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20:06:18:04 Repealed.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20:06:18:09 Maximum company-sponsored courses, Repealed. 2
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20:06:18:11 Repealed.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Including Midwest Zone Standard Continuing Education Filing Form, Repealed.
Appendix B Application for Course Approval and Instructor Qualification Form, Repealed.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 individual producer, business entity, or applicant with a present physical
presence in South Dakota and a domiciliary address or principal place of business address in South
Dakota. For the purposes of this section, the term address does not include a person with a post
office box or mail forwarding service based in South Dakota.
Source:
General Authority: SDCL 58-30-195.
Law Implemented: SDCL 58-30-145, 58-30-148, and 58-30-195.


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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.










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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 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 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 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 listed on the Immunization Schedules of the Centers for Disease Control and
Prevention as of July 2, 2025;
(3) With respect to infants, children, and adolescents, evidence-informed preventive care
and screenings provided for in comprehensive guidelines, such as the Recommended Uniform
Screening Panel as of December 31, 2025, supported by the Health Resources and Services
Administration; and
(4) With respect to women, to the extent not described in subdivision 20:06:54:01(1),
evidence-informed preventive care and screenings provided for in comprehensive guidelines
supported by the Health Resources and Services Administration as of September 1, 2026. 6
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 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 Force References: A & B Recommendations, U.S. Preventive
Services Taskforce. Copies can 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
http://www.uspreventiveservicestaskforce.org/Page/Name/recommendations 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. Cost: $0. 7
Immunization Schedules, Centers for Disease Control and Prevention. Copies can be
obtained from the Centers for Disease Control and Prevention, 2136 Ford Parkway
Suite 5011, Saint Paul, Minnesota, 55116; https://www.immunize.org/official-guidance/cdc/rec-
schedules. Cost $0.
Recommended Uniform Screening Panel, Health Resources and Services
Administration. Copies can be obtained 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. Cost: $0.
Women’s Preventive Services Guideline, Health Resources and Services Administration.
Copies can be obtained from the Health Resources and Services Administration, 5600 Fischers
Lane, Mail Stop 06E53A, Rockville, MD 20857; https://www.hrsa.gov/womens-guidelines.
Cost: $0.
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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 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. 9
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 10
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 11
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 12
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 13
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 14
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 15
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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20:08:03:06. Dishonest and unethical practices, broker-dealer, 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. Acts
and practices, including those listed in this section, are contrary to the standards and are grounds
for denial, suspension, or revocation of registration or such other action authorized by statute.
(1) Broker-Dealers
(a) Engaging 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 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 to a customer the purchase, sale, or exchange of any security without
reasonable grounds to believe that such 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:
(1) Placing financial or other interest of the broker-dealer or agent ahead of the interest
of the retail customer; 17
(2) 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
(3) Failing to otherwise comply with the obligations set forth in Regulation Best Interest,
as set forth in rule 17 C.F.R. § 240.15l-1, including 17 C.F.R. § 240.17a-14 (July 1, 2026);
(e) Using a title, credential, or professional designation containing any variant of the term
“adviser” or “advisor” without licensure as either an investment adviser or an investment adviser
representative, unless permitted by law;
(d)(f) Executing a transaction on behalf of a customer without authorization to do so;
(e)(g) 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)(h) 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)(i) Failing to segregate customers’ a customer’s free securities or securities held in
safekeeping;
(h)(j) 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. § 200 et seq. (July 1, 2026);
(i)(k) 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; 18
(j)(l) 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)(m) Charging unreasonable and inequitable fees for services performed, including
miscellaneous services such as for the collection of monies due for principal,; dividends or
interest,; exchange or transfer of securities, appraisals, safekeeping, or custody of securities; and
other services related to its securities business;
(l)(n) 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)(o) 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 any person controlled by, controlling, or
under common control with such the broker-dealer;
(n)(p) 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) Effecting any transaction in a security which that involves no change in the beneficial
ownerships thereof ownership; 19
(2) 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
substantially the same price, for the sale of any such security, has been or will be entered by or for
the same or different parties 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, nothing in this subsection prohibits a broker-dealer from entering bona fide
agency cross transactions for customers;
(3) Effecting, alone or with one or more other persons, 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)(q) 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)(r) Publishing or circulating, or causing to be published or circulated, any notice, circular,
advertisement, newspaper article, investment service, or communication of any kind which that
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 broker-dealer
believes that such the quotation represents a bona fide bid for, or offer of, such security;
(q)(s) Using any advertising or sales presentation in such a fashion as to be deceptive or
misleading manner. An example of such practice would be a deceptive or misleading manner is
the distribution of any nonfactual data, material, or presentation based on conjecture, unfounded 20
or unrealistic claims, or assertions in any brochure, flyer, or display by words, pictures, graphs, or
otherwise designed to supplement, detract from, supersede, or defeat the purpose or effect of any
prospectus or disclosure; or
(r)(t) Failing to disclose 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
the customer, and if such the disclosure is not made in writing, it shall be supplemented by the
giving or sending of written disclosure at or before the completion of the transaction;
(s)(u) 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(v) 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;
(w) 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;
(x) 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 21
agent, in writing, and the broker-dealer or broker-dealer agent complies with the terms of the
alternative payment arrangements; or
(y) 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
(a) Engaging 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 a securities transactions transaction not recorded on the regular books or
records of the broker-dealer which 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 an account containing fictitious information in order to
execute transactions which would otherwise be an otherwise prohibited transaction;
(d) Sharing 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 the agent represents;
(e) Dividing or otherwise splitting the agent's commissions, profits, or other compensation
from the purchase or sale of securities with any person 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 § 20:08:03:06(2)(e) of this rule, a broker-dealer or
agent: 22
(i) May 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 12 U.S.C. § 1841, et seq. (July 1, 2026); 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 12 U.S.C. § 1841, et seq. (July 1, 2026);
(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.
