Administrative Code

Virginia Administrative Code
12/3/2021

Part I. Investment Advisor Registration, Notice Filing for Federal Covered Advisors, Expiration, Renewal, Updates and Amendments, Terminations and Merger or Consolidation

21VAC5-80-10. Application for registration as an investment advisor and notice filing as a federal covered advisor.

A. Application for registration as an investment advisor shall be filed in compliance with all requirements of IARD and in full compliance with forms and regulations prescribed by the commission and shall include all information required by such forms.

B. An application shall be deemed incomplete for registration as an investment advisor unless the applicant submits the following executed forms, fee, and information:

1. Form ADV Parts 1 and 2 submitted to IARD.

2. The statutory fee made payable to FINRA in the amount of $200 submitted to IARD pursuant to § 13.1-505 F of the Act.

3. A copy of the client agreement.

4. A copy of the firm's supervisory and procedures manual as required by 21VAC5-80-170.

5. Copies of all advertising materials.

6. Copies of all stationery and business cards.

7. A signed affidavit stating that an investment advisor domiciled in Virginia has not conducted investment advisory business prior to registration, and for investment advisors domiciled outside of Virginia an affidavit stating that the advisor has fewer than six clients in the prior 12-month period.

8. An audited or certified balance sheet prepared in accordance with generally accepted accounting practices reflecting the financial condition of the investment advisor not more than 90 days prior to the date of such filing.

9. A copy of the firm's disaster recovery plan as required by 21VAC5-80-160 F.

10. Evidence of at least one qualified individual with an investment advisor representative registration pending on IARD on behalf of the investment advisor.

11. A copy of the firm's physical security and cybersecurity policies and procedures as required by 21VAC5-80-260 A.

12. A copy of the firm's privacy policy as required by 21VAC5-80-260 B.

13. Any other information the commission may require.

For purposes of this section, the term "net worth" means an excess of assets over liabilities, as determined by generally accepted accounting principles. Net worth shall not include: prepaid expenses (except as to items properly classified as assets under generally accepted accounting principles), deferred charges such as deferred income tax charges, goodwill, franchise rights, organizational expenses, patents, copyrights, marketing rights, unamortized debt discount and expense, all other assets of intangible nature, home furnishings, automobiles, and any other personal items not readily marketable in the case of an individual; advances or loans to stockholders and officers in the case of a corporation; and advances or loans to partners in the case of a partnership.

C. The commission shall either grant or deny each application for registration within 30 days after it is filed. However, if additional time is needed to obtain or verify information regarding the application, the commission may extend such period as much as 90 days by giving written notice to the applicant. No more than three such extensions may be made by the commission on any one application. An extension of the initial 30-day period, not to exceed 90 days, shall be granted upon written request of the applicant.

D. Every person who transacts business in this Commonwealth as a federal covered advisor shall file a notice as prescribed in subsection E of this section in compliance with all requirements of the IARD.

E. A notice filing for a federal covered advisor shall be deemed incomplete unless the federal covered advisor submits the following executed forms, fee, and information:

1. Form ADV Parts 1 and 2.

2. A fee made payable to FINRA in the amount of $200.

Statutory Authority

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

Historical Notes

Derived from Rule 1000, Case No. SEC870040, eff. July 2, 1987; amended by Case No. SEC900034, eff. July 1, 1990; Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 14, Issue 22, eff. July 1, 1998; Volume 17, Issue 20, eff. July 1, 2001; Volume 24, Issue 21, eff. July 1, 2008; Volume 25, Issue 22, eff. July 1, 2009; Volume 26, Issue 22, eff. July 1, 2010; Volume 29, Issue 20, eff. June 3, 2013; amended, Virginia Register Volume 36, Issue 2, eff. September 16, 2019.

21VAC5-80-20. Expiration.

An investment advisor's registration or federal covered advisor's notice filing shall expire annually at midnight on the 31st day of December, unless renewed in accordance with 21VAC5-80-30.

Statutory Authority

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

Historical Notes

Derived from Rule 1001, Case No. SEC870040, eff. July 2, 1987; amended, Virginia Register Volume 13, Issue 25, eff. September 1, 1997.

21VAC5-80-30. Renewals.

A. To renew its registration, an investment advisor will be billed by IARD the statutory fee of $200 prior to the annual expiration date. A renewal of registration shall be granted as of course upon payment of the proper fee together with any surety bond that the commission may require pursuant to 21VAC5-80-180 B unless the registration was, or the renewal would be, subject to revocation under § 13.1-506 of the Act.

B. To renew its notice filing, a federal covered advisor will be billed by IARD the fee of $200 prior to the annual expiration date. A renewal of notice filing shall be granted as a matter of course upon payment of the proper fee.

