Cal. Code Regs. tit. 10 § 260.231

Current through Register 2024 Notice Reg. No. 44, November 1, 2024

Section 260.231 - Application for Investment Adviser Certificate

The application for a certificate as an investment adviser and all amendments thereto shall be filed as follows:

(a) Initial Application: The application for a certificate as an investment adviser pursuant to Section 25231 of the Code shall be made by completing Form ADV in accordance with the form instructions and by filing the form with IARD for transmission to the Commissioner. The Commissioner may require additional documentation as deemed appropriate as prescribed in subsection (a)(4) of this rule.

(1) Part 2 of Form ADV shall be filed directly with the Commissioner until the form can be filed with IARD.

(2) An applicant shall complete a Customer Authorization of Disclosure of Financial Records, as set forth in subsection (i), and maintain the form in the applicant's books and records as provided in Section 25241 of the Code and Section 260.241.3 of these rules. The applicant shall provide the form to the Commissioner upon request.

(3) The applicant shall file directly with the Commissioner, a Statement of Financial Condition with worksheet that demonstrates compliance with the minimum financial requirements as prescribed in Section 260.237.2, investment advisory contract(s), proof of compliance with the qualification requirements prescribed in Section 260.236, and the federal taxpayer identification number as provided in subdivision (j) of this section, if the applicant is a business entity other than a sole proprietorship.

(4) The Commissioner may request additional information, documentation or detail pertaining to Form ADV to be filed directly with the Commissioner.

(b) Filing fee: The fee for filing an initial application is $125 as prescribed in Section 25608(q). The payment of this fee shall keep the certificate, if granted, in effect during the calendar year during which it is granted. The applicant shall remit the fee directly with IARD in accordance with its procedures for transmission to the Commissioner. Fees are not refundable except pursuant to Government Code Sections 13140- 13144.

(c) Completion of Filing: For the purposes of Section 250.51, an application for a certificate as an investment adviser is not considered filed until the required fee and all required submissions are received by the Commissioner. The filing of Form ADV with IARD does not constitute automatic approval. The applicant shall not consider the application approved until approved by the Commissioner and the approval has been received through IARD.

(d) Amendments to Form ADV: Any amendment to Form ADV shall be filed with IARD in accordance with the requirements of Section 260.241.4.

(e) Annual Renewal: The annual renewal shall consist of the fee as prescribed in Section 25608(q). The renewal fee shall be filed through IARD in accordance with its procedures for transmission to the Commissioner. This fee shall keep the certificate in effect for the next calendar year.

(f) Successions: An application for a certificate as an investment adviser pursuant to Section 25231 shall be filed in accordance with the instructions in this section if a person is succeeding to the business of an investment adviser licensed pursuant to Section 25230, and is not eligible for registration with the Securities and Exchange Commission. Notwithstanding the foregoing, if an investment adviser succeeds to and continues the business of a predecessor investment adviser, and the succession is based solely on a change on the predecessor's date or state of incorporation, form of organization, or composition of a partnership, and there has been no practical change in control or management, the successor may, within 30 days after the succession, amend the Form ADV of the predecessor investment adviser to reflect these changes.

(g) Switching to Securities and Exchange Commission registration: Upon registration with the Securities and Exchange Commission, the investment adviser shall file Form ADV-W with IARD in accordance with instructions in Form ADV-W.

(h) Dually certificated broker-dealers: Subsections (b) and (e) of this rule shall not apply to a broker-dealer licensed under Section 25210 of the Code.

(i) An authorization for the disclosure of financial records shall be made on the following form:

STATE OF CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT CUSTOMER AUTHORIZATION OF DISCLOSURE OF FINANCIAL RECORDS

Pursuant to Corporations Code Section 25241 and Government Code Sections 7470 and 7473, any financial institution, wherever situated, possessing financial records of:

___________________________

Name of (check appropriate designation(s) below)

__________ Broker-Dealer

__________ Investment Adviser

is hereby authorized to disclose to the California Department of Business Oversight records of the above named broker-dealer or investment adviser business whether such records relate to accounts which have been closed, accounts which are currently maintained, or accounts which are hereafter established.

This authorization is effective as of the date of execution and shall remain effective until five years after the expiration or revocation of the above-named broker-dealer or investment adviser license, including renewals of such license.

This authorization may not be revoked.

The terms used in this authorization shall have the definitions contained in the California Right to Financial Privacy Act (Government Code Section 7460 et seq.) and the Corporate Securities Law (Corporations Code Section 25000 et seq.).

