N.H. Rev. Stat. Ann. § 421-B:4-411
(a) Financial requirements. Subject to the Securities Exchange Act of 1934, 15 U.S.C. section 78o(h), or the Investment Advisers Act of 1940, 15 U.S.C. section 80b-18a, an order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter, including without limitation the following:
(b) Financial reports.
(c) Recordkeeping. Subject to the Securities Exchange Act of 1934, 15 U.S.C. section 78o(h) or the Investment Advisers Act of 1940, 15 U.S.C. section 80b-18a:
(4) Every investment adviser registered or required to be registered under this chapter shall make and keep true, accurate and current the following books, ledgers, and records:
(A) A journal or journals, including cash receipts and disbursements records, and any other records of original entry forming the basis of entries in any ledger.
(B) General and auxiliary ledgers or other comparable records, reflecting asset, liability, reserve, capital, income, and expense accounts.
(C) A memorandum of each order given by the investment adviser for the purchase or sale of any security or any instruction received by the investment adviser from the client concerning the purchase, sale, receipt, or delivery of a particular security, and of any modification or cancellation of any such order or instruction. Such memoranda shall show the terms and conditions of the order, instruction, modification, or cancellation; shall identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed such order; and shall show the account for which entered, the date of entry, and the bank or broker-dealer by or through whom executed where appropriate. Orders entered pursuant to the exercise of discretionary power shall be so designated.
(D) All checkbooks, bank statements, canceled checks, and cash reconciliations of the investment adviser.
(E) All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such.
(F) All trial balances, financial statements, and internal audit working papers relating to the business of such investment adviser.
(G) Originals of all written communications received and copies of all written communications sent by such investment adviser relating to (A) any recommendation made, or proposed to be made and any advice given or proposed to be given, (B) any receipt, disbursement or delivery of funds or securities, or (C) the placing or execution of any order to purchase or sell any security; provided, however, that (i) the investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for the investment adviser, and (ii) if the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication, or other investment advisory service to more than 10 persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with the copy of such notice, circular or advertisement, a memorandum describing the list and the source thereof.
(H) A list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities, or transactions of any client.
(I) All powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof.
(J) All written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the business of such investment adviser as such.
(K) A copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication that the investment adviser circulates or distributes, directly or indirectly, to 10 or more persons (other than persons connected with such investment adviser) and, if such notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication recommends the purchase or sale of a specific security and does not state the reasons for such recommendation, a memorandum of the investment adviser indicating the reasons therefor.
(L)(i) A record of every transaction in a security in which the investment adviser or any advisory representative of such investment adviser has, or by reason of such transaction, acquires any direct or indirect beneficial ownership, except (i) transactions effected in any account over which neither the investment adviser nor any investment adviser representative has any direct or indirect influence or control; and (ii) transactions in securities which are direct obligations of the United States. Such record shall state the title and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale, or other acquisition or disposition); the price at which it was effected; and the name of the broker-dealer or bank with or through whom the transaction was effected. Such record may also contain a statement declaring that the reporting or recording of any such transaction shall not be construed as an admission that the investment adviser or investment adviser representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded not later than 10 days after the end of the calendar quarter in which the transaction was effected.
(ii) An investment adviser shall not be deemed to have violated subsection (c)(4) because of failure to record securities transactions of any investment adviser representative if the investment adviser establishes that adequate procedures were instituted and reasonable diligence used to obtain promptly reports of all transactions required to be recorded.
(M)(i) Notwithstanding the provisions of subsection (c)(4)(L) where the investment adviser is primarily engaged in a business or businesses other than advising advisory clients, a record shall be maintained of every transaction in a security in which the investment adviser or any investment adviser representative of such investment adviser has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, except (i) transactions effected in any account over which neither the investment adviser nor any investment adviser representative of the investment adviser has any direct or indirect influence or control; and (ii) transactions in securities which are direct obligations of the United States. Such record shall state the title and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale or other acquisition or disposition); the price at which it was effected, and the name of the broker-dealer or bank with or through whom the transaction was effected. Such record may also contain a statement declaring that the reporting or recording of any such transaction shall not be construed as an admission that the investment adviser or investment adviser representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded not later than 10 calendar days after the end of the calendar quarter in which the transaction was effected.