(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).
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 of
registration.
(3) Broker-dealers and agents
(a) 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 over-the-counter unlisted non-National Association of Securities Dealers Automated 23
Quotations security, failing to promptly provide the most current prospectus or the most recently
filed 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.
(c) Marking 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 than every three months, failing to provide each customer with a statement of account which
with respect to all OTC non-NASDAQ over-the-counter non-National 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, 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.
(e) Failing 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 a broker-dealer or agent. Any
broker-dealer or agent who engages in one or more of the following practices shall be deemed to
have engaged is engaging in dishonest or unethical practices as used in SDCL 47-31B-412(d)(13)
and such the conduct may constitute grounds for denial, suspension, or revocation of registration
or such other action authorized by statute.
(a) Sales load communications: 24
(1) In connection with the offer or sale of an investment company shares share, failing to
adequately disclose to a customer all sales charges, including asset based and contingent deferred
sales charges, which may be imposed with respect to the purchase, retention, or redemption of
such the shares.
(2) In connection with the solicitation of an investment company shares share, stating or
implying 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 associated with the purchase
of the shares share: (i) a front-end load; (ii) a contingent deferred sales load; (iii) an SEC Rule 12b-
1, 17 C.F.R. § 270.12b-1 (July 1, 2026) fee or a service fee which exceeds .25 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 an investment company shares share, failing 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) letter of intent feature, if available, which will
reduce the sales charges charge.
(4) In connection with the solicitation of an investment company shares share,
recommending 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 associated transaction or other fees fee.
(b) Recommendations. 25
(1) In connection with the solicitation of an investment company shares share,
recommending to a customer the purchase of an investment company shares which share that
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 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.
(2) In connection with the solicitation of an investment company shares share,
recommending to a customer 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.
(c) Disclosure Statements.
(1) In connection with the solicitation of an investment company shares share, stating or
implying to a customer 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 Form N-1A, 17 C.F.R. §
239.15A (July 1, 2026), for one, five and ten year periods and fully explaining the difference
between current yield and total return. However, if the fund's registration statement under the
Securities Act of 1933, 15 U.S.C. § 77a et seq. (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 substitute the periods otherwise prescribed. 26
(2) In connection with the solicitation of an investment company shares share, stating or
implying to a customer that 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 an investment company shares share, stating or
implying to a customer 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, 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 an investment company shares share, stating or
implying to a customer: (i) that 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 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.
(5) In connection with the offer or sale of an investment company shares share, making:
(i) projections of future performance; (ii) statements not warranted under existing circumstances;
or (iii) statements based upon nonpublic information. 27
(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.
(e) Definitions. For purposes of this subsection (4), the following terms mean:
(1) "Recommend":,” 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 conduct.
(2) "Solicitation":,” any oral, written, or other communication used to offer or sell an
investment company shares share 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, 15 U.S.C. § 77r (July 1, 2026), 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, 15 U.S.C. § 78o(a) (July 1, 2026).
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.
(5) Variable contracts: The term, variable contract, includes variable annuities. Because owners
an owner of Variable Contracts assume a variable contract assumes certain investment risks, the
contracts are also contract is considered securities a security and are is subject to SDCL chapter
47-31B. As securities, the sales and distribution of a variable contracts are fully contract is subject
to sales practice rules. The suitability rule, as set forth in § 20:08:03:06(1)(c), applies when a 28
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 expresses preference for an investment other than an insurance product; (iii) the investor
has the inability to fully appreciate how much of the purchase payment or premium is allocated to
cover insurance or other costs, and the investor's ability to understand the general complexity of
Variable Contracts generally a variable contract; (iv) the investor's willingness to invest a set
amount on a yearly basis; (v) the investor's need for liquidity and short-term investment; (vi) the
investor's immediate need for retirement income; and (vii) the investor's 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 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 a variable contract.
(a) The agent should must 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 agent should must 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, administrative charges, and investment advisory fees;
any applicable state and local government premium taxes, inheritance taxes and market risk; 29
(c) The agent should must 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 and registered principal should review the customer's investment
objectives, risk tolerance, and other information to determine that 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 should must have a thorough knowledge of the specifications of
each variable contract that is recommended, including the death benefit,; fees and expenses,; sub-
account choices,; special features,; withdrawal privileges,; and tax treatment;
(f) A current prospectus should be given to the customer when a variable contract is
recommended and should be discussed with the customer;
(g) The registered agent should must 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 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 result in a tax penalty.
Customers 59½ A customer who is fifty-nine and one-half years-old should be informed when
surrender charges apply to withdrawals;
(h) The broker should must develop procedures to screen for any customer whose age may
make a long-term investment inappropriate;
(i) Brokers should must establish procedures to require a registered principal's careful review
of a variable contract investments investment that exceed exceeds a stated percentage to the 30
customer's net worth, and any contract in which a customer is investing more than a stated dollar
amount;
(j) When a registered agent recommends the purchase of a variable contract for any tax-
qualified retirement account (e.g., 401(k) plan, IRA), the registered agent should 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 registered agent should must 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 must 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 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 be signed by the customer, the registered agent, and
the registered principal; and
(m) The broker should must have a compliance procedure that will "red flag" registered
agents who have a high rate of variable contract replacements or rollovers so that the firm can
determine whether the replacements are suitable.
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. 31
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, SDCL 47-31B-412, 47-31B-605(a)(2), 47-31B-
605(b).