Insurance producer residency, preventive services, and broker-dealer standards

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CHAPTER 20:06:18
PRODUCER LICENSING
Section
20:06:18:01 Definitions.
20:06:18:01.01 Information management system.
20:06:18:02 Applicability.
20:06:18:03 Continuing education requirements for licensees.
20:06:18:03.01 Continuing education requirements for licensees obtaining new lines of
authority.
20:06:18:04 Repealed.
20:06:18:04.01 Reciprocity between states.
20:06:18:05 Guidelines for filing for course approval.
20:06:18:05.01 Course attendance roster.
20:06:18:05.02 Forms used for course approval.
20:06:18:05.03 Guidelines for course renewal.
20:06:18:06 Course approval.
20:06:18:07 Unapproved course subject matter.
20:06:18:08 Approved course subject matter.
20:06:18:09 Maximum company-sponsored courses, Repealed.
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20:06:18:10 Independent study.
20:06:18:11 Repealed.
20:06:18:12 Electronic fee.
20:06:18:13 Time extension of continuing education requirements.
20:06:18:14 Instructor qualifications.
20:06:18:15 Grounds for revocation or denial of instructor status.
20:06:18:16 Course attendance -- Exceptions.
20:06:18:17 Advertisement of courses.
20:06:18:18 Carry-over of credits prohibited.
20:06:18:19 Effective date of producer appointments.
20:06:18:20 Maximum credit for a course during a two-year period.
20:06:18:21 Definition of initial pretrial hearing.
20:06:18:22 Prohibited compensation arrangements.
20:06:18:23 Definition of resident.
Appendix A Midwest Zone Declaration Regarding Continuing Education Course Approval,
Including Midwest Zone Standard Continuing Education Filing Form, Repealed.
Appendix B Application for Course Approval and Instructor Qualification Form, Repealed.

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20:06:18:23. Definition of resident. For the purposes of SDCL 58-30-145 and 58-30-148,
"resident" means an applicant that has a present physical presence in this state and is domiciled or
has its principal place of business in this state. An applicant does not qualify as a resident by having
a post office box or using a mail forwarding service located in this state.
Source:
General Authority: SDCL 58-30-195.
Law Implemented: SDCL 58-30-145, 58-30-148.



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CHAPTER 20:06:54
PREVENTIVE SERVICES
Section
20:06:54:01 Coverage for preventive items and services.
20:06:54:02 Coverage for office visits in conjunction with preventive items and services.
20:06:54:03 Preventive items and services with out-of-network providers.
20:06:54:04 Reasonable medical management allowed.
20:06:54:05 Additional services not prohibited.
20:06:54:06 Applicability.
Appendix A Grade A and B Recommendations of the United States Preventive Services Task
Force, Repealed.











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20:06:54:01. Coverage for preventive items and services. A group health plan, or a
health insurance issuer offering group or individual health insurance coverage, shall must
provide coverage for all of the following items and services, and may not impose any cost-
sharing requirements such as a copayment, coinsurance, or deductible, or other cost-sharing
requirement with respect to, the following items or services:
(1) Evidence-based items or services that have in effect a rating of A or B in the
recommendations A & B Recommendations of the United States Preventive Services Task Force
as of July 1, 2018, and as appearing in Appendix A with respect to the individual involved
September 1, 2026;
(2) Immunizations for routine use in children, adolescents, and adults that have in effect a
recommendation from the Advisory Committee on Immunization Practices of the Centers for
Disease Control and Prevention with respect to the individual involved. For this purpose, a
recommendation from the Advisory Committee on Immunization Practices of the Centers for
Disease Control and Prevention is considered in effect after it has been adopted by the Director
of the Centers for Disease Control and Prevention, and a recommendation is considered to be for
routine use if it is, which are listed on the Immunization Schedules Recommended Adult
Immunization Schedule and Recommended Child and Adolescent Immunization Schedule of the
Centers for Disease Control and Prevention as of July 2, 2025;
(3) With respect to infants, children, and adolescents, evidence-informed Evidence-
informed preventive care and screenings provided for in comprehensive guidelines infants,
children, and adolescents, as provided in the Recommended Uniform Screening Panel as of
December 31, 2025, and Bright Futures: Recommendations for Preventive Pediatric Health Care,
Fourth Edition, 2017 supported by the Health Resources and Services Administration; and
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(4) With respect to women, to the extent not described in subdivision 20:06:54:01(1),
evidence-informed Evidence-informed preventive care and screenings provided for in
comprehensive guidelines supported by the Women's Preventive Services Guidelines published
by the Health Resources and Services Administration as of September 1, 2026.
A health carrier shall, at least annually at the beginning of each new plan year or policy
year, whichever is applicable, revise the preventive services covered under its the health carrier's
health insurance policies pursuant to this section consistent with the recommendations of the
United States Preventive Services Task Force, the Advisory Committee on Immunization
Practices of the Centers for Disease Control and Prevention and the guidelines with respect to
infants, children, adolescents, and women, evidenced-based preventive care and screenings by
the Health Resources and Services Administration in effect at the time.
Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7,
2010; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36,
58-18-41, 58-18-79, 58-18-80, 58-18-83.