(iii) An investment adviser shall not be deemed to have violated subsection (c)(4)(M) because of failure to record securities transactions of any investment adviser representative if the investment adviser establishes that adequate procedures were instituted and reasonable diligence used to obtain promptly reports of all transactions required to be recorded.
(N)(i)(a) A copy of each written statement and each amendment or revision thereof, given or sent to any client or prospective client of such investment adviser;
(ii) A memorandum describing any legal or disciplinary event listed in Item 8 of Part 2A or Item 3 of Part 2B of Form ADV and presumed to be material, if the event involved the investment adviser or any of its supervised persons and is not disclosed in the written statements described in subsection (c)(13)(A). The memorandum shall explain the investment adviser's determination that the presumption of materiality is overcome, and shall discuss the factors described in those items.
(O) All accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of the performance or rate of return of any or all managed accounts or securities recommendations in any notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication that the investment adviser circulates or distributes, directly or indirectly, to 10 or more persons (other than persons connected with, affiliated with or employed by such investment adviser); provided, however, that, with respect to the performance of managed accounts, the retention of all account statements, if they reflect all debts, credits, and other transactions in a client's account for the period of the statement, and all worksheets necessary to demonstrate the calculation of the performance or rate of return of all managed accounts shall be deemed to satisfy the requirements of this subsection.
(P) Copies, with original signatures of the investment adviser's appropriate signatory and the investment adviser representative, of each initial Form U-4 and each amendment to Disclosure Reporting Pages (DRPs U-4) must be retained by the investment adviser (filing on behalf of the investment adviser representative), and shall be made available for inspection upon request by the secretary of state.
(Q) A separate file on all written complaints of customers and action taken by the investment adviser, if any, or a separate record of such complaints and a clear reference to the files containing the correspondence connected with such complaints as maintained in such office. For purposes of subsection (c)(4)(Q), a "complaint" means any written statement of a customer or any person acting on behalf of a customer alleging a grievance involving the activities of those persons under the control of the investment adviser in connection with the solicitation or execution of any transaction or the disposition of securities or funds of that customer.
(R) A litigation file open to inspection by the secretary of state documenting any criminal or civil actions filed in any state or federal court against the investment adviser's branch office or against any of its personnel with respect to a securities transaction and the disposition of any such litigation.
(5) If an investment adviser subject to RSA 421-B:4-411(c)(3) has custody or possession of securities or funds of any client, the records required to be made and kept under subsection (b), shall also include:
(A) A journal or other record showing all purchases, sales, receipts, and deliveries of securities (including certificate numbers) for such accounts, and all other debits and credits to such accounts.
(B) A separate ledger account for each such client showing all purchases, sales, receipts, and deliveries of securities, the date and price of each such purchase and sale, and all debits and credits.
(C) Copies of confirmations of all transactions effected by or for the account of any such client.
(D) A record for each security in which any such client has a position, which record shall show the name of each such client having any interest in each security, the amount or interest of each such client, and the location of each such security.
(6) With respect to the portfolio being supervised or managed and to the extent that the information is reasonably available to or obtainable by the investment adviser, every investment adviser subject to subsection (c) who renders any investment supervisory or management service to any client shall make and keep true, accurate, and current:
(A) Records showing separately for each such client the securities purchased and sold, and the date, amount, and price of each such purchase and sale.
(B) For each security in which any such client has a current position, information from which the investment adviser can promptly furnish the name of each such client, and the current amount or interest of such client.
(8) (A) All books and records required to be made under subsections (a), (b), (c), (d), (e)(1), (h), and (i), except for the books and records required to be made under subsections (c)(11) and (c)(15), shall be maintained and preserved in (i) an easily accessible place for a period of not less than 5 years from the end of the fiscal year during which the last entry was made on those books and records and (ii) during the first 2 years, an appropriate office of the investment adviser.
