N.Y. Comp. Codes R. & Regs. tit. 13 § 11.9

Current through Register Vol. 46, No. 45, November 2, 2024

Section 11.9 - Record keeping requirements

(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.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.9

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Amended New York State Register December 2, 2020/Volume XLII, Issue 48, eff. 2/2/2021