(a) The Internet communication contains a legend in which it is clearly stated that:

(1)  The broker-dealer or agent in question may only transact business in the District if licensed, excluded, or exempted from broker-dealer or agent licensing requirements; and,
 
(2)  Follow-up, individualized responses to persons in the District by the broker-dealer or agent that involve either effecting or attempting to effect transactions in securities, or rendering of personalized investment advice for compensation, will not be made without compliance with broker-dealer or agent licensing requirements, or an applicable exemption or exclusion; and, 

(b) The Internet communication contains a mechanism which includes, but is not limited to, technical “firewalls” or other implemented policies and procedures, designed reasonably to ensure that before any subsequent, direct communication with prospective customers or clients in the District, the broker-dealer and agent are first licensed in the District or qualify for an exemption or exclusion from the licensing requirement; and,
 
(c) The Internet communication is limited to the dissemination of general information on products and services and does not involve either effecting or attempting to effect transactions in securities, or rendering personalized investment advice for compensation in the District over the Internet; and,
 
(d) With respect to agent Internet communications:

(1)  The broker-dealer affiliation of the agent is prominently disclosed within the Internet communication;
 
(2)  The broker-dealer with whom the agent is associated retains responsibility for reviewing and approving the content of any Internet communication by an agent;
 
(3)  The broker-dealer with whom the agent is associated first authorizes the distribution of information on the particular products and services through the Internet communication; and
 
(4)  When disseminating information through the Internet communication, the agent acts within the scope of the authority granted by the broker-dealer.

 

 

(a) An applicant who at the time of his or her application is filed is a registered representative, registered with the NASDR, the New York Stock Exchange or the American Stock Exchange;

 

(b) An applicant who has made the required score on an appropriate written qualification examination given by the NASDR; and

 

(c) An applicant who has lawfully and actively engaged in the securities business on a full-time basis for the five(5) years immediately preceding the date on which he or she filed his or her application;
1803.3  The Department may, for good cause shown, waive the requirements of § 1803.1.

(a)  Whether the applicant has disciplinary history;
 
(b) Whether the applicant has certified to Department staff persons that the applicant has reviewed the act and this title.
 
(c)  Whether the applicant has substantial long-term and continuous experience as a principal, agent or employee, other than in a clerical capacity, of a broker-dealer or investment adviser. Staff persons also will consider whether the applicant has similar experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business.
 
(d)  Whether the applicant has some continuous experience in a responsible position, other than in a clerical capacity, in the securities, banking, finance or other related business and also possesses educational credentials or professional designations such as one of the following:

(1)  An advanced degree obtained through graduation from a formal degree program of an accredited educational institution with a concentration in economics, finance, mathematics, business, business administration or similar subjects.
 
(2) A license in good standing with the relevant licensing authority as a certified public accountant.

(e)  Whether the applicant is a member of the bar in good standing of any state.
 
(f)  Whether the applicant previously has passed the examination and has remained continuously employed in the securities industry or possesses some employment experience in the securities industry and has not had a significant lapse of this employment as of the date of filing of the application for registration with the Department.

(a) a current, complete, and signed copy of SEC Form BD, or its successor, with  “DC” checked; and
 
(b)  a list of licensed agents associated or to be associated with the successor broker-dealer;

 

 

 

 

1806.2 An individual who has not been licensed in any jurisdiction for a period of two (2) years shall be required to comply with the examination requirements of § 1803.

 

 

1807 Termination and Withdrawal of Registration as an Agent of a Broker-Dealer  

(a)  Uniform Request for Broker Dealer Withdrawal (Form BDW) (Revised 8/99); or
 
(b)  Uniform Termination Notice for Securities Industry Registration (Form U-5) (Revised 8/99).
 

 

 

(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 license of each agent, the fee shall be forty-five dollars ($ 45);

 

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

 

(d) For processing of fingerprints, the fee shall be twenty-five dollars ($ 25); and

 

 

 

 

(a) A detailed original document of financial condition which discloses the nature and the amount of assets and liabilities; and

 

(b)  The net worth of the issuer as of the date within thirty (30) days of the date on which the statement is filed.

