Monday, 6 April 2020

More state securities regulators issue COVID-19-related orders

By Jay Fishman, J.D.

State securities regulators continue to issue emergency orders extending filing deadlines or allowing issuers or industry professionals to temporarily forego providing certain form items because of business disruptions caused by COVID-19. The North American Securities Administrators Association, Inc. (NASAA) is continuously updating on its website a list of those orders.

Orders. Below is a summary of the orders as of April 3, 2020. Important Note: Some of the states issuing temporary relief orders below are requiring financial professionals to keep a copy of the order in their records to demonstrate their reliance on the order—because any activities not meeting an order’s conditions may later be treated by the respective state securities regulators as non-exempt, unregistered securities activity, thereby subjecting the financial professional to state enforcement action. A best practice would be to keep a copy of the orders issued by all states whether or not required.

Arizona. Licensing staff are continuing to process licensing/registration applications through the CRD/IARD systems. Requests for supplemental information may be submitted via email. Field examiners are conducting streamlined, remote examinations using phone and email correspondence in lieu of traditional on-site examinations during this time. Enforcement staff also are limiting in-person contacts with witnesses and regulatory partners, taking advantage of phone, email, and other forms of telecommunications technology to complete their work in a virtual environment.

Arkansas. In accordance with the governor’s executive order issued March 17, 2020, it will be the position of the Arkansas Securities Commissioner that statutes and rules administered by the commissioner that have specific time constraints be relaxed when it is shown that the need is related to COVID-19. This period of time constraint relaxation will extend through April 16, 2020. Some statutes and rules that may need to be subject to relaxation include: Arkansas Code Sections 23-42-503(a)(7),(8), 23-42-504(a)(9), 23-42-509, 23-39-506, 23-39-510, 23-55-603, and 25-19-105; and Rules of the Arkansas Securities Commissioner 302.01 and 302.02, 302.01(c), 302.02(f), 509, and 607.

California. Effective immediately, the due dates for the following filings are extended to 45 days after the original due date: (1) Notice of Changes by Broker-Dealers and Investment Advisers (Rule 260.241.4(a)-(f)); (2) Form PF for private fund advisers (Rule 260.204.9(b)(2)(A)-(B)); (3) Annual Report (Rule 260.241.2(a)(4)); and (4) Interim Report (Rule 260.241.2(d)(1)-(3)). Note: This guidance only changes the due date for the above-mentioned filing requirements. It does not alter the method of submitting the filing requirements. Licensees should submit these filing requirements under existing procedures. For example, licensees filing Form ADV amendments should continue submitting the filing through the Investment Adviser Registration Depository (IARD).

The manual signature requirement has also been temporarily relieved. Effective immediately, licensees may electronically file an initial or transfer Form U4 without obtaining individual applicant’s manual (wet) signature if the firm: (1) provides the applicant with a copy of the completed Form U4 prior to filing; (2) obtains the applicant’s written acknowledgment (which may be electronic) before filing that the information has been received and reviewed, and that the applicant agrees that the content is accurate and complete; (3) retains the written acknowledgment in accordance with SEC Rule 17a-4(e)(1); (4) makes it available promptly upon regulatory request; and (5) obtains the applicant’s manual signature as soon as practicable.

Connecticut. For non-monetary filings relating to mutual funds (e.g., terminations, name changes, and correspondent changes), scanned submissions may be submitted via email to dob.sec-reg@ct.gov in lieu of a mailed paper filing.

For initial filings and renewal filings (with electronic payment) relating to mutual funds, closed-end funds, unit investment trusts and face-amount certificate companies, e-mail a copy of the Form NF to: (1) dob.sec-reg@ct.gov; and (2) dob.ar@ct.gov.

Delaware. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; and extended the investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

Florida. The state has temporarily relieved any holder of a Florida Securities Act registration with an annual updating amendment or financial statement filing deadline occurring in the month of March or April 2020. The existing deadline is suspended and tolled for a period of 45 days from the existing filing deadline, unless extended by subsequent order.

Registration staff are continuing to process registration applications through the CRD, IARD, and Regulatory Enforcement and Licensing (REAL) systems. Requests for supplemental information may be submitted via email. Examination staff are conducting streamlined, remote examinations using phone and email correspondence in lieu of traditional on-site examinations during this time.

Georgia. Issuers filing a notice under Georgia Securities Act Section 10-5-21 (investment company and Rule 506 issuers), Section 10-5-22 (issuers registering securities by coordination) or Section 10-5-23 (issuers registering securities by qualification) must file the notice or registration using NASAA’s Electronic Filing Depository (EFD) or SeamlessDocs. Issuers unable to file using the above methods must contact the commissioner at registrations@sos.ga.gov explaining why the issuer cannot use these methods.

Idaho. The state has temporarily relieved financial professionals displaced by COVID-19 and extended investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

Indiana. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; extended investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

Investment adviser representative applicants now have until June 30, 2020, to submit fingerprints.

