Administrative Code

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Virginia Administrative Code
Title 21. Securities and Retail Franchising
Agency 5. State Corporation Commission, Division of Securities and Retail Franchising
Chapter 80. Investment Advisors
11/16/2018

21VAC5-80-180. Requirements for Surety Bonds and Financial Reporting.

A. Investment advisors required to provide a balance sheet pursuant to Part 2A, Item 18 of Form ADV must demonstrate a net worth in excess of $25,000. In the case of an investment advisor that is registered in the state in which it maintains its principal place of business, its balance sheet must demonstrate that it is in compliance with the state's net worth or net capital requirements (as the case may be).

B. Investment advisors who maintain their principal place of business in the Commonwealth of Virginia and are subject to subsection A of this section, whose net worth drops below $25,001, must notify the Division of Securities and Retail Franchising within 24 hours of initial awareness of the discrepancy and immediately take action to establish a net worth in excess of $25,000 or obtain a surety bond in the penalty amount of $25,000. The surety bond form must be utilized. Additionally, within 24 hours after transmitting such notice, the investment advisor shall file a report with the Division of Securities and Retail Franchising of its financial condition, including the following:

1. A trial balance of all ledger accounts.

2. A computation of net worth.

3. A statement of all client funds or securities which are not segregated.

4. A computation of the aggregate amount of client ledger debit balances.

5. A statement as to the number of client accounts.

C. An investment advisor registered in the state in which it maintains its principal place of business and subject to subsection A of this section whose net worth or net capital (as the case may be) drops below the state's requirement, must notify the Division of Securities and Retail Franchising within 24 hours of initial awareness of the discrepancy and immediately take action to establish a net worth or net capital that is in compliance with the state's requirement. Additionally, within 24 hours after transmitting such notice, the investment advisor shall file a report with the Division of Securities and Retail Franchising of its financial condition, including the following:

1. A trial balance of all ledger accounts.

2. A computation of net worth or net capital.

3. A statement of all client funds or securities which are not segregated.

4. A computation of the aggregate amount of client ledger debit balances.

5. A statement as to the number of client accounts.

Statutory Authority

§§ 12.1-13 and 13.1-523 of the Code of Virginia.

Historical Notes

Derived from Rule 1204, Case No. SEC870040, eff. July 2, 1987; amended, Volume 13, Issue 25, eff. September 1, 1997; Volume 15, Issue 22, eff. July 1, 1999; Volume 29, Issue 20, eff. June 3, 2013.

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