(B) Partnership articles and any amendments thereto, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor shall be maintained in the principal office of the investment adviser and preserved until at least 3 years after termination of the enterprise.
(C) Books and records required to be made under subsections (c)(11) and (c)(15) shall be maintained and preserved in an easily accessible place for a period of not less than 5 years, the first 2 years in an appropriate office of the investment adviser, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated, directly or indirectly, any notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication.
(v) With respect to records stored on film, at all times have available for the secretary of state's examination its records pursuant to provisions of this chapter, and facilities for immediate, easily readable projection of the film and for producing easily readable facsimile enlargements.
(B) Pursuant to subsection (i) an investment adviser may maintain and preserve, on computer tape or disk or other computer storage medium, records which, in the ordinary course of the adviser's business, are created by the adviser on electronic media or are received by the adviser solely on electronic media or by electronic data transmission.
(iii) An investment adviser shall deliver the disclosure statement required by this section to an advisory client or prospective advisory client not less than 48 hours prior to entering into any investment advisory contract with such client or prospective client, or at the time of entering into any such contract, if the advisory client has the right to terminate the contract without penalty within 5 business days after entering into the contract.
(B) Any disclosure statement requested in writing by an advisory client pursuant to an offer required by subsection (c)(13)(C) shall be mailed or delivered within 7 days of the receipt of the request.
(C) If the adviser is the general partner of a limited partnership, the manager of a limited liability company, or the trustee of a trust, then for purposes of this section the investment adviser shall treat each of the partnership's limited partners, the company's members, or the trust's beneficial owners as a client. For purposes of subsection (c)(13)(C), a limited liability partnership or limited liability limited partnership is a "limited partnership."
(D) If an investment adviser renders substantially different types of investment advisory services to different advisory clients, the investment adviser may provide them with different disclosure documents or brochures, provided that each client receives all applicable information about services and fees. The brochure delivered to a client may omit any information required by Part 2A of Form ADV if such information is applicable only to a type of investment advisory service or fee that is not rendered or charged, or proposed to be rendered or charged, to that client or prospective client.
(E) The investment adviser shall amend its brochure and any brochure supplements and deliver the amendments to clients promptly when information contained in the brochure or brochure supplements becomes materially inaccurate. The instructions to Part 2 of Form ADV contain updating and delivery instructions that the investment adviser shall follow. An amendment will be considered to be delivered promptly if the amendment is delivered within 30 days of the event that requires the filing of the amendment.
(F) Nothing in this section shall relieve any investment adviser from any obligation pursuant to any provision of this chapter or the rules and regulations thereunder or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this section.
(G)(i) If the investment adviser is a sponsor of a wrap fee program, then the brochure, required to be delivered by subsection (c)(13)(A) to a client or prospective client of the wrap fee program, must be a wrap fee brochure containing all information required by Form ADV. Any additional information in a wrap fee brochure shall be limited to information applicable to wrap fee programs that the investment adviser sponsors.
(iii) A wrap fee brochure does not take the place of any brochure supplements that the investment adviser is required to deliver under subsection (c)(13)(G).
(H) All investment advisers registered or required to be registered under this chapter must deliver to each of their clients their current brochure and all required brochure supplements within 30 days from the date of effectiveness of Part 2 of Form ADV.
(I) For the purpose of subsection (c)(13)(G), the following definitions shall apply:
(iii) Accompanied by an opinion of the accountant as to the report of financial position and by a note stating the principles used to prepare it, the basis of included securities, and any other explanations required for clarity.
(B) The financial statements required by this subsection (c)(14) shall be filed with the secretary of state within 90 days following the end of the investment adviser's fiscal year.
(C) Every investment adviser that has its principal place of business in a state other than this state shall maintain such books or records as required by the state in which the investment adviser maintains its principal place of business, provided that the investment adviser:
(15) Every licensed broker-dealer shall comply with minimum financial requirements and financial reporting requirements as follows:
(A) Each broker-dealer licensed or required to be licensed under this chapter shall comply with Rules 15c3-1, 15c3-2, and 15c-3 under the Securities and Exchange Act of 1934, 17 C.F.R. 240.15c3-1, 17 C.F.R. 240.15c3-2, and 17 C.F.R. 240.15c3-3.
