1. (a) Filings made through IARD. Pursuant to Arkansas Code §§ 23-42-208 and 23-43-302 of the Arkansas Securities Act, Arkansas Code § 23-42-101 et seq., the Securities Commissioner designates the IARD to receive and store filings and collect related fees from investment advisers and investment adviser representatives on behalf of the Securities Commissioner.

2. (b) Application for investment registration.

   1. (1) Initial applications. The application for initial registration as an investment adviser pursuant to Arkansas Code § 23-42-302 of the Arkansas Securities Act shall be made by doing the following:

      1. (A) Completing and filing Form ADV, in accordance with the form instructions, along with the fee as set forth in Arkansas Code § 23-42-304(a) of the Arkansas Securities Act, with the IARD; and
      2. (B) Submitting directly to the Securities Commissioner the following:
3. (i)
4. (a) (a) Financial statements.
5. (b) (b) Each investment adviser applying for initial registration must submit an unaudited balance sheet in a form prepared in accordance with generally accepted accounting principles dated within thirty (30) days of the filing.
6. (c) (c) The balance sheet shall be certified as true and accurate by the chief financial officer of the applicant as indicated on the Form ADV or, if there is no chief financial officer, the person executing the Form ADV.

7. (d) (d) If the applicant has been engaged in business for one (1) year or more preceding the filing of the application, the applicant may submit audited financial statements for the last fiscal period along with an unaudited balance sheet in a form acceptable to the Securities Commissioner dated within thirty (30) days of the filing;

   1. (ii)
8. (a) (a) For an investment adviser applicant that maintains a principal place of business in a state other than Arkansas, the requirements of subdivision (b)(1)(B)(i) of this section may be satisfied by filing with the Securities Commissioner a copy of any financial reports required by and filed with the securities commissioner or director in the other state.

9. (b) (b) When deemed necessary, the applicant shall furnish any further information required by the Securities Commissioner;

   1. (iii)
10. (a) (a) A corporate surety bond of fifty thousand dollars ($50,000) covering the applicant and each representative if the applicant has custody of any customer funds or securities, unless the applicant has custody solely as a consequence of its authority to make withdrawals from client accounts to pay its advisory fee and complies with the terms described under 23 CAR § 300-309(b)(2)(C)(i) – (iii).

11. (b) (b) However, no surety bond is required if an applicant maintains its principal place of business in a state other than Arkansas and is the following:

    1. (1) (1) Registered or licensed as an investment adviser in that state; and

    2. (2) (2) Is in compliance with the applicable bonding requirements of that state;

       1. (iv)
12. (a) (a) Copies of investment advisory contracts to be used by the investment adviser.

13. (b) (b) All investment advisory contracts entered into by the investment adviser with any client shall be fair and reasonable and indicate the customer’s risk tolerance, investment objectives, annual income, net worth, and liquid net worth, and shall be signed and dated by all persons having an interest in the account;

    1. (v) Independent Contractor Acknowledgement Form; and

       1. (vi) Any other information not specifically required by the Arkansas Securities Act or this part that the Securities Commissioner may reasonably require including, but not limited to, copies of orders, pleadings, or documents relating to any past or present:
14. (a) (a) Litigation;

15. (b) (b) Regulatory proceedings; and

    1. (c) (c) Customer complaints.
    2. (2) Annual renewal. The application for annual renewal registration as an investment adviser shall be accomplished by filing for renewal with the IARD in accordance with the form instructions along with the fee as set forth in Arkansas Code § 23-42-304(a) of the Arkansas Securities Act.

    3. (3) Updates and amendments.

       1. (A)

          1. (i) Each year, an investment adviser must file an annual updating amendment for Form ADV with IARD within ninety (90) days after the end of the registrant’s fiscal year.
          2. (ii) In addition to the annual updating amendment, any material information that becomes inaccurate must be filed promptly, within thirty (30) days of the event that requires the filing of the amendment, according to the Form ADV general instructions.

