TITLE 21. SECURITIES AND RETAIL FRANCHISING

STATE CORPORATION COMMISSION

Proposed Regulation

Titles of Regulations: 21VAC5-10. General Administration - Securities Act.

21VAC5-20. Broker-Dealers, Broker-Dealer Agents and Agents of the Issuer (amending 21VAC5-20-95, 21VAC5-20-120, 21VAC5-20-190, 21VAC5-20-220).

21VAC5-80. Investment Advisors (amending 21VAC5-80-100, 21VAC5-80-250).

Statutory Authority: §§ 12.1-13 and 13.1-523 of the Code of Virginia.

Public Hearing Information: A public hearing will be scheduled upon request.

Public Comment Deadline: April 29, 2025.

Agency Contact: Jude Richnafsky, Manager of Examinations and Securities and Retail Franchising, Division of Securities and Retail Franchising, State Corporation Commission, Tyler Building, Ninth Floor, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9883, or email jude.richnafsky@scc.virginia.gov.

Summary:

The proposed amendments (i) require a broker-dealer agent, agent of the issuer, and investment advisor representative to file amended or updated forms within 30 days of the amendment or update; (ii) remove the requirement that a broker-dealer or investment advisor file certain forms when employing an agent or representative employed by more than one broker-dealer or investment advisor; (iii) waive individuals applying for registration as an agent of the issuer from the required examination if the issuer's securities are exempt from registration by order of the State Corporation Commission; and (iv) remove obsolete forms.

AT RICHMOND, FEBRUARY 25, 2025

COMMONWEALTH OF VIRGINIA, ex rel.

CASE NO. SEC-2025-00002

STATE CORPORATION COMMISSION

Ex Parte: In the matter of

Adopting Revisions to the Rules

Governing the Virginia Securities Act

ORDER ESTABLISHING PROCEEDING

Section 12.1-13 of the Code of Virginia ("Code") provides, in relevant part, that "in the administration and enforcement of all laws within its jurisdiction, the State Corporation Commission ("Commission") shall have the power to promulgate rules and regulations." Section 13.1-523 of the Virginia Securities Act ("Act"), § 13.1-501 et seq. of the Code, provides that the Commission shall have authority to make, amend and rescind such rules and forms as may be necessary to carry out the provisions of Chapter 5 of Title 13.1 of the Code. The rules issued by the Commission pursuant to § 13.1-523 of the Act ("Rules") are set forth in Title 21 of the Virginia Administrative Code.

The Division of Securities and Retail Franchising ("Division") has submitted to the Commission proposed revisions to Chapters 20 and 80 to: (i) provide clarification that an amendment to the form titled "Uniform Application for Securities Industry Registration or Transfer" ("Form U4") by a broker-dealer agent, agent of the issuer, or investment advisor representative must be filed within 30 days of the event that requires the filing of the amendment; (ii) eliminate the requirement that broker-dealers and investment advisors execute and file with the Division the form titled "Agent Multiple Employment Agreement" ("Form S.A. 16") and the form titled "Investment Advisor Representative Multiple Employment Agreement" ("Form S.A. 15"), respectively; and (iii) waive the "Uniform Securities Agent State Law Examination, Series 63" ("S63") and the "Uniform Combined State Law Examination, Series 66" ("S66") examination requirement in Rule 21VAC5-20-220 A, Examination/qualification, for an individual applying for registration as an agent of the issuer when the issuer's securities are exempt from registration by order of the Commission pursuant to § 13.1-514.1 B of the Act. Collectively, these are referred to as the "Proposed Revisions."

The Division has recommended to the Commission that the Proposed Revisions should be considered for adoption, with an effective date of August 1, 2025.

NOW THE COMMISSION, upon consideration of this matter, is of the opinion and finds that a proceeding should be established to consider revising the Rules. To initiate this proceeding, the Division has prepared the Proposed Revisions, which are appended to this Order Establishing Proceeding ("Order"). The Commission finds that notice of the Proposed Revisions should be given to the public, and that interested persons should be provided an opportunity to file written comments on, propose modifications or supplements to, or request a hearing on the Proposed Revisions for adoption with a proposed effective date of August 1, 2025.

Accordingly, IT IS ORDERED THAT:

(1) This case is docketed and assigned Case No. SEC-2025-00002.

(2) All comments and other documents and pleadings filed in this matter shall be submitted electronically to the extent authorized by Rule 5VAC5-20-150, Copies and format, of the Commission's Rules of Practice and Procedure.¹ Confidential and Extraordinarily Sensitive Information shall not be submitted electronically and shall comply with Rule 5VAC5-20-170, Confidential information, of the Rules of Practice. Any person seeking to hand deliver and physically file or submit any pleading or other document shall contact the Clerk's Office Document Control Center at (804) 371-9838 to arrange the delivery.

(3) On or before April 29, 2025, any interested person may comment on, propose modifications or supplements to, or request a hearing on the Proposed Revisions by following the instructions on the Commission's website: scc.virginia.gov/casecomments/Submit-Public-Comments. Those unable, as a practical matter, to submit such documents electronically may file such comments by U.S. mail to the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, 23218-2118. All documents shall refer to Case No. SEC-2025-00002. Any request for hearing shall state why a hearing is necessary and why the issues raised in the request for hearing cannot be addressed adequately in written comments.