Kentucky. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; and extended investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

Maine. Out-of-state financial professionals who are displaced due to the pandemic to operate in Maine may temporarily service existing clients if they meet certain conditions. The state's order also: allows an investment adviser that may no longer be able to service a client to transfer or reassign the client to another firm with the client's verbal consent; allows investment advisory firms flexibility in the deadline to provide updated firm information annually to clients; suspends onsite training requirements for new licensees and the requirement that broker-dealer firms conduct on-site audits of branch offices located in Maine; waives late fees for issuers of securities who miss a filing deadline because of the pandemic; and permits filing by email.

Minnesota. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; extended the investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

Securities registration staff are continuing to process licensing/registration applications through the CRD/IARD systems. Requests for supplemental information may be submitted via email. Field examiner staff are conducting streamlined, remote examinations using phone and email correspondence in lieu of traditional on-site examinations during this time, and enforcement staff are limiting in-person contacts with witnesses and regulatory partners.

New Jersey. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; and extended the investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

New Mexico. The state has temporarily relieved financial professionals displaced by COVID-19; relieved the requirement to obtain physical signatures on Form U-4; and extended the investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

New York.

  1. Any registration renewal, amendment, financial statement or NY-IAQ filing that would have been due between March 1, 2020, and April 30, 2020 is extended for 90 days from the end of the relief period. The availability of this relief may be revoked by the Department of Law by posting the revocation to its website. Any party eligible to rely on this relief will be given 90 days from the date of the revocation to make the required filing.
  2. All filings required to be submitted directly to Investor Protection Bureau (IPB) or the Department of Law: (1) under General Business Law Section 359-e or 359-eee, 13 NYCRR 10 or 13 NYCRR 11 related to registration, other than real estate related filings; and (2) under General Business Law Section 680 et seq. or 13 NYCRR 200, must be submitted by email in addition to the required paper or CD filings. Electronic copies may be redacted to include only the last four digits of any person's social security number, or other sensitive personal identification number, if the number is required in the filing. Note: These procedures do not apply to FINRA member broker-dealer filings submitted through the CRD system, Form ADV submitted through IARD, or filings submitted through Blue Express.
  3. Each email submission requiring any payment, must also contain: (1) a copy of the front and back of the check to be mailed to the Department of Law; and (2) a signed statement from the applicant (electronic or by hand) stating, in substance, that “I will cause this filing and payment to be mailed to the Department of Law forthwith.”
  4. Each paper filing should also include a printout of the cover email to Department of Law.
  5. Brokers, Dealers, Issuers, Salespersons, Commodities:
    • Filings on Form 99 (IPB), M-1, M-2, M-3, M-4, M-11, CBD, CM-2, CM-3, CM-4,CI-1, CM-ADV, paper form NF and Form BD for non-FINRA members should be submitted to ipbbd@ag.ny.gov. The Office of the Attorney General expects to continue to accept electronic Form NF filings through Blue Express. All FINRA member filings and payments must continue to be made through CRD.
    • Exemption and No Action requests should be submitted to ipbexna@ag.ny.gov. Note that the Notice of Appearance Form must be scanned in a separate PDF from the rest of the application.
  6. Investment Adviser, NY-IAQ and Financial Statements:
    • New NY-IAQs for each investment adviser representative and financial statements accompanying any new Form ADV should be submitted to ipbia@ag.ny.gov. (All Form ADVs will continue to be submitted through IARD). All fees due will continue to be accepted through IARD.
    • Investment Adviser literature should be submitted to ipbialit@ag.ny.gov. (No paper filing is required for investment adviser literature.)
  7. All theatrical filings should be submitted to ipbtheatricals@ag.ny.gov. 
Note that processing of paper filings not also submitted via email per these procedures may not be processed until normal working conditions resume.

Oklahoma. Field examiners are conducting streamlined, remote examinations using phone and email correspondence in lieu of traditional on-site examinations during this time. Personnel are continuing to process registration applications through the CRD/IARD systems. Requests for supplemental information may be submitted via email. Enforcement staff also are limiting in-person contacts with witnesses and regulatory partners, and taking advantage of phone, email, and other forms of telecommunications technology.

South Carolina. The state has temporarily relieved financial professionals displaced by COVID-19 and extended investment adviser annual update amendment filing deadline for up to 30 days from the normally required date.

Tennessee. Registration staff are continuing to process registration applications through the CRD/IARD systems. Requests for supplemental information may be submitted via email. Field examiner staff are conducting streamlined, remote examinations using phone and email correspondence in lieu of traditional on-site examinations during this time. Enforcement staff are limiting in-person contacts with witnesses and regulatory partners by utilizing phone, email, and other forms of telecommunications technology.

Washington. The order temporarily relieves financial professionals displaced by COVID-19; relieves the requirement to obtain physical signatures on Form U-4; and extends investment adviser annual update amendment filing deadline for up to 45 days from the normally required date.

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