       2. (B) Each year, an investment adviser must file directly with the Securities Commissioner, within ninety (90) days after the close of the fiscal year unless written permission to file at some other date is granted by the Securities Commissioner in advance of the date for filing, the following:

          1. (i) Proof of corporate surety bond coverage for the investment adviser and each representative if the investment adviser has custody of any customer funds or securities, unless the custody is solely as a consequence to the authority to make withdrawals from client accounts to pay advisory fees and the investment adviser complies with the terms described under 23 CAR § 300-309(b)(2)(C)(i) – (iii);
          2. (ii) Any amendments to its investment advisory contracts; and
          3. (iii) Annual financial statements as follows:

16. (a)

    1. (1) (a)(1) An investment adviser that has custody of client funds or securities, or that requires prepayment of client fees of more than five hundred dollars ($500) per client and more than six (6) months in advance, shall submit audited financial statements with the Securities Commissioner, if that investment adviser has been in business for twelve (12) months or more.
    2. (2) (2) All audited financial statements shall be prepared in accordance with generally accepted accounting principles and audited by an independent certified public accountant in conformity with generally accepted auditing standards;

17. (b) (b) Notwithstanding subdivision (b)(3)(B)(iii)(a) of this section, an investment adviser that has custody of client funds or securities solely due to its role as the adviser to a private fund or pooled investment vehicle, when all conditions of 23 CAR § 300-309(b)(2)(D) are met, including a proper audit of the fund that is provided to the Securities Commissioner and all investors, shall submit an unaudited balance sheet in a form prepared in accordance with generally accepted accounting principles;

    1. (c) (c) Notwithstanding subdivision (b)(3)(B)(iii)(a) of this section, an investment adviser that has custody of client funds or securities solely as a consequence of its authority to make withdrawals from client accounts to pay its advisory fee and that complies with the terms described under 23 CAR § 300-309(b)(2)(C)(i) – (iii), shall submit an unaudited balance sheet in a form prepared in accordance with generally accepted accounting principles;

       1. (d) (d) An investment adviser that does not have custody of client funds or securities, or that has not been in business for at least twelve (12) months, shall submit an unaudited balance sheet in a form prepared in accordance with generally accepted accounting principles;
18. (e) (e) An unaudited balance sheet filed with the Securities Commissioner shall be certified as true and accurate by the chief financial officer of the registrant as indicated on Form ADV, or if there is no chief financial officer, by the person executing the Form ADV; and

19. (f)

    1. (1) (f)(1) For an investment adviser registrant that maintains a principal place of business in a state other than Arkansas, the requirements of subdivision (b)(3)(B)(iii) of this section may be satisfied by filing with the Securities Commissioner a copy of any financial reports required by and filed with the securities commissioner in the other state.
    2. (2) (2) When deemed necessary, the registrant shall furnish any further information as required by the Securities Commissioner.

    3. (4) Completion of filing. An application for initial or renewal registration is not considered filed for purposes of Arkansas Code § 23-42-302(a) of the Arkansas Securities Act until the required fee and all required sections of Form ADV are received and accepted by the IARD and all other required submissions have been received and accepted by the Securities Commissioner.

       1. (c) Application for investment adviser representative registration.

    4. (1) Initial applications.

       1. (A) The application for initial registration as an investment adviser representative pursuant to Arkansas Code § 23-42-302(a) of the Arkansas Securities Act shall be made by completing Form U4 in accordance with the form instructions and filing Form U4 with the IARD.

       2. (B) The application for initial registration shall also include the following:

          1. (i) The fee required by Arkansas Code § 23-42-304 of the Arkansas Securities Act;
          2. (ii) Compliance with the examination requirements of subsection (f) of this section; and
          3. (iii) Any additional exhibits or information not specifically required by this part but essential to a full presentation of all material facts relating to an applicant’s qualifications or registration.

    5. (2) Annual renewal.

       1. (A) The application for annual renewal of registration for a registered representative shall be made by filing necessary amendments to Form U4 in accordance with the form instructions with the IARD.
       2. (B) The application for annual renewal of registration shall include the fee required by Arkansas Code § 23-42-304 of the Arkansas Securities Act.

    6. (3) Updates and amendments.

       1. (A) The registered representative is under a continuing obligation to update information required by Form U4 as changes occur.
       2. (B) Any amendments to the representative’s Form U4 must be filed promptly with the IARD.
       3. (C) An amendment will be considered promptly filed if received by the IARD within thirty (30) days of the event that requires the filing of the amendment.

