DFI-Sec 5.02(2)(2) Except as follows, each investment adviser registered or required to be registered under ch. 551, Stats., whose principal office is in this state who has custody of client funds or securities shall maintain at all times a minimum net worth of $35,000: DFI-Sec 5.02(3)(3) If an investment adviser is an individual, the person shall segregate from personal capital an amount sufficient to satisfy the net capital requirement, and the amount so segregated shall be utilized solely for the business for which the investment adviser is registered. DFI-Sec 5.02(4)(4) The requirements of subs. (1) and (2) shall not apply to any investment adviser that has its principal office in a state other than this state, provided that the investment adviser is registered in that state and is in compliance with that state’s minimum net capital requirements, if any. DFI-Sec 5.02(5)(5) For purposes of this section, the term “net worth” means an excess of assets over liabilities, as determined by generally accepted accounting principles, but shall not include as assets any of the following: DFI-Sec 5.02(5)(a)(a) Prepaid expenses, deferred charges, goodwill, franchise rights, organizational expenses, patents, copyrights, marketing rights, unamortized debt discount and expense, and all other assets of an intangible nature. DFI-Sec 5.02(5)(b)(b) Home, home furnishings, automobiles and any other personal items not readily marketable, if the investment adviser is an individual. DFI-Sec 5.02(5)(c)(c) Advances or loans to stockholders and officers, if the investment adviser is a corporation. DFI-Sec 5.02(5)(d)(d) Advances or loans to partners or members, if the investment adviser is a partnership or limited liability company. DFI-Sec 5.02(6)(6) The division may by order exempt any investment adviser whose principal office is in this state from the provisions of this section, either unconditionally or upon specified conditions, if by reason of the special nature of its business or the particular facts and circumstances of the application, the division determines that compliance with the provisions is not necessary in the public interest or for the protection of investors. DFI-Sec 5.02 HistoryHistory: Cr. Register, December, 1977, No. 264, eff. 1-1-78; cr. (3), Register, December, 1992, No. 444, eff. 1-1-93; am. (1), Register, December, 1995, No. 480, eff. 1-1-96; am. (1), renum. (2) and (3) to be (3) and (6) and am. (6), cr. (2), (4) and (5), Register, December, 1998, No. 516, eff. 1-1-99; r. and recr. (1) and (2), Register, December, 1999, No. 528, eff. 1-1-00; CR 04-074: am. (2) Register December 2004 No. 588, eff. 1-1-05; CR 08-077: am. (1), (2) (intro.), (3), (4), (5) (intro.) and (d) Register December 2008 No. 636, eff. 1-1-09. DFI-Sec 5.03(1)(1) Every registered investment adviser whose principal office is in this state shall prepare and keep current at that office, or at a designated office located in this state, as specified in writing to, and permitted by, the division, or at an office under the direct supervision and control of the principal or designated office, the following books and records relating to its business: DFI-Sec 5.03(1)(a)(a) All partnership agreements, or all articles of incorporation, by-laws, minute books and stock certificate books of the investment adviser. DFI-Sec 5.03(1)(b)(b) A general ledger (or other records in the case of a sole proprietor) reflecting all asset, liability, income, expense, and capital accounts. DFI-Sec 5.03(1)(c)(c) A record showing all payments received, including date of receipt, purpose, and from whom received; and all disbursements, including date paid, purpose, and to whom made. DFI-Sec 5.03(1)(e)(e) All trial balances, financial statements, and internal audit working papers which may be prepared relating to the business of the investment adviser. DFI-Sec 5.03(1)(f)(f) A memorandum of each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser from the client concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any order or instruction. The memoranda shall show the terms and conditions of the order, instruction, modification or cancellation; shall identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed the order; and shall show the account for which entered, the date of entry, and the bank, broker or dealer by or through whom executed. Orders entered pursuant to the exercise of discretionary power shall be so designated. DFI-Sec 5.03(1)(g)(g) Copies of all written communications, correspondence, confirmations, appraisals and other records relating to investment activities of clients. DFI-Sec 5.03(1)(h)(h) A separate file containing a copy of all complaints made or submitted by clients relating to investment activities for clients, and all investigative inquiries made by law enforcement and securities regulatory authorities to the investment adviser or its investment adviser representatives regarding their securities and investment advisory business, and containing evidence, including representative copies, of the responses made by the investment adviser and its investment adviser representatives to the complaint or investigation. In this paragraph, “complaint” means any written or oral statement of a client or any person acting on behalf of a client alleging a grievance involving the activities of persons under the control of the investment adviser in connection with providing investment advice or placing orders on behalf of clients. DFI-Sec 5.03(1)(i)(i) A list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client. DFI-Sec 5.03(1)(j)(j) A copy of all powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser or to a third party. DFI-Sec 5.03(1)(k)(k) A copy of all written agreements entered into by the investment adviser with any client, or with any other person if the agreement relates to the business of the investment adviser. DFI-Sec 5.03(1)(L)(L) A file containing any advertisement (as defined within the meaning of section 206 (4)-1. of the investment advisers act of 1940) used in connection with the offering of the investment advisory services in this state. DFI-Sec 5.03(1)(n)(n) A record that complies with Rule 204-2 (a) (12) under section 204 of the investment advisers act of 1940 containing information for all securities transactions effected for the account of the investment adviser or any of its employees subject to that rule, including the title and amount of the security involved, the date and nature of the transaction, the execution price, and information regarding client transactions in the same security. DFI-Sec 5.03(1)(o)(o) A record of the initial offer and delivery, evidenced by the client’s written acknowledgement, as well as the annual offer or delivery, or both, to each client of the adviser’s brochure or other document used to comply with s. DFI-Sec 5.05 (8).