The Audit & Compliance Division conducts on-site compliance examinations and for-cause audits of branch and main offices of firms registered to offer investment advice to Illinois consumers. The definitions of those firms subject to state regulation are determined by the SEC and the National Securities Markets Improvement Act of 1996 (NSMIA). Compliance examinations are conducted to review the books and records of the entity being examined, and are intended to assure compliance with the Illinois Securities Law and attendant rules. For-cause audits are usually conducted to assist in an enforcement inquiry. The Division currently has 17 auditors and compliance examiners, and field assistance is also provided by other Department personnel. The Division is in constant communication with, and routinely cooperates with, the U.S. Securities & Exchange Commission, as well as other state and federal regulatory agencies.
Salespersons holding themselves out separately as investment advisers or financial planners remains a problem discovered during audits. In Illinois, anyone holding themselves out to the public as offering these services may have to register as an investment adviser. In order for a salesperson to rely on an exemption from the definition from an investment adviser they must not provide investment advice to more than 5 clients. All work product must also be approved by the dealer before it is distributed to the customer or the salesperson is deemed to be acting separate and apart from the dealer and the exclusion is not available. This is true regardless of whether any direct fee is involved, because all salespersons receive indirect compensation (commissions).
Due to recent changes in federal and state law, investment advisor representatives who conduct business in this State and federal covered investment advisor representatives with a place of business in Illinois must register with the Securities Department and are subject to compliance examinations and audits. A place of business of a federal covered investment adviser representative is defined as an office at which the investment advisor representative regularly provides investment advisory services, solicits, meets with, otherwise communications with clients, and any other location that is held out to the general public as a location at which the investment adviser representative provides investment advisory services, solicits, meets with, or otherwise communications with clients. Another change in the federal law requires audits of investment advisers with a principal place of business in another state to be conducted based upon the books and records requirements of the investment adviser's home state.
DISCLAIMER
The Secretary of State, Illinois Securities Department or their information providers shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or untimeliness of the information, or for any delay or interruption in the transmission thereof to the user, or for any claims or losses arising therefrom.
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