By Jay Fishman, J.D.
The latest states to have issued COVID-19 related blue sky orders include New Hampshire, North Dakota, Oklahoma and Washington.
New Hampshire. I. A. Broker-dealers, agents, investment advisers, investment adviser representatives and federal covered investment advisers ("financial professionals") displaced from their ordinary business locations because of COVID-19 but that/who wish to engage in activities requiring them to register or notice file. The displaced financial professionals are temporarily exempt from New Hampshire’s registration and/or notice filing requirements if: (1) the financial professional is working from a location outside the jurisdiction where he/she/it is currently registered (because of COVID-19); (2) the financial professional was properly registered and/or notice filed with the required securities regulators and self-regulatory organizations as of March 1, 2020; (3) the financial professional is neither currently subject to an ongoing enforcement proceeding in any jurisdiction nor in violation of New Hampshire’s Securities Act and corresponding rules/regulations, except for those provisions within the scope of this emergency order; and (4) the financial professional limits activities to existing customers or clients and does not solicit new customers or clients in or from New Hampshire.
B. A financial professional that/who meets the above conditions may engage in the following activities without registering or notice filing in New Hampshire: (a) conduct activities as a financial professional that would require registration or notice filing with the state but conducts those activities with or on behalf of only customers or clients that/who the financial professional had a preexisting customer or client relationship on March 1, 2020; and (b) open and maintain a temporary branch office or office of supervisory jurisdiction in the state that had no operation on March 1, 2020, provided that the financial professional, by email to Linda.Elkins@sos.nh.gov, informs New Hampshire’s securities staff of (i) the branch or supervisory jurisdiction office's physical address; (ii) the names and registration status of all persons working in the office; and (iii) a primary point of contact for the office, with full contact information. Note that any firm opening a temporary branch office in accordance with the above provided relief is also temporarily relieved from having to maintain updated Form U-4 information about the office of employment address for registered persons who temporarily relocate due to COVID-19.
II. Relief from obtaining physical Form U-4 signatures. Broker-dealer, investment adviser or federal covered investment adviser firms may submit Form U-4 electronically without first obtaining physical signatures from individual agents or investment adviser representatives, so long as the firm: (1) before filing Form U-4, provides the individual agent or investment adviser representative with a copy of the completed Form U-4; (2) before filing Form U-4, obtains the individual's written agreement that Form U-4's content is complete and accurate; (3) retains the written acknowledgment in accordance with New Hampshire’s laws and regulations; and (4) obtains the individual applicant's physical signature as soon as practicable.
III. Relief from annual update filings and document delivery requirements for state-registered investment advisers. Investment advisers registered in New Hampshire may perform any of the state's Securities Act's and corresponding rules' Form ADV filing, update and customer delivery requirements for up to 45 days after the action is due to be performed. Note that this relief is unavailable for any person not registered in New Hampshire as an investment adviser, including any financial professional mentioned in Part I of this emergency order that/who is not registered in the state.
North Dakota. Temporary relief from notary attestation for registrants and other filers affected by the COVID-19 outbreak. Registrants and other filers affected by COVID-19 may, until further notice, send the North Dakota Securities Department a signed, unsworn declaration as an attachment to any document subject to notarization requirements. Please go to the North Dakota Securities Department website to find this order and the short notice form that registrants and notice filers must complete and submit to receive the temporary relief.
Oklahoma. I. Notice filings (temporary electronic filing mandate). All notices must be filed electronically—file Rule 506 offerings through NASAA's electronic filing depository (EFD) and email all other exemption notice filings including Regulation A, Tier 2 offerings, as well as registration filings and interpretive opinion requests to ElectronicFiling@securities.ok.gov. Mutual fund notice filings must be filed through BlueExpress or emailed to ElectronicFiling@securities.ok.gov. Unit investment trust notice filings must be filed through BlueExpress, EFD or emailed to ElectronicFiling@securities.ok.gov. Payment of fees must be made by electronic fund transfer. The Department, after receiving an emailed filing, will contact the filer with payment instructions. Note that emailed filings will not take effect until the Department receives the payment.
II. Exempt private fund advisers and registered advisers. First, the existing deadline for exempt private fund advisers that occurs from March 17, 2020 until May 31, 2020 is tolled until July 15, 2020. Second (and similarly), the fiscal-year end deadline for registered advisers that occurs from March 17, 2020 until May 31, 2020 is tolled until July 15, 2020. Any Form ADV-instruction required written amendment(s) must promptly continue to be made no later than 30 days after the registered adviser discovers the facts or circumstances giving rise to the amendment(s).
Washington. Investment advisers, the CARES Act and net worth requirements. The Washington Department of Financial Institutions (DFI) will not construe Washington-registered investment adviser firms that obtained a loan under the CARES Act to have a net worth deficiency if: (1) the adviser meets the net worth deficiency requirement before obtaining the loan and would not be considered deficient but for the loan; and (2) the loan must be specifically identified in the adviser's financial books and records, including the balance sheet.
The adviser must notify DFI immediately of the details and must reclassify the loan as a liability upon a determination that the loan (or a portion of it) will not be forgiven and that the adviser will be required to repay the entire amount or a portion of it. Information including the loan application and supporting documentation, the notification of loan approval and all information pertaining to the portion of the loan that will be forgiven should be maintained as part of the adviser's required books and records.
The adviser must notify the Director and file a report containing the information in WAC 460-24A-170(4) [the investment adviser net worth requirement rule] if the reclassification results in the adviser falling below the adviser's net worth requirement. The adviser may choose to obtain a bond or, instead, take the necessary action to meet the net worth requirement.