements. To license as an investment adviser representative, the
investment adviser or federal covered adviser with which the applicant will
associate must submit the following:
(2)(a) To
the CRD:
(2)(a)(i) FINRA Form U-4;
and
(2)(a)(ii) proof applicant
passed the Series 65 Exam or both the Series 66 Exam and Series 7
Exam.
(2)(b) To the
IARD, a license fee as specified in the Division's fee schedule.
(3) Miscellaneous provisions
(3)(a) Except as provided in Subparagraph
(C)(3)(b), applicant may associate with only one investment adviser or federal
covered adviser at a time.
(3)(b) A
dual license may be allowed by the director if:
(3)(b)(i) Applicant requests a dual license
in writing to the Division which identifies the investment advisers or federal
covered advisers with which applicant intends to associate and sets forth the
reasons for the dual license;
(3)(b)(ii) Both investment advisers or
federal covered advisers with which applicant intends to associate represent in
writing to the Division that each assumes full responsibility for applicant at
all times; and
(3)(b)(iii)
Applicant discloses the dual license to each client.
(D) Investment adviser and associated investment adviser representative renewal requirements
(1) All licenses expire on December 31 of
each year.
(2) To renew licenses of
the investment adviser and associated investment adviser representatives, the
investment adviser must submit the following:
(2)(a) To the IARD:
(2)(a)(i) SEC Form ADV - Uniform Application
for Investment Adviser Registration, Parts 1 and 2, including applicant's
audited balance sheet if required under item 18 of Form ADV Part 2;
(2)(a)(ii) a license fee for the investment
adviser and a license fee for each associated investment adviser representative
as specified in the Division's fee schedule (the license fee for the investment
adviser includes the fee for one designated official).
(2)(b) To the CRD:
(2)(b)(i) FINRA Form U-4 - Uniform
Application for Securities Industry Registration or Transfer for applicant's
designated official and any investment adviser representatives.
(2)(c) To the Division:
(2)(c)(i) Division Form 4-5BIA, Indemnity
Bond of Investment Adviser, if required by Section
R164-4-5;
and
(2)(c)(ii) the investment
adviser's most recently audited balance sheet, if the investment adviser
requires payment of advisory fees six months or more in advance and in excess
of $1,200 per client, or if the investment adviser has custody or possession of
clients' funds or securities.
(E) Investment adviser representatives of federal covered advisers
(1) All licenses
expire on December 31 of each year.
(2) To renew licenses of the investment
adviser representatives of a federal covered adviser, the federal covered
adviser must submit to the IARD before December 31, a license fee for each
investment adviser representative as specified in the Division's fee
schedule.
(F) Investment adviser and investment adviser representative withdrawal requirements
(1) Investment adviser withdrawal
requirements
(1)(a) To withdraw a license or
application, applicant must file with the IARD, SEC Form ADV-W - Notice of
Withdrawal from Registration as Investment Adviser.
(1)(b) A withdrawal is effective thirty days
following receipt of SEC Form ADV-W, unless the Division notifies applicant
otherwise.
(2)
Investment adviser representative withdrawal requirements
(2)(a) To withdraw a license or application,
applicant must file with the CRD, a completed FINRA Form U-5.
(2)(b) A withdrawal is effective thirty days
following receipt of applicant's FINRA Form U-5, unless the Division notifies
applicant otherwise.
(G) Acts or practices which require licensing as an investment adviser and compliance with statutes and rules pertaining thereto
(1) Lawyers, accountants, engineers
or teachers
(1)(a) A lawyer, accountant,
engineer or teacher (professional) must be licensed as an investment adviser or
investment adviser representative if the professional provides investment
advice or investment advisory services to the professional's clients for a fee,
if the advice is not "solely incidental" to the professional's regular
professional practice with respect to clients.
(1)(b) For purposes of this subparagraph (1),
providing investment advice under ANY of the following circumstances would NOT
be considered to be "solely incidental":
(1)(b)(i) The investment advice the
professional or the investment advisory service the professional renders
clients is the primary professional advice for which the professional charges
or is paid a fee;
(1)(b)(ii) The
professional advertises or otherwise holds himself out to the public as a
provider of investment advice; or
(1)(b)(iii) The professional holds funds for
clients pursuant to discretionary authority to invest such funds.
(1)(c) Following are examples to
assist in understanding the meaning of "solely incidental":
(1)(c)(i) If the primary professional advice
for which the professional receives a fee involves business or tax planning and
the professional neither advertises or otherwise holds himself out as a
provider of investment advice, nor holds funds which the professional invests
for clients. The professional may also provide investment advice to clients in
connection with the planning or other professional services, without being
required to become licensed as an investment adviser.
(1)(c)(ii) If the professional advertises or
otherwise holds himself out as a provider of investment advice, the
professional must be licensed as an investment adviser whether or not the
professional actually provides investment advice.
(1)(c)(iii) If the professional holds client
funds which the professional invests for the client, the professional must be
licensed as an investment adviser whether or not the professional actually
provides investment advice.
(2) Broker-dealers and broker-dealer agents
(2)(a) A broker-dealer or broker-dealer agent
must be licensed as an investment adviser or investment adviser representative
if for a fee, the securities broker-dealer or sales agent of the securities
broker-dealer provides investment advice to clients if the investment advice is
not "solely incidental" to the conduct of business as a broker- dealer or
broker-dealer agent.
(2)(b) For
purposes of this subparagraph, providing investment advice under ANY of the
following circumstances would NOT be considered "solely incidental":
(2)(b)(i) Providing investment advice to a
client for a fee in addition to any commission received in connection with
transactions in which the client either purchases or sells
securities;
(2)(b)(ii) Providing
investment advice, for a fee, to clients who are not clients of the broker-
dealer with which the agent is licensed; or
(2)(b)(iii) Receiving compensation from an
investment adviser to whom the broker-dealer or agent refers clients.
(3) Insurance agents
(3)(a) An insurance agent who, for a fee,
provides investment advice to a client, must be licensed as an investment
adviser or investment adviser representative.
(3)(b) An insurance agent who, performs an
analysis of a client's estate, for a fee, which recommends that the client
purchases or sells either specific securities or specific types of securities
must be licensed as an investment adviser or investment adviser
representative.
(3)(c) An insurance
agent who, receives a commission from the sale of insurance to a client who
makes such purchase with the proceeds of securities the insurance agent
recommended be sold, must be licensed as an investment adviser or investment
adviser representative.
(4) Others
(4)(a) One must be licensed as an investment
adviser or investment adviser representative, as appropriate, whether or not
described in subparagraphs (1), (2), or (3) of paragraph (G) if:
(4)(a)(i) Advertising, or otherwise holding
oneself out as a provider of investment advice;
(4)(a)(ii) Publishing a newspaper, news
column, news letter, news magazine, or business or financial publication,
which, for a fee, gives investment advice based upon the specific investment
situations of the clients; or
(4)(a)(iii) Receiving a fee from an
investment adviser for client referrals.
Disclaimer: These regulations may not be the most recent version. Utah may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.