N.Y. Comp. Codes R. & Regs. tit. 13 § 11.12

Current through Register Vol. 46, No. 43, October 23, 2024

Section 11.12 - Definitions

(a) A single client or a single person for purposes of section 359-eee(a)(5) shall mean

(1) a natural person, and:

(i) Any minor child of the natural person;

(ii) Any relative, spouse, or relative of the spouse of the natural person who has the same principal residence;

(iii) All accounts of which the natural person and/or the persons referred to in this paragraph (a)(1) are the only primary beneficiaries; and

(iv) All trusts of which the natural person and/or the persons referred to in this paragraph (a)(1) are the only primary beneficiaries;

(2)

(i) A corporation, general partnership, limited partnership, limited liability company, trust (other than a trust referred to in subparagraph (a) (1) (iv) of this section), or other legal organization (any of which are referred to hereinafter as a "legal organization") that receives investment advice based on its investment objectives rather than the individual investment objectives of its shareholders, partners, limited partners, members or beneficiaries (any of which are referred to hereinafter as an "owner"); and

(ii) Two (2) or more legal organizations referred to in subparagraph (a) (2) (i) of this section that have identical owners.

(3) Special rules. For purposes of this section:

(i) An owner must be counted as a client if the investment adviser provides investment advisory services to the owner separate and apart from the investment advisory services provided to the legal organization, provided, however, that the determination that an owner is a client will not affect the applicability of this section with regard to any other owner.

(ii) An owner need not be counted as a client of an investment adviser solely because the investment adviser, on behalf of the legal organization, offers, promotes, or sells interests in the legal organization to the owner, or reports periodically to the owners as a group solely with respect to the performance of, or plans for, the legal organization's assets or similar matters;

(iii) A limited partnership or limited liability company is a client of any general partner, managing member or other person acting as investment adviser to the partnership or limited liability company; and

(iv) Any person for whom an investment adviser provides investment advisory services without compensation need not be counted as a client.

(b) Federally covered investment adviser means a person who is registered under section 203 of the Investment Advisers Act of 1940, 15 U.S.C. § 80(B) et seq.

(c) Financial institution shall mean:

(1) a bank as defined under General Business Law § 359-e; or

(2) credit union, or similar institution that is organized or chartered under the laws of a State or of the United States, authorized to receive deposits, and supervised and examined by an official or agency of a State or the United States if its deposits or share accounts are insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law. The term does not include:

(A) an insurance company or other organization primarily engaged in the business of insurance;

(B) a Morris Plan bank; or

(C) an industrial loan company.

(d) General distribution shall mean a distribution to more than five (5) persons in this State at any one time.

(e) Institutional buyer shall mean any of the following, whether acting for itself or for others in a fiduciary capacity:

(1) a depository institution or international banking institution;

(2) an insurance company;

(3) a separate account of an insurance company;

(4) an investment company as defined in the Investment Company Act of 1940 (15 U.S.C.A. § 80a-3);

(5) a broker-dealer registered under the Securities Exchange Act of 1934;

(6) an employee pension, profit-sharing, or benefit plan if the plan has total assets in excess of $ 10,000,000 or its investment decisions are made by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1102(a)), that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this Act, a depository institution, or an insurance company;

(7) a plan established and maintained by a State, a political subdivision of a State, or an agency or instrumentality of a State or a political subdivision of a State for the benefit of its employees, if the plan has total assets in excess of $ 10,000,000 or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in ERISA (29 U.S.C. § 1102(a)), that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this Act, a depository institution, or an insurance company;

(8) a trust, if it has total assets in excess of $ 10,000,000, its trustee is a depository institution, and its participants are exclusively members of plans of the types identified in subparagraph (6) or (7) of this subdivision, regardless of size of assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

(9) an organization described in section 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)), a corporation, Massachusetts or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $ 10,000,000;

(10) a small business investment company licensed by the Small Business Administration under section 301 (c) of the Small Business Investment Act of 1958 (15 U.S.C. section 681(c)) with total assets in excess of $ 10,000,000;

(11) a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. section 80b-2(a)(22)) with total assets in excess of $ 10,000,000;

(12) a federally covered investment adviser acting for its own account;

(13) a qualified institutional buyer as defined in Rule 144A(a)(1) (17 C.F.R. 230.144A(a)(1)) other than Rule 144A(a)(1)(H) (17 C.F.R. 230.144A(a)(1)(H)), adopted under the Securities Act of 1933;

(14) a major United States institutional investor as defined in Rule 15a-6(b)(4)(i) ( 17 C.F.R. 240.15a- 6(b)(4)(i)) adopted under the Securities Exchange Act of 1934;

(f) Investment adviser shall mean any person who, for compensation, engages in the business of advising members of the public, either directly or through publications or writings within or from the State of New York, as to the value of securities or as to the advisability of investing in, purchasing, or selling or holding securities, or who, for compensation and as a part of a regular business issues or promulgates analyses or reports concerning securities to members of the public within or from the State of New York.

(g) Investment adviser representative shall mean a natural person who represents:

(1) an investment adviser or solicitor in performing any of the acts that define an investment adviser under GBL § 359-eee(1)(a) or,

(2) a federally covered investment adviser from a place of business in the State and who satisfies the requirements of Rule 203A-3 (17 CFR § 275.203A-3) adopted under the Investment Advisers Act of 1940.

(h) Investment supervisory service shall mean any person giving continuous advice as to the investment of funds on the basis of individual needs of each client.

(i) Person shall mean a natural person, corporation, company, partnership, trust or association.

(j) Principal shall mean and include every person or entity directly or indirectly controlling an investment adviser or solicitor. Principals are subject to the same registration and examination requirements of investment adviser representatives under this part.

(k) Solicitor shall mean a person who as part of a regular business, engages in the business of providing investment advice to the limited extent that such person receives compensation for introducing a prospective investor or investors to an investment adviser or a federally covered investment adviser, unless such person would be excluded from the definition of investment adviser under an enumerated exception under GBL § 359-eee(1)(a) or § 11.13 of this part. Solicitors are subject to the same registration and examination requirements as investment advisers, and principals and representatives of solicitors are subject to the same registration and examination requirements as investment adviser representatives, under this part.

(l) Supervisor shall mean a natural person who directly supervises one or more natural persons associated with an investment adviser in their capacity as investment adviser representatives.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.12

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Amended New York State Register December 2, 2020/Volume XLII, Issue 48, eff. 2/2/2021