    7. (4) Completion of filing. An application for initial or renewal registration is not considered filed for purposes of Arkansas Code § 23-42-302(a) until the required fee and all required submissions have been received and accepted by IARD and all other required submissions have been received and accepted by the Securities Commissioner.

       1. (d) Acceptance of registration.
    8. (1) Promptly upon the filing of an application for registration, the Securities Commissioner will either accept the application or notify the applicant of any information, documents, or other matters necessary to complete the application.
    9. (2) The date of effectiveness of registration shall be governed by Arkansas Code § 23-42-302(f) of the Arkansas Securities Act.
    10. (3) Notification of the effectiveness of registration shall be available to an applicant through IARD.

20. (e) Notice filing requirements for Securities and Exchange Commission registered investment.

    1. (1) Notice filing.

       1. (A) The notice filing for a United States Securities and Exchange Commission registered investment adviser pursuant to Arkansas Code § 23-42-301(c) of the Arkansas Securities Act shall be filed with IARD on an executed Form ADV.
       2. (B) A notice filing of a United States Securities and Exchange Commission registered investment adviser shall be deemed filed when the fee required by Arkansas Code § 23-42-304 of the Arkansas Securities Act and Form ADV are filed with and approved by the United States Securities and Exchange Commission.

    2. (2) Annual renewal.

       1. (A) The annual renewal of the notice filing for a United States Securities and Exchange Commission registered investment adviser pursuant to Arkansas Code § 23-42-301(c) of the Arkansas Securities Act shall be filed with IARD.
       2. (B) The renewal of the notice filing for a United States Securities and Exchange Commission registered investment adviser shall be deemed filed when the fee required by Arkansas Code § 23-42-304 of the Arkansas Securities Act is filed with and approved by the United States Securities and Exchange Commission.
    3. (3) Updates and amendments. A United States Securities and Exchange Commission registered investment adviser must file with IARD, in accordance with the instructions in Form ADV, any amendments to the United States Securities and Exchange Commission registered investment adviser’s Form ADV.

21. (f) Examination of investment adviser representative.

    1. (1) Examination requirements. An individual applying to be registered as an investment adviser representative under the Arkansas Securities Act shall provide the Securities Commissioner with proof of knowledge of the investment advisory business and the Arkansas Securities Act by obtaining a passing score within the two-year period immediately preceding the filing date of the application, on either of the following examinations:

       1. (A) Series 65, Uniform Investment Adviser Law; or
       2. (B) Appropriate FINRA examinations for registration as a broker-dealer agent set out in 23 CAR § 300-302(c)(2), combined with the Series 66, Uniform Combined State Law.

    2. (2) Waivers. The examination requirements under subdivision (f)(1)of this section shall not apply to an individual who currently holds and maintains in good standing one (1) of the following professional designations:

       1. (A) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards;
       2. (B) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;
       3. (C) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;
       4. (D) Chartered Financial Analyst (CFA) awarded by the CFA Institute;
       5. (E) Chartered Investment Counselor (CIC) awarded by the Investment Adviser Association; or
       6. (F) Any other professional designation as the Securities Commissioner may by rule or order accept.
    3. (3) Any individual who has been registered as an investment adviser representative or broker-dealer agent in any state, commonwealth, territory, district, or province in the United States or Canada within the two (2) years immediately preceding the filing of an application and who has at any time in the past met the requirements of subdivision (f)(1) of this section shall not be required to repeat the examinations in order to become registered as an investment adviser representative.
    4. (4) Solely in those cases where circumstances warrant because of the limited time, amount, or nature of the issue or transaction involved, or the specific circumstances unique to the applicant, the Securities Commissioner may, upon petition and good cause shown by the applicant, waive any or all of the examination requirements set forth above.
    5. (5) An applicant who is an agent for a broker-dealer/investment adviser and who is not required by the agent’s home jurisdiction to make a separate filing on CRD as an investment adviser representative but who has previously met the requirements of subdivision (f)(1) of this section shall not be required to repeat the examinations in order to become registered as an investment adviser representative in this state.

22. (g) Brochure requirement.

