Reports by Broker-Dealers and Investment Advisers
(1)General Rule. Every broker-dealer and every investment adviser who takes any discretionary authority from any investment advisory client to execute transactions or has custody of any investment advisory client’s securities or funds, shall file reports of financial conditions containing the information required by a form to be supplied or approved by the Director, as follows:
(a)The report shall be filed annually reflecting the financial condition as of the end of the fiscal year;
(b)Whenever the Director so requires, an interim report shall be filed as of the date and within the period specified by the Director.
(2)Nature and Form of Reports. Each report of financial condition filed pursuant to section (1) of this rule shall be prepared and filed in accordance with the following requirements:
(a)The report required by subsections (1)(a) and (b) of this rule of a broker-dealer or investment adviser shall be certified by a certified public accountant or a public accountant who shall be in fact independent; provided, however, that such report need not be certified if such broker-dealer or investment adviser is a member of the National Association of Securities Dealers and since the date of the previous financial statement or report filed pursuant to this rule:
(A)Said broker-dealer or investment adviser has not transacted a business in securities directly with or for other than members of a national securities exchange, has not carried any margin account, credit balance or security for any person other than a general partner and has not been required to file a certified financial statement with any national securities exchange; or
(B)His or its securities business has been limited to acting as broker (agent) for the issuer, said broker-dealer has promptly transmitted to such issuer all funds and promptly delivered to the subscriber all securities received in connection therewith and said broker-dealer has not otherwise held funds or securities for or owed money or securities to customers; or
(C)His or its securities has been limited to buying and selling evidences of indebtedness secured by mortgage, deed of trust, or other lien upon real estate or leasehold interest and said broker-dealer has not carried any margin account, credit balance or security for any securities customer. A broker-dealer or investment adviser who files a report which is not certified shall include in the oath or affirmation required by subsection (2)(b) of this rule a statement of the facts and circumstances relied upon as a basis for exemption from the certification requirements.
(b)Attached to the report shall be an oath or affirmation that, to the best knowledge and belief of the person making such oath or affirmation:
(A)The financial statement and supporting schedules are true and correct; and
(B)Neither the broker-dealer nor investment adviser, nor any partner, officer or director, as the case may be, has any proprietary interest in any account classified solely as that of a customer. The oath or affirmation shall be made before a person duly authorized to administer such oaths or affirmations. If the broker-dealer or investment adviser is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; or if a corporation, by a duly authorized officer.
(3)Extension of Time for Filing Reports. In the event any broker-dealer or investment adviser finds that he cannot file his report for any year within the time specified in section (1) of this rule without undue hardship, he may file with the Director an application for an extension of time to a specified date which shall not be more than 90 days after the date as of which financial condition is reported. The application shall state the reasons for the requested extension and shall contain an agreement to file the report on or before the specified date. The application shall be deemed granted unless the Director, within ten days after receipt thereof, enters an order denying the application.
(4)Exemption. The provisions of section (1) of this rule shall not apply to any broker-dealer registered under the Securities Exchange Act of 1934, provided that such broker-dealer files with, or transmits for filing to, the Director a copy of such report on Form X-17A-5 (or any form in substitution therefor) filed with the Securities and Exchange Commission and verified as provided in section (2) of this rule, not later than the date on which such report is required to be filed with the Securities and Exchange Commission.
Rule 441-195-0050 — Reports by Broker-Dealers and Investment Advisers,