Reference: The Guide to Clinical Preventive Services, 2014. Recommendation of the
U.S. Preventive Services Task ForceReferences:
A & B Recommendations, United States Preventive Services Taskforce. Copies can may
be obtained by contacting the Agency for Healthcare Research and Quality Publications
Clearinghouse, on a single copy basis. Mail AHRQ Publications Clearinghouse, P.O. Box 8547,
Silver Spring, MD 20907-8547. Online: http://www.ahrq.gov/. Telephone: 800-358-9295, E-
mail: [email protected]. You may also view online at
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http://www.uspreventiveservicestaskforce.org/Page/Name/recommendations free of charge from
the USPSTF Senior Project Coordinator, 5600 Fischers Lane, Mail Stop 06E53A, Rockville, MD
20857; https://www.uspreventiveservicestaskforce.org/uspstf/recommendation-topics/uspstf-a-
and-b-recommendations.
Bright Futures: Recommendations for Preventive Pediatric Health Care, Fourth
Edition, 2017, American Academy of Pediatrics. Copies may be obtained from the American
Academy of Pediatrics, available online: https://www.aap.org/en/catalog/categories/bright-
futures/bright-futures-guidelines-for-health-supervision-of-infants-children-and-adolescents-4th-
edition-/. Cost: $74.95.
Recommended Adult Immunization Schedule, 2025 edition, Centers for Disease Control
and Prevention. Copies may be obtained free of charge from the Centers for Disease Control and
Prevention, 2136 Ford Parkway Suite 5011, Saint Paul, Minnesota, 55116;
https://www.cdc.gov/vaccines/hcp/imz-schedules/downloads/adult/adult-combined-schedule.pdf.
Recommended Child and Adolescent Immunization Schedule, 2025 edition, Centers
for Disease Control and Prevention. Copies may be obtained free of charge from the Centers for
Disease Control and Prevention, 2136 Ford Parkway Suite 5011, Saint Paul, Minnesota, 55116;
https://www.cdc.gov/vaccines/hcp/imz-schedules/downloads/child/0-18yrs-child-combined-
schedule.pdf.
Recommended Uniform Screening Panel, 2025 edition, Health Resources and Services
Administration. Copies may be obtained free of charge from the Health Resources and Services
Administration, 5600 Fischers Lane, Mail Stop 06E53A, Rockville, MD 20857;
https://mchb.hrsa.gov/sites/default/files/mchb/programs-impact/recommended-uniform-
screening-panel-table-december-15-2025.pdf.
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Women's Preventive Services Guidelines, Health Resources and Services
Administration. Copies may be obtained free of charge from the Health Resources and Services
Administration, 5600 Fischers Lane, Mail Stop 06E53A, Rockville, MD 20857;
https://www.hrsa.gov/womens-guidelines.

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DEPARTMENT OF LABOR AND REGULATION DIVISION OF INSURANCE GRADE A AND B RECOMMENDATIONS OF THE UNITED STATES PREVENTIVE SERVICES TASK FORCE (REPEALED) Chapter 20:06:54 APPENDIX A SEE: § 20:06:54:01 Source: 37 SDR 63, effective September 27, 2010; 37 SDR 111, effective December 7, 2010.
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Appendix A Grade A and B Recommendations of the United States Preventive Services Task Force Topic Text Grade Date in Effect Screening for abdominal aortic aneurysm The USPSTF recommends one-time screening for abdominal aortic aneurysm (AAA) by ultrasonography in men aged 65 to 75 who have ever smoked. B Feb 28, 2005
Screening and counseling to reduce alcohol misuse The U.S. Preventive Services Task Force (USPSTF) recommends screening and behavioral counseling interventions to reduce alcohol misuse (go to Clinical Considerations) by adults, including pregnant women, in primary care settings. B April 30, 2004
Aspirin to prevent CVD: men The USPSTF recommends the use of aspirin for men age 45 to79 years when the potential benefit due to a reduction in myocardial infarctions outweighs the potential harm due to an increase in gastrointestinal hemorrhage. A March 30, 2009
Aspirin to prevent CVD: women The USPSTF recommends the use of aspirin for women age 55 to 79 years when the potential benefit of a reduction in ischemic strokes outweighs the potential harm of an increase in gastrointestinal hemorrhage. A March 30, 2009
Screening for bacteriuria The USPSTF recommends screening for asymptomatic bacteriuria with urine culture for pregnant women at 12 to 16 weeks' gestation or at the first prenatal visit, if later. A July 31, 2008
Screening for high blood pressure The U.S. Preventive Services Task Force (USPSTF) recommends screening for high blood pressure in adults aged 18 and older. A Dec 31, 2007
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Counseling related to BRCA screening The USPSTF recommends that women whose family history is associated with an increased risk for deleterious mutations in BRCA1 or BRCA2 genes be referred for genetic counseling and evaluation for BRCA testing. B Sept 30, 2005
Screening for breast cancer (mammography) The USPSTF recommends screening mammography for women with or without clinical breast examination (CBE), every 1-2 years for women aged 40 and older. B Sept 30, 2002
Chemoprevention of breast cancer The USPSTF recommends that clinicians discuss chemoprevention with women at high risk for breast cancer and at low risk for adverse effects of chemoprevention. Clinicians should inform patients of the potential benefits and harms of chemoprevention. B July 31, 2002
Interventions to support breast feeding The USPSTF recommends interventions during pregnancy and after birth to promote and support breastfeeding. B Oct 31, 2008
Screening for cervical cancer The USPSTF strongly recommends screening for cervical cancer in women who have been sexually active and have a cervix. A Jan 31, 2003
Screening for chlamydial infection: non- pregnant women The U.S. Preventive Services Task Force (USPSTF) recommends screening for chlamydial infection for all sexually active non-pregnant young women aged 24 and younger and for older non-pregnant women who are at increased risk. A June 30, 2007
Screening for chlamydial infection: pregnant women The USPSTF recommends screening for chlamydial infection for all pregnant women aged 24 and younger and for older pregnant women who are at increased risk. B June 30, 2007
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Screening for cholesterol abnormalities: men 35 and older The U.S. Preventive Services Task Force (USPSTF) strongly recommends screening men aged 35 and older for lipid disorders. A June 30, 2008
Screening for cholesterol abnormalities: men younger than 35 The USPSTF recommends screening men aged 20 to 35 for lipid disorders if they are at increased risk for coronary heart disease. B June 30, 2008
Screening for cholesterol abnormalities: women 45 and older The USPSTF strongly recommends screening women aged 45 and older for lipid disorders if they are at increased risk for coronary heart disease. A June 30, 2008