    1. (1) Unless otherwise provided in this section, an investment adviser registered or required to be registered pursuant to Arkansas Code § 23-42-301 of the Arkansas Securities Act shall furnish each advisory client and prospective advisory client with a written disclosure statement that shall be Form ADV Part 2A, the brochure, Part 2B, the brochure supplement, and any other information as the Securities Commissioner may require.

    2. (2) Delivery.

       1. (A) An investment adviser shall deliver the brochure to an advisory client or prospective advisory client either:

          1. (i) At a time not less than forty-eight (48) hours prior to entering into any investment advisory contract with the prospective client; or
          2. (ii) At the time of entering into the contract so long as the advisory client has a right to terminate the contract without penalty within five (5) business days after entering into the contract.
       2. (B) Delivery of the brochure need not be made in connection with entering into a contract for impersonal advisory services.

    3. (3) Offer to deliver.

       1. (A) An investment adviser shall annually, within one hundred twenty (120) days of its fiscal year-end, without charge, deliver or offer in writing to deliver, upon written request, a brochure to its advisory clients.
       2. (B) The delivery or offer required by subdivision (g)(3)(A) of this section need not be made to advisory clients receiving advisory services solely pursuant to a contract for impersonal advisory services of less than five hundred dollars ($500).
       3. (C) With respect to an advisory client entering into a contract or receiving advisory services pursuant to a contract for impersonal advisory services that requires a fee of five hundred dollars ($500) or more, an offer of the type specified in subdivision (g)(3)(A) of this section shall also be made at the time of entering into an advisory contract.
    4. (4) Receipt of request. Any statement requested in writing by an advisory client or prospective advisory client required by this subsection must be mailed or delivered within seven (7) days of the receipt of the request.
    5. (5) Omission of inapplicable information. If an investment adviser renders substantially different types of investment advisory services to different advisory clients, any information required by Form ADV Part 2A, the brochure, and Part 2B, the brochure supplement, may be omitted from the statement furnished to an advisory client or prospective advisory client if the information is not applicable to the type of investment advisory service or fee that is rendered or charged, or proposed to be rendered or charged, to that client or prospective client.
    6. (6) Other disclosures. Nothing in this section shall relieve any investment adviser from any obligation pursuant to any provision of the Arkansas Securities Act or this part or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this section.

23. (h) Registration exemption for investment advisers to private funds.

    1. (1) Definitions. For purposes of this subsection, the following definitions shall apply:

       1. (A) “3(c)(1) fund” means a qualifying private fund that is eligible for the exclusion from the definition of an investment company under Section 3(c)(1) of the Investment Company Act of 1940, 15 U.S.C. § 80a-3(c)(1);
       2. (B) “Private fund adviser” means an investment adviser who provides advice solely to one (1) or more qualifying private funds;
       3. (C) “Qualifying private fund” means a private fund that meets the definition of a qualifying private fund in Rule 203(m)-1 of the Investment Advisers Act of 1940, 17 C.F.R. § 275.203(m)-1;
       4. (D) “Value of primary residence” means the fair market value of a person’s primary residence, subtracted by the amount of debt secured by the property up to its fair market value; and
       5. (E) “Venture capital fund” means a private fund that meets the definition of a venture capital fund in Rule 203(l)-1 of the Investment Advisers Act of 1940, 17 C.F.R. § 275.203(l)-1, and is a private fund ultimately comprised of only investors that are accredited investors as defined in Rule 501 of Regulation D, promulgated under the Securities Act of 1933, 17 C.F.R. § 230.501.

    2. (2) Exemption for private fund advisers. Subject to the additional requirements of subdivision (h)(3) of this section, a private fund adviser shall be exempt from the registration requirements of Arkansas Code § 23-42-301 if the private fund adviser satisfies each of the following conditions:

       1. (A) Neither the private fund adviser nor any of its advisory affiliates are subject to an event that would disqualify an issuer under Rule 506(d)(1) of United States Securities and Exchange Commission Regulation D, 17 C.F.R. § 230.506(d)(1);

       2. (B)

          1. (i) The private fund adviser files with the state each report and amendment thereto that an exempt reporting adviser is required to file with the United States Securities and Exchange Commission pursuant to United States Securities and Exchange Commission Rule 204-4 of the Investment Advisers Act of 1940, 17 C.F.R. § 275.204-4.
          2. (ii) These filings are to be made electronically through the Investment Adviser Registration Depository (IARD); and
       3. (C) The private fund adviser pays the fees specified in Arkansas Code § 23-42-304(a)(6) of the Arkansas Securities Act.

