Chapter 18 NCAC 06A

18 NCAC 06A .1414 DISHONEST/UNETHICAL PRACTICES OF DEALERS AND SALESMEN (a) All dealers and salesmen shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business and shall give particular attention to any conflicts o…

18 NCAC 06A .1415 REGISTRATION OF PARTNERS/EXECUTIVE OFFICERS/DIRECTORS (a) Any partner, executive officer, director, or a person occupying a similar status or performing similar functions who represents a registered dealer in effecting or attempting to effect purchases or sales …

18 NCAC 06A .1416 REPORTING REQUIREMENTS OF DEALERS AND SALESMEN (a) All bankruptcies of dealers or salesmen registered with the Securities Division must be reported to the administrator within 30 days after the filing of the petition for bankruptcy. (b) All arbitrations involvin…

18 NCAC 06A .1417 APPLICATION FOR LIMITED REGISTRATION OF CANADIAN SECURITIES DEALERS AND SALESMEN (a) An applicant for limited registration as a dealer pursuant to G.S. 78A-36.1 (the "Dealer") shall file the following with the Administrator: (1) a representation that the Dealer …

SECTION .1500 - MISCELLANEOUS PROVISIONS 18 NCAC 06A .1501 RESCISSION OFFERS (a) All rescission offers under G.S. 78A-56(g) shall be typed or printed and shall be captioned in bold print or type "Rescission Offer." Offers must set forth in bold type the name of the security with …

18 NCAC 06A .1502 APPLICATION TO EXCHANGE SECURITIES (a) The application and all accompanying documents shall be typed or printed and submitted to the administrator in duplicate. The application shall be signed and dated by the applicant or by a person authorized to act in the ap…

18 NCAC 06A .1503 FORM OF CONSENT TO SERVICE OF PROCESS If the filing of a consent to service of process is required by statute or rule, the consent shall name the Secretary of State as service agent and shall be filed using the Uniform Consent to Service of Process (Form U-2) an…

18 NCAC 06A .1504 REQUEST FOR INTERPRETATIVE OPINIONS: NO-ACTION LETTERS (a) Requests for interpretative opinions and "no-action" letters shall be directed to the administrator and shall contain the following: (1) specific facts surrounding the proposed transaction in letter form…

18 NCAC 06A .1505 LEGENDS REQUIRED (repealed) History Note: Authority G.S. 78A-10(a); 78A-17(9)(a); 78A-49(b); Eff. April 1, 1981; Repealed Eff. January 1, 1984.

18 NCAC 06A .1506 PUBLIC INFORMATION (repealed) History Note: Authority G.S. 78A-46(a); 78A-49(a); 78A-49(g); 78A-50(c); 132-1.1; Eff. April 1, 1981; Amended Eff. January 1, 1984; Repealed Eff. August 1, 1998.

18 NCAC 06A .1507 IMPLICATIONS OF REGISTRATION OR EXEMPTION The filing of an application for registration, the fact an application has been filed, or the fact a security is effectively registered does not constitute a finding that any document filed under this Chapter is true, co…

18 NCAC 06A .1508 FAILURE TO FURNISH INFORMATION Failure to furnish requested information or evidence of compliance and/or the failure of any issuer, dealer, salesman, or interested person to comply with any rule or order: (1) May result in an application for registration being d…

18 NCAC 06A .1509 FORMS (repealed) History Note: Authority G.S. 78A-49; Eff. April 1, 1981; Amended Eff. September 1, 1990; October 1, 1988; January 1, 1984; Temporary Amendment Eff. October 1, 1997; Repealed Eff. August 1, 1998.

18 NCAC 06A .1510 LIMITED LIABILITY COMPANY MEMBERSHIP INTERESTS AS SECURITIES (a) Membership interests, as defined in G.S. 57C-1-03(15), in a limited liability company shall be presumed to be securities within the meaning of G.S. 78A-2(11) in either of the following circumstance…

18 NCAC 06A .1605 REPORTING REQUIREMENT/TERMINATION/QUALIFIED INVEST (repealed) History Note: Filed as a Temporary Rule Eff. January 1, 1988 For a Period of 180 Days to Expire on June 29, 1988; Authority G.S. 105-163.013(a); Eff. March 1, 1988; Repealed Eff. March 1, 1996.

18 NCAC 06A .1606 REPORTING REQUIREMENT/TERMINATION/QUALIFIED INVEST (repealed) History Note: Filed as a Temporary Rule Eff. January 1, 1988 for a Period of 180 Days to Expire on June 29, 1988; Authority G.S. 105-163.013; Expired Eff. March 1, 1988.

18 NCAC 06A .1607 FORMS History Note: Authority G.S. 105-163.013(d); Eff. September 1, 1990; Amended Eff. March 1, 1996; Expired Eff. January 1, 2017 pursuant to G.S. 150B-21.3A.