(1) The above-mentioned principal has applied or will apply for a license as agent of an issuer, or is licensed as agent of an issuer under the provisions of Section 101 of the Act (D.C. Register at 47 DCR 7837);

 

(2) The above named principal is required to file a surety bond in accordance with the provisions of Section 203 (g)(1)(A) of the Act (D.C. Register at 47 DCR 7847), and § 1810.1;

 

(3) This bond is a continuous obligation and shall cover the full period or periods of licensing of the principal, including initial and renewal licensing;

 

(4) The surety shall not be obligated to this bond unless the principal fails to account for all money and securities coming into its possession for the benefit of investors, or fails to discharge all obligations imposed on it by the Act and the rules adopted thereunder;

 

(5) The liability of the surety for any one or more claims by any one or more persons shall not be cumulative and shall not exceed in the aggregate the sum of this bond;

 

(6) Any person or persons, including the Department, who have cause of action arising under the Act, or any provision of this bond, may bring suit on this bond;

 

(7) In the event that either the principal or the surety, or both, are served with notice of any suit on this bond, the person served with the notice shall immediately give written notice of the filing of the action to the Department of Insurance and Securities Regulation of the District of Columbia; and

 

(8) No suit may be maintained to enforce any liability on the bond unless brought within two years after the sale or other act upon which the liability is based.

 

 

 

 

(a) Whether the accountant reviewed the procedures followed for safeguarding the securities of customers;

 

(b) Whether, with respect to significant items in the report covered by the certificate, any auditing procedures generally recognized as normal have been omitted, including a specific designation of the procedures and of the reasons for their omission;

 

(c) Whether the audit was made in accordance with generally acceptable auditing standards applicable in the circumstances; and

 

(d)  Whether the audit omitted any procedure considered necessary by the accountant under the circumstances of the particular case.

 

 

1816-1817 Reserved
 

 

 

1818 Financial and Disciplinary Information that Broker-Dealers Must Disclose to Clients

(a) A financial condition of the broker-dealer that is reasonably likely to impair the ability of the broker-dealer to meet contractual commitments to clients. 

 

(b) A legal or disciplinary event that is material to an evaluation of the broker-dealer’s or their representative’s integrity or ability to meet contractual commitments to clients.
 
(c) A failure to comply with any arbitration award issued in connection with doing business as a broker-dealer or agent.

(a) A criminal or civil action in a court of competent jurisdiction in which the person:

(1) Was convicted or pleaded guilty or nolo contendere (“no contest”) to a felony or misdemeanor, or is the named subject of a pending criminal proceeding (any of the foregoing referred to hereafter as “action”), and such action involved: an investment related business; fraud, false statements, or omissions; wrongful taking of property; or bribery, forgery, counterfeiting, or extortion;
 
(2) Was found to have been involved in a violation of an investment-related statute or rule; or
 
(3) Was the subject of any order, judgment, or decree permanently or temporarily enjoining the person or otherwise limiting the person from engaging in any investment related activity.

(b) An administrative proceeding before the SEC, the Department, or any federal or state agency (any of the foregoing being referred to hereafter as “agency”) in which the person:

(1) Was found to have caused an investment related business to lose its authorization to do business; or
 
(2) Was found to have been involved in a violation of an investment-related statute or rule, or was the subject of an order by the agency denying, suspending, or revoking the authorization to act in, or barring or suspending the person’s association with, an investment-related business; or otherwise significantly limiting the person’s investment-related activities.

(c) A Self Regulatory Organization (“SRO”) proceeding in which the person:

(1) Was found to have caused an investment-related business to lose its authorization to do business; or
 
(2) Was found to have been in violation of the SRO’s rules and was the subject of an order by the SRO barring or suspending the person from membership or from association with other members, or expelling the person from membership; fining the person more than $2,500; or otherwise significantly limiting the person’s investment-related activities.