    3. (3) Additional requirements for private fund advisers to certain 3(c)(1) funds. In order to qualify for the exemption described in subdivision (h)(2) of this section, a private fund adviser that advises at least one 3(c)(1) fund that is not a venture capital fund shall, in addition to satisfying each of the conditions specified in subdivisions (h)(2)(A) — (C) of this section, comply with the following requirements:

       1. (A) The private fund adviser shall advise only those 3(c)(1) funds (other than venture capital funds) whose outstanding securities (other than short-term paper) are beneficially owned entirely by persons who, after deducting the value of the primary residence from the person’s net worth, would each meet the definition of a qualified client in Rule 205-3 of the Investment Advisers Act of 1940, 17 C.F.R. § 275.205-3, at the time the securities are purchased from the issuer;

       2. (B) At the time of purchase, the private fund adviser shall disclose the following in writing to each beneficial owner of a 3(c)(1) fund that is not a venture capital fund:

          1. (i) All services, if any, to be provided to individual beneficial owners;
          2. (ii) All duties, if any, the investment adviser owes to the beneficial owners; and
          3. (iii) Any other material information affecting the rights or responsibilities of the beneficial owners; and
       3. (C) The private fund adviser shall obtain on an annual basis audited financial statements of each 3(c)(1) fund that is not a venture capital fund, and shall deliver a copy of such audited financial statements to each beneficial owner of the fund.
    4. (4) Federal covered investment advisers. If a private fund adviser is registered with the United States Securities and Exchange Commission, the adviser shall not be eligible for this exemption and shall comply with the state notice filing requirements applicable to federal covered investment advisers in Arkansas Code § 23-42-301(c)(1) of the Arkansas Securities Act.
    5. (5) Investment adviser representatives. A person is exempt from the registration requirements of Arkansas Code § 23-42-301(c) of the Arkansas Securities Act if he or she is employed by or associated with an investment adviser that is exempt from registration in this state pursuant to this section and does not otherwise act as an investment adviser representative.

    6. (6) Electronic filing.

       1. (A) The report filings described in subdivision (h)(2)(B) of this section shall be made electronically through the IARD.
       2. (B) A report shall be deemed filed when the report and the fee required by Arkansas Code § 23-42-304(a)(6) of the Arkansas Securities Act are filed and accepted by the IARD on the state's behalf.
    7. (7) Transition. An investment adviser that becomes ineligible for the exemption provided by this subsection must comply with all applicable laws and rules requiring registration or notice filing within ninety (90) days from the date the investment adviser’s eligibility for this exemption ceases.
    8. (8) Waiver authority with respect to statutory disqualification. Subdivision (h)(2)(A) of this section shall not apply upon a showing of good cause and without prejudice to any other action of the Securities Commissioner, if the Securities Commissioner determines that it is not necessary under the circumstances that an exemption be denied.

    9. (9) Grandfathering for investment advisers to 3(c)(1) funds with nonqualified clients. An investment adviser to a 3(c)(1) fund (other than a venture capital fund) that has one (1) or more beneficial owners who are not qualified clients as described in subdivision (c)(1) of this section is eligible for the exemption contained in subdivision (h)(2) of this section if the following conditions are satisfied:

       1. (A) The subject fund existed prior to the effective date of this subsection;
       2. (B) As of the effective date of this subsection, the subject fund ceases to accept beneficial owners who are not qualified clients, as described in subdivision (h)(3)(A) of this section;
       3. (C) The investment adviser discloses in writing the information described in subdivision (h)(3)(B) of this section to all beneficial owners of the fund; and
       4. (D) As of the effective date of this subsection, the investment adviser delivers audited financial statements as required by subdivision (h)(3)(C) of this section.

    10. (10) Requests for records.

