1. A person who is an investment adviser, a representative of an investment adviser or a federal covered adviser is a fiduciary and has a duty to act primarily for the benefit of the clients of the investment adviser, representative of the investment adviser or federal covered adviser, as applicable.2. An investment adviser, representative of an investment adviser or federal covered adviser shall not violate subsection 1 by engaging in unethical business practices, including, without limitation, the following conduct: (a) If investment supervisory services are provided to a client, recommending to the client the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry relating to the investment objectives, financial situation and needs of the client and any other information known by the investment adviser;(b) Exercising discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within 10 business days after the date of the first transaction placed, pursuant to the oral discretionary authority of the client, unless the discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specified security must be executed, or both;(c) Inducing trading in the account of a client that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account in light of the fact that the investment adviser or a representative of the investment adviser in the situation can directly benefit from the number of securities transactions effected in the account of the client;(d) Placing an order to purchase or sell a security for the account of a client without authority;(e) Placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party trading authorization from the client;(f) Loaning money to a client unless:(1) The investment adviser is a financial institution engaged in the business of loaning funds; or(2) The client is an affiliate of the investment adviser;(g) Borrowing money or securities from a client unless the client is: (2) An affiliate of the investment adviser; or(3) A financial institution engaged in the business of loaning funds;(h) Misrepresenting to an advisory client or prospective advisory client:(1) The qualifications of the investment adviser or any employee of the investment adviser; or(2) The nature of the advisory services being offered or fees to be charged for the service;(i) Omitting or failing to state to an advisory client or prospective advisory client a material fact necessary to make a comprehensive statement regarding: (1) The qualifications of the investment adviser or any employee of the investment adviser; or(2) The nature of the advisory services being offered or fees being charged for the services of the investment adviser;(j) Providing a report or recommendation to any advisory client prepared by someone other than the investment adviser without disclosing that fact to the client;(k) Charging a client an unreasonable advisory fee;(l) Failing to disclose to a client, in writing before rendering advice, any material conflict of interest relating to the investment adviser, or any of its employees, which could reasonably be expected to impair the rendering of unbiased and objective advice, including, without limitation, a conflict of interest relating to: (1) A compensation arrangement connected with advisory services to a client that is in addition to compensation for the advisory services; or(2) Charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the adviser or its employees;(m) Making a guarantee to a client that a specific result will be achieved, regardless of whether the guarantee relates to a gain or loss;(n) Disclosing the identity, affairs or investments of a client unless:(2) The consent of the client is obtained by the investment adviser or a representative of the investment adviser;(o) Taking any action, directly or indirectly, with respect to a security or fund in which the client has a beneficial interest, where the investment adviser has custody or possession of the security or fund and the action of the investment adviser violates section 7;(p) Entering into, extending or renewing an investment advisory contract, unless the contract is:(2) Discloses, in substance: (I) The services to be provided;(II) The term of the contract;(IV) The formula for computing the fee described in sub-subparagraph (III);(V) The amount of the prepaid fee to be returned in the event of contract termination or non-performance;(VI) Whether the contract grants discretionary power to the investment adviser; and(VII) That an assignment of the contract must not be made by the investment adviser without the consent of the parties to the contract;(q) Failing to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information, the use of which is contrary to the provisions of section 204A of the Investment Advisers Act of 1940;(r) Entering into, extending or renewing any advisory contract contrary to the provisions of section 205 of the Investment Advisers Act of 1940;(s) Indicating in an advisory contract any condition, stipulation or provision which binds any person to waive compliance with a provision of chapter 90 of NRS or the Investment Advisers Act of 1940, or any other practice contrary to the provisions of section 215 of the Investment Advisers Act of 1940;(t) Engaging in any act, practice or course of business which is fraudulent, deceptive or manipulative and contrary to the provisions of section 206(4) of the Investment Advisers Act of 1940, notwithstanding the fact that the investment adviser or a representative of the investment adviser is not registered or required to be registered under section 203 of the Investment Advisers Act of 1940;(u) Engaging in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of chapter 90 of NRS or any rule or regulation adopted by the Administrator;(v) Accessing the account of a client by using the unique identifying information of the client; or(w) Failing to establish, maintain and enforce a required policy or procedure.3. The provisions of this section apply to a federal covered adviser:(a) To the extent that the alleged conduct violating subsection 1 is fraudulent or deceptive; and(b) As permitted by section 203A of the Investment Advisers Act of 1940 and the National Securities Markets Improvement Act of 1996, Public Law No. 104-290.4. The provisions of paragraph (r) of subsection 2 apply to all investment advisers and representatives of investment advisers who are registered or required to be registered pursuant to law or regulation, notwithstanding whether the adviser or representative would be exempt from federal registration pursuant to section 203(b) of the Investment Advisers Act of 1940.5. The provisions of paragraph (j) of subsection 2 do not apply to an investment adviser who:(a) Uses published research reports or statistical analyses to render advice; or(b) Orders any such report or analysis in the normal course of providing service.6. As used in this section, "unique identifying information":(a) Includes, without limitation, the username and password used by a client to access the account of the client; and(b) Does not include data aggregation software if:(1) The investment adviser does not know, or have access to, the password of the client used for the client account;(2) There is an agreement between the data aggregation software company and the custodian or online account platform which permits back-door access to the client account; and(3) The data is supplied in a manner in which the investment adviser may only view the information and cannot effectuate any changes to the underlying account of the client.Nev. Admin. Code § 90.Sec. 5
Added to NAC by Sec'y of State by R018-21A, eff. 6/2/2023