For Securities Professionals
Notice Regarding Criminal Convictions for applicants in the securities industry
- The Secretary of State does not require applicants for registration to submit to a criminal background check as part of the registration process. However, an applicant may have to submit to a fingerprint-based criminal background check by FINRA depending on the application. The Secretary of State does, in certain cases, run reports on applicants that disclose criminal convictions. The application forms used in the financial industry require that an applicant disclose any felony convictions/guilty pleas, and convictions/guilty pleas regarding certain misdemeanors.
- The Secretary of State considers criminal convictions. Before the Secretary of State denies an applicant a registration due to a criminal conviction, it will consider the factors listed in N.C.G.S. § 93B-8.1(b1).
- If the Secretary of State denies an applicant a registration, in whole or in part because of a criminal conviction, the applicant may appeal pursuant to Chapter 150B of the North Carolina General Statutes. See also Chapter 78A and Chapter 78C of the North Carolina General Statutes.
Dealers and Salesmen
Securities dealers and salesmen conducting business in North Carolina are subject to the North Carolina Securities Act. Additional rules regarding the administration and enforcement of the Act are set forth in the North Carolina Administrative Code.
Investment Advisers and Representatives
Investment advisers and investment adviser representatives conducting business in North Carolina are subject to the North Carolina Investment Advisers Act.
Additional rules regarding the administration and enforcement of the Act are set forth in the North Carolina Administrative Code.
The Securities Division has seen an increase in investment advisers subject to state registration relocating to North Carolina and conducting business before registering with the State of North Carolina. An investment adviser that is physically located in North Carolina and that is not registered with the U.S. Securities and Exchange Commission cannot transact business as an investment adviser unless it is registered or exempt from registration pursuant to N.C. Gen. Stat. §78C-16. Even if the firm does not have clients in North Carolina, if it has any clients and it is holding itself out as an investment adviser (e.g. it has a website), it is engaged in investment adviser activity subject to registration.
There is not a “grace period” during the pendency of the registration process. Engaging in investment advisory activity after the firm has relocated to North Carolina but before its NC registration has been approved is a violation of the Investment Advisers Act, and constitutes grounds for an enforcement action that may include significant penalties. If you are moving to North Carolina, the Securities Division recommends registering with the State of North Carolina before moving here.
For insurance agents wishing to sell variable annuities, please ask the compliance officer of the broker-dealer firm with which you are employed to file a Form U-4 on your behalf. Once your securities registration has been approved, contact the NC Department of Insurance at (855) 408-1212 and give them your CRD number and the effective date of your North Carolina securities registration. You must successfully pass the Series 63 exam to be a securities salesman.
Registrations, Covered Securities and Exemptions
The NC Securities Act requires that any securities offering made in North Carolina be registered with the NC Securities Division. If an offering falls under an exemption to registration, a notice filing is generally required in order to advise the Securities Division of the exemption. It is the responsibility of the issuer to prove entitlement to any claimed exemption. Click the header above for more information.
- Registration by coordination (See N.C.G.S. § 78A-26 and 18 NCAC 06A .1302)
- Registration by qualification (See N.C.G.S. § 78A-27 and 18 NCAC 06A .1303)
- Notice Filing for investment securities company (See N.C.G.S. § 78A-31(a) and 18 NCAC 06A .1212)
- Notice Filing for Rule 506 transaction (See N.C.G.S. § 78A-31(b) and 18 NCAC 06A .1211)
- Exemption notice for .1205(b) offering (See N.C.G.S. § 78A-17(9) and 18 NCAC 06A .1205(b))
- Exemption notice for not-for-profit issuer (See N.C.G.S. § 78A-16(9) and 18 NCAC 06A .1209)
- Securities FAQ
North Carolina has enacted its own intrastate crowdfunding law, the NC PACES Act. This new crowdfunding law offers an exemption if the offer or sale is conducted in accordance with specific guidelines.