Screening for cholesterol abnormalities: women younger than 45 The USPSTF recommends screening women aged 20 to 45 for lipid disorders if they are at increased risk for coronary heart disease. B June 30, 2008
Screening for colorectal cancer The USPSTF recommends screening for colorectal cancer (CRC) using fecal occult blood testing, sigmoidoscopy, or colonoscopy, in adults, beginning at age 50 years and continuing until age 75 years. The risks and benefits of these screening methods vary. A Oct 31, 2008
Chemoprevention of dental caries The USPSTF recommends that primary care clinicians prescribe oral fluoride supplementation at currently recommended doses to preschool children older than 6 months of age whose primary water source is deficient in fluoride. B April 30, 2004
Screening for depression: adults The USPSTF recommends screening adults for depression when staff-assisted depression care supports are in place to assure accurate diagnosis, effective treatment, and follow-up. B Dec 31, 2009
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Screening for depression: adolescents The USPSTF recommends screening of adolescents (12-18 years of age) for major depressive disorder (MDD) when systems are in place to ensure accurate diagnosis, psychotherapy (cognitive-behavioral or interpersonal), and follow-up. B March 30, 2009
Screening for diabetes The USPSTF recommends screening for type 2 diabetes in asymptomatic adults with sustained blood pressure (either treated or untreated) greater than 135/80 mm Hg. B June 30, 2008
Counseling for a healthy diet The USPSTF recommends intensive behavioral dietary counseling for adult patients with hyperlipidemia and other known risk factors for cardiovascular and diet-related chronic disease. Intensive counseling can be delivered by primary care clinicians or by referral to other specialists, such as nutritionists or dietitians. B Jan 30, 2003
Supplementation with folic acid The USPSTF recommends that all women planning or capable of pregnancy take a daily supplement containing 0.4 to 0.8 mg (400 to 800 µg) of folic acid. A May 31, 2009
Screening for gonorrhea: wp,em The U.S. Preventive Services Task Force (USPSTF) recommends that clinicians screen all sexually active women, including those who are pregnant, for gonorrhea infection if they are at increased risk for infection (that is, if they are young or have other individual or population risk factors; go to Clinical Considerations for further discussion of risk factors). B May 31, 2005
Prophylactic medication for gonorrhea: newborns The USPSTF strongly recommends prophylactic ocular topical medication for all newborns against gonococcal ophthalmia neonatorum. A May 31, 2005
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Screening for hearing loss The USPSTF recommends screening for hearing loss in all newborn infants. B July 31, 2008
Screening for hemoglobinopathies The U.S. Preventive Services Task Force (USPSTF) recommends screening for sickle cell disease in newborns. A Sept 30, 2007
Screening for hepatitis B The U.S. Preventive Services Task Force (USPSTF) strongly recommends screening for hepatitis B virus (HBV) infection in pregnant women at their first prenatal visit. A June 30, 2009
Screening for HIV The U.S. Preventive Services Task Force (USPSTF) strongly recommends that clinicians screen for human immunodeficiency virus (HIV) all adolescents and adults at increased risk for HIV infection (go to Clinical Considerations for discussion of risk factors). A July 31, 2005
Screening for congenital hypothyroidism The USPSTF recommends screening for congenital hypothyroidism (CH) in newborns. A March 31, 2008
Screening for iron deficiency anemia The USPSTF recommends routine screening for iron deficiency anemia in asymptomatic pregnant women. B May 31, 2006
Iron supplementation in children The U.S. Preventive Services Task Force (USPSTF) recommends routine iron supplementation for asymptomatic children aged 6 to 12 months who are at increased risk for iron deficiency anemia (go to Clinical Considerations for a discussion of increased risk). B May 30, 2006
Screening and counseling for obesity: adults The USPSTF recommends that clinicians screen all adult patients for obesity and offer intensive counseling and behavioral interventions to promote sustained weight loss for obese adults. B Dec 31, 2003
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Screening and counseling for obesity: children The USPSTF recommends that clinicians screen children aged 6 years and older for obesity and offer them or refer them to comprehensive, intensive behavioral interventions to promote improvement in weight status. B Jan 31, 2010
Screening for osteoporosis The U.S. Preventive Services Task Force (USPSTF) recommends that women aged 65 and older be screened routinely for osteoporosis. The USPSTF recommends that routine screening begin at age 60 for women at increased risk for osteoporotic fractures. (Go to Clinical Considerations for discussion of women at increased risk.) B Sept 30, 2002
Screening for PKU The USPSTF recommends screening for phenylketonuria (PKU) in newborns. A March 31, 2008
Screening for Rh incompatibility: first pregnancy visit The U.S. Preventive Services Task Force (USPSTF) strongly recommends Rh (D) blood typing and antibody testing for all pregnant women during their first visit for pregnancy-related care. A Feb 29, 2004
Screening for Rh incompatibility: 24-28 weeks gestation The USPSTF recommends repeated Rh (D) antibody testing for all unsensitized Rh (D)-negative women at 24-28 weeks' gestation, unless the biological father is known to be Rh (D)-negative. B Feb 29, 2004
Counseling for STIs The USPSTF recommends high-intensity behavioral counseling to prevent sexually transmitted infections (STIs) for all sexually active adolescents and for adults at increased risk for STIs. B Oct 31, 2008
Screening for syphilis: non- The U.S. Preventive Services Task Force (USPSTF) strongly recommends A July 31, 2004
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pregnant persons that clinicians screen persons at increased risk for syphilis infection. Screening for syphilis: pregnant women The USPSTF recommends that clinicians screen all pregnant women for syphilis infection. A July 31, 2004
Counseling for tobacco use The USPSTF recommends that clinicians ask all adults about tobacco use and provide tobacco cessation interventions for those who use tobacco products. A April 30, 2009
Counseling for tobacco use The USPSTF recommends that clinicians ask all pregnant women about tobacco use and provide augmented, pregnancy-tailored counseling for those who smoke. A April 30, 2009
Screening for visual acuity in children The USPSTF recommends screening to detect amblyopia, strabismus, and defects in visual acuity in children younger than age 5 years. B May 31, 2004


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CHAPTER 20:08:03
BROKER-DEALER AND AGENT RULES
Section
20:08:03:01 Registration for broker-dealers, broker-dealer agents, and agents of the issuer.
