1. If an investment adviser is licensed or required to be licensed pursuant to NRS 90.330 and the investment adviser has custody of client funds or securities, the investment adviser must maintain a minimum net worth of $35,000 unless the investment adviser has custody of the funds and securities solely as a result of:(a) A direct fee deduction; or(b) Advising a pooled investment vehicle.2. An investment adviser who is licensed or required to be licensed pursuant to NRS 90.330 and who has discretionary authority over client funds or securities but does not have custody of client funds or securities shall maintain a minimum net worth of $10,000.3. An investment adviser who is licensed or required to be licensed pursuant to NRS 90.330 and who accepts prepayment of more than $500 per client 6 or more months in advance shall maintain a positive net worth.4. If the net worth of an investment adviser falls below the minimum standards established by this section, the investment adviser must:(a) Notify the Administrator not more than 1 business day after the occurrence of the event; and(b) File a report with the Administrator, not more than 1 business day after the notification described in paragraph (a), which must include, without limitation: (1) A trial balance of all ledger accounts;(2) A statement of all client funds or securities which are not segregated;(3) A computation of the aggregate amount of client ledger debit balances; and(4) A statement of the number of client accounts.5. The Administrator may require an investment adviser to submit a current appraisal in order to establish the worth of any asset.6. Nothing in this section shall be construed to relieve an investment adviser from any requirement of the state of its principal place of business relating to minimum net worth.7. As used in this section: (a) "Custody" has the meaning ascribed to it in section 7.(b) "Discretion" does not include an investment adviser placing a trade order with a broker-dealer pursuant to a third-party trading agreement if: (1) The investment adviser has executed a separate investment adviser contract exclusively with its client which acknowledges that a third-party trading agreement will be executed to allow the investment adviser to effect securities transactions for the client in the broker-dealer account of the client;(2) The investment adviser contract specifically states that the client does not grant discretionary authority to the investment adviser and the investment adviser does not exercise any discretion with respect to the account of the client; and(3) A third-party trading agreement is executed between the client and the broker-dealer which specifically limits the authority of the investment adviser in the broker-dealer account of the client to the placement of trade orders and the deduction of investment adviser fees.(c) "Net worth" means an excess of assets over liabilities as determined by generally accepted accounting principles. As used in this paragraph, the term "assets" does not include:(1) Prepaid expenses, unless the item is properly classified as an asset under generally accepted accounting principles;(5) Organization expenses;(9) Unamortized debt discounts and expenses;(13) Advances or loans to a stockholder or officer in a corporation or a partner in a partnership;(14) Any other assets of intangible nature; and(15) Any other personal items of an individual that are not readily marketable.Nev. Admin. Code § 90.Sec. 24
Added to NAC by Sec'y of State by R018-21A, eff. 6/2/2023