Audit and Compliance Securities

The Securities Department Audit and Compliance Division conducts on-site compliance examinations and unannounced audits of broker dealers, investment advisers, and individuals engaged in the offer or sale of securities or investment advice. Definitions of those firms subject to state regulation are determined by the SEC and the National Securities Markets Improvement Act of 1996. Compliance examinations are conducted to ensure compliance with the Illinois Securities Law and the attendant rules. The division collaborates and cooperates with other state regulators and the SEC.

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 is generally required to register as an investment adviser. In order for a salesperson to rely on an exemption from the definition of an investment adviser, they must not provide investment advice to more than five clients. All work product also must 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).

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.

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.