20:08:03:02 Record keeping requirements for broker-dealers.
20:08:03:03 Broker-dealer minimum financial requirements.
20:08:03:04 Net capital requirements of broker-dealers.
20:08:03:05 Waiver of certain broker-dealer records and financial requirements.
20:08:03:06 Dishonest and unethical practices, broker -- Broker-dealer, broker -- Broker-
dealer agents.
20:08:03:07 Fraudulent practices of broker-dealers, broker-dealer agents, and agents of the
issuer.
20:08:03:07.01 Certification and professional designations.
20:08:03:08 Written supervisory procedures.
20:08:03:09 Copies of complaints to be filed with director.
20:08:03:10 Notice of transfer of control or of name change.
20:08:03:11 Notice of net capital deficiency.
20:08:03:12 Repealed.
20:08:03:13 Notice of thefts required.
20:08:03:14 Broker-dealer conduct on the premises of financial institutions.
20:08:03:15 Cross-border exemptions from registration for broker-dealers and agents.
20:08:03:16 Employee of the issuer exemption.
20:08:03:17 Finders.
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20:08:03:18 Business brokers.
20:08:03:06. Dishonest and unethical practices, broker -- Broker-dealer, broker --
Broker-dealer agents. Any broker-dealer or agent who engages in one or more of the following
practices shall be deemed to have engaged in dishonest or unethical practices as used in SDCL
47-31B-412(d)(13) and such conduct may constitute grounds for denial, suspension, or
revocation of registration or such other action authorized by statute Each broker-dealer and agent
shall observe high standards of commercial honor and just and equitable principles of trade in the
conduct of their business. The following acts and practices are contrary to the standards and are
grounds for denial, suspension, or revocation of registration or any other action authorized by
statute:
(1) Broker-Dealers A broker-dealer may not:
(a) Engaging Engage in a pattern of unreasonable and unjustifiable delays either in the
delivery of securities purchased by any of its customers or in the payment upon request of free
credit balances reflecting completed transactions of any of its customers, or both;
(b) Inducing Induce trading in a customer's account which that is excessive in size or
frequency in view of the financial resources and character of the account;
(c) Recommending Recommend to a customer the purchase, sale, or exchange of any
security without reasonable grounds to believe that such the transaction or recommendation is
suitable for the customer based upon reasonable inquiry concerning the customer's investment
objectives, financial situation and needs, and any other relevant information known by the
broker-dealer.;
The rule in this subsection (c) may be referred hereinafter to as the suitability rule;
(d) When making a recommendation to a retail customer:
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(i) Placing financial or other interest of the broker-dealer or agent ahead of the interest
of the retail customer;
(ii) Recommending an investment strategy or the sale or purchase of any security
without a reasonable basis to believe the recommendation is in the best interest of the retail
customer based on the customer's investment profile and the potential risks, rewards, and costs
associated with the recommendation; or
(iii) Failing to otherwise comply with Regulation Best Interest, as set forth in 17 C.F.R.
