Administrative Code

Virginia Administrative Code
12/3/2021

Part V. Miscellaneous

21VAC5-80-230. Clarification of investment advisor representative.

For purposes of clause (iv) of the definition of "investment advisor representative" in § 13.1-501 of the Act, an individual is deemed to have prepared reports or analyses concerning securities if that individual is identified to a client as having prepared such reports or analyses.

Statutory Authority

§ 13.1-523 of the Code of Virginia.

Historical Notes

Derived from Rule 1400, Case No. SEC920008, eff. October 15, 1992.

21VAC5-80-240. Investment advisor representative registration on behalf of other investment advisors or federal covered advisors.

A. The purpose of this section is to permit an individual who is registered under the Act as an investment advisor representative to assist clients in the selection of other investment advisors or federal covered advisors without being subject to investment advisor representative registration requirements with respect to the other investment advisors or federal covered advisors.

As used in this section, the term "other investment advisor" or "federal covered advisor" means an investment advisor or federal covered advisor other than the one on whose behalf the individual is registered as an investment advisor representative.

B. An individual is subject to investment advisor representative registration requirements of the Act with respect to any other investment advisor or federal covered advisor unless the following conditions exist when the individual initially engages, with respect to such advisor, in activity which would require registration as an investment advisor representative under the Act.

1. The individual is registered under the Act as an investment advisor representative of an investment advisor so registered or a federal covered advisor who has filed notice under the Act.

2. The other investment advisor is registered under the Act as an investment advisor or the federal covered advisor has filed notice under the Act.

C. Except as expressly provided in this section, nothing contained in this section is intended, or should be construed, to relieve any person utilizing this section from complying with the applicable provisions of the Act or of any other of these regulations.

Statutory Authority

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

Historical Notes

Derived from Rule 1401, Case No. SEC920008, eff. October 15, 1992; amended, Virginia Register Volume 13, Issue 25, eff. September 1, 1997.

21VAC5-80-250. Employment of investment advisor representative by more than one investment advisor or federal covered advisor.

A. In accordance with § 13.1-504 C of the Act, an investment advisor representative (representative) may be employed by more than one investment advisor or federal covered advisor (employing advisor) if all of the following conditions are satisfied:

1. Each employing advisor is under common ownership and control as defined in subsection B of this section.

2. Each employing advisor is registered or has filed notice, as the case may be, in accordance with 21VAC5-80-10.

3. Each employing advisor consents in writing to the employment of the representative as an investment advisor representative by each of the other employing advisors.

4. The representative is registered in accordance with 21VAC5-80-70 by and on behalf of each employing advisor.

5. Each employing advisor executes an Investment Advisor Representative Multiple Employment Agreement (Form S.A.15), and the executed agreement is filed with the commission at its Division of Securities and Retail Franchising prior to the representative transacting business in Virginia on behalf of such advisor.

6. A new Investment Advisor Representative Multiple Employment Agreement is executed and filed with the commission at its Division of Securities and Retail Franchising within 15 days after any information in a current agreement on file with the commission becomes materially deficient, incomplete or inaccurate.

B. The term "common ownership and control" as used herein means possession of at least a 50% ownership interest in each employing advisor by the same individual or individuals.

Statutory Authority

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

Historical Notes

Derived from Virginia Register Volume 14, Issue 22, eff. July 1, 1998.

21VAC5-80-260. Information security and privacy.

A. Every investment advisor registered or required to be registered shall establish, implement, update, and enforce written physical security and cybersecurity policies and procedures reasonably designed to ensure the confidentiality, integrity, and availability of physical and electronic records and information. The policies and procedures shall be tailored to the investment advisor's business model, taking into account the size of the firm, type of services provided, and the number of locations of the investment advisor.

1. The physical security and cybersecurity policies and procedures shall:

a. Protect against reasonably anticipated threats or hazards to the security or integrity of client records and information;

b. Ensure that the investment advisor safeguards confidential client records and information; and

c. Protect any records and information the release of which could result in harm or inconvenience to any client.

2. The physical security and cybersecurity policies and procedures shall cover at least five functions:

a. The organizational understanding to manage information security risk to systems, assets, data, and capabilities;

b. The appropriate safeguards to ensure delivery of critical infrastructure services;

c. The appropriate activities to identify the occurrence of an information security event;

d. The appropriate activities to take action regarding a detected information security event; and

e. The appropriate activities to maintain plans for resilience and to restore any capabilities or services that were impaired due to an information security event.

3. The investment advisor shall review, no less frequently than annually, and modify, as needed, these policies and procedures to ensure the adequacy of the security measures and the effectiveness of their implementation.

B. The investment advisor shall deliver upon the investment advisor's engagement by a client, and on an annual basis thereafter, a privacy policy to each client that is reasonably designed to aid in the client's understanding of how the investment advisor collects and shares, to the extent permitted by state and federal law, nonpublic personal information. The investment advisor shall promptly update and deliver to each client an amended privacy policy if any of the information in the policy becomes inaccurate.

Statutory Authority

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

Historical Notes

Derived from Virginia Register Volume 36, Issue 2, eff. September 16, 2019.

Website addresses provided in the Virginia Administrative Code to documents incorporated by reference are for the reader's convenience only, may not necessarily be active or current, and should not be relied upon. To ensure the information incorporated by reference is accurate, the reader is encouraged to use the source document described in the regulation.

As a service to the public, the Virginia Administrative Code is provided online by the Virginia General Assembly. We are unable to answer legal questions or respond to requests for legal advice, including application of law to specific fact. To understand and protect your legal rights, you should consult an attorney.