The above-named licensee has duly caused this authorization to be signed on its behalf by the undersigned, thereunto duly authorized. Executed on ______________________________, 20 ___ at _______________

____________________

Name of Licensee

______________________________

Licensee's Department of

Business Oversight File Number

By ________________________________________

________________________________________

(Title)

Form QR 500.261

STATE OF CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT

INSTRUCTIONS FOR CUSTOMER AUTHORIZATION OF DISCLOSURE OF FINANCIAL RECORDS

On the reverse is a Customer Authorization of Disclosure of Financial Records form. The Commissioner of Business Oversight is authorized to require such authorization from certain licensees and other persons pursuant to the authority cited in the first paragraph of the form.

The form must be properly executed and submitted with the attached application for license, qualification, registration or other authority.

All information required on the form, except the signature of the person executing the form, is to be typewritten.

If the form requests a Department of Business Oversight file number, the applicant need only provide such number if it is known to the applicant and is the type of file number appropriate for the license, qualification, registration or other authority applied for in the attached application.

If additional authorization forms are needed, they may be obtained from any office of the Department of Business Oversight, or accurate copies of the form may be utilized by applicants.

(j) The following notices required by state and federal law are hereby incorporated as part of any uniform form:

NOTICES REQUIRED UNDER STATE AND FEDERAL LAW INFORMATION PRACTICES ACT OF 1977 (California Civil Code Section 1798.17)

(a) The Department of Business Oversight of the State of California, Securities Regulation Division, is requesting the information specified in the application for registration, qualification, a certificate or a license.

(b) The Chief Administrative Officer, the Department of Business Oversight, 1515 K Street, Suite 200, Sacramento, CA 95814, telephone (916) 445-5541, is responsible for the system of records and shall, upon request, inform individuals regarding the location of the Department of Business Oversight's records and the categories of persons who use the information in the records.

(c) The records are maintained pursuant to the Corporate Securities Law of 1968 (Corporations Code Section 25000, et seq.).

(d) The submission of all items of information is mandatory unless otherwise noted. The Department of Business Oversight is required to collect from all applicants social security numbers under Family Code Section 17520, and social security numbers or federal taxpayer identification numbers under Business and Professions Code Section 494.5. The Privacy Act of 1974 prohibits a state agency from denying an individual any right, benefit or privilege provided by law because of the individual's refusal to disclose the individual's social security account number.

(e) Failure to provide all or any part of the information requested may preclude the Department of Business Oversight from approving the application.

(f) The principal purposes within the Department of Business Oversight for which the information is to be used are to determine whether (1) a license, qualification, registration, certificate or other authority should be accepted, granted, approved, denied, revoked or limited in any way; (2) business entities or individuals licensed or otherwise regulated by the Department of Business Oversight are conducting themselves in accordance with applicable laws; and/or (3) laws administered by the Department of Business Oversight are being or have been violated and whether administrative action, civil action, or referral to appropriate federal, state or local law enforcement or regulatory agencies, or to a self-regulatory organization, as authorized by law, is appropriate.

(g) Any known or foreseeable disclosures of the information pursuant to subdivision (e) or (f) of Civil Code Section 1798.24 may include transfers to other federal, state, or local law enforcement or regulatory agencies, or to a self-regulatory organization, as authorized by law.

(h) Subject to certain exceptions or exemptions, the Information Practices Act grants an individual a right of access to personal information concerning the requesting individual that is maintained by the Department of Business Oversight.

FEDERAL PRIVACY ACT OF 1974 (Public Law 93-579)

In accordance with Section 7 of the Privacy Act of 1974 (found at 5 U.S.C. § 552a note (Disclosure of Social Security Number)), the following is information on whether the disclosure of a social security account number is voluntary or mandatory, by what statutory or other authority such number is solicited, and what uses will be made of it.

(1) The Department of Business Oversight is required to collect from all applicants social security numbers under Family Code Section 17520, and social security numbers and federal taxpayer identification numbers under Business and Professions Code Section 494.5 The Privacy Act of 1974 prohibits a state agency from denying an individual any right, benefit or privilege provided by law because of the individual's refusal to disclose the individual's social security account number.

(2) A social security account number or federal taxpayer identification number is solicited pursuant to one or more of the following authorities: Sections 25210, 25211, 25230, 25230.1, 25231, and 25241 of the Corporations Code; Sections 260.210, 260.211, 260.211.1, 260.231, 260.231.2, 260.236.1, and 260.236.2 of Title 10, California Code of Regulations; Section 17520 of the Family Code; and Section 494.5 of the Business and Professions Code.

(3) For all persons disclosing a social security account number or federal taxpayer identification number, the number is used to match the information to the names on the list provided by the Department of Child Support Services under Family Code Section 17520, and the lists of tax delinquencies provided by the State Board of Equalization and the Franchise Tax Board under Business and Professions Code Section 494.5. The social security number may be used, in addition to other information provided, to conduct a background investigation of the individual by the Department of Justice's Identification and Information Branch or by other federal, state or local law enforcement agencies, or a self-regulatory organization, as authorized by law. The social security number may also be used to respond to requests for this number made by child support agencies.

NOTICE REGARDING TAXPAYER INFORMATION

(4) The State Board of Equalization and the Franchise Tax board are authorized to share taxpayer information with the Department of Business Oversight and in the event the state tax obligation is not paid by a certificate holder after a certificate is issued, the Department of Business Oversight may be required to suspend the certificate.

Cal. Code Regs. Tit. 10, § 260.231

1. Amendment of form filed 5-14-69; effective thirtieth day thereafter (Register 69, No. 20).
2. Amendment filed 7-13-70; effective thirtieth day thereafter (Register 70, No. 29).
3. Amendment filed 3-1-74; effective thirtieth day thereafter (Register 74, No. 9).
4. Amendment of form (Item 6-A) filed 7-18-79; effective thirtieth day thereafter (Register 79, No. 29).
5. Amendment filed 4-27-84; effective thirtieth day thereafter (Register 84, No. 18).
6. Repealer and new section filed 12-19-85 as an emergency; designated effective 1-1-86 (Register 85, No. 51). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 5-1-86.
7. Editorial correction of Part III (2) printing error (Register 86, No. 5).
8. Certificate of Compliance as to 12-19-85 order transmitted to OAL 4-10-86 and filed 5-8-86 (Register 86, No. 19).
9. Change without regulatory effect filed 3-2-89 (Register 89, No. 11).
10. Change without regulatory effect amending first paragraph of Part I and Part III(1) filed 11-20-91 pursuant to section 100, title 1, California Code of Regulations (Register 92, No. 9).
11. Change without regulatory effect amending subsection (b) filed 2-16-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 7).
12. Change without regulatory effect amending subsection (b) filed 9-25-2002 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 39).
13. Repealer and new section filed 3-4-2003; operative 4-3-2003 (Register 2003, No. 10).
14. Amendment of section and NOTE filed 3-6-2007; operative 4-5-2007 (Register 2007, No. 10).
15. Amendment of subsections (a)(3), (i) and (j) and amendment of NOTE filed 1-7-2014; operative 1-7-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 2).

Note: Authority cited Sections 25231, 25610, 25612.3 and 25612.5, Corporations Code. Reference: Sections 31 and 494.5, Business and Professions Code; Section 1798.17, Civil Code; Sections 25230, 25231, 25234, 25236, 25237, 25241, 25242, 25608, 25612.3, 25612.5 and 25613, Corporations Code; Section 17520, Family Code; Sections 7470, 7473, 7490 and 13140- 13144, Government Code; and Section 7 of Public Law 93-579(5 U.S.C. Section 552a note).

1. Amendment of form filed 5-14-69; effective thirtieth day thereafter (Register 69, No. 20).
2. Amendment filed 7-13-70; effective thirtieth day thereafter (Register 70, No. 29).
3. Amendment filed 3-1-74; effective thirtieth day thereafter (Register 74, No. 9).
4. Amendment of form (Item 6-A) filed 7-18-79; effective thirtieth day thereafter (Register 79, No. 29).
5. Amendment filed 4-27-84; effective thirtieth day thereafter (Register 84, No. 18).
6. Repealer and new section filed 12-19-85 as an emergency; designated effective 1-1-86 (Register 85, No. 51). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 5-1-86.
7. Editorial correction of Part III (2) printing error (Register 86, No. 5).
8. Certificate of Compliance as to 12-19-85 order transmitted to OAL 4-10-86 and filed 5-8-86 (Register 86, No. 19).
9. Change without regulatory effect filed 3-2-89 (Register 89, No. 11).
10. Change without regulatory effect amending first paragraph of Part I and Part III(1) filed 11-20-91 pursuant to section 100, title 1, California Code of Regulations (Register 92, No. 9).
11. Change without regulatory effect amending subsection (b) filed 2-16-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 7).
12. Change without regulatory effect amending subsection (b) filed 9-25-2002 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 39).
13. Repealer and new section filed 3-4-2003; operative 4-3-2003 (Register 2003, No. 10).
14. Amendment of section and Note filed 3-6-2007; operative 4-5-2007 (Register 2007, No. 10).
15. Amendment of subsections (a)(3), (i) and (j) and amendment of Note filed 1-7-2014; operative 1-7-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 2).