(4) The Division shall file its response to any comments filed pursuant to Ordering Paragraph 3 on or before May 27, 2025.

(5) If a sufficient request for hearing is not received, the Commission may consider the matter and enter an order based upon the comments, documents or other pleadings filed in this proceeding.

(6) The Division shall provide notice of this Order to any interested persons as the Division may designate.

(7) The Commission's Office of General Counsel shall provide a copy of this Order, together with the Proposed Revisions, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

(8) Interested persons may download unofficial copies of the Order and the Proposed Revisions from the Commission's website: scc.virginia.gov/pages/Case-Information.

(9) This matter is continued.

A COPY hereof shall be sent by the Clerk of the Commission to: C. Meade Browder, Jr., Senior Assistant Attorney General, at MBrowder@oag.state.va.us, Office of the Attorney General, Division of Consumer Counsel, 202 N. 9th Street, 8th Floor, Richmond, Virginia 23219-3424; and the Commission's Office of General Counsel and the Director of Securities and Retail Franchising.

_____________________________

¹ 5VAC5-20-10 et seq. State Corporation Commission Rules of Practice and Procedure ("Rules of Practice").

FORMS (21VAC5-10)

Broker-Dealer and Agent Forms

Form BD, Uniform Application for Broker-Dealer Registration (rev. 1/2008)

Form BDW, Uniform Notice of Termination or Withdrawal of Registration as a Broker-Dealer (rev. 4/2007)

Form S.A. 2, Application for Renewal of a Broker-Dealer's Registration (rev. 10/2017)

Form S.A. 11, Broker-Dealer's Surety Bond (rev. 7/1999)

Form S.D.4, Application for Renewal of Registration as an Agent of an Issuer (2017)

Form S.D.4.A, Agents to be Renewed - Exhibit I (rev. 1974)

Form S.D.4.B, Agents to be Canceled (Records Clear) - Exhibit II (rev. 1974)

Form S.D.4.C, Agents to be Canceled (Without clear Clear Records) - Exhibit III (rev. 1974)

Rev. Form U4, Uniform Application for Securities Industry Registration or Transfer (rev. 5/2009)

Rev. Form U5, Uniform Termination Notice for Securities Industry Registration (rev. 5/2009)

Investment Advisor and Investment Advisor Representative Forms

Form ADV, Uniform Application for Registration of Investment Registration and Report by Exempt Reporting Advisers

Part IA, SEC 1707 (7/2017)

Part IB, paper version (rev. 10/2012)

Part 2, Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements (undated)

Form ADV-W - Notice of Withdrawal from Registration as an Investment Advisor (rev. 11/2010)

Form S.A. 3, Affidavit for Waiver of Examination (undated, filed 10/2017)

Form S.A. 10, Investment Advisor's Surety Bond Form (rev. 10/2017)

Form S.A. 15, Investment Advisor Representative Multiple Employment Agreement (eff. 7/2007)

Form S.A. 16, Agent Multiple Employment Agreement (eff. 7/2007)

Rev. Form U4, Uniform Application for Securities Industry Registration or Transfer (rev. 5/2009)

Rev. Form U5, Uniform Termination Notice for Securities Industry Registration (rev. 5/2009)

Securities Registration and Notice Filing Forms

Form U–1, Uniform Application to Register Securities (undated, filed 10/2017)

Form U–2, Uniform Consent to Service of Process (rev. 6/2016)

Form U–2A, Uniform Form of Corporate Resolution (rev. 6/2016)

Form S.A. 4, Registration by Notification - Original Issue (rev. 11/1996)

Form S.A. 5, Registration by Notification - Non-Issuer Distribution (rev. 11/1996)

Form S.A. 6, Registration by Notification - Non-Issuer Distribution "Secondary Trading" (1989)

Form S.A. 8, Registration by Qualification (rev. 7/1991)

Form S.A. 12, Escrow Agreement (1971)

Form S.A. 13, Impounding Agreement (rev. 7/1999)

Form VA–1, Parts 1 and 2, Notice of Limited Offering of Securities (rev. 11/1996)

Form NF, Uniform Investment Company Notice Filing (4/1997)

21VAC5-20-95. Employment of an agent by more than one broker-dealer.

A. In accordance with § 13.1-504 B of the Act, an agent may be employed by more than one broker-dealer if all of the following conditions are satisfied:

1. Each employing broker-dealer is under common ownership and control as defined in subsection B of this section or as provided in subdivision C 2 c under 21VAC5-20-330 C 2 c.

2. Each employing broker-dealer is registered in accordance with 21VAC5-20-10.

3. Each employing broker-dealer consents in writing to the employment of the agent by each of the other employing broker-dealers.

4. 3. Each employing broker-dealer agrees to be responsible for the employment activity of the agent.

5. 4. The agent is registered in accordance with 21VAC5-20-90 by and on behalf of each employing broker-dealer.