§ 240.15l-1 or the related obligations set forth in 17 C.F.R. § 240.17a-14 (July 1, 2026);
(e) Executing a transaction on behalf of a customer without authorization to do so;
(e)(f) Exercising any discretionary power in effecting a transaction for a customer's
account without first obtaining written discretionary authority from the customer, unless the
discretionary power relates solely to either the time and/or or price, or both, for the executing of
orders;
(f)(g) Executing any transaction in a margin account without securing from the customer a
properly executed written margin agreement promptly after the initial transaction in the account;
(g)(h) Failing to segregate customers' a customer's free securities or securities held in
safekeeping;
(h)(i) Hypothecating a customer's securities without having a lien theron, unless the
broker-dealer secures from the customer a properly executed written consent promptly after the
initial transaction, except as permitted by Rules of the Securities and Exchange Commission
under 17 C.F.R. Part 200 (July 1, 2026);
(i)(j) Entering into a transaction with or for a customer at a price not reasonably related to
the current market price of the security or receiving an unreasonable commission or profit;
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(j)(k) Failing to furnish to a customer purchasing securities in an offering, no later than the
due date of confirmation of the transaction, either a final prospectus or a preliminary prospectus
and an additional document, which together include all information set forth in the final
prospectus;
(k)(l) Charging unreasonable and inequitable fees for services performed, including
miscellaneous services such as the collection of monies due for principal,; for dividends or
interest,; for exchange or transfer of securities, appraisals, safekeeping, or custody of securities;
and for other services related to its securities business performed in relation to the broker-dealer's
securities business;
(l)(m) Offering to buy from or sell to any person any security at a stated price, unless such
the broker-dealer is prepared to purchase or sell, as the case may be, at such the price and under
such the conditions as are stated at the time of such the offer to buy or sell;
(m)(n) Representing that a security is being offered to a customer "at the market" or a price
relevant to the market price, unless such the broker-dealer knows or has reasonable grounds to
believe that a market for such the security exists other than that made, created, or controlled by
such the broker-dealer, or by any such person for whom the broker-dealer is acting or with whom
the broker-dealer is associated in such the distribution, or by any person controlled by,
controlling, or under common control with such the broker-dealer;
(n)(o) Effecting any transaction in, or inducing the purchase or sale of, any security by
means of any manipulative, deceptive, or fraudulent device, practice, plan, program, design, or
contrivance, which may include including:
(1)(i) Effecting any transaction in a security which that involves no change in the
security's beneficial ownerships thereof ownership;
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(2)(ii) Entering an order or orders for the purchase or sale of any security with the
knowledge that an order or orders of substantially the same size, at substantially the same time,
and for substantially the same price, for the sale of any such the security, has been or will be
entered by or for the same or different parties or any other party for the purpose of creating a
false or misleading appearance of active trading in the security or a false or misleading
appearance with respect to the market for the security. However, provided that nothing in this
subsection prohibits a broker-dealer from entering bona fide agency cross transactions for
customers;
(3)(iii) Effecting, alone or with one or more other persons another person, a series of
transactions in any security creating actual or apparent active trading in such the security, or
raising or depressing the price of such the security, for the purpose of inducing the purchase or
sale of such the security by others;
(o)(p) Guaranteeing a customer against loss in any securities account of such the customer
carried by the broker-dealer or in any securities transaction effected by the broker-dealer or in
any securities transaction effected by the broker-dealer with or for such the customer;
(p)(q) Publishing or circulating, or causing to be published or circulated, any notice,
circular, advertisement, newspaper article, investment service, or communication of any kind,
which purports to report any transaction as a purchase or sale of any security, unless such the
broker-dealer believes that such the transaction was a bona fide purchase or sale of such the
security; or which purports to quote the bid price or asked price for any security, unless such the
broker-dealer believes that such the quotation represents a bona fide bid for, or offer of, such the
security;
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(q)(r) Using any advertising or sales presentation in such a fashion as to be deceptive or
misleading. An example of such practice would be a distribution of Distributing any nonfactual
data, material, or presentation based on conjecture,; unfounded or unrealistic claims,; or
assertions in any brochure, flyer, or display by words, pictures, graphs, or any other advertising
or sales presentation that is deceptive, misleading, or otherwise designed to supplement, detract
from, supersede, or defeat the purpose or effect of any prospectus or disclosure; or
(r)(s) Failing to disclose to a customer that the broker-dealer is controlled by, controlling,
affiliated with, or under common control with the issuer of any security before entering into any
contract with or for a customer for the purchase or sale of such the security, the existence of such
control to such customer, and if such the disclosure is not made in writing, it shall must be
supplemented by the giving or sending of written disclosure at or before the completion of the
transaction;
(s)(t) Failing to make a bona fide public offering of all of the securities allotted to a broker-
dealer for distribution, whether acquired as an underwriter, a selling group member, or from a
member participating in the distribution as an underwriter or selling group member; or
(t) Failure or refusal(u) Failing or refusing to furnish a customer, upon reasonable request,
information to which the customer is entitled, or to respond to a formal written request or
complaint.;
(v) Failing to pay and fully satisfy any final judgment or arbitration award, resulting from
an investment-related, customer-initiated arbitration or court proceeding, unless an alternative
payment arrangement is agreed to between the customer and the broker-dealer or broker-dealer
agent, in writing, and the broker-dealer or broker-dealer agent complies with the terms of the
alternative payment arrangement;
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(w) Attempting to avoid payment of any final judgment or arbitration award resulting from
an investment-related, customer-initiated arbitration or court proceeding, unless an alternative
payment arrangement is agreed to between the customer and the broker-dealer or broker-dealer
agent, in writing, and the broker-dealer or broker-dealer agent complies with the terms of the
alternative payment arrangements; or
(x) Failing to pay and fully satisfy any fine, civil penalty, order of restitution, order of
disgorgement, or similar monetary payment obligation imposed upon the broker-dealer or
broker-dealer agent by the Securities and Exchange Commission, the securities or other financial
services regulator of any state or province, or any self-regulatory organization;
(2) Agents An agent may not:
(a) Engaging Engage in the practice of lending or borrowing money or securities from a
customer, except as provided in FINRA Rule 3240, lending or borrowing securities from a
customer, or acting as a custodian for money, securities, or an executed stock power of a
customer;
(b) Effecting Effect a securities transactions transaction that is not recorded on the regular
books or records of the broker-dealer which that the agent represents, unless the transactions are
transaction is authorized in writing by the broker-dealer prior to execution of the transaction;
(c) Establishing or maintaining Establish or maintain an account containing fictitious
information in order to execute transactions which would otherwise be an otherwise prohibited
transaction;
(d) Sharing Share directly or indirectly in profits or losses in the account of any customer
without the written authorization of the customer and the broker-dealer which that the agent
represents;
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(e) Dividing or otherwise splitting Divide or split the agent's commissions, profits, or other
compensation from the purchase or sale of securities with any person that is not also registered as
an agent for the same broker-dealer, or for a broker-dealer under direct or indirect common
control.