        1. (A) Upon a written request from the Securities Commissioner or the Securities Commissioner’s authorized representative, an investment adviser relying on an exemption provided by this subsection shall make available to the Securities Commissioner all records subject to the custody or control of the investment adviser related to any private fund to which the investment adviser provides investment advice.

        2. (B) Failure to comply with this subdivision (h)(10) will result in the loss of the exemption provided by this subsection.

           1. (i) Information security and privacy.

    11. (1) Physical security and cybersecurity policies and procedures.

        1. (A)

           1. (i) Every investment adviser registered or required to be registered shall establish, implement, update, and enforce written physical security and cybersecurity policies and procedures reasonably designed to ensure the confidentiality, integrity, and availability of physical and electronic records and information.
           2. (ii) The policies and procedures must be tailored to the investment adviser’s business model, taking into account the:
24. (a) (a) Size of the firm;

25. (b) (b) Type or types of services provided; and

    1. (c) (c) Number of locations of the investment adviser.

       1. (B) The physical security and cybersecurity policies and procedures must:

          1. (i) Protect against reasonably anticipated threats or hazards to the security or integrity of client records and information;
          2. (ii) Ensure that the investment adviser safeguards confidential client records and information; and
          3. (iii) Protect any records and information the release of which could result in harm or inconvenience to any client.

       2. (C) The physical security and cybersecurity policies and procedures must cover at least five (5) functions:

          1. (i) Identify. Develop the organizational understanding to manage information security risk to:
26. (a) (a) Systems;

27. (b) (b) Assets;

    1. (c) (c) Data; and

       1. (d) (d) Capabilities;

          1. (ii) Protect. Develop and implement the appropriate safeguards to ensure delivery of critical infrastructure services;
          2. (iii) Detect. Develop and implement the appropriate activities to identify the occurrence of an information security event;
          3. (iv) Respond. Develop and implement the appropriate activities to take action regarding a detected information security event; and
          4. (v) Recover. Develop and implement the appropriate activities to maintain plans for resilience and to restore any capabilities or services that were impaired due to an information security event.
       2. (D) Maintenance. The investment adviser must review, no less frequently than annually, and modify as needed these policies and procedures to ensure the adequacy of the security measures and the effectiveness of their implementation.

    2. (2) Privacy policy.

       1. (A) The investment adviser must deliver upon the investment adviser’s engagement by a client, and on an annual basis thereafter, a privacy policy to each client that is reasonably designed to aid in the client’s understanding of how the investment adviser collects and shares, to the extent permitted by state and federal law, nonpublic personal information.
       2. (B) The investment adviser must promptly update and deliver to each client an amended privacy policy if any of the information in the policy becomes inaccurate.

28. (j) Proxy voting policies and procedures.

    1. (1) If an investment adviser registered or required to be registered pursuant to Arkansas Code § 23-42-301 of the Arkansas Securities Act has the authority to vote client securities:

       1. (A)

          1. (i) The investment adviser must establish, maintain, and enforce written proxy voting policies and procedures that are reasonably designed to ensure that the investment adviser votes client securities in the best interest of clients.
          2. (ii) These procedures must include how the investment adviser addresses material conflicts that may arise between its interests and those of the investment adviser’s clients;
       2. (B) Disclose to clients how they may obtain information from the investment adviser about how it voted with respect to their securities; and
       3. (C) Describe to clients the investment adviser’s proxy voting policies and procedures and, upon request, furnish a copy of the policies and procedures to the requesting client.
    2. (2) If the investment adviser does not have the authority to vote client securities then this information must be disclosed to clients.

29. (k) Code of ethics.

    1. (1) An investment adviser registered or required to be registered pursuant to Arkansas Code § 23-42-301 of the Arkansas Securities Act must establish, maintain, and enforce a written code of ethics that, at a minimum, includes:

       1. (A) A standard or standards of business conduct that the investment adviser requires of its supervised persons, which must reflect the investment adviser’s fiduciary obligations and those of its supervised persons;
       2. (B) Provisions requiring the investment adviser’s supervised persons to comply with applicable state and federal securities laws;
       3. (C) Provisions requiring all of the investment adviser’s access persons to report, and the investment adviser to review, their personal securities transactions and holdings periodically as provided below; and
       4. (D) Provisions requiring supervised persons to report any violations of the investment adviser’s code of ethics promptly to its chief compliance officer or, provided the investment adviser’s chief compliance officer also receives reports of all violations, to other persons designated in the investment adviser’s code of ethics.

