New York Codes, Rules and Regulations › Title 13 - DEPARTMENT OF LAW › Chapter II - SECURITIES TRANSACTIONS AND PERSONNEL › Subchapter A - SECURITIES-GENERAL › Part 11 - INVESTMENT ADVISORY SERVICES › Section 11.9 - Record keeping requirements

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
				  All of the following books and records must be maintained and preserved in an
				  easily accessible place for a period of not less than five (5) years from last
				  transaction or publication, the first two (2) years in an appropriate office of
				  the investment adviser. Before ceasing operations, the investment adviser must
				  arrange for maintenance and preservation and be responsible for all books and
				  records for the full period described above:
(1) Journals, ledgers and underlying
				  documentation for entries; annual financial statements (including trial
				  balances and internal working papers), business tax returns (income &
				  employer taxes);
(2) Check books,
				  bank statements, canceled checks, reconciliations;
(3) All bills and statements, paid or
				  unpaid;
(4) Employment records.
				  Records should include, but are not limited to, a list of all individuals who
				  give investment advice on behalf of the applicant in this
				  jurisdiction;
(5) Record of
				  complaints organized by complainant. These records should include, but are not
				  limited to any regulatory or disciplinary action against any individuals who
				  give investment advice on behalf of the applicant in this
				  jurisdiction;
(6) A list or record
				  of all accounts in which the investment adviser is vested with any
				  discretionary power with respect to the funds, securities or transactions of
				  any client;
(7) A copy of each
				  notice, circular, advertisement, newspaper article, investment letter, bulletin
				  or other communication that the investment adviser circulates or distributes,
				  directly or indirectly to five (5) or more persons. If purchase or sale of a
				  specific security is recommended and the reason is not stated, there must be a
				  memorandum indicating the reason. The investment adviser is not required to
				  keep a record of the names and addresses the notice, circular, letter or other
				  communication is sent to, except if it is distributed to persons named on any
				  list, then a memorandum describing the list and its source should be retained
				  with the notice, circular, letter or other communication;
(8) All written agreements entered into by
				  the investment adviser with the client or otherwise relating to the business of
				  the investment adviser;
(9) Record
				  of every transaction in a security in which the investment adviser has or by
				  reason of such transaction acquires, any direct or indirect beneficial
				  ownership (not including accounts over which the investment adviser has no
				  control or influence or transactions in securities which are direct obligations
				  of the United States). The record shall state the title and amount of security
				  involved; date and nature of transaction; price at which it was effected; name
				  of broker, dealer or bank. The transaction must be recorded not later than ten
				  (10) days after the end of the calendar quarter in which the transaction was
				  effected. The record may contain the statement that this is not an admission of
				  direct or indirect beneficial ownership in the security;
(10) A copy of each written statement and
				  each amendment or revision, given or sent to any client or prospective client
				  and a record of the dates that each written statement, was given or
				  offered;
(11) All accounts, books,
				  internal working papers and any other records or documents necessary to form
				  the basis for or to demonstrate the calculation of the performance or rate of
				  return of any or all managed accounts or securities recommendations in any
				  notice, circular or letter. Investment records including documentation and
				  verification of all claims of investment performance record or any projections
				  made to client(s);
(12)
				  Certificates or other documentation for continuing education;
(13) Client file should contain:
(i) Written contract--must be
				  original;
(ii) All correspondence
				  to or from client;
(iii) All powers
				  of attorney and any other evidence of the granting of discretionary
				  authority;
(iv) Memorandum of each
				  order given by investment adviser for purchase or sale of any security; any
				  instruction from the client concerning the purchase, sale, delivery or receipt
				  of a particular security, and of any modification or cancellation of orders or
				  instructions. (Must show terms and conditions of the order, instruction,
				  modification or cancellation, identify the person connected with the investment
				  adviser who recommended the transaction to the client and the person who placed
				  the order, the account, the date, entity that executed it, duly noted if
				  entered pursuant to discretionary power);
(v) Brokerage, bank statements;
(vi) All written acknowledgements of receipt
				  obtained from clients and copies of disclosure documents;
(vii) Risk analysis for each
				  client;
(viii) Records of fees
				  charged, collected;
(ix)
				  Recommendations to clients including but not limited to portfolio review
				  analyses;
(x) Investments made on
				  behalf of clients;
(xi) If
				  known--name of client broker, bank, accountant, insurance agent, prior
				  investments, real estate, mortgages, amounts of coverage, assumed tax brackets,
				  significant family relationships including ages;
(xii) Assets managed;
(xiii) Unusual material items affecting cash
				  flow;
(xiv) Person responsible for
				  the account;
(xv) Record of ending
				  relationship, date; and
(xvi)
				  Documentation of each client's financial assets and income that support any
				  designation made or acknowledged b y the Investment Adviser of such client as
				  an "accredited investor" (17
				  C.F.R. 230.501)  or "qualified client" (17
				  CFR §
													275.205-3)  as those terms are
				  defined under federal law. The investment adviser shall make and maintain
				  documents evidencing reasonable steps to verify any designation as "accredited
				  investor" or "qualified client" and maintain all documents reviewed in the
				  course of such verification.
(14) Investment advisers with custody or
				  possession of securities or funds of any client must additionally keep the
				  following records:
(i) Journal or other record
				  showing all purchases, sales, receipts and deliveries of securities (including
				  certificate numbers) for such accounts and all other debits and credits to such
				  accounts;
(ii) Separate ledger
				  account for each client showing all purchases, sales, receipts and deliveries
				  of securities, the date and price of each such purchase and sale, and all
				  debits and credits;
(iii) Copies of
				  confirmations of all transactions affected by or for the account of any such
				  client; and
(iv) A record for each
				  security in which any client has a position showing the name of each client
				  having any interest in each security, the amount or interest of each such
				  client, and the location of each security.
(15) Investment advisers who render
				  investment supervisory or management service must keep the following records
				  (with respect to the portfolio):
(i) Records
				  showing separately for each such client the securities bought and sold, the
				  date, amount and price of each such purchase and sale; and
(ii) For each security in which the client
				  has a current position, information from which the investment adviser can
				  promptly furnish the name of such client and the current amount or interest of
				  such client.
(16) Upon
				  the Department of Law's request for any records maintained pursuant to this
				  section, such records shall be filed with the Investor Protection Bureau of the
				  Department of Law within ten (10) business days of such request or within a
				  timeframe otherwise agreed to by the Department of Law.