Bonding Requirements for Investment Advisers

Bonding Requirements for Investment Advisers. A. Every investment adviser registered or required to be registered under the Act who has custody of or discretionary authority over client funds or securities shall be bonded in an amount determined by the Division based upon the number of clients and the total assets under management of the investment adviser. Such bond shall be at a minimum of Thirty Thousand Dollars ($30,000.00) for investment advisers having custody of client funds or requiring payment of advisory fees six (6) months or more in advance and in excess of Twelve Hundred Dollars ($1,200.00), and Ten Thousand Dollars ($10,000.00) for investment advisers with discretionary authority over client funds. B. Any bond required by this Rule shall be issued by a company qualified to do business in this state in the form determined by the Division and shall be subject to the claims of all clients of such investment adviser regardless of the client’s state of residence. C. The requirements of this Rule shall not apply to those applicants or registrants who comply with the minimum financial requirements of Rule 6.09. D. An investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of Subsection (A) of this Rule, provided that the investment adviser is registered or licensed as an investment adviser in the state where it has its principal place of business and is in compliance with such state’s requirements relating to bonding and/or minimum financial requirements.