Statutory Authority

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

Historical Notes

Derived from Rule 1002, Case No. SEC870040, eff. July 2, 1987; amended by Case No. SEC890040, eff. July 1, 1989; Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 15, Issue 22, eff. July 1, 1999; Volume 17, Issue 20, eff. July 1, 2001; Volume 29, Issue 20, eff. June 3, 2013.

21VAC5-80-40. Updates and amendments.

A. An investment advisor or federal covered advisor shall file electronically on IARD, in accordance with Form ADV instructions, any amendments to the investment advisor's Form ADV.

1. An amendment will be considered to be filed promptly if filed within 30 days of the event that requires the filing of the amendment; and

2. Within 90 days of the end of the investment advisor's fiscal year, an investment advisor must file electronically on IARD an Annual Updating Amendment to the Form ADV.

3. An investment advisor is prohibited from using an amendment until it receives notice of acceptance from the commission through IARD.

B. An investment advisor shall file the balance sheet as prescribed by Part 2A, Item 18 of Form ADV, unless excluded from such requirement, with the commission at its Division of Securities and Retail Franchising within 90 days of the investment advisor's fiscal year end. Any investment advisor who is registered in the state in which it maintains its principal place of business shall file with the commission at its Division of Securities and Retail Franchising any financial documents required to be filed by the state within 10 days of the time it must file these documents in such state.

C. A federal covered advisor shall maintain all other-than-Annual Amendments to Part 2 of Form ADV at its principal place of business and shall make a copy available to the commission at its Division of Securities and Retail Franchising within five days of its request.

Statutory Authority

§§ 12.1-13 and 13.1-523.1 of the Code of Virginia.

Historical Notes

Derived from Rule 1003, Case No. SEC870040, eff. July 2, 1987; amended by Case No. SEC890040, eff. July 1, 1989; amended, Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 14, Issue 22, eff. July 1, 1998; Volume 17, Issue 20, eff. July 1, 2001; Volume 19, Issue 23, eff. July 1, 2003; Volume 29, Issue 20, eff. June 3, 2013.

21VAC5-80-50. Termination of registration and notice filings.

When an investment advisor or federal covered advisor desires to terminate its registration or notice filing, it shall file Form ADV-W on IARD. Notice of termination by a federal covered advisor shall be effective upon receipt by the commission or at a later date specified in the notice.

Statutory Authority

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

Historical Notes

Derived from Rule 1004, Case No. SEC870040, eff. July 2, 1987; amended by Case No. SEC890040, eff. July 1, 1989; amended, Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 17, Issue 20, eff. July 1, 2001; Volume 29, Issue 20, eff. June 3, 2013.

21VAC5-80-60. Investment advisor merger or consolidation.

In any merger, consolidation, or reorganization of an investment advisor or federal covered advisor, the surviving or new entity shall amend or file, as the case may be, a new application for registration or notice filing together with the proper fee on IARD.

For each investment advisor representative of the new or surviving entity who will transact business in this Commonwealth, an application for registration together with the proper fee or fees must also be filed on IARD in full compliance with the forms prescribed by the commission. The foregoing filing requirement applies to each investment advisor representative who has a place of business located in the Commonwealth and who is connected with a federal covered advisor that is the new or surviving entity to the merger or consolidation.

Statutory Authority

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

Historical Notes

Derived from Rule 1005, Case No. SEC870040, eff. July 2, 1987; amended by Case No. SEC890040, eff. July 1, 1989; Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 15, Issue 22, eff. July 1, 1999; Volume 17, Issue 20, eff. July 1, 2001; Volume 29, Issue 20, eff. June 3, 2013.

21VAC5-80-65. Investment advisor records retention requirements.

The following requirements apply to every registered investment advisor as a condition of registration as an investment advisor under the Act:

1. All of the investment advisor's records, immediately upon the request of the commission, will be made available for inspection by the commission and reproduction for the commission in an office where the records are maintained;

2. All of the investment advisor's records or legible copies of the same, or printouts of the same, pertaining to a securities transaction, any part of which occurred or is to occur within the Commonwealth of Virginia, will be made available for inspection of the commission in the office of the commission's Division of Securities and Retail Franchising within five days after request of the commission for same;

3. The term "records" as used in this section means and includes all books, papers, documents, tapes, films, photographs, electronic readable format or other materials, regardless of physical form or characteristics that (i) are maintained for recordation or storage of information prepared, used or to be used in connection with a securities transaction or (ii) were used or are to be used in connection with securities transactions;

4. Failure to comply with this section may be considered grounds for the institution of a proceeding to revoke an investment advisor's registration or for such other penalty prescribed by the Act; and

5. Any investment advisor subject to a commission investigation may be required to pay the actual cost of the investigation.

Statutory Authority

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

Historical Notes

Derived from Virginia Register Volume 23, Issue 23, eff. July 1, 2007.

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