PURPOSE: This rule requires broker-dealers to furnish the commissioner notice of impending net capital deficiency, and announces the commissioner, once a year and without prior notice, may require all registered broker-dealers to furnish a net capital report.

1. (1) Broker-dealers registered with the Securities and Exchange Commission and subject to rule 15c3-1 of the Securities Exchange Act of 1934 whose net capital at any time is less than the minimum required by any net capital rule to which a person is subject shall give notice and file such reports with the commissioner as are required to be given and filed with the Securities and Exchange Commission (SEC) under Regulation 17a-11 of the Securities Exchange Act of 1934.

2. (2) Every registered broker-dealer, other than those which effect only transactions in redeemable securities of investment companies registered under the Investment Company Act of 1940 and who do not hold or owe funds or securities for or to any customers except prior to prompt completion of customers’ transactions, who is not registered with the SEC shall make a computation of its net capital and ratio of its aggregate indebtedness to its net capital not less than monthly and shall comply with the following requirements:

   1. (A) No withdrawal of any part of their net worth, including subordinated indebtedness, whether by redemption, retirement, repurchase, repayment or otherwise, shall be permitted or effected that will cause its net capital to be less than one hundred twenty percent (120%) of the amount prescribed in 15 CSR 30-51.050 or its aggregate indebtedness to exceed one thousand five hundred percent (1,500%) of its net capital, without notice to the commissioner as follows (section 409.203(b)):

      1. 1. Every broker-dealer to which this

rule is applicable, whose net capital is less than one hundred twenty percent (120%) the amount prescribed in 15 CSR 30-51.050 or whose aggregate indebtedness exceeds one thousand five hundred percent (1,500%) of its net capital, shall promptly notify the commissioner by telegraph or in writing of the deficiency and its extent; and

1. 2. Every broker-dealer to which this

rule is applicable shall file with the commissioner a report in writing on its net capital and ratio of its aggregate indebtedness to its net capital as of the end of each month in which its net capital is less than one hundred twenty percent (120%) of the amount prescribed in 15 CSR 30-51.050 or its aggregate indebtedness exceeds one thousand two hundred percent (1,200%) of its net capital, promptly after it has knowledge of that fact and in no event later than fifteen (15) days after the end of each such month.

1. (3) The commissioner, in coordination with the securities administrators of other states and in addition to any other reports s/he may require, may require all registered broker-dealers to which section (1) is applicable to file reports on their net capital and aggregate indebtedness as of the end of any month, without prior notice, once during each year (section 409.203(b), RSMo).

AUTHORITY: sections 409.202 and 409.413(a), RSMo 1986.* Original rule filed (6/30/02)* MATT BLUNT and Investment Adviser Representatives June 25, 1968, effective Aug. 1, 1968. Amended: Filed May 21, 1969, effective Aug. 1, 1969. Amended: Filed July 21, 1972, effective Aug. 1, 1972. Amended: Filed Nov. 15, 1974, effective Nov. 25, 1974. Amended: Filed Aug. 11, 1978, effective Feb. 11, 1979.

*Original authority: 409.202, RSMo 1967, amended 1977, 1978, 1986 and 409.413, RSMo 1967.