2014 New Hampshire Revised Statutes
Title XXXVIII - SECURITIES
Chapter 421-B - SECURITIES
Section 421-B:9 - Post-Licensing Provisions; Examinations.

    421-B:9 Post-Licensing Provisions; Examinations. –
    I. The records of a broker-dealer licensed or required to be licensed under this chapter, of an investment adviser registered or required to be registered under this chapter, and of an issuer-dealer licensed or required to be licensed under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the secretary of state, within or without this state, as the secretary of state considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The secretary of state may copy, and remove for audit or inspection, copies of all records the secretary of state reasonably considers necessary or appropriate to conduct the audit or inspection.
    II. For the purpose of ascertaining compliance with law or relationships and transactions between any person and any broker-dealer, investment adviser, or issuer-dealer or proposed broker-dealer, investment adviser, or issuer-dealer and in circumstances where the secretary of state has reasonable grounds to believe there is noncompliance with or violation of any law, rule, or order, he may, as often and to the extent he deems advisable, examine the accounts, records, documents, and transactions pertaining to or affecting the securities affairs or proposed securities affairs and transactions of:
       (a) Any person having a contract under which he enjoys by terms or in fact the exclusive or dominant right to manage or control the broker-dealer, investment adviser, or issuer-dealer;
       (b) Any person in this state engaged in, proposing to be engaged in, holding himself out as so engaging, or proposing or assisting in the promotion, formation, or financing of a broker-dealer, investment adviser, or issuer-dealer, or corporation or other group to finance a broker-dealer, investment adviser, or issuer-dealer or the production of its business;
       (c) Any rating bureau or organization;
       (d) Any licensee or other person subject to this chapter; or
       (e) If adequate information cannot be obtained, any broker-dealer, issuer-dealer, investment adviser, holding company or person holding the shares of voting stock or proxies of a broker-dealer, investment adviser, or issuer-dealer as voting trustee or otherwise, for the purpose of controlling the management thereof.
    III. Whenever the secretary of state decides to examine the affairs of any person, he shall designate one or more examiners and instruct them as to the scope of the examination. The examiner shall, upon demand, exhibit his official credentials to the person under examination.
       (a) The secretary of state shall conduct each examination in an expeditious, fair and impartial manner.
       (b) Upon any such examination the secretary of state, or the examiner if specifically so authorized in writing by the secretary of state, shall have power to administer oaths, and to examine under oath any individual as to any matter relevant to the affairs under examination or relevant to the examination.
       (c) Every person being examined, and all of the officers, attorneys, employees, agents, and representatives of such person shall make freely available to the secretary of state or his examiners the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination and shall facilitate the examination.
       (d) If the secretary of state or examiner finds any accounts or records to be inadequate, or kept or posted in a manner not in accordance with commonly accepted securities accounting principles, the secretary of state may employ experts to reconstruct, rewrite, post or balance them at the expense of the person being examined if such person has failed to maintain, complete or correct such records or accounting after the secretary of state or examiner has given him written notice and a reasonable opportunity to do so.
       (e) Neither the secretary of state nor any examiner shall remove any record, account, document, file or other property of the person being examined from the offices or place of such person except with the written consent of such person in advance of such removal or pursuant to an order of court duly obtained. This provision shall not be deemed to affect the making and removal of copies or abstracts of any such record, account, document, or file.
       (f) Any individual who refuses without just cause to be examined under oath or who willfully obstructs or interferes with the examiners in the exercise of their authority pursuant to this section shall be guilty of a misdemeanor.
    IV. (a) Upon completion of an examination, the examiner in charge shall make a true report thereof which shall comprise only facts appearing upon the books, records or other documents of the person examined, or as ascertained from the sworn testimony of its officers or agents or other individuals examined concerning its affairs, and such conclusions and recommendations as may reasonably be warranted from such facts. The report of examination shall be verified by the oath of the examiner in charge thereof.
       (b) Such a report of examination of a broker-dealer or issuer-dealer so verified shall be prima facie evidence in any delinquency proceeding against the broker-dealer or issuer-dealer, its officers, employees, or agents upon the facts stated therein, whether or not the report has been filed as provided in subparagraph V(c) of this section.
    V. (a) The secretary of state shall deliver a copy of the examination report to the person examined, together with a notice affording such person 20 days or such additional reasonable period as the secretary of state for good cause may allow, within which to review the report and recommend changes therein.
       (b) If so requested by the person examined, within the period allowed under subparagraph V(a), or if deemed advisable by the secretary of state without such request, the secretary of state shall hold a closed hearing relative to the report and shall not file the report in the department until after such closed hearing and his order thereon; except, that the secretary of state may furnish a copy of the report to the governor, secretary of state or state treasurer pending final decision thereon.
       (c) If no such closed hearing has been requested or held, the examination report, with such modifications, if any, thereof as the secretary of state deems proper, shall be accepted by the secretary of state and filed upon expiration of the review period provided for in subparagraph V(a). The report shall in any event be so accepted and filed within 6 months after final hearing thereon.
       (d) The secretary of state shall forward to the person examined a copy of the examination report as filed, together with any recommendations or statements relating thereto which he deems proper.
       (e) The report when so filed in the department shall be admissible in evidence in accordance with rules of the superior court, in any action or proceeding brought by the secretary of state against the person examined, or against its officers, employees or agents. In any such action or proceeding, the secretary of state or his examiners may, however, at any time testify and offer proper evidence as to information secured or matters discovered during the course of an examination, whether or not a written report of the examination has been either made, furnished, or filed in the department.
    VI. All reports pursuant to this section shall be absolutely privileged and although filed in the department as provided in paragraph V shall nevertheless not be for public inspection. The comments and recommendations of the examiner shall also be deemed confidential information and shall not be available for public inspection, except as the secretary of state in his or her discretion may deem advisable.
    VI-a. The broker-dealer or other person examined pursuant to this section shall bear the expense of the examination. Such expenses shall be limited to a reasonable per diem allowance for compensation and expenses as determined by the secretary of state. The per diem allowance shall not exceed $100. Notwithstanding any other provision of law, domestic issuer-dealers shall be exempt from bearing the expense of examinations conducted pursuant to this section, except for the mileage expenses to and from the examination incurred by the department.
    VII. [Repealed.]
    VIII. Notwithstanding any other provision of law, the broker-dealer or other person liable for the travel expense of an examination pursuant to paragraph VII shall make such payment either directly to the individual conducting the examination, whether or not such individual is a classified state employee, or to the state of New Hampshire, as may be directed by the secretary of state. The secretary of state may direct that the travel expense allowance be paid directly to the individual conducting the examination. The compensation allowance shall be paid directly to the state. The amounts paid directly to individuals conducting the examination pursuant to this section may be in excess of any amounts that may be appropriated for such purposes.

Source. 1981, 214:1. 1987, 411:2, 3, 17. 1989, 144:1. 1990, 100:5, 6. 1991, 355:75, 89, II, 90. 1992, 288:31, 41. 1995, 201:3. 1997, 112:4. 2001, 260:13, 21, I. 2003, 156:3, eff. Aug. 16, 2003. 2006, 245:12, eff. July 1, 2006. 2007, 104:1, eff. July 1, 2007.