Title 3 . Commerce, Community, and Economic Development

Chapter 8 . Land Sales

Section 27. Minimum financial requirements for state investment advisers

3 AAC 08.027. Minimum financial requirements for state investment advisers

(a) A state investment adviser registered or required to be registered under AS 45.55 that is not required to be bonded under 3 AAC 08.025 shall maintain a positive net worth at all times.

(b) A state investment adviser registered or required to be registered under AS 45.55 that does not otherwise have custody of or discretionary authority over client funds or securities requiring a bond under 3 AAC 08.025, but that accepts prepayment of more than $500 per client and six or more months in advance, shall maintain a positive net worth at all times.

(c) As a condition of the right to continue to transact business in this state, if the net worth of a state investment adviser registered or required to be registered under AS 45.55 that is not bonded under 3 AAC 08.025 becomes negative, the state investment adviser shall notify the administrator of that fact by the close of business on the next business day, unless the state investment adviser receives a waiver from the administrator. A state investment adviser registered or required to be registered under AS 45.55 that is required to be bonded under 3 AAC 08.025 shall notify the administrator by the close of business on the next business day if the state investment adviser's net worth is less than the amount of the bond required under 3 AAC 08.025. After transmitting a notice required by this subsection, the state investment adviser shall file with the administrator by the close of business on the next business day a report of the state investment adviser's financial condition, including the following:

(1) a trial balance of all ledger accounts;

(2) a statement of all client funds or securities which are not segregated;

(3) a computation of the aggregate amount of client ledger debit balances; and

(4) a statement as to the number of client accounts.

(d) For purposes of this section, "net worth" means an excess of assets over liabilities, as determined by generally accepted accounting principles; for purposes of this subsection, assets do not include

(1) prepaid expenses, other than items properly classified as current assets under generally accepted accounting principles;

(2) deferred charges;

(3) goodwill;

(4) franchise rights;

(5) organizational expenses;

(6) patents;

(7) copyrights;

(8) marketing rights;

(9) unamortized debt;

(10) discount and expense;

(11) assets of an intangible nature;

(12) a personal residence;

(13) home furnishings;

(14) automobiles;

(15) an individual's personal belongings, if not readily marketable;

(16) a corporation's advances or loans to shareholders and officers; and

(17) a partnership's advances or loans to partners.

(e) The administrator will, in the administrator's discretion, require that a current appraisal be submitted in order to establish the worth of an asset.

(f) A state investment adviser that has its principal place of business is in a state other than this state is exempt from the requirements of this section, if the state investment adviser is registered as an investment adviser in the state in which it has its principal place of business and is in compliance with that state's minimum capital requirements.

History: Eff. 3/24/76, Register 57; am 4/19/2000, Register 154

Authority: AS 45.55.040

AS 45.55.050

AS 45.55.060

AS 45.55.950