(B) Each broker-dealer licensed or required to be licensed under this chapter shall comply with Rules 17a-11 under the Securities and Exchange Act of 1934, (17 C.F.R. 240.17a-11) and shall file with the secretary of state upon request, or as required by this chapter or orders or rules promulgated thereunder, copies of notices and reports required under Rules 17a-5, 17a-10, and 17a-11 under the Securities and Exchange Act of 1934, 17 C.F.R. 240.17a-5, 17 C.F.R. 240.17a-10, and 17 C.F.R. 240.17a-11.
(C) To the extent that the Securities and Exchange Commission promulgates changes to the rules, described in subsections (c)(15)(A) and (c)(15)(B) broker-dealers in compliance with such rules as amended shall not be subject to enforcement action by the secretary of state for violation of this section to the extent that the violation results solely from the broker-dealer's compliance with the amended rules.
(16) Every licensed investment adviser shall comply with minimum financial requirements and financial reporting requirements as follows:
(A) An investment adviser registered or required to be registered under this chapter who has custody of client funds or securities shall maintain at all times a minimum net worth of $35,000, and every investment adviser licensed or required to be licensed under this chapter who has discretionary authority over client funds or securities, but does not have custody of client funds or securities, shall maintain at all times a minimum net worth of $10,000.
(B) Unless otherwise exempted, as a condition of the right to continue to transact business in this state, every investment adviser registered or required to be registered under this chapter shall by the close of business on the next business day notify the secretary of state if such investment adviser's total worth is less than the minimum required. After transmitting such notice, each investment adviser shall file by the close of business on the next business day, a report with the secretary of state of its financial condition, including the following:
(iv) A statement as to the number of client accounts.
(C) For purposes of subsection (c)(16), the term "net worth," means an excess of assets over liabilities, as determined by generally accepted accounting principles, but shall not include as assets: prepaid expenses (except as to items properly classified as current assets under generally accepted accounting principles), deferred charges, goodwill, franchise rights, organizational expenses, patents, copyrights, marketing rights, unamortized debt discount and expense, all other assets of intangible nature; home, home furnishings, automobiles, and any other personal items not readily marketable in the case of an individual; advances or loans to stockbrokers and officers in the case of a corporation; and advances or loans to partners in the case of a partnership.
(D) The secretary of state may require that a current appraisal be submitted in order to establish the worth of any asset.
(E) For purposes of these rules an investment adviser shall not be deemed to be exercising discretion when it places a trade order with a broker-dealer, pursuant to a third party trading agreement if:
(iii) A third party trading agreement is executed between the client and a broker-dealer which specifically limits the investment adviser's authority in the client's broker-dealer account to the placement of trade orders and deduction of investment adviser fees.
(F) Every investment adviser that has its principal place of business in a state other than this state shall maintain such minimal capital as required by the state in which the investment adviser maintains its principal place of business, provided that the investment adviser is licensed in such state and is in compliance with such state's minimal capital requirements.
(d) Audits or inspections.
(2) For the purpose of ascertaining compliance with law or relationships and transactions between any person and any broker-dealer, investment adviser, or agent or proposed broker-dealer, investment adviser, or agent and in circumstances where the secretary of state has reasonable grounds to believe there is noncompliance with or violation of any law, rule, or order, the secretary of state may, as often and to the extent he or she deems advisable, examine the accounts, records, documents, and transactions pertaining to or affecting the securities affairs or proposed securities affairs and transactions of:
(A) Any person having a contract under which the person enjoys by terms or in fact the exclusive or dominant right to manage or control the broker-dealer, investment adviser, or agent;
(B) Any person in this state engaged in, proposing to be engaged in, holding himself, herself, or itself out as so engaging, or proposing or assisting in the promotion, formation, or financing of a broker-dealer, investment adviser, or agent, or corporation or other group to finance a broker-dealer, investment adviser, or agent or the production of its business;
(C) Any rating bureau or organization;
(D) Any registrant or other person subject to this chapter; or
(E) If adequate information cannot be obtained, any broker-dealer, agent, investment adviser, holding company or person holding the shares of voting stock or proxies of a broker-dealer, investment adviser, or agent as voting trustee or otherwise, for the purpose of controlling the management thereof.
