The State of Hawaii Department of Commerce and Consumer Affairs regulates the securities compliance branch which includes the Investment Adviser program, receives and investigates complaints through the securities enforcement branch, and educates the public through its investor education program.
Hawaii Code 485A § 16-39 provides the laws for investment advisers and the conditions that must be met to conduct business.
This also includes the registration process requirements as follows:
1. Payment of a filing fee and application for registration through IARD with any required attachments.
2. Provide examples of all written client contracts and/or agreements.
3. Provide a month end balance sheet not more than 30 days old from the filing date.
4. An audited financial statement if the applicant has engaged in business for more than one fiscal year and had custody or discretionary authority over client funds. If the applicant does not have custody or discretionary authority over client funds, then a financial statement notarized by an authorized officer is acceptable.
5. A $50,000 surety bond is required if the investment adviser:
a. Maintains custody of client funds or securities; or
b. Has discretionary authority over customer accounts; or
c. Advisers that do not meet the minimum financial requirements must obtain a surety bond to cover the deficiency of the net worth rounded to the nearest $5,000.
d. Applicants whose physical business location is registered in another state are exempt from the surety bond as long as they are in compliance with that state’s bonding requirements.
6. Written statement as to whether the firm maintains custody and/or has discretionary authority of client funds.
7. De Minimis- registration is not required if the applicant physical address is out of state and there are fewer than five clients.
The premium that you pay for a Hawaii Investment Adviser Surety Bond is dependent on credit.
Most states require the Series 63 examination even if you have already passed the FINRA examination.
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