(A) Notwithstanding the provisions of § subsection 20:08:03:06(2)(e) of this rule, a
broker-dealer or agent:
(i) May, provided that the agent or a broker-dealer may:
(i) Share a commission, discount, or other remuneration from the purchase or sale of a
security with:
(a) A depository institution as defined in SDCL 47-31B-102(5).
(b) A bank holding company approved by the board of governors of the federal
reserve bank pursuant to the Bank Holding Company Act of 1956, 70 Stat. 133, 12 U.S.C. 1841,
as amended; or
(c) A financial holding company approved by the board of governors of the
federal reserve bank pursuant to the Bank Holding Company Act of 1956, 70 Stat. 133, 12
U.S.C. 1841, as amended;
(B) May provide to an employee of a depository institution compensation for the
referral of a customer if the compensation is a nominal one-time cash fee of a fixed dollar
amount and the payment of the fee is not contingent on whether the referral results in a purchase
or sale of a security. share a commission, discount, or other remuneration from the purchase or
sale of a security with a depository institution, as defined in SDCL 47-31B-102(5); a bank
holding company or financial holding company approved by the board of governors of the
federal reserve bank pursuant to the Bank Holding Company Act of 1956, 12 U.S.C. §§ 1841 to
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1852, inclusive (July 1, 2026); or an employee of a depository institution, for the referral of a
customer, if the payment is a nominal one-time cash fee of a fixed dollar amount and the
payment of the fee is not contingent on whether the referral results in a purchase or sale of a
security;
(f) Engaging in conduct specified in subsection (1)(b),(c),(d),(e),(f),(i),(j),(n),(o),(p), or (q)
subsections (1)(b), (c), (d), (e), (f), (g), (h), (k), (l), (p), (q), (r), (s), (w), (x), or (y).; or
The conduct set forth above is not inclusive.(g) Engaging in other conduct such as
forgery,; embezzlement,; nondisclosure, incomplete disclosure, or misstatement of material
facts,; or any other manipulative or deceptive practices shall also be grounds for denial,
suspension, or revocation of registration. practice;
(3) Broker-dealers and agents A broker-dealer or agent may not:
(a) Any Engage in any acts or practices enumerated in subsection (1) above.;
(b) In connection with the solicitation of a sale or purchase of an OTC unlisted non-
NASDAQ security, failing fail to promptly provide the most current prospectus or the most
recently filed recent periodic report filed under Section 13 of the Securities Exchange Act 15
U.S.C. § 78m (July 1, 2026) when requested to do so by a customer. in connection with the
solicitation of a sale or purchase of an over-the-counter unlisted non-National Association of
Securities Dealers Automated Quotations security;
(c) Marking Make any order tickets ticket or confirmations confirmation as unsolicited
when in fact the transaction was solicited.;
(d) For any month in which activity has occurred in a customer's account, but in no event
less frequently than every three months, failing fail to provide each customer with a statement of
account which with respect to all OTC non-NASDAQ over-the-counter non-National
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Association of Securities Dealers Automated Quotation equity securities in the account, contains
containing a value for each such security based on the closing market bid on a date certain.
However, provided that this subsection applies only if the firm has been a market maker in such
the security at any time during the month in which the monthly or quarterly statement is issued.;
or
(e) Failing Fail to comply with any applicable provision of the Conduct Rules and any
other Rules of Fair Practice of FINRA or any applicable fair practice, ethical standard, or
fiduciary standard promulgated by the Securities and Exchange Commission or by a self-
regulatory organization approved by the Securities and Exchange Commission.;
(4) Sale of investment company shares by broker-dealers or agents. Any broker-dealer or agent
who engages in one or more of the following practices shall be deemed to have engaged in
dishonest or unethical practices as used in SDCL 47-31B-412(d)(13) and such conduct may
constitute grounds for denial, suspension, or revocation of registration or such other action
authorized by statute.
(a) Sales load communications: A broker-dealer or agent in connection with the offer or
sale of an investment company share may not have any sales load communications that:
(1) In connection with the offer or sale of an investment company share, failing (a) Fail
to adequately disclose to a customer all sales charges, including asset based and contingent
deferred sale charges any asset-based, contingent, or other sales charge, which may be imposed
with respect to the purchase, retention, or redemption of such shares. the share;
(2) In connection with the solicitation of investment company shares, stating or
implying (b) State or imply to a customer, either orally or in writing, that the shares are share
is sold without a commission, are is "no load," or have has "no sales charge," if there is
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associated with the purchase of the shares share: (i) a front-end load; (ii) a contingent deferred
sales load; (iii) an a fee pursuant to SEC Rule 12b-1, 17 C.F.R. § 270.12b-1 (July 1, 2026) fee or
a service fee which exceeds .25 exceeding one-quarter percent of average net fund assets per
year; or (iv) in the case of closed-end investment company shares share, underwriting fees,
commissions, or other offering expenses.
(3) In connection with the solicitation of investment company shares, failing;
(c) Fail to disclose to a customer any relevant: (i) sales charge discount on the purchase of
shares a share, in dollar amounts at or above a breakpoint; or (ii), or letter of intent feature, if
available, which will reduce the sales charges.
