Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 7 - STATE SECURITIES BOARD › Chapter 116 - INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES › Section 116.5 - Minimum Records

Current through Reg. 49, No. 28; July 12, 2024
(a) Records to be
				made by investment advisers. Persons registered as investment advisers whose
				principal place of business is located in another state shall maintain records
				at least in accordance with the minimum record-keeping requirements of that
				state. Persons registered as investment advisers whose principal place of
				business is located in Texas shall make and keep current the following minimum
				records or the equivalent thereof:
(1) A
				journal or 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
				investment adviser for the purchase or sale of any security, of any instruction
				received by the investment adviser from the client concerning the purchase,
				sale, receipt or delivery of a particular security, and of any modification or
				cancellation of any such order or instruction. Such memoranda shall show the
				terms and conditions of the order, instruction, modification or cancellation;
				shall identify the person connected with the investment adviser who recommended
				the transaction to the client and the person who placed such order; and shall
				show the account for which entered, the date of entry, and the bank, broker, or
				dealer by or through whom executed where appropriate. Orders entered pursuant
				to the exercise of discretionary power shall be so designated.
(4) A list or other record of all accounts in
				which the investment adviser is vested with any discretionary power with
				respect to funds, securities, or transactions of any client.
(5) A copy of each notice, circular,
				advertisement, newspaper article, investment letter, bulletin, or other
				communication recommending the purchase or sale of a specific security, which
				the investment adviser circulates or distributes, directly or indirectly, to 10
				or more persons (other than investment supervisory clients or persons connected
				with such investment adviser), and if such notice, circular, advertisement,
				newspaper article, investment letter, bulletin, or other communication does not
				state the reasons for such recommendation, a memorandum of the investment
				adviser indicating the reasons therefor.
(6) In the case of any client receiving
				investment supervisory or management service, to the extent that the
				information is reasonably available to or obtainable by the investment adviser,
				records showing separately for that client:
(A) the client's current position in any
				security; and
(B) all securities
				purchased and sold and the date, amount, and price of each purchase and
				sale.
(7) In the case of
				an investment adviser who has custody or possession of the funds or securities
				of any client:
(A) a journal or other record
				showing all purchases, sales, receipts and deliveries of securities (including
				certificate numbers) for such accounts and other debits and credits to such
				accounts;
(B) a separate ledger
				account for each such 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;
(C)
				copies of confirmations of all transactions effected by or for the account of
				any such client; and
(D) a record
				for each security in which any client has a position, which record shall show
				the name of each such client having any interest in each security, the amount
				or interest of each such client, and the location of each such
				security.
(8) A record
				of every transaction in a security in which the investment adviser or any
				investment adviser representative has, or by reason of such transaction
				acquires any direct or indirect beneficial ownership, except:
(A) transactions effected in any account over
				which neither the investment adviser nor any investment adviser representative
				has any direct or indirect influence or control; and
(B) transactions in securities which are
				direct obligations of the United States. Such record shall state the title and
				amount of the security involved; the date and nature of the transaction (i.e.,
				purchase, sale, or other acquisition or disposition); the price at which it was
				effected; and the name of the broker, dealer, or bank with or through whom the
				transaction was effected. A transaction shall be recorded not later than 10
				days after the end of the calendar quarter in which the transaction was
				effected.
(9) For each
				client, a record listing the client's:
(A)
				birth year;
(B) employment status,
				including occupation;
(C) annual
				income;
(D) net worth, excluding
				the value of the client's primary residence;
(E) investment objectives; and
(F) risk tolerance.
(10) For accounts in existence on the
				effective date of this section, the investment adviser must obtain the
				information required in paragraph (9) of this subsection within one year of
				January 1, 2012, and thereafter must update this information for each client at
				intervals not greater than 36 months.
(11) The internal control report that an
				investment adviser is required to obtain or receive from its related person,
				pursuant to §116.17(b)(6)(B).
(12) A memorandum describing the basis upon
				which the investment adviser has determined that the presumption that any
				related person is not operationally independent under §116.17(a)(7) has
				been overcome.