4666493 Final Rulemaking amending the fingerprint requirement, procedures, and fee rules for agents, broker-dealers, investment advisers and investment adviser representatives

DISTRICT OF COLUMBIA

DEPARTMENT OF INSURANCE, SECURITIES, AND BANKING

 

NOTICE OF FINAL RULEMAKING

 

The Commissioner of the Department of Insurance, Securities, and Banking, pursuant to the authority set forth in Sections 101 through 104 of the DISB Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012 (D.C. Law 19-143; DC Official Code §§ 31-631–634 (2012 Repl.)); Section 203 of the Securities Act of 2000, effective October 26, 2000 (D.C. Law 13-203, D.C. Official Code § 31-5602.03(e) (2012 Repl.)); and Title I of the District of Columbia Administrative Procedure Act, effective October 1, 1968 (82 Stat. 1204; D.C. Official Code § 2-501, et seq.(2012 Repl.));  hereby gives notice of his intent to repeal Section 108, Section 109, Section 161, and Section 166; and add new Sections 127 through 131, in Title 26B (Securities), Chapter 1 (Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives), of the District of Columbia Municipal Regulations (DCMR). 

 

These final rules will amend the fingerprint requirement, procedures and fee rules to require all applicants for licensure or registration as an agent, broker-dealer, investment adviser, or investment adviser representative, to be fingerprinted in order for the Department to obtain local and national criminal background checks; require all applicants to submit fingerprints to the Federal Bureau of Investigation (FBI) for criminal history background checks; increase the processing fee from $25 for all applicants to $50.00 for the required background checks; establish that criminal record information obtained from the FBI are confidential records; authorize and establish procedures that provide the applicants with an opportunity to challenge any final denial or termination based on the information revealed by the criminal background check, including an opportunity to be heard; consolidate provisions related to fees; and clarify certain definitions.

 

A notice of proposed rules was published in the D.C. Register on September 20, 2013 (60 DCR 13196).  No comments on the proposed rules were received.  No substantive changes have been made.  These rules shall become effective on the date of publication of this notice in the D.C. Register.

 

Chapter 1, BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, AND INVESTMENT ADVISER REPRESENTATIVES, of Subtitle B, Title 26, SECURITIES, of the DCMR is amended as follows:

 

Section 108, FINGERPRINTS, is repealed in its entirety and the title replaced with “RESERVED” for future use. 

 

Section 109, FEES, is repealed in its entiretly and the title replaced with “RESERVED” for future use. 

 

Section 161, INVESTMENT ADVISER FEES, is repealed in its entirety and the title replaced with “RESERVED” for future use. 

 

Section 166, FINGERPRINTING REQUIREMENT, is repealed in its entirety and the title replaced with “RESERVED” for future use. 

 

New Sections 127 through 131 are added to read as follows:

 

Section 127, BACKGROUND CHECK REQUIREMENT

 

127.1               Each applicant applying for an initial license or registration; or person going from an inactive status to active status as an agent, broker-dealer, investment adviser, or investment adviser representative, shall obtain a criminal background check and shall be subject to the Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012 (D.C. Law 19-143, D.C. Official Code § 31-631 et seq.).

 

127.2               Criminal background checks shall be conducted in accordance with the DISB Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012, Sections 101 through 104 (D.C. Law 19-143; D.C. Official Code § 31-631 et seq.)

 

127.3               An applicant who has been denied based on information obtained from a criminal background check shall have an opportunity for a hearing as outlined in 26B DCMR § 300 et seq., or pursuant to the Office of Administrative Hearings Rules of Practice and Procedure, 2 DCMR § 2800 et seq., as applicable.

 

128                  CONFIDENTIALITY

 

128.1               All fingerprints and resulting criminal record information obtained by the Commissioner or his or her designee pursuant to D.C. Official Code § 31-632 shall be treated as confidential records by the Department of Insurance, Securities, and Banking.  Confidential records shall:

 

(a)                Not be deemed to be a public record within the meaning of the District of Columbia Administrative Procedure Act of 1976, effective March 25, 1977 (D.C. Law 1-96; D.C. Official Code § 2-531 et seq.);

 

(b)               Be kept confidential by law;

 

(c)                Be maintained as privileged documents; and

 

(d)               Not be subject to discovery or admissible in any private civil action.

 

 

 129                 FINGERPRINT REQUIREMENT  

 

129.1               Each applicant  applying for an initial license, or who is going from inactive to active status  as  an agent, broker-dealer, investment adviser, or investment adviser representative,  shall obtain a criminal background check and shall be subject to the Fingerprint-Based Background Check Authorization Act of 2012, effective June 20, 2012 (D.C. Law 19-143, D.C. Official Code § 31-631 et seq.).

 

129.2               All fingerprinting shall be clearly legible and shall be recorded on the forms as authorized and currently in use by the Federal Bureau of Investigation.

 

130                  FEES

 

130.1               The filing fees shall be as follows:

 

(a)                For initial and renewal licenses of each broker-dealer, the fee shall be two hundred and fifty dollars ($ 250);

 

(b)               For initial and renewal application as an investment adviser, the fee shall be two hundred and fifty dollars ($ 250);

 

(c)                For initial and renewal license of each agent, the fee shall be forty-five dollars ($ 45);

 

(d)               For initial and renewal applications as an investment adviser representative, the fee shall be forty-five dollars ($ 45);

 

(e)                For transfer of an agent's license, the fee shall be forty-five dollars ($ 45);

 

(f)                For transfer of the license of an investment adviser representative, the fee shall be forty-five dollars ($ 45);

 

(g)               For processing of fingerprints, the fee shall be fifty dollars ($ 50).

 

130.2               Fees paid pursuant this section shall be paid directly to the Financial Industry Regulatory Authority (“FINRA”) through the IARD or FINRA Central Registration Depository system. However, any applicant not a member of FINRA shall pay the fees pursuant to this section to the Commissioner, made payable to the "D.C. Treasurer" and shall be sent with the application for a license, or other request for services as set forth in these regulations, to the Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 601, Washington, D.C. 20002.

 

130.3               All payments of fees made directly to the District of Columbia, except for payment of civil penalties under Section 602 (b)(4) of the Act (D.C. Official Code § 31-5606.02(b)(4); D.C. Register at 47 DCR 7877) as set forth below, shall be made by check, money order, United States postal money order, certified check, bank cashier's check, credit card, bank money order, or any manner of electronic transfer of funds acceptable to the Commissioner, payable to the "D.C. Treasurer".

 

130.4               No third party check or money order endorsed over to the "District of Columbia" shall be accepted as payment of any fee.

 

130.5               All payments for civil penalties under Section 602 of the Act (D.C. Official Code § 31-5606.02; D.C. Register at 47 DCR 7877) shall be made by United States postal money order, certified check or bank cashier's check, payable to the "D.C. Treasurer".

 

130.6               Any person whose payment of fees is returned to the Department due to insufficient funds or for a similar reason shall pay to the District the amount of fee owed plus an additional fee in the amount of twenty-five dollars ($ 25.00) for each payment returned.

 

130.7               The Commissioner may require any person to make payment of fees in the form of a United States postal money order, certified check, bank cashier's check or bank money order if any previous payment of fees has been returned to the Department due to insufficient funds or for a similar reason.