1818.4 For purposes of calculating the 10-year period during which events are presumed to be material under these regulations, the date of the reportable event shall be the date on which the final order, judgment, or decree was entered, or the date on which any rights of appeal from preliminary orders, judgments, or decrees expired.

 

 

1819 Practices Deemed Unethical or Dishonest For Broker-Dealers and Agents

(a)  Engaging in an unreasonable and unjustifiable delay in the delivery of securities purchased by any of its customers or in the payment, upon request, of free credit balances reflecting completed transactions of any of its customers, or failing to notify customers of their right to receive possession of any certificate of ownership to which they are entitled;
 
(b)  Inducing trading in a customer’s account that is excessive in size or frequency in view of the customer’s investment objective, level of sophistication in investments, and financial situation and needs;
 
(c)  Recommending a transaction without reasonable grounds to believe that such transaction is suitable for the customer in light of the customer’s investment objective, level of sophistication in investments, financial situation and needs, and any other information material to the investment;
 
(d)  Executing a transaction on behalf of a customer without prior authorization to do so;
 
(e)  Exercising any discretionary power in effecting a transaction for a customer’s account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time and/or price for the execution of orders;
 
(f)  Executing any transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account;
 
(g)  Failing to segregate and identify customer’s free securities or securities held in safekeeping;
 
(h)  Hypothecating a customer’s securities without having a lien thereon unless the broker-dealer secures from the customer a properly executed written consent promptly after the initial transaction, except as permitted by SEC regulations;
 
(i)  Entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security or receiving an unreasonable commission or profit (commissions or profits equal to 10% or more of the price of a security are presumed to be unreasonable);
 
(j)  Failing to furnish to a customer purchasing securities in an offering, no later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which, together with the preliminary prospectus, includes all information set forth in the final prospectus;
 
(k)  Charging unreasonable and inequitable fees for services performed, including miscellaneous services such as collection of monies due for principal, dividends or interest, exchange or transfer of securities, appraisals, safekeeping, or custody of securities and other services related to its securities business;
 
(l)  Charging any fee for which no notice is given to the customer, and consent obtained, prior to the event incurring the fee;
 
(m)  Offering to buy from or sell to any person any security at a stated price, unless such broker-dealer is prepared to purchase or sell, as the case may be, at such price and under such conditions as are stated at the time of such offer to buy or sell;
 
(n)  Representing that a security is being offered to a customer “at the market” or a price relevant to the market price, unless such broker-dealer knows or has reasonable grounds to believe that a market for such security exists other than that made, created or controlled by such broker-dealer, or by any person for whom he is acting or with whom he is associated in such distribution, or any person controlled by, controlling or under common control with such broker-dealer;
 
(o)  Effecting any transaction in, or inducing the purchase or sale of, any security by means of any manipulative or deceptive device, practice, plan, program, design or contrivance, that may include but not be limited to:

(1)  Effecting any transaction in a security that involves no change in the beneficial ownership thereof;
 
(2)  Entering an order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same size, at substantially the same time and substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or false or misleading appearance with respect to the market for the security; provided, however, nothing in this subparagraph shall prohibit a broker-dealer from entering bona fide agency cross transactions for its customers; or
 
(3)  Effecting, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in such security or raising or depressing the price of such security for the purpose of inducing the purchase or sale of such security by others; 

(p)  Guaranteeing a customer against loss in any securities account of such customer carried by the broker-dealer or in any securities transaction effected by the broker-dealer with or for such customer;
 
(q)  Publishing or circulating or causing to be published or circulated, any notice, circular, advertisement, newspaper article, investment service, or communication of any kind that purports to report any transaction as a purchase or sale of any security, unless such broker-dealer believes that such transaction was a bona fide purchase or sale of such security; or that purports to quote the bid price or asked price for any security, unless such broker-dealer believes that such quotation represents a bona-fide bid for, or offer of, such security;
 
