North Carolina Administrative Code › Title 18 - SECRETARY OF STATE › Chapter 06 - SECURITIES DIVISION › Subchapter A - RECODIFIED RULES › Section .1700 - REGISTRATION OF INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES › Section 06A .1705 - BONDING REQUIREMENTS FOR CERTAIN INVESTMENT ADVISERS

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Every investment adviser having custody
				  of or discretionary authority over client funds or securities shall be bonded
				  in an amount of not less than thirty-five thousand dollars ($35,000.00) by a
				  bonding company qualified to do business in this state or in lieu thereof may
				  provide evidence of a deposit of cash or securities in such amount. The
				  requirements of this Rule shall not apply to those applicants or registrants
				  who comply with the requirements of Rule .1704.
(b) Should an investment adviser's bond be
				  terminated by the surety resulting in the investment adviser's failure to meet
				  the requirements of Paragraph (a) of this Rule and the bond was not terminated
				  due to fault of the investment adviser, then the investment adviser shall be
				  provided a reasonable time period up to six months, without the necessity of
				  ceasing to do business as an investment adviser, to obtain another bond in
				  order to meet the requirements of Paragraph (a) of this Rule provided that the
				  investment adviser notifies the administrator in writing within two business
				  days of the termination of the bond and files such further information as the
				  administrator may require regarding the financial status of the investment
				  adviser until evidence of compliance with Paragraph (a) of this Rule is
				  provided.
(c) The surety bond shall
				  be filed with the administrator on Form NCIAB (North Carolina Securities
				  Division Investment Adviser's Bond) or on a form whose terms are substantially
				  equivalent to the terms of Form CDCS-1A and which is approved as the
				  substantial equivalent by the Administrator. Evidence of a deposit of cash or
				  securities shall be filed with the administrator on Form CDCS-IA (Certification
				  of Deposit of Cash or Securities -- Investment Advisers) or on a form whose
				  terms are substantially equivalent to the terms of Form CDCS-1A and which is
				  approved as the substantial equivalent by the Administrator.
(d) An investment adviser that has its
				  principal place of business in a state other than this state shall be exempt
				  from the requirements of Paragraph (a) of this Rule, provided that the
				  investment adviser is registered as an investment adviser in the state where it
				  has its principal place of business and is in compliance with such state's
				  requirements relating to bonding, if any.
Authority
					 G.S.
					 78C-17(d);
					 78C-18(b);
					 78C-18(c);
					 78C-30(a);
Temporary Rule Eff. January 2, 1989, for a period of 180 days to expire on June
					 30, 1989;
Eff. February 1, 1989;
Temporary Amendment
					 Eff. October 1, 1997;
Amended Eff. August 1, 1998;
Pursuant to
					 G.S.
					 150B-21.3A, rule is necessary without
					 substantive public interest Eff. December 6,
					 2016.