Section 26-B199. DEFINITIONS

 

188.1The definitions of terms found in Section 101 of the Act (D.C. Register at 47 DCR 7837) and the following words and phrases shall apply to this chapter.

 

Affiliate - shall have the same definition as in Section 2(a)(3) of the federal Investment Company Act of 1940, as now or hereafter amended.

 

Associated Person - shall mean a partner, officer, director, salesman, trader, manager, or any employee handling funds or securities or soliciting transactions or accounts for the broker-dealer.

 

Capital - shall have the same meaning as set forth in SEC Rule 15c3-1 (net capital requirements for brokers and dealers) under the Securities Exchange Act of 1934; and any amendments thereto.

 

Client's independent agent - shall mean any person who agrees to act as an investment advisory client's agent in connection with the contract but does not include the following:

 

(1)The investment adviser relying on this Chapter;

 

(2)An affiliated person of the investment adviser, including an investment adviser representative;

 

(3)An interested person of the investment adviser;

 

(4)A person who receives, directly or indirectly, any compensation in connection with the contract from the investment adviser, an affiliated person of the investment adviser, an affiliated person of an affiliated person of the investment adviser or an interested person of the investment adviser; or

 

(5)A person with any material relationship between himself (or an affiliated person of that person) and the investment adviser (or an affiliated person of the investment adviser) that exists or has existed at any time during the past two years.

 

Commissioner - shall mean the Commissioner of the Department of Insurance, Securities and Banking.

 

Company - shall mean a corporation, partnership, association, joint stock company, trust, limited liability company, limited liability partnership, or any organized group of persons, whether incorporated or not; or any receiver, trustee in a case under Title 11 of the United States Code, or similar official or any liquidating agent for any of the foregoing, in his capacity as such. "Company" shall not include the following:

 

(1)A company required to be registered under the federal Investment Company Act of 1940 but which is not so registered;

 

(2)A private investment company (for purposes of this subparagraph (2), a private investment company is a company which would be defined as an investment company under Section 3(a) of the federal Investment Company Act of 1940 but for the exception from that definition provided by Section 3(c)(1) of that Act);

 

(3)An investment company registered under the federal Investment Company Act of 1940; or

 

(4)A business development company as defined in Section 202(a)(22) of the federal Investment Advisers Act of 1940, unless each of the equity owners of any such company, other than the investment adviser entering into the contract, is a natural person or company within the meaning of paragraph AA09.1(c) of this section.

 

Complaint - shall mean any written statement of a customer of any person acting on behalf of a customer alleging a grievance involving the activities of the broker-dealer or persons under the control of the broker-dealer in connection with the solicitation or execution of any transaction in securities or commodities or the disposition of securities, commodities or funds of that customer.

 

Contract for impersonal advisory services - means any contract relating solely to the provision of investment advisory services:

 

(1)By means of written material or oral statements which do not purport to meet the objectives or needs of specific individuals or accounts; or

 

(2)Through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security; or

 

(3)Any combination of the foregoing services.

 

Director - shall mean the Director of the Securities Bureau of the Department of Insurance and Securities Regulation.

 

Entering into, - in reference to an investment advisory contract, does not include an extension or renewal without material change of any such contract which is in effect immediately prior to such extension or renewal.

 

Found - shall mean determined or ascertained by adjudication or consent in a final SRO proceeding, administrative proceeding, or court action;

 

IARD - shall mean the Investment Adviser Registration Depository, which is operated by NASDR.

 

Interested person - shall mean:

 

(a)Any person of the immediate family of any affiliated person of the investment adviser;

 

(b)Any person who knowingly has any direct or indirect beneficial interest in or who is designated as trustee, executor, or guardian of any legal interest in any security issued by the investment adviser or by a controlling person of the investment adviser if that beneficial or legal interest exceeds:

 

(1)One tenth of one percent of any class of outstanding securities of the investment adviser or a controlling person of the investment adviser; or

 

(2)Five percent (5%) of the total assets of the person seeking to act as the client's independent agent; or

 

(c)Any person or partner or employee of any person who, at any time since the beginning of the last two years, has acted as legal counsel for the investment adviser.

 

Investment advisory contract - shall mean a contract in which one person receives consideration from another person primarily for providing advisory services.

 

Investment company contract - shall mean a contract with an investment company registered under the Investment Company Act of 1940 which meets the requirements of Section 15(c) of that Act.

 

Investment-related - shall mean pertaining to securities, commodities, banking, insurance, real estate [including, but not limited to, citing as or being associated with a dealer, investment company, investment adviser, government securities broker or dealer, municipal securities dealer, bank, savings and loan association, entity or person required to be registered under the Commodity Exchange Act (7 U.S.C. 1 et seq.), or fiduciary];

 

Involved - shall mean acting or aiding, abetting, causing, counseling, commanding, inducing, conspiring, with or failure reasonably to supervise another in doing an act.

 

Management person - shall mean a person with power to exercise, directly or indirectly, a controlling influence over the management or policies of an investment adviser, which is not a natural person or to determine the general investment advice given to clients;

 

Mass transfer - shall mean the change of registration of all or substantially all agents of one broker-dealer to a new broker-dealer, or all or substantially all of the investment adviser representatives of one investment adviser to a new investment adviser as a result of a purchase, merger, or other reorganization.

 

Related person - shall mean another person is any person controlling, controlled by, under common control with, or any employee or employer of, such other person.

 

Time of Entry - shall mean the time when the broker-dealer transmits the order or instruction for execution or, if it is not transmitted, the time when it is received.

 

source

Final Rulemaking published at 40 DCR 6732 (September 24, 1993); as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 4106 (May 11, 2001).