(r)  Using any advertising or sales presentation in such a fashion as to be deceptive or misleading. An example of such practice would be a distribution of any nonfactual data, material, or presentation based on conjecture, unfounded or unrealistic claims or assertions in a brochure, flyer, or display by words, pictures, graphs or otherwise designed to supplement, detract from, supersede or defeat the purpose or effect of any prospectus or disclosure;
 
(s)  Failing to disclose that the broker-dealer is controlled by, controlling, affiliated with or under common control with the issuer of any security before entering into any contract with or for a customer for the purchase or sale of such security, and, if such disclosure is not made in writing, it shall be supplemented by the giving or sending of written disclosure at or before the completion of the transaction;
 
(t)  Failing to make a bona fide public offering of all the securities allotted to a broker-dealer for distribution, whether acquired as an underwriter or a selling group member, or from a member participating in the distribution as an underwriter or selling group member;
 
(u)  Failing or refusing to furnish a customer, upon reasonable request, information to which he is entitled, including: 

(1)  with respect to a security recommended by the broker-dealer, material information that is reasonably available; and
 
(2)  a written response to any written request or complaint;

(v)  Making a recommendation that one customer buy a particular security and that another customer sell that security, where the broker-dealer acts as a principal and such recommendations are made within a reasonably contemporaneous time period, unless individual suitability considerations or preferences justify the different recommendations;
 
(w)  Where the broker-dealer holds itself out as a market maker in a particular security, or publicly quotes bid prices in a particular security, failing to buy that security from a customer promptly upon the customer’s request to sell;
 
(x)  Recommending a security to its customers without conducting a reasonable inquiry into the risks of that investment or communicating those risks to its agents and its customers in a reasonably detailed manner and with such emphasis as is necessary to make the disclosure meaningful;
 
(y)  Representing itself as a financial or investment planner, consultant, or adviser, when the representation does not fairly describe the nature of the services offered, the qualifications of the person offering the services, and the method of compensation for the services;
 
(z)  Falsifying any record or document or failing to create or maintain any required record or documents;
 
(aa) A broker-dealer shall not enter into any contract with a customer if the contract contains any condition, stipulation or provision binding the customer to waive any rights under the Act, or any rule or order thereunder. Any such condition, stipulation or provision is void;

 

(bb)  Violating any standard in the conduct rules promulgated by the NASD; or
 
(cc)  Aiding or abetting any of the conduct listed above.

(a)  Engaging in the practice of lending or borrowing money or securities from a customer, or acting as a custodian for money, securities or an executed stock power of a customer;
 
(b)  Effecting securities transactions not recorded on the regular books or records of the broker-dealer that the agent represents, unless the transactions are authorized in writing by the broker-dealer prior to execution of the transaction;
 
(c)  Establishing or maintaining an account containing fictitious information in order to execute transactions that would otherwise be prohibited;
 
(d)  Sharing directly or indirectly in profits or losses in the account of any customer without the written authorization of the customer and the broker-dealer that the agent represents;
 
(e)  Dividing or otherwise splitting the agent’s commissions, profits or other compensation from the purchase or sale of securities with any person not also registered as an agent for the same broker-dealer or for a broker-dealer under direct or indirect common control;
 
(f)  Where a recommendation is made that an unsophisticated customer purchase an over-the-counter security that:

(1)  trades sporadically or in small volume; and
 
(2)  is not traded on any United States securities exchange (excluding the Spokane Exchange) or on the NASDAQ National Market System, failing to inform the customer that he may not be able to find a buyer if the customer would subsequently want to sell the security; 

(g)  Where a recommendation is made to purchase an over-the-counter security in which the asked price is greater than the bid by 25 percent or more, failing to inform the customer of the bid and the asked prices and of the significance of the spread between them should the customer wish to resell the security;
 