SECTION .1700 - REGISTRATION OF INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES 18 NCAC 06A .1701 DEFINITIONS For purposes of Chapter 78C of the North Carolina General Statutes and Sections .1700 and .1800 of these Rules, the following definitions shall apply: (1) "Acc…

18 NCAC 06A .1702 APPLICATION FOR INVESTMENT ADVISER REGISTRATION/NOTICE FILING FOR INVESTMENT ADVISER COVERED UNDER FEDERAL LAW (a) The application for initial registration as an investment adviser pursuant to Section 78C-17(a) of the Act shall be made by completing Form ADV (Un…

18 NCAC 06A .1703 APPLICATION/INVESTMENT ADVISER REPRESENTATIVE REGISTRATION (a) The application for initial registration as an investment adviser representative pursuant to Section 78C-17(a) of the Act shall be made by completing Form U-4 (Uniform Application for Securities Indu…

18 NCAC 06A .1704 MINIMUM FINANCIAL REQUIREMENTS FOR INVESTMENT ADVISERS (a) Unless an investment adviser posts a bond pursuant to Rule .1705, an investment adviser registered or required to be registered under the Act who has custody of client funds or securities shall maintain …

18 NCAC 06A .1705 BONDING REQUIREMENTS FOR CERTAIN INVESTMENT ADVISERS (a) Every investment adviser having custody of or discretionary authority over client funds or securities shall be bonded in an amount of not less than thirty-five thousand dollars ($35,000.00) by a bonding co…

18 NCAC 06A .1706 RECORD-KEEPING REQUIREMENTS FOR INVESTMENT ADVISERS (a) Except as otherwise provided in Paragraph (j) of this Rule, every investment adviser registered or required to be registered under the Act shall make and keep true, accurate and current the following books,…

18 NCAC 06A .1707 INVESTMENT ADVISER BROCHURE RULE (a) General Requirements. Unless otherwise provided in this Rule, an investment adviser, registered or required to be registered pursuant to Section 78C-16 of the Act, shall offer and deliver to each advisory client and prospecti…

18 NCAC 06A .1708 FINANCIAL REPORTING REQUIREMENTS FOR INVESTMENT ADVISERS (a) Every registered investment adviser who has custody of client funds or securities or who requires payment of advisory fees six months or more in advance and in excess of five hundred dollars ($500.00) …

18 NCAC 06A .1709 EXAM REQUIRE/INVESTMENT ADVISERS: REPRESENTATIVES (a) Examination Requirements. A person applying to be registered as an investment adviser or investment adviser representative under the Investment Advisers Act shall provide the Administrator with proof that he …

18 NCAC 06A .1710 TERMINATION/WITHDRAWAL/INVESTMENT ADVISER REGISTRATIONS (a) Investment advisers. The application for withdrawal of registration as an investment adviser pursuant to Section 78C-19(e) of the Act shall be completed by following the instructions on Form ADV-W (Noti…

18 NCAC 06A .1711 TRANSFER/INVESTMENT ADVISER REPRESENTATIVE'S REGISTRATION History Note: Authority G.S. 78C-16(a); 78C-16(b); 78C-17(a); 78C-17(b); 78C-20: 78C-30(a); 78C-30(b); Temporary Rule Eff. January 2, 1989 for a Period of 180 Days to Expire on June 30, 1989; Eff. Februar…

18 NCAC 06A .1712 CHANGE OF NAME OF INVESTMENT ADVISER (repealed) History Note: Authority G.S. 78C-17(c); 78C-18(d); 78C-30(a)(b); Temporary Rule Eff. January 2, 1989 for a period of 180 days to expire on June 30, 1989; Eff. February 1, 1989; Temporary Amendment Eff. October 1, 1…

18 NCAC 06A .1713 INVEST ADVISER MERGER/CONSOLIDATION/ACQUISITION/SUCCESSION (a) When there is a merger, consolidation, acquisition, succession, or other similar fundamental change in the ownership of a registered investment adviser, the acquiring or successor entity shall file a…

18 NCAC 06A .1714 REGISTRATION OF PARTNERS/EXECUTIVE OFFICERS/DIRECTORS (repealed) History Note: Authority G.S. 78C-16(a)(b); 78C-17(a); 78C-18(b)(d); 78C-19(a); 78C-30(a)(b); Temporary Rule Eff. January 2, 1989, for a period of 180 days to expire on June 30, 1989; Eff. February …

18 NCAC 06A .1715 INVESTMENT ADVISER REGISTRATION DEPOSITORY (a) Use of IARD. Unless otherwise provided, all investment adviser and investment adviser representative applications, amendments, reports, notices, related filings and fees required to be filed with the Administrator p…

18 NCAC 06A .1716 TRANSITION SCHEDULE FOR CONVERSION TO IARD History Note: Authority G.S. 78C-20; 78C-30; Temporary Adoption Eff. January 14, 2002; Eff. April 1, 2003; Expired Eff. January 1, 2017 pursuant to G.S. 150B-21.3A.