6. Each employing broker-dealer executes an Agent Multiple Employment Agreement (Form S.A.16), and the executed agreement is filed with the commission at its Division of Securities and Retail Franchising prior to the agent transacting business in Virginia on behalf of such broker-dealer.

7. A new Agent Multiple Employment Agreement is executed and filed with the commission at its Division of Securities and Retail Franchising within 15 days after any information in a current agreement on file with the commission becomes materially deficient, incomplete or inaccurate.

B. The term "common ownership and control" as used in this section means the same individual or individuals possess possesses at least a 50% ownership interest in each employing broker-dealer.

21VAC5-20-120. Updates and amendments.

A broker-dealer agent shall amend or update Form U4 as required by the "Amendment Filings" provisions set forth under "How to Use Form U4 information becomes inaccurate." A Form U4 must be filed within 30 days of an amendment or update. All filings shall be made on CRD for agents of FINRA member firms or with the commission at its Division of Securities and Retail Franchising for all other broker-dealer agents.

21VAC5-20-190. Updates and amendments.

An agent of the issuer shall amend or update his Form U4 as required by the "Amendment Filings" provisions set forth under "How to Use Form U4 information becomes inaccurate." A Form U4 must be filed within 30 days of an amendment or update. Filings shall be made with the commission at its Division of Securities and Retail Franchising.

21VAC5-20-220. Examination/qualification; waiver of examination requirement.

A. Except as described in subsection B of this section, an individual applying for registration as an agent of the issuer shall be required to provide evidence in the form of a FINRA exam report of passing: (i) the Uniform Securities Agent State Law Examination, Series 63; (ii) the Uniform Combined State Law Examination, Series 66; or (iii) a similar examination in general use by securities administrators which that, after reasonable notice and subject to review by the commission, the Director of the Division of Securities and Retail Franchising designates.

B. The commission may, in a registered offering not being made to the general public or, in a Small Company Offering Registration, or in an offering exempt by commission order pursuant to § 13.1-514.1 B of the Act, waive the examination requirement for an officer or director of an issuer that is a corporation, or a general partner of an issuer of a limited partnership or a manager of an issuer that is a limited liability company who:

1. Will receive no commission or similar remuneration directly or indirectly in connection with the offer or sale of the issuer's securities; and

2. In the case of a small company offering registration, agrees to deliver to each prospective purchaser of a security to be issued by such issuer, at or before the time the offering document is required to be delivered, a copy of "A Consumer's Guide to Small Business Investments" prepared by NASAA (see CCH NASAA Reports ¶3676) and the application to register the agent is accompanied by an executed Affidavit Regarding Offers of Small Company Offering Registration (SCOR) Securities by Issuer Agents.

21VAC5-80-100. Updates and amendments.

An investment advisor representative shall amend or update Form U4 as required by the "Amendment Filings" provisions set forth under "How to Use Form U4 information becomes inaccurate." A Form U4 must be filed within 30 days of an amendment or update. All filings shall be made in compliance with all requirements of CRD.

21VAC5-80-250. Employment of investment advisor representative by more than one investment advisor or federal covered advisor.

A. In accordance with § 13.1-504 C of the Act, an investment advisor representative (representative) may be employed by more than one investment advisor or federal covered advisor (employing advisor) if all of the following conditions are satisfied:

1. Each employing advisor is under common ownership and control as defined in subsection B of this section.

2. Each employing advisor is registered or has filed notice, as the case may be, in accordance with 21VAC5-80-10.

3. Each employing advisor consents in writing to the employment of the representative as an investment advisor representative by each of the other employing advisors.

4. 3. The representative is registered in accordance with 21VAC5-80-70 by and on behalf of each employing advisor.

5. Each employing advisor executes an Investment Advisor Representative Multiple Employment Agreement (Form S.A.15), and the executed agreement is filed with the commission at its Division of Securities and Retail Franchising prior to the representative transacting business in Virginia on behalf of such advisor.

6. A new Investment Advisor Representative Multiple Employment Agreement is executed and filed with the commission at its Division of Securities and Retail Franchising within 15 days after any information in a current agreement on file with the commission becomes materially deficient, incomplete or inaccurate.

B. The term "common ownership and control" as used herein in this section means possession of at least a 50% ownership interest in each employing advisor by the same individual or individuals.

FORMS (21VAC5-80)

Form ADV, Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Advisers

Part IA, SEC 1707 (7/2017)

Part IB, paper version (rev. 10/2012)

Part 2, Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements (undated)

Form ADV-W, Notice of Withdrawal from Registration as an Investment Advisor, SEC 777 (rev. 11/2010)

Form S.A. 3, Affidavit for Waiver of Examination (undated, filed 10/2017)

Form S.A. 10, Investment Advisor's Surety Bond Form (rev. 10/2017)

Form S.A. 15, Investment Advisor Representative Multiple Employment Agreement (eff. 7/2007)

Form S.A. 16, Agent Multiple Employment Agreement (eff. 7/2007)

Rev. Form U4, Uniform Application for Securities Industry Registration or Transfer, (rev. 5/2009)

Rev. Form U5, Uniform Termination Notice for Securities Industry Registration (rev. 5/2009)