(h)  Using excessively aggressive or high pressure sales tactics, such as repeatedly telephoning and offering securities to individuals who have expressed disinterest and have requested that the calls cease, or using profane or abusive language, or calling prospective customers at home at an unreasonable hour at night or in the morning;
 
(i)  Conducting or facilitating securities transactions outside the scope of the agent’s relationship with his broker-dealer employer unless he has provided prompt written notice to his employer;
 
(j)  Acting or registering as an agent of more than one broker-dealer without giving written notification to and receiving written permission from all such broker-dealers; or
 
(k)  Holding himself out as an objective investment adviser or financial consultant without fully disclosing his financial interest in a recommended securities transaction at the time the recommendation is made;
 
(l)  Engaging in any of the conduct specified in § 1819.2; or
 
(m)  Aiding or abetting any of the conduct listed in this subsection or § 1819.2.

(a)  In connection with the offer or sale of investment company shares, failing to adequately disclose to a customer all sales charges, including asset based and contingent deferred sales charges, which may be imposed with respect to the purchase, retention or redemption of such shares;
 
(b)  In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, that the shares are sold without a commission, are “no load” or have “no sales charge” if there is associated with the purchase of the shares a front-end loan, a contingent deferred sales load, a SEC Rule 12b-1 fee or a service fee which exceeds .25 percent of average net fund assets per year, or in the case of closed-end investment company shares, underwriting fees, commissions or other offering expenses;
 
(c)  In connection with the offer or sale of investment company shares, failing to disclose to a customer any available sales charge discount on the purchase of shares in dollar amounts at or above a breakpoint or the availability of a letter of intent feature which will reduce the sales charges to the customer;
 
(d)  In connection with the offer or sale of investment company shares, recommending to a customer the purchase of a specific class of investment company shares in connection with a multi-class sales charge or fee arrangement without reasonable grounds to believe that the sales charge or fee arrangement associated with such class of shares is suitable and appropriate based on the customer’s investment objectives, financial situation and other securities holdings, and the associated transaction or other fees;
 
(e)  In connection with the offer or sale of investment company shares, recommending to a customer the purchase of investment company shares which results in the customer simultaneously holding shares in different investment company portfolios having similar investment objectives and policies without reasonable grounds to believe that such recommendation is suitable and appropriate based on the customer’s investment objectives, financial situation and other securities holdings, and any associated transaction charges or other fees;
 
(f)  In connection with the offer or sale of investment company shares, recommending to a customer the liquidation or redemption of investment company shares for the purpose of purchasing shares in a different investment company portfolio having similar investment objectives and policies without reasonable grounds to believe that such recommendation is suitable and appropriate based on the customer’s investment objectives, financial situation and other securities holdings and any associated transaction charges or other fees;
 
(g)  In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, the fund’s current yield or income without disclosing the fund’s most recent average annual total return, calculated in a manner prescribed in SEC Form N-1A, for one, five and ten year periods and fully explaining the difference between current yield and total return; provided, however, that if the fund’s registration statement under the Securities Act of 1933 has been in effect for less than one, five, or ten years, the time during which the registration statement was in effect shall be substituted for the periods otherwise prescribed;
 
(h)  In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, that the investment performance of an investment company portfolio is comparable to that of a savings account, certificate of deposit or other bank deposit account without disclosing to the customer that the shares are not insured or otherwise guaranteed by the Federal Deposit Insurance Corporation or any other government agency and the relevant differences regarding risk, guarantees, fluctuation of principal and/or return, and any other factors which are necessary to ensure that such comparisons are fair, complete and not misleading;
 
(i)  In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, the existence of insurance, credit quality, guarantees or similar features regarding securities held, or proposed to be held, in the investment company’s portfolio without disclosing to the customer other kinds of relevant investment risks, including but not limited to, interest rate, market, political, liquidity, or currency exchange risks, which may adversely affect investment performance and result in loss and/or fluctuation of principal notwithstanding the creditworthiness of such portfolio securities;
 
