Statutory Authority: 6 Delaware Code,Sections 7313, 7314 and 7325(6 Del.C. 7313, 7314 & 7325)
Delaware Securities Act, Rules 700 and 701
The Delaware Securities Division of the Attorney General’s Office hereby gives notice that it intends to amend Rules 700 and 701 to accomplish the following:
1. Establish minimum competency requirements for new investment advisors and investment adiviser representatives to protect Delaware investors.
2. Efficiently regulate the growing number of investment advisors and investment adivser representatives.
3. Streamline the mechanics of licensing by adopting the uniform qualification exams used by sister states, thereby avoiding duplicative or burdensome licensing processes.
The legal authority for this action is found in section 7325 of the Delaware Securities Act as well as sections 7313 and 7314 of the Act. Any person may submit his or her written comments on the proposed action by sending them to:
Securities Commissioner
Department of Justice
Carvel State Office Building, 5th Floor
820 N. French Street
Wilmington, DE 19801
All comments must be received no later than 30 days after the date of publication of this notice. Final action will be taken upon expiration of that period.
James B. Ropp, Securities Commissioner
Part G. Investment Advisers and Investment Adviser Representatives
§700 Registration of Investment Advisors
(a) A person applying for a license as an investment adviser in Delaware shall make application for such license on Form ADV (Uniform Application for Investment Adviser Registration under the Investment Advisers Act of 1940). Amendments to such application shall also be made on Form ADV.
(b) The applicant shall file the following items with the Commissioner: (i) the application on Form ADV; (ii) the fee required by Section 7314 of the Act; (iii) a balance sheet prepared in accordance with Schedule G of Form ADV; (iv) a list of all investment adviser representatives employed by the investment adviser; (v) such other information as the Commissioner may reasonably require proof of compliance with Rule 710 by filing an Investment Adviser Affidavit available at http://www.state.de.us/securities or by contacting the Division of Securities; and (vi) such other information as the Commissioner may reasonably require.
(c) Registration expires at the end of the calendar year. Any investment adviser may renew its registration by filing with the Commissioner an updated Form ADV, together with the fee required by Section 7314 of the Act and a list of all investment adviser representatives employed by the investment adviser.
(d) Every investment adviser must have at least one investment adviser representative registered with the Commissioner to obtain or to maintain its license as an investment adviser.
§701 Registration of Investment Adviser Representatives
(a) A person applying for a license as an investment adviser representative in Delaware shall make application for such license on Form U-4 (Uniform Application for Securities Industry Registration or Transfer). Amendments to such application shall also be made on Form U-4.
(b) The applicant shall file the following items with the Commissioner: (i) the application on Form U-4; (ii) the fee required by Section 7314 of the Act; (iii) a certification that the applicant has successfully completed the Uniform Investment Adviser Law Examination (Series 65 or 66) administered by the NASD proof of compliance with Rule 710 by filing an Investment Adviser Representative Affidavit available at http://www.state.de.us/securities or by contacting the Division of Securities; and (iv) such other information as the Commissioner may reasonably require. The Commissioner may waive the exam requirements upon good cause shown.
(c) Good cause for waiver of the exam requirement of subsection (b)(iii) of this Rule shall include holding a credential designated by the Commissioner by rule or order, so long as the individual is in good standing with the organization that issued the credential. Such credentials shall include the designation Certified Financial Planner awarded by the Certified Financial Planner Board of Standards.
(d) (c) Registration expires at the end of the calendar year. Any investment adviser representative may renew his or her registration by filing with the Commissioner a letter of intent to renew and the fee required by Section 7314 of the Act.
§ 710 Examination Requirements
(a) Examination Requirements. An individual applying to be registered as an investment adviser or investment adviser representative under the Act shall provide the Commissioner with proof of obtaining a passing score on one of the following examinations:
(1) The Uniform Investment Adviser Law Examination (Series 65 examination); or
(2) The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).
(b) Grandfathering.
(1) Any individual who is registered as an investment adviser or investment adviser representative in any jurisdiction in the United States on the effective date of this Rule shall not be required to satisfy the examination requirements for continued registration, except that the Commissioner may require additional examinations for any individual found to have violated any state or federal securities law.
(2) An individual who has not been registered in any jurisdiction for a period of two (2) years shall be required to comply with the examinations requirements for this Rule.
(c) Waivers. The examination shall not apply to an individual who currently holds one of the following professional designations:
(1) Certified Financial Planner (CFP) awarded by the International Board of Standards and Practices for Certified Financial Planners, Inc.;
(2) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;
(3) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;
(4) Charted Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;
(5) Chartered Investment Counselor (CIC) awarded by the Investment Counsel Association of America, Inc.; or
(6) Such other professional designation as the Commissioner may by rule or order recognize.
(d) The Commissioner reserves the power to waive the exam requirements upon good cause shown.