(3) Whenever the secretary of state decides to examine the affairs of any person, he or she shall designate one or more examiners and instruct them as to the scope of the examination. Upon demand, the examiner shall exhibit his or her official credentials to the person under examination.
(A) The secretary of state shall conduct each examination in an expeditious, fair, and impartial manner.
(B) Upon any such examination the secretary of state, or the examiner if specifically so authorized in writing by the secretary of state, shall have power to administer oaths, and the power to examine under oath any individual as to any matter relevant to the affairs under examination or relevant to the examination.
(C) Every person being examined, and all of the officers, attorneys, employees, agents, and representatives of such person shall make freely available to the secretary of state or his or her examiners the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination and shall facilitate the examination.
(D) If the secretary of state or examiner finds any accounts or records to be inadequate, or kept or posted in a manner not in accordance with commonly accepted securities accounting principles, then the secretary of state may employ experts to reconstruct, rewrite, post or balance them at the expense of the person being examined if such person has failed to maintain, complete or correct such records or accounting after the secretary of state or examiner has given him or her written notice and a reasonable opportunity to do so.
(E) Neither the secretary of state nor any examiner shall remove any record, account, document, file or other property of the person being examined from the offices or place of such person except with the written consent of such person in advance of such removal or pursuant to an order of court duly obtained. Subsection (c)(2)(E) shall not be deemed to affect the making and removal of copies or abstracts of any such record, account, document, or file.
(F) Any individual who refuses without just cause to be examined under oath or who willfully obstructs or interferes with the examiners in the exercise of their authority pursuant to subsection (d) shall be guilty of a misdemeanor.
(4) (A) Upon completion of an examination, the examiner in charge shall make a true report thereof which shall comprise only facts appearing upon the books, records or other documents of the person examined, or as ascertained from the sworn testimony of its officers or agents or other individuals examined concerning its affairs, and such conclusions and recommendations as may reasonably be warranted from such facts. The report of examination shall be verified by the oath of the examiner in charge thereof.
(B) Such a report of examination of a broker-dealer or agent so verified shall be prima facie evidence in any delinquency proceeding against the broker-dealer or agent, its officers, employees, or agents upon the facts stated therein, whether or not the report has been filed as provided in subsection (d)(5)(C).
(5) (A) The secretary of state shall deliver a copy of the examination report to the person examined, together with a notice affording such person 20 days or such additional reasonable period as the secretary of state for good cause may allow, within which to review the report and recommend changes therein.
(B) If so requested by the person examined, then, within the period allowed under subsection (d)(5)(A), or if deemed advisable by the secretary of state without such request, the secretary of state shall hold a closed hearing relative to the report and shall not file the report in the department until after such closed hearing and his or her order thereon; except, that the secretary of state may furnish a copy of the report to the governor, secretary of state or state treasurer pending final decision thereon.
(C) If no such closed hearing has been requested or held, then the examination report, with any modifications, that the secretary of state deems proper, shall be accepted by the secretary of state and filed upon expiration of the review period provided for in subsection (d)(5)(A). The report shall in any event be so accepted and filed within 6 months after final hearing thereon.
(D) The secretary of state shall forward to the person examined a copy of the examination report as filed, together with any recommendations or statements relating thereto which he or she deems proper.
(E) The report when so filed in the department shall be admissible in evidence in accordance with rules of the superior court, in any action or proceeding brought by the secretary of state against the person examined, or against its officers, employees, or agents. In any such action or proceeding, the secretary of state or his or her examiners may, however, at any time testify and offer proper evidence as to information secured or matters discovered during the course of an examination, whether or not a written report of the examination has been either made, furnished, or filed in the department.
(j) Requests for Information. The secretary of state may require at any reasonable time and in any reasonable manner from any person or company subject to this chapter:
Source. 2015, 273:1, eff. Jan. 1, 2016.