18 NCAC 06A .1717 Cash Payments for Client Solicitations (a) It shall be unlawful for any investment adviser required to be registered pursuant to G.S. 78C-16 to pay a cash fee, directly or indirectly, to a solicitor with respect to solicitation activities unless: (1) The investm…

SECTION .1800 - MISCELLANEOUS PROVISIONS - INVESTMENT ADVISERS 18 NCAC 06A .1801 DISHONEST OR UNETHICAL PRACTICES (a) An investment adviser or an investment adviser covered under federal law is a fiduciary and has a duty to act primarily for the benefit of its clients. The provis…

18 NCAC 06A .1802 CUSTODY/CLIENT FUNDS OR SECURITIES BY INVESTMENT ADVISERS (a) It shall be unlawful for any investment adviser to take or have custody of any securities or funds of any client unless: (1) the investment adviser notifies the administrator in writing that the inves…

18 NCAC 06A .1803 AGENCY CROSS TRANSACTIONS (a) For purposes of this Rule, "agency cross transaction for an advisory client" means a transaction in which a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlling…

18 NCAC 06A .1804 EXEMPTION/SECTION 78C-8(A)(3)/CERTAIN BROKER-DEALERS (a) For purposes of this Rule: (1) "Publicly distributed written materials" means written materials which are distributed to 35 or more persons who pay for those materials; (2) "Publicly made oral statements" …

18 NCAC 06A .1805 PERFORMANCE-BASED COMPENSATION EXEMPTION (a) For purposes of this Rule: (1) "Affiliate" shall have the same definition as in Section 2(a)(3) of the federal Investment Company Act of 1940; (2) "Client's independent agent" means any person who agrees to act as an …

18 NCAC 06A .1806 TRANSACTIONS DEEMED NOT TO BE ASSIGNMENTS For purposes of Section 78C-8(c)(2) of the Act, a transaction which does not result in a change of actual control or management of an investment adviser or investment adviser covered under federal law is not an assignmen…

18 NCAC 06A .1807 REQUEST FOR INTERPRETATIVE OPINIONS (a) Requests for interpretative opinions shall be directed to the administrator and shall contain the following: (1) Specific facts surrounding the proposed transaction in letter form with the identity of the persons involved;…

18 NCAC 06A .1808 SUPERVISION OF INVESTMENT ADVISER REPRESENTATIVES (a) An investment adviser shall be responsible for the acts, practices, and conduct of its investment adviser representatives in connection with advisory services until such time as the investment adviser represe…

18 NCAC 06A .1809 PUBLIC INFORMATION (repealed) History Note: Filed as a Temporary Rule Eff. January 2, 1989, for a period of 180 days to expire on June 30, 1989; Authority G.S. 78C-27(a); 78C-30(a); 78C-30(g); 78C-31(c); 132-1; 132-1.1; Eff. February 1, 1989; Repealed Eff. Augus…

18 NCAC 06A .1810 FORM OF CONSENT TO SERVICE OF PROCESS If the filing of a consent to service of process is required by statute or rule, the consent shall name the Secretary of State as service agent and shall be filed using the Uniform Consent to Service of Process (Form U-2) an…

18 NCAC 06A .1811 FORMS (repealed) History Note: Filed as a Temporary Rule Eff. January 2, 1989, for a period of 180 days to expire on June 30, 1989; Authority G.S. 78C-30(a); 78C-30(b); Eff. February 1, 1989; Amended Eff. September 1, 1990; Temporary Amendment Eff. October 1, 19…

SECTION .2000 – INVEST NC EXEMPTION (CROWDFUNDING) 18 NCAC 06A .2001 PURPOSE The purpose of the rules in this Section is to promote the overall economic health of North Carolina by: (1) facilitating responsible and competitive intrastate capital formation by North Carolina compan…

18 NCAC 06A .2002 SCOPE (a) The Secretary of State establishes and enforces the rules in this Section pursuant to the authority delegated by: (1) the North Carolina PACES Act, S.L. 2016-103, the Invest NC Exemption under G.S. 78A; and (2) G.S. 78A-45(a). (b) The rules in this Sec…

18 NCAC 06A .2003 DEFINITIONS Except as otherwise provided, the following definitions apply to G.S. 78A-17.1 and this Section: (1) The definitions in: (a) G.S. 78A-2; (b) Rule .1104 of this Subchapter; and (c) 18 NCAC 06B .0102. (2) "Bank" means: (a) a banking institution organiz…

18 NCAC 06A .2004 EXEMPTION LIMITATIONS (a) An issuer shall set a target offering amount, a target date, and a minimum offering amount for the securities offering. (b) An issuer conducting a securities offering shall: (1) set a target offering amount of no more than two million d…

18 NCAC 06A .2005 COUNTING SALES Sales by the issuer to its controlling persons, its funding portal, or its registered dealer shall not be included in the calculations of the minimum offering amount or the target offering amount. For purposes of this Rule and Rule .2061, "control…