New York Attorney General Finalizes Rules to "Modernize and Streamline" Securities Filings
The New York State Investor Protection Bureau ("IPB") finalized two rules that will modernize registration and filing requirements by transitioning filings and payments to standardized national systems.
The IPB adopted amendments to 13 NYCRR Part 10 ("Brokers, Dealers and Salespersons") that require dealers to submit electronic notice filings through the North American Securities Administrators Association electronic filing depository system for "federal 'covered securities'" that are sold in New York. The amendments also require certain dealers of "Federal Covered Investment Company Securities," "Federal Regulation D Covered Securities" and "Federal Tier 2 Securities" to file with the IPB's Department of Law (the "Department") Form NF, Form D, and the uniform notice filing for Tier 2, respectively.
The amendments to Part 10 go into effect on December 2, 2020.
The IPB also adopted amendments to 13 NYCRR Part 11 ("Investment Advisory Services") that require investment adviser representatives to register through the Central Registration Depository / Investment Adviser Registration Depository. The amendments clarify that the Department has the authority to reject, suspect, condition or rescind any registration statement or application "in the public interest for good cause." Additionally, the amendments provide:
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an "implementation period" that allows individuals in compliance with the rule as it exists to continue operations until December 2, 2021, so long as they apply for registration under the new requirements by August 31, 2021;
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a new exam waiver category for certain investment adviser representatives with at least two years of experience prior to the effective date of the amendments; and
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an extended compliance period for individuals who are in compliance with the rule as it exists, but do not qualify for an exam waiver.
The amendments also require New York State-registered investment advisers to "take reasonable steps" to ensure the "accredited investor" and "qualified client" status of any client identifying as such, including creating and maintaining verification documents. The amendments to Part 11 go into effect on February 1, 2021.