April 14, 1989
TO: BOARD OF GOVERNORS NO. 24-89
STATE SECURITIES MEMBERS NO. 12-89
UNIT INVESTMENT TRUST MEMBERS NO. 21-89
RE: NEW MEXICO ADOPTS BLUE CHIP EXEMPTION
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Currently, all mutual funds and unit trusts that offer
their shares to New Mexico residents must register the offering
with the New Mexico Securities Division. To register in New
Mexico, a fund or trust must submit the Form U-1, U-2, U-2A and a
copy of the prospectus and statement of additional information,
and a fee of one-tenth of one percent with a minimum of $350 for
registering a definite amount of securities or $500 for
registering an indefinite amount of securities and a maximum of
$2,500. In addition, each fund must file an annual sales report.
As you may remember, the Institute attempted to obtain an
exemption from registration in New Mexico in 1985. (See
Memorandum to State Securities Members No. 10-85, dated March 5,
l986.) That effort was unsuccessful and the current regulatory
process subsequently developed. We are pleased to inform you
that as a result of the Institute's efforts this year, New Mexico
has enacted an exemption for qualified mutual funds and unit
trusts based on the similar exemption in the Revised Uniform
Securities Act of l985. The exemption is an alternative to the
registration process.
A mutual fund is exempt from registration if its investment
adviser or an affiliate of its investