NC Register Volume 16 Issue 15 - Office of Administrative Hearings

electronically (if it has not previously done so)with IARD unless it has been granted ahardship exemption under Rule .1715 of thisSection.(2) If the amendment to Form ADV is made afterMarch 15, 2002, or at an earlier date if aninvestment adviser has filed its Form ADV [17CFR 279.1] (or any amendments to FormADV) electronically with IARD, the registrantmust file amendments to Form ADV requiredby this Section electronically with IARD,unless it has been granted a hardshipexemption under Rule .1715 of this Section.(b) Electronic filing of Form U-4. By June 30, 2002, for eachinvestment adviser representative registered or required to beregistered under the Act, Form U-4 must be resubmittedelectronically (if it has not previously been done) with IARD,unless the investment adviser (filing on behalf of the investmentadviser representative) has been granted a hardship exemptionunder Rule .1715 of this Section.History Note: Authority G.S. 78C-20;Temporary Adoption Eff. January 14, 2002.18 NCAC 06 .1717 CASH PAYMENTS FOR CLIENTSOLICITATIONS(a) It shall be unlawful for any investment adviser required to beregistered pursuant to G.S. 78C-16 to pay a cash fee, directly orindirectly, to a solicitor with respect to solicitation activitiesunless:(1) The investment adviser is registered under theNorth Carolina Investment Advisers Act;(2) The solicitor is not a person:(A)subject to a Securities and ExchangeCommission ("the Commission")order issued under Section 203(f) ofthe Investment Advisers Act of 1940("the 1940 Act"), or subject to anorder of the Administrator issuedunder G.S. 78C-19 or G.S. 78A-39;or(B) convicted within the previous 10years of any felony or misdemeanorinvolving conduct described inSection 203(e)(2)(A)-(D) of the 1940Act or described in G.S. 78C-19(a)(2)c.; or(C) who has been found by theCommission to have engaged, or hasbeen convicted of engaging, in any ofthe conduct specified in Paragraphs(1), (5) or (6) of Section 203(e) of the1940 Act, or who has been found bythe North Carolina SecuritiesDivision (the "Division") to haveengaged in or acted as accessory afterthe fact to, or has been convicted ofengaging in or acting as accessoryafter the fact to, a violation of anyprovision of the North CarolinaInvestment Advisers Act, the NorthTEMPORARY RULES16:15 NORTH CAROLINA REGISTER February 1, 20021736(D)Carolina Securities Act, or theCommodities Act (Chapters78A,78C, and 78D of the North CarolinaGeneral Statutes); orwho is subject to an order, judgmentor decree described in Section203(e)(4) of the 1940 Act or in G.S.78C-19(a)(2)d;(3) Such cash fee is paid pursuant to a writtenagreement to which the adviser is a party;(4) Such cash fee is paid to a solicitor:(A)(B)(C)With respect to solicitation activitiesfor the provision of impersonaladvisory services only; orWho is:(i)(ii)a partner, officer, director oremployee of such investmentadviser, ora partner, officer, director oremployee of a person whichcontrols, is controlled by, oris under common controlwith such investmentadviser; provided that thestatus of such solicitor as apartner, officer, director oremployee of such investmentadviser or other person, andany affiliation between theinvestment adviser and suchother person, is disclosed tothe client at the time of thesolicitation or referral; orOther than a solicitor specified in Part(a)(2)(A) or (B) of this Rule, if all ofthe following conditions are met:(i) The written agreementrequired by Paragraph (c) ofthis Rule:(I) describes thesolicitationactivities to beengaged in by thesolicitor on behalfof the investmentadviser and thecompensation to bereceived therefore;(II) contains anundertaking by thesolicitor to performhis duties under theagreement in amanner consistentwiththeinstructions of theinvestment adviserand the provisionsof the Act and therulesandthereunder;