(4) In connection with the solicitation of investment company shares, recommending
charge; or
(d) Recommend to a customer the purchase of a specific class of an investment company
shares share in connection with a multi-class sales charge or fee arrangement without reasonable
grounds to believe that the sales charge or fee arrangement associated with such the class of
shares is suitable and appropriate based on the customer's investment objectives, financial
situation and other securities holdings, and the any associated transaction charge or other fees.
fee;
(b) Recommendations. (5) A broker-dealer or agent in connection with the offer or sale
of an investment company shares share may not recommend to a customer:
(1) In connection with the solicitation of investment company shares, recommending to
a customer the (a) The purchase of an investment company shares share which results in
the customer simultaneously holding shares in different investment company portfolios having
similar investment objectives and policies without reasonable grounds to believe that such the
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recommendation is suitable and appropriate based on the customer's investment objectives,;
financial situation and other securities holdings,; and any associated transaction charges charge
or other fees. fee; or
(2) In connection with the solicitation of investment company shares, recommending
to a customer the (b) The liquidation or redemption of an investment company share for
the purpose of purchasing shares in a different investment company portfolio having similar
investment objectives and policies without reasonable grounds to believe that such the
recommendation is suitable and appropriate based on the customer's investment objectives,;
financial situation and other securities holdings,; and any associated transaction charges or other
fees. fee;
(c) Disclosure Statements. (6) A broker-dealer or agent in connection with the offer or
sale of an investment company shares share may not state or imply to a customer:
(1) In connection with the solicitation of investment company shares, stating
or implying to a customer the (a) The fund's current yield or income without disclosing the
fund's most recent average annual total return, calculated in a manner prescribed in SEC
Securities Exchange Commission Form N-1A, 17 C.F.R. § 239.15A (July 1, 2026), for one-,
five-, and ten year ten-year periods and fully explaining the difference between current yield and
total return. However, provided that if the fund's registration statement under the Securities Act
of 1933, 15 U.S.C. § 77a to 77aa, inclusive (July 1, 2026), has been in effect for less than one,
five, or ten years, the time during which the registration statement was in effect shall be
substituted for must be substituted for the periods otherwise prescribed.;
(2) In connection with the solicitation of investment company shares, stating
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or implying to a customer that the (b) The investment performance of an investment
company portfolio is comparable to that of a savings account, certificate of deposit, or other bank
deposit account without disclosing to the customer that the shares are share is not insured or
otherwise guaranteed by the FDIC, Federal Deposit Insurance Corporation, or any other
government agency and the relevant differences regarding risk,; guarantees,; fluctuation of either
principal and/or or return, or both; and any other factors which that are necessary to ensure that
such the comparisons are fair, complete, and not misleading.;
(3) In connection with the solicitation of investment company shares, stating or
implying to a customer the (c) The existence of insurance, credit quality, guarantees, or
similar features regarding securities held, or proposed to be held, in the investment company's
portfolio without disclosing to the customer other kinds of relevant investment risks, including
interest rate,; market, political, liquidity, or currency exchange risks associated with interest
rates, markets, political conditions, liquidity, or currency exchange, or any other relevant
investment risk, which may adversely affect investment performance and result in either loss
and/or or fluctuation, or both, of principal, notwithstanding the creditworthiness of such the
portfolio securities.
(4) In connection with the offer or sale of investment company shares, stating or
implying to a customer: (i) that the (d) The purchase of such shares the share shortly before
an ex-dividend date is advantageous to such the customer, unless there are specific, clearly
described tax or other advantages to the customer; or (ii) that, or that a distribution of long-term
capital gains by an investment company is part of the income yield from an investment in such
shares. the share; or
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(5) In connection with the offer or sale of investment company shares, making: (i)
(e) the making of projections of future performance; (ii), statements not warranted under
existing circumstances; or (iii), or statements based upon nonpublic information.
(d) Prospectus.
In connection with the solicitation of an investment company shares share, the delivery
of a prospectus is not dispositive that the broker-dealer or agent has fulfilled the duties set forth
in the subsections of this rule this section.
(e) Definitions. For purposes of this subsection (4), the following terms mean:
(1) "Recommendation": any affirmative act or statement that endorses, solicits, requests,
or commends a securities transaction to a customer or any affirmative act or statement that
solicits, requests, commands, importunes, or intentionally aids such a person to engage in such
the conduct.
(2) "Solicitation": any oral, written, or other communication used to offer or sell
investment company shares excluding any proxy statement, report to shareholders, or other
disclosure document relating to a security covered under Section 18(b)(2) of the Securities Act of
1933, that is required to be and is filed with the Securities and Exchange Commission or any
national securities organization registered under Section 15A of the Securities Exchange Act of
1934.
The conduct set forth above in this section is not inclusive. Engaging in other conduct such
as forgery, embezzlement, nondisclosure, incomplete disclosure or misstatement of material
facts, or manipulative or deceptive practices shall also be grounds for denial, suspension or
revocation of registration.
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(5) Variable contracts: The term, variable contract, includes variable annuities. Because owners
of Variable Contracts assume certain investment risks, the contracts are also considered
securities and are (7) Variable contracts, including variable annuities, are securities that are
subject to SDCL chapter 47-31B. As securities, the sales and The sale or distribution of a
variable contracts are fully contract is subject to sales practice rules. The suitability rule, as set
forth in § Subsection 20:08:03:06(1)(c), applies when a variable contract is recommended and
sold to a customer. Questions of suitability will arise when the investor customer (i) states that
his or her life insurance needs are adequately met; (ii) the investor customer expresses preference
for an investment other than an insurance product; (iii) the investor customer has the inability is
unable to fully appreciate how much of the purchase payment or premium is allocated to cover
insurance or other costs, and the investor's customer lacks the ability to understand the general
complexity of Variable Contracts generally a variable contract; (iv) the investor's customer
expresses willingness to invest a set amount on a yearly basis; (v) the investor's customer has a
need for liquidity and short-term investment; (vi) the investor's customer expresses a need for
immediate need for retirement income; and (vii) the investor's customer investment
sophistication and whether he or she is able to monitor the investment experience of the separate
account.