(j)  In connection with the offer or sale of investment company shares, stating or implying to a customer, either orally or in writing, (i) that the purchase of such shares shortly before an ex-dividend date is advantageous to such customer unless there are specific, clearly described tax or other advantages to the customer, or (ii) that a distribution of long-term capital gains by an investment company is part of the income yield from an investment in such shares;
 
(k)  In connection with the offer or sale of investment company shares, making representations to a customer, either orally or in writing, that the broker-dealer or agent knows or has reason to know are based
in whole or in part on information contained in dealer-use-only material which has not been approved for public distribution; or
 
(l)  Aiding or abetting any of the conduct listed above.

(a) The purchases and sales of securities;

 

(b) The receipts and deliveries of securities (including certificate numbers);

 

(c)  The disbursements of cash and all other debits and credits;

 

(d)  The account for which each transaction was effected;

 

(e)  The name and amount of securities;

 

(f)  The unit and aggregate purchase of the sale price, if any; and

 

(g)  The trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered;

(a) All purchases, sales, and receipts;

 

(b) All deliveries of securities and commodities for the account; and

 

(c) All other debits and credits to the account.

(a)  Securities in transfer;

 

(b)  Dividends and interest received;

 

(c)  Securities borrowed and securities loaned;

 

(d) Monies borrowed and monies loaned (together with a record of the collateral and any substitutions in the collateral); and

 

(e)  Securities failed to receive and failed to deliver.

(a)  The terms and conditions of the order or instructions;

 

(b)  Any modification or cancellation;

 

(c)  The account for which entered;

 

(d)  The time of entry;

 

(e)  The price at which executed; and

 

(f)  To the extent feasible, the time of execution or cancellation.

 

 

(a) His or her name, address, social security number, and the starting date of his or her employment or other association with the broker-dealer;

 

(b) His or her date of birth;

 

(c) The educational institutions attended by him or her and whether or not he or she graduated therefrom;

 

(d) A complete, consecutive statement of all his or her business connections for at least the preceding ten (10) years, including his or her reason for leaving each prior employment, and whether the employment was part-time or full-time;

 

(e) A record of any denial of membership or registration, and of any disciplinary action taken, or sanction imposed, upon him or her by any federal or state agency, or by any national securities exchange or national securities association, including any finding that he or she was a cause of any disciplinary action or had violated any law;

 

(f) A record of any denial, suspension, expulsion or revocation of membership or registration of any broker-dealer with which he or she was associated in any capacity when the action was taken;

 

(g) A record of any permanent or temporary injunction entered against him or her or any broker-dealer with which he or her was associated in any capacity at the time the injunction was entered;

 

(h) A record of any arrests, indictments or convictions for any felony or any misdemeanor, except minor traffic offenses, of which he or she has been the subject;

 

(i)  A record of any other name or names by which he or she has been known or which he or she has used.  Provided, that if the associated person has been registered as a registered representative of the broker-dealer with, or his or her employment has been approved by, the NASD, or the American Stock Exchange, the New York Stock Exchange, the Pacific Coast Stock Exchange, or the Philadelphia Stock Exchange, then retention of a full, correct, and complete copy of any and all application for the registration or approval shall be considered to satisfy the requirements of this subsection.

 

 

(a) All records required to be made or maintained pursuant to §§ 1820.5, 1820.7 through 1820.15, 1822.3, and 1822.4;

 

(b)  All check books, bank statements, cancelled checks and cash reconciliations; 

 

(c)  All bills receivable or payable (or copies) paid or unpaid, relating to the business of the broker-dealer;

 

(d) All trial balances, computations of minimum net capital and ratio or aggregate indebtedness to net capital, financial statements, branch office reconciliations and internal audit working papers, relating to the business of the broker-dealer as referred to in §§ 1820.16 and 1820.17;

 

(e) Originals of all communications received and copies of all communications sent by the broker-dealer (including inter-office memoranda and communications) to his or her business;

 

(f) All guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority given in respect of any account, and copies of resolutions empowering an agent to act on behalf of a corporation; and

 

(g)  All written agreements (or copies) entered into by the broker-dealer relating to his or her business, including agreements with respect to any account.

