§ 5403. Investment adviser registration requirement and exemptions
(a) It is unlawful for a person to transact business in this State as an investment adviser
unless the person is registered under this chapter as an investment adviser or is
exempt from registration as an investment adviser under subsection (b) of this section.
(b) The following persons are exempt from the registration requirement of subsection (a)
of this section:
(1) a person without a place of business in this State that is registered under the securities
act of the state in which the person has its principal place of business if its only
clients in this State are:
(A) federal covered investment advisers, investment advisers registered under this chapter,
or broker-dealers registered under this chapter;
(B) institutional investors;
(C) bona fide preexisting clients whose principal places of residence are not in this
State if the investment adviser is registered under the securities act of the state
in which the clients maintain principal places of residence; or
(D) any other client exempted by rule adopted or order issued under this chapter;
(2) a person without a place of business in this State if the person has had, during the
preceding 12 months, not more than five clients that are resident in this State in
addition to those specified under subdivision (1) of this subsection; or
(3) any other person exempted by rule adopted or order issued under this chapter.
(c) It is unlawful for an investment adviser, directly or indirectly, to employ or associate
with an individual to engage in an activity related to investment advice in this State
if the registration of the individual is suspended or revoked or the individual is
barred from employment or association with an investment adviser, federal covered
investment adviser, or broker-dealer by an order under this chapter, the Securities
and Exchange Commission, or a self-regulatory organization, unless the investment
adviser did not know, and in the exercise of reasonable care could not have known,
of the suspension, revocation, or bar. Upon request from the investment adviser and
for good cause, the Commissioner, by order, may waive, in whole or in part, the application
of the prohibitions of this subsection to the investment adviser.
(d) It is unlawful for an investment adviser to employ or associate with an individual
required to be registered under this chapter as an investment adviser representative
who transacts business in this State on behalf of the investment adviser unless the
individual is registered under subsection 5404(a) of this chapter or is exempt from
registration under subsection 5404(b). (Added 2005, No. 11, § 1, eff. July 1, 2006.)