    2. (2) Holdings reports. The code of ethics must require the investment adviser’s access persons to submit to its chief compliance officer or other persons designated in the investment adviser’s code of ethics a report of the access person’s current securities holdings that meets the following requirements:

       1. (A) Content of holdings reports. Each holdings report must contain, at a minimum:

          1. (i) The title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each reportable security in which the access person has any direct or indirect beneficial ownership;
          2. (ii) The name of any broker, dealer, or bank with which the access person maintains an account in which any securities are held for the access person’s direct or indirect benefit; and
          3. (iii) The date the access person submits the report; and

       2. (B) Timing of holdings reports. The investment adviser’s access person must each submit a holdings report:

          1. (i) No later than ten (10) days after the person becomes an access person, and the information must be current as of a date no more than forty-five (45) days prior to the date the person becomes an access person; and
          2. (ii) At least once each twelve-month period thereafter on a date selected by the investment adviser, and the information must be current as of a date no more than forty-five (45) days prior to the date the report was submitted.
    3. (3) Preapproval of certain investments. The investment adviser’s code of ethics must require its access persons to obtain the investment adviser’s approval before they directly or indirectly acquire beneficial ownership in any security in an initial public offering or in a limited offering.
    4. (4) Small advisers. If the investment adviser has only one (1) access person, it is not required to submit reports to itself or to obtain its own approval for investments in any security in an initial public offering or in a limited offering if the investment adviser maintains records of all of its holdings and transactions that this subsection would otherwise require the investment adviser to report.

    5. (5) Definitions. For purposes of this subsection concerning a code of ethics, the following definitions apply:

       1. (A) “Access person” means:

          1. (i) Any of the investment adviser’s supervised persons:
30. (a) (a) Who has access to nonpublic information regarding any client’s purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any reportable fund; or

31. (b) (b) Who is involved in making securities recommendations to clients, or who has access to such recommendations that are nonpublic; and

    1. (ii) If providing investment advice is the investment adviser’s primary business, all of its directors, officers, and partners are presumed to be access persons;

       1. (B)

          1. (i) “Chief compliance officer” means a supervised person with the authority and resources to develop and enforce the investment adviser’s policies and procedures.
          2. (ii) The individual designated to serve as chief compliance officer must be registered as an investment adviser representative and must have the background and skills appropriate for fulfilling the responsibilities of the position; and

       2. (C)

          1. (i) “Supervised person” means any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.
          2. (ii) The definition includes investment adviser representatives, employees, independent contractors, or other associated persons and supervised personnel, or other person acting on the behalf of the investment adviser.
          3. (l) Material nonpublic information. An investment adviser registered or required to be registered pursuant to Arkansas Code § 23-42-301 of the Arkansas Securities Act must establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material, nonpublic information by the investment adviser or any person associated with the investment adviser.
          4. (m) Investment adviser representative continuing education.

    2. (1) Every investment adviser representative registered under Arkansas Code § 23-42-301 of the Arkansas Securities Act must complete the following investment adviser representative (IAR) continuing education requirements each reporting period:

       1. (A)

          1. (i) IAR ethics and professional responsibility requirements.
          2. (ii) An investment adviser representative must complete six (6) credits of IAR regulatory and ethics content offered by an authorized provider, with at least three (3) hours covering the topic of ethics; and

       2. (B)

          1. (i) IAR products and practice requirement.
          2. (ii) An investment adviser representative must complete six (6) credits of IAR products and practice content offered by an authorized provider.

    3. (2) Agent of FINRA-registered broker-dealer compliance. An investment adviser representative who is also registered as an agent of a FINRA member broker-dealer and who complies with FINRA’s continuing education requirements is considered to be in compliance with subdivision (m)(1)(B) of this section, IAR products and practice requirement, for each applicable reporting period so long as FINRA continuing education content meets all of the following baseline criteria as determined by NASAA:

       1. (A) The continuing education content focuses on compliance, regulatory, ethical, and sales practices standards;
       2. (B) The continuing education content is derived from state and federal investment advisory statutes, rules, and regulations, securities industry rules and regulations, and accepted standards and practices in the financial services industry; and
       3. (C) The continuing education content requires that its participants demonstrate proficiency in the subject matter of the educational materials.