 

 

 

 

 

 

 

 

(a) A copy of its complete, most recent, Form ADV, including all parts and schedules, on file with the U.S. Securities and Exchange Commission;
 
(b) A non-refundable notice filing or renewal fee in the amount of $250 for the federal covered adviser and a non-refundable registration or renewal fee in the amount of $45 for each investment adviser representative required to be registered in the District.  Payment of fees shall be maid by a method specified in § 1861.3; and
 
(c) A consent to service of process (the Form U-2 and, if applicable, the Form U-2A), pursuant to § 706 of the Act (D.C. Register at 47 DCR 7883).

 

 

(a) The Internet communication contains a legend in which it is clearly stated that:

(1)  the investment adviser or investment adviser representative in question may only transact business in this state if first licensed, excluded, or exempted from the District investment adviser or investment adviser representative licensing requirements; and
 
(2)  follow-up, individualized responses to persons in this state by the investment adviser or investment adviser representative that involve either effecting or attempting to effect transactions in securities, or rendering of personalized investment advice for compensation, will not be made without compliance with the District investment adviser or investment adviser representative licensing requirements, or an applicable exemption or exclusion;

(b)  The Internet communication contains a mechanism, which includes but is not limited to, technical “firewalls” or other implemented policies and procedures, designed reasonably to ensure that before any subsequent, direct communication with prospective customers or clients in the District, the investment adviser and investment adviser representative are first licensed in the District or qualify for an exemption or exclusion from the licensing requirement. Nothing in this paragraph shall be construed to relieve a District licensed investment adviser or investment adviser representative from any applicable securities licensing requirement in the District;
 
(c) The Internet communication is limited to the dissemination of general information on products and services and does not involve either effecting or attempting to effect transactions in securities, or rendering personalized investment advice for compensation in the District over the Internet; and
 
(d) In the case of an investment adviser representative:

(1)  The affiliation of the investment adviser representative with the investment adviser is prominently disclosed within the Internet communication;
 
(2)  The investment adviser with whom the investment adviser representative is associated retains responsibility for reviewing and approving the content of any Internet communication by an investment adviser representative;
 
(3)  The investment adviser with whom the investment adviser representative is associated first authorizes the distribution of information on the particular products and services through the Internet communication; and
 
(4)  In disseminating information through the Internet communication, the investment adviser representative acts within the scope of the authority granted by the investment adviser.

(a) Proof of compliance by the investment adviser with the examination requirements of § 1860;

 

(b) A statement of financial condition of the applicant, prepared in accordance with generally accepted accounting principles in such detail as to disclose the nature and amount of assets, liabilities, and capital. This requirement may be satisfied by either of the following:

(1) An audited statement of financial condition as of the end of the applicant's most recent fiscal year which complies with the requirement of § 1877; provided that such statement is no more than 45 days prior to the date of filing; or

 

(2) An unaudited balance sheet. Such balance sheet shall be accompanied by an oath or affirmation that the statement is true and correct to the best of his or her knowledge and belief and shall be made before a person duly authorized to administer the oath or affirmation. Such balance sheet shall be as of a date within thirty (30) days of the date on which the application is filed; and

 

(3) As a part of the statement of financial condition, the Director may require the filing of the following separate schedules:

 

(4) Listing the securities owned by the applicant valued at the market; and

 

(5) Stating material contractual commitments of the applicant not otherwise reflected in the statements;

(c) The fee required by §1861;

 

(d) Except for an investment adviser that is a sole proprietorship, or the substantial equivalent, each investment adviser licensed with the Department shall register with the Department at least one investment adviser representative;

 

(e) A copy of the Surety Bond required by § 1879; and

 

(f) Any other information required by statute or requested from the applicant by the Director.