(a) Availability. The exemption from investment adviser
and investment adviser representative registration provided by the
Texas Securities Act, §4004.001, or this section is not available
if the financial institution or other institutional investor named
therein is in fact acting only as agent for another purchaser that
is not a financial institution or other institutional investor listed
in §4005.011 or this section. These exemptions are available
only if the financial institution or other institutional investor
named therein is acting for its own account or as a bona fide trustee
of a trust organized and existing other than for the purpose of acquiring
the investment advisory services for which the investment adviser
or investment adviser representative is claiming the exemption. For
purposes of this section, an investment adviser or investment adviser
representative that is providing investment advisory services to a
corporation, general partnership, limited partnership, limited liability
company, trust or other legal entity, other than a private fund (as
that term is defined in §139.23 of this title (relating to Registration
Exemption for Investment Advisers to Private Funds)), is not providing
investment advisory services to a shareholder, general partner, member,
other security holder, beneficiary or other beneficial owner of the
legal entity unless the investment adviser provides investment advisory
services to such owner separate and apart from the investment advisory
services provided to the legal entity.
(b) Investment advice rendered to certain institutional
investors. The State Securities Board, pursuant to the Act, §4004.001,
exempts from the investment adviser and investment adviser representative
registration requirements of the Act, persons who render investment
advisory services to any of the following:
(1) an "institutional accredited investor," as that
term is defined in §107.2 of this title (relating to Definitions);
(2) any "qualified institutional buyer," as that term
is defined in §107.2 of this title (relating to Definitions);
and
(3) a corporation, partnership, trust, estate, or other
entity (excluding individuals) having net worth of not less than $5
million, or a wholly-owned subsidiary of such entity.
(c) Exclusions from exemption. There is no exemption
under this section for an investment adviser providing investment
advisory services to a natural person. A private fund adviser, as
that term is defined in §139.23 of this title (relating to Registration
Exemption for Investment Advisers to Private Funds), may not rely
on this exemption except as provided in subsection (e) of this section.
(d) Financial statements. For purposes of determining
an institutional investor's total assets or net worth under this section,
an investment adviser or investment adviser representative may rely
upon the entity's most recent annual balance sheet or other financial
statement which shall have been audited by an independent accountant
or which shall have been verified by a principal of the institutional
investor.
(e) Grandfathering. An investment adviser to a private
fund, as that term is defined in §139.23 of this title (relating
to Registration Exemption for Investment Advisers to Private Funds),
may nonetheless qualify for the exemption described in subsection
(b) of this section if:
(1) the private fund existed prior to March 31, 2014;
(2) the investment adviser qualified for the exemption
in subsection (b) of this section as modified by subsection (c) of
this section as both subsections existed prior to March 31, 2014;
and
(3) as of March 31, 2014, the private fund ceases to
accept new beneficial owners.
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Source Note: The provisions of this §109.6 adopted to be effective July 14, 2005, 30 TexReg 3987; amended to be effective March 31, 2014, 39 TexReg 491; amended to be effective March 21, 2021, 46 TexReg 1733; amended to be effective July 18, 2024, 49 TexReg 5141 |