Alaska Administrative Code › Title 3 - Commerce, Community, and Economic Development › Part 1 - Banking, Securities, Small Loans and Corporations › Chapter 08 - Securities › Article 1 - Registration, Notice, and Regulation of Broker-Dealers, Agents, State Investment Advisers, and Federal Covered Advisers, and Investment Adviser Representatives › 3 AAC 08.040 - Books and records of state investment advisers

Current through May 31, 2024
(a) A state
				  investment adviser registered or required to be registered under AS 45.55 shall
				  make the following books and records and keep them true, accurate, and current:
(1) 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 memorandum of each order given by the
				  state investment adviser for the purchase or sale of a security, of any
				  instruction received by the state investment adviser from the client concerning
				  the purchase, sale, receipt, or delivery of a particular security, and of any
				  modification or cancellation of an order or instruction; the memorandum must
(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 the person
				  who placed the order;
(C) show the
				  account for which the order was entered, the date of entry, and the bank,
				  broker, or dealer by or through whom the order was executed, if applicable;
				  and
(D) designate that the order
				  was entered under the exercise of discretionary power, if discretionary power
				  was exercised;
(4) all
				  check books, bank statements, cancelled checks, and cash reconciliations of the
				  state investment adviser;
(5) all
				  bills or statements, or copies of them, paid or unpaid, relating to the state
				  investment adviser's business as an investment adviser;
(6) all trial balances, financial statements,
				  and internal audit working papers relating to the state investment adviser's
				  business as an investment adviser;
(7) the original of each written
				  communication received and a copy of each written communication sent by the
				  state investment adviser,
(A) and relating to
(i) a recommendation made or proposed to be
				  made or advice given or proposed to be given;
(ii) the receipt, disbursement, or delivery
				  of funds or securities; or
(iii)
				  the placing or execution of any order to purchase or sell any security;
				  and
(B) except that
(i) the state investment adviser is not
				  required to keep unsolicited market letters or other similar communications of
				  general public distribution not prepared by or for the state investment
				  adviser; and
(ii) if the state
				  investment adviser sends a notice, circular, or other advertisement offering a
				  report, analysis, publication, or other advisory service to more than 10
				  persons, the state investment adviser is not required to keep a record of the
				  names and addresses of the persons to whom the notice, circular, or
				  advertisement was sent; however, if the notice, circular, or advertisement is
				  distributed to persons named on a list, the state investment adviser shall
				  retain with the copy of the notice, circular, or advertisement a memorandum
				  describing the list and all its source;
(8) a list or other record of each client
				  account, identifying those accounts in which the state investment adviser is
				  vested with discretionary power with respect to the funds, securities, or
				  transactions of a client;
(9) a
				  copy of a power of attorney and other evidence of the granting of any
				  discretionary authority by a client to the state investment adviser;
(10) a copy in writing of each agreement
				  entered into by the state investment adviser with a client, and any other
				  written agreements otherwise relating to the business of the state investment
				  adviser as an investment adviser;
(11) a copy of each notice, circular,
				  advertisement, newspaper article, investment letter, bulletin, or other
				  communication, including a communication by electronic media, that the state
				  investment adviser circulates or distributes, directly or indirectly, to two or
				  more persons, other than persons connected with the state investment adviser;
				  if a communication listed in this paragraph recommends the purchase or sale of
				  a specific security and does not state the reasons for the recommendation, the
				  state investment adviser shall include a memorandum indicating the reasons for
				  the recommendation;
(12) a record
				  of each transaction in a security in which the state investment advisor or any
				  advisory representative has, or by reason of any transaction acquires, direct
				  or indirect beneficial ownership; the record must state the title and amount of
				  the security involved, the date of the transaction, whether the transaction was
				  a purchase, sale, or other acquisition or disposition, the price at which the
				  transaction was effected, and the name of the broker, dealer, or bank with or
				  through whom the transaction was effected; the record may also contain a
				  statement declaring that the reporting or recording of any transaction may not
				  be construed as an admission that the state investment adviser or advisory
				  representative has a direct or indirect beneficial ownership in the security; a
				  transaction must be recorded not later than 10 days after the end of the
				  calendar quarter in which the transaction was effected; however, a state
				  investment adviser
(A) need not make or keep
				  a record of a transaction
(i) effected in any
				  account over which the state investment advisor or an advisory representative
				  lacks direct or indirect influence or control; or
(ii) in securities that are direct
				  obligations of the United States; and
(B) does not violate this paragraph because
				  of the failure to record a securities transaction of an advisory representative
				  if the state investment adviser establishes that adequate procedures were
				  instituted and reasonable diligence was used to obtain reports of each
				  transaction required to be recorded;
(13) a copy of each written disclosure
				  statement and each amendment or revision to that statement given or sent to a
				  client or prospective client of the state investment adviser in accordance with
				  the provisions of 17 C.F.R.
				  275.204-3 and a record of the dates that each
				  written disclosure 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) for each
				  client that the state investment adviser obtained by means of a solicitor to
				  whom a cash fee was paid by the state investment adviser
(A) evidence of a written agreement to which
				  the state investment adviser is a party related to the payment of the fee; a
				  written agreement that satisfies the requirements of   17 C.F.R. 275.206(4)-3 (a)
				   also satisfies the requirements of this subparagraph;
(B) a signed and dated acknowledgment of
				  receipt from the client evidencing the client's receipt of the
(i) state investment adviser's written
				  disclosure statement given or sent in accordance with
				  17 C.F.R.
				  275.204-3; and
(ii) solicitor's written disclosure statement
				  given or sent in accordance with 17 C.F.R. 275.206(4)-3; and
(C) a copy of the solicitor's
				  written disclosure statement given or sent in accordance with  17 C.F.R.
				  275.206(4)-3 ;
(15) all
				  accounts, books, internal working papers, and 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 a communication
				  by electronic media, that the state investment adviser circulates or
				  distributes, directly or indirectly, to two or more persons, other than persons
				  connected with the state investment adviser; however, with respect to the
				  performance of a managed account, the retention of the following items
				  satisfies the requirements of this paragraph:
(A) each account statement, if it reflects
				  all debits, credits, and other transactions in a client's account for the
				  period of the statement; and
(B)
				  each worksheet necessary to demonstrate the calculation of the performance or
				  rate of return of the managed accounts;
(16) a copy of all communications received or
				  sent regarding any litigation related to a written customer or client complaint
				  involving the state investment adviser, an investment adviser representative,
				  or an employee of the state investment adviser or investment adviser
				  representative;
(17) written
				  information about each advisory client that is the basis for making a
				  recommendation or providing investment advice to that client;
(18) written procedures for the supervision
				  of the activities of employees and investment adviser representatives that are
				  reasonably designed to achieve compliance with applicable securities laws and
				  regulations;
(19) a copy of each
				  document, other than a notice of general dissemination, that was filed with or
				  received from a state or federal agency or self-regulatory organization and
				  that pertains to the state investment adviser or to an advisory representative
				  within the meaning set out in (
l
)(1)(A) of this section;
				  documents to be kept under this paragraph include applications, amendments,
				  renewal filings, and correspondence.