    4. (3) Credentialing organization continuing education compliance. Credits of continuing education completed by an investment adviser representative who was awarded and currently holds a credential that qualifies for an examination waiver under subdivision (f)(2) of this section comply with subdivisions (m)(1)(A) and (B) of this section provided all of the following are true:

       1. (A) The investment adviser representative completes the credits of continuing education as a condition of maintaining the credential for the relevant reporting period;
       2. (B) The credits of continuing education completed during the relevant reporting period by the investment adviser representative are mandatory to maintain the credential; and
       3. (C) The continuing education content provided by the credentialing organization during the relevant reporting period is approved IAR continuing education content.
    5. (4) IAR continuing education reporting. Every investment adviser representative is responsible for ensuring that the authorized provider reports the investment adviser representative’s completion of the applicable IAR continuing education requirements.
    6. (5) No carry forward. An investment adviser representative who completes credits of continuing education in excess of the amount required for the reporting period may not carry forward excess credits to a subsequent reporting period.

    7. (6) Failure to complete or report.

       1. (A) An investment adviser representative who fails to comply with this subsection by the end of a reporting period will renew as “CE inactive” at the close of the calendar year in this state until the investment adviser representative completes and reports all required IAR continuing education credits for all reporting periods as required by this subsection.
       2. (B) An investment adviser who is CE inactive at the close of the next calendar year is not eligible for investment adviser representative registration or renewal of an investment adviser representative registration.
    8. (7) Discretionary waiver by the administrator. The administrator may, in his or her discretion, waive any requirements of this subsection.

    9. (8) Home state. An investment adviser representative registered or required to be registered in this state who is registered as an investment adviser representative in the individual’s home state is considered to be in compliance with this subsection provided that both of the following are true:

       1. (A) The investment adviser representative’s home state has continuing education requirements that are at least as stringent as the NASAA Model Rule on Investment Adviser Representative Education; and
       2. (B) The investment adviser representative is in compliance with the home state’s investment adviser representative continuing education requirements.
    10. (9) Unregistered periods. An investment adviser representative who was previously registered under the Arkansas Securities Act and became unregistered must complete IAR continuing education for all reporting periods that occurred between the time that the investment adviser representative became unregistered and when the person became registered again under the Arkansas Securities Act unless the investment adviser representative takes and passes the examination or receives an examination waiver as required by subsection (f) of this section in connection with the subsequent application for registration.

    11. (10) Definitions. As used in this subsection:

        1. (A) “Approved IAR continuing education content” means the materials, written, oral, or otherwise, that have been approved by NASAA or its designee and which make up the educational program provided to an investment adviser representative under this subsection;
        2. (B) “Authorized provider” means a person that NASAA or its designee has authorized to provide continuing education content required by this subsection;
        3. (C) “Credit” means a unit that has been designated by NASAA or its designee as at least fifty (50) minutes of educational instruction;
        4. (D) “Home state” means the state in which the investment adviser representative has its principal office and place of business;
        5. (E) “IAR ethics and professional responsibility content” means approved IAR continuing education content that addresses an investment adviser representative’s ethical and regulatory obligations;
        6. (F) “IAR products and practice content” means approved IAR continuing education content that addresses an investment adviser representative’s continuing skills and knowledge regarding financial products, investment features, and practices in the investment advisory industry; and

        7. (G)

           1. (i) “Reporting period” means one (1) twelve-month period as determined by NASAA.
           2. (ii) An investment adviser representative’s initial reporting period with this state commences the first day of the first full reporting period after the individual is registered or required to be registered with this state.

Codification Notes: The Securities Act of 1933 is codified at 15 U.S.C. § 77a et seq. The Investment Company Act of 1940 is codified at 15 U.S.C. § 80a-1 et seq. The Investment Advisers Act of 1940 is codified at 15 U.S.C. § 80b-1 et seq.