Nevada Administrative Code › Chapter 90 - Securities › Section 90.Sec. 5 - NEW

Current through June 11, 2024
1.
		  A person who is an investment adviser, a representative of an investment
		  adviser or a federal covered adviser is a fiduciary and has a duty to act
		  primarily for the benefit of the clients of the investment adviser,
		  representative of the investment adviser or federal covered adviser, as
		  applicable.
2. An investment
		  adviser, representative of an investment adviser or federal covered adviser
		  shall not violate subsection 1 by engaging in unethical business practices,
		  including, without limitation, the following conduct:
(a) If investment supervisory services are
		  provided to a client, recommending to the client the purchase, sale or exchange
		  of any security without reasonable grounds to believe that the recommendation
		  is suitable for the client on the basis of information furnished by the client
		  after reasonable inquiry relating to the investment objectives, financial
		  situation and needs of the client and any other information known by the
		  investment adviser;
(b) Exercising
		  discretionary power in placing an order for the purchase or sale of securities
		  for a client without obtaining written discretionary authority from the client
		  within 10 business days after the date of the first transaction placed,
		  pursuant to the oral discretionary authority of the client, unless the
		  discretionary power relates solely to the price at which, or the time when, an
		  order involving a definite amount of a specified security must be executed, or
		  both;
(c) Inducing trading in the
		  account of a client that is excessive in size or frequency in view of the
		  financial resources, investment objectives and character of the account in
		  light of the fact that the investment adviser or a representative of the
		  investment adviser in the situation can directly benefit from the number of
		  securities transactions effected in the account of the client;
(d) Placing an order to purchase or sell a
		  security for the account of a client without authority;
(e) Placing an order to purchase or sell a
		  security for the account of a client upon instruction of a third party without
		  first having obtained a written third-party trading authorization from the
		  client;
(f) Loaning money to a
		  client unless:
(1) The investment adviser is a
		  financial institution engaged in the business of loaning funds; or
(2) The client is an affiliate of the
		  investment adviser;
(g)
		  Borrowing money or securities from a client unless the client is:
(1) A broker-dealer;
(2) An affiliate of the investment adviser;
		  or
(3) A financial institution
		  engaged in the business of loaning funds;
(h) Misrepresenting to an advisory client or
		  prospective advisory client:
(1) The
		  qualifications of the investment adviser or any employee of the investment
		  adviser; or
(2) The nature of the
		  advisory services being offered or fees to be charged for the
		  service;
(i) Omitting or
		  failing to state to an advisory client or prospective advisory client a
		  material fact necessary to make a comprehensive statement regarding:
(1) The qualifications of the investment
		  adviser or any employee of the investment adviser; or
(2) The nature of the advisory services being
		  offered or fees being charged for the services of the investment
		  adviser;
(j) Providing a
		  report or recommendation to any advisory client prepared by someone other than
		  the investment adviser without disclosing that fact to the client;
(k) Charging a client an unreasonable
		  advisory fee;
(l) Failing to
		  disclose to a client, in writing before rendering advice, any material conflict
		  of interest relating to the investment adviser, or any of its employees, which
		  could reasonably be expected to impair the rendering of unbiased and objective
		  advice, including, without limitation, a conflict of interest relating to:
(1) A compensation arrangement connected with
		  advisory services to a client that is in addition to compensation for the
		  advisory services; or
(2) Charging
		  a client an advisory fee for rendering advice when a commission for executing
		  securities transactions pursuant to such advice will be received by the adviser
		  or its employees;
(m)
		  Making a guarantee to a client that a specific result will be achieved,
		  regardless of whether the guarantee relates to a gain or loss;
(n) Disclosing the identity, affairs or
		  investments of a client unless:
(1) Required
		  by law; or
(2) The consent of the
		  client is obtained by the investment adviser or a representative of the
		  investment adviser;
(o)
		  Taking any action, directly or indirectly, with respect to a security or fund
		  in which the client has a beneficial interest, where the investment adviser has
		  custody or possession of the security or fund and the action of the investment
		  adviser violates section 7;
(p)
		  Entering into, extending or renewing an investment advisory contract, unless
		  the contract is:
(1) In writing; and
(2) Discloses, in substance:
(I) The services to be provided;
(II) The term of the contract;
(III) The advisory fee;
(IV) The formula for computing the fee
		  described in sub-subparagraph (III);
(V) The amount of the prepaid fee to be
		  returned in the event of contract termination or non-performance;
(VI) Whether the contract grants
		  discretionary power to the investment adviser; and
(VII) That an assignment of the contract must
		  not be made by the investment adviser without the consent of the parties to the
		  contract;
(q)
		  Failing to establish, maintain and enforce written policies and procedures
		  reasonably designed to prevent the misuse of material nonpublic information,
		  the use of which is contrary to the provisions of section 204A of the
		  Investment Advisers Act of 1940;
(r) Entering into, extending or renewing any
		  advisory contract contrary to the provisions of section 205 of the Investment
		  Advisers Act of 1940;
(s)
		  Indicating in an advisory contract any condition, stipulation or provision
		  which binds any person to waive compliance with a provision of chapter 90 of
		  NRS or the Investment Advisers Act of 1940, or any other practice contrary to
		  the provisions of section 215 of the Investment Advisers Act of 1940;
(t) Engaging in any act, practice or course
		  of business which is fraudulent, deceptive or manipulative and contrary to the
		  provisions of section 206(4) of the Investment Advisers Act of 1940,
		  notwithstanding the fact that the investment adviser or a representative of the
		  investment adviser is not registered or required to be registered under section
		  203 of the Investment Advisers Act of 1940;
(u) Engaging in conduct or any act,
		  indirectly or through or by any other person, which would be unlawful for such
		  person to do directly under the provisions of chapter 90 of NRS or any rule or
		  regulation adopted by the Administrator;
(v) Accessing the account of a client by
		  using the unique identifying information of the client; or
(w) Failing to establish, maintain and
		  enforce a required policy or procedure.