It shall be deemed to be is a dishonest or unethical practice, as used described in SDCL 47-
31B-412(d)(13), for a broker-dealer or agent of a broker-dealer to violate FINRA Rules 2320 and
2330 or to exclude any of the following procedures below in this subsection (5), in order to
determine suitability when recommending to a customer Variable Contracts fail to comply with
any requirements in this section concerning a variable contract.
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(a) The registered agent or registered principal should shall make reasonable efforts to
obtain the customer's occupation, marital status, age, number of dependents, investment
objectives, risk tolerance, tax status, previous investment experience, liquid net worth, other
investments and savings, and annual income;
(b).
The registered agent or registered principal should shall discuss all relevant facts with the
customer, including liquidity issues, such as potential surrender charges and the, Internal
Revenue Service (IRS) penalty fees, including mortality and expense charges and other penalty
fees, administrative charges, and investment advisory fees, and other liquidity issues; any
applicable state and local government premium taxes, inheritance taxes and market risk;
(c) and all other relevant facts.
The registered agent or registered principal should shall seek to ensure that the variable
contract application and any other information provided by the customer is complete and
accurate and promptly forwarded to a registered principal of the broker for review;
(d) .
The registered agent or registered principal should shall review the customer's investment
objectives, risk tolerance, and other information to determine that whether the variable contract
as a whole and the underlying sub-accounts recommended to the customer are suitable prior to
approving the transaction;
(e) .
The registered agent or registered principal should shall have a thorough knowledge of the
specifications of each variable contract that is recommended, including the death benefit, fees
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and expenses, sub-account choices, special features, withdrawal privileges, and tax treatment,
and other specifications of any recommended variable contract.
(f) A current prospectus should be given The registered agent or registered principal
shall discuss with the customer and provide a current prospectus to the customer when a variable
contract is recommended and should be discussed with the customer;
(g) .
The registered agent or registered principal should shall inquire about whether the
customer has a long-term investment objective and typically should may recommend a variable
contract only if the answer to that question, with consideration of other product attributes, is
affirmative. The registered agent should make sure shall ensure that the customer understands the
effect of surrender charges on redemptions and that a withdrawal prior to the age of 59½ fifty-
nine and one-half could may result in a tax penalty. Customers 59½ A customer who is fifty-nine
and one-half years-old should must be informed when surrender charges apply to withdrawals;
(h) .
The broker should shall develop procedures to screen for any customer whose age may
make a long-term investment inappropriate;
(i) Brokers should.
The broker shall establish procedures to require a registered principal's careful review of a
variable contract investments investment that exceed exceeding a stated percentage to of the
customer's net worth, and any contract in which a customer is investing more than a stated dollar
amount;
(j) When.
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If a registered agent recommends the purchase of a variable contract for any tax-qualified
retirement account (e.g., a 401(k) plan, IRA), or other tax-qualified retirement account, the
registered agent should must disclose to the customer that the tax deferred accrual feature is
provided by the tax-qualified retirement plan and that the tax deferred accrual feature of the
variable contract is unnecessary;
(k) A.
The registered agent or registered principal should shall conduct an especially a
comprehensive suitability analysis prior to approving the sale of a variable contract with
surrender charges to a customer in a tax-qualified account subject to plan minimum distribution
requirements;
(l) .
The broker should shall have an exchange or replacement analysis document or utilize an
existing form authorized by a state insurance commission or other regulatory agency.
If such a document is used, it should, which must be completed for all variable contract
replacements and should include an explanation of the benefits of replacing one contract for
another variable contract, considering such matters as product enhancements and improvements,
lower cost structures, and surrender charges. The document also should must be signed by the
customer, the registered agent, and the registered principal; and
(m) .
The broker should shall have a compliance procedure that will "red flag" identifies any
registered agents who have agent with a high rate of variable contract replacements or rollovers
so that the firm can may determine whether the replacements are suitable.
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The conduct set forth above is not inclusive. Engaging in other conduct such as forgery,
embezzlement, nondisclosure, incomplete disclosure or misstatement of material facts,; or
manipulative or deceptive practices shall also be grounds for denial, suspension, or revocation or
registration.
For purposes of this section, "recommend," or "recommendation," means any affirmative
act or statement to endorse, solicit, request, or commend a securities transaction to a customer or
any affirmative act or statement that solicits, requests, commands, importunes, or intentionally
aids a person to engage in the conduct.
For purposes of this section, "solicitation," means any oral, written, or other
communication used to offer or sell an investment company share, excluding any proxy
statement, report to shareholders, or other disclosure document relating to a security covered
under the Securities Act of 1933, 15 U.S.C. § 77r(b)(2) (July 1, 2026), which is required to be
and is filed with the Securities and Exchange Commission or any national securities organization
registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78o(a) (July 1, 2026).
Source: 27 SDR 5, effective July 31, 2000; 28 SDR 48, effective October 10, 2001; 30 SDR
211, effective July 1, 2004; 37 SDR 112, effective December 9, 2010.
General Authority: SDCL 47-31B-605(a)(1) and (2).
Law Implemented: SDCL 47-31B-103, 47-31B-412(d), 47-31B-605(a)(2)(b).