NC Register Volume 16 Issue 15 - Office of Administrative Hearings

Director upon a finding that the release is necessary for theconduct of a communicable disease investigation or for theinvestigation of a release, theft or loss of a biological agent.History Note: Authority G.S. 130A-149;Temporary Adoption Eff. January 10, 2002.TEMPORARY RULESadviser representatives who act as solicitors for investmentadviser firms. That subsection conditioned this multipleregistration upon the adoption of a system of disclosure similarto the system required by the SEC, whereby investment adviserswho paid "referral fees" to persons who sent them clients wouldbe required to disclose that compensation agreement to eachclient at the time of referral.TITLE 18 – SECRETARY OF STATERule-making Agency: Secretary of StateRule Citation: 18 NCAC 06 .1417, .1501, .1702-.1703, .1706-.1707, .1710-.1717Effective Date: January 14, 2002 for 18 NCAC 06 .1501,.1702-.1703, .1706-.1707, .1710-.1717Effective Date: January 15, 2002 for 18 NCAC 06 .1417Comment Procedures: Written and oral comments regardingthese amendments may be directed to David S. Massey,Securities Administrator, NC Department of the Secretary ofState, PO Box 29622, Raleigh, NC 27626-0622, (919) 733-3924,dmassey@sosnc.com.CHAPTER 06 – SECURITIES DIVISIONSECTION .1400 - REGISTRATION OF DEALERS ANDSALESMENFindings Reviewed and Approved by: Beecher R. GrayAuthority for the rulemaking: G.S. 78A-36, 78A-49, 78A-56,78C-16, 78C-20, 78C-30Reason for Proposed Action:18 NCAC 06 .1417 – S.L. 2001, c. 225 created a new G.S. 78A-36.1, which contained an abbreviated procedure for registrationavailable for Canadian broker dealers and securities salesmenservicing clients who had moved into North Carolina.18 NCAC 06 .1501 - S.L. 2001, c. 183 amended G.S. 78A-56 torequire that persons electing to make rescission offers pursuantto the provisions of Section 78A-56 file a written copy of therescission offer with the Securities Division at least 10 daysprior to sending the offer to investors.18 NCAC 06 .1702-.1703, .1706-.1707, .1710-.1716 – S.L. 2001,c. 273, s. 4 amended G.S. 78C-20 to provide that"[a] llapplications for initial and renewal registrations or noticefilings required under G.S. 78C-17 shall be filed with theInvestment Adviser Registration Depository (IARD) operated bythe National Association of Securities Dealers." The IARD is aninternet-based, centralized registration network created by theSecurities and Exchange Commission ("SEC"), the NASD, andthe North American Securities Administrators Association("NASAA") for the purpose of processing all applications forregistration of investment adviser firms and investment adviserrepresentatives in the United States. The IARD is the result of aCongressional mandate in the National Securities MarketsImprovement Act of 1996 ("NSMIA") to the SEC to establish anelectronic process to receive inquiries regarding disciplinaryactions and proceedings involving investment advisers. Thesubject matter of Rule .1712, Change of the Name of anInvestment Adviser, has been subsumed into new Rule .1715,which requires that all changes to Forms ADV be filed with theIARD. There is no mechanism in the IARD system by which theautomatic registration requirements of Rule .1714 can beimplemented. Therefore, the Division will rely instead on thestatutory provisions of G.S. 78C-17(a) for the registrationmechanism applicable to executive officers and principals ofinvestment adviser firms.18 NCAC 06 .1717 – S.L. 2001, c. 273, s. 2 created a new G.S.78C-16(b2), authorizing multiple registration of investment16:15 NORTH CAROLINA REGISTER February 1, 2002172518 NCAC 06 .1417 APPLICATION FOR LIMITEDREGISTRATION OF CANADIAN SECURITIESDEALERS AND SALESMEN(a) An applicant for limited registration as a dealer pursuant toG.S. 78A-36.1 (the "Dealer") shall file the following with theAdministrator:(1) a representation that the Dealer does not havean office or physical presence in this state;(2) a representation that the Dealer is a resident ofCanada;(3) a representation that the Dealer will engageonly in the activities described in G.S. 78A-36.1(j) in this state;(4) a completed application for registration as asecurities dealer in the form required by thejurisdiction in Canada in which the Dealer hasits head office;(5) an originally executed copy of a Form U-2 orsimilar consent to service of process wherebythe Dealer names the North Carolina Secretaryof State as an agent duly authorized to acceptservice of process on behalf of the Dealer;(6) a certification by the securities regulatoryagency of each jurisdiction in Canada fromwhich the Dealer will be effecting transactionsinto this state stating that the Dealer is bothregistered and in good standing as a securitiesdealer in that jurisdiction;(7) evidence that the Dealer is a member of aCanadian self-regulatory organization("SRO"), the Bureau des services financiers, ora Canadian stock exchange; and(8) a filing fee in the amount of two hundreddollars ($200.00).(b) An applicant for limited registration as a salesman (the"Salesman") intending to effect securities transactions in thisstate on behalf of a Canadian dealer registered under this Sectionshall file the following with the Administrator:(1) a completed application for registration as asecurities salesman in the form required by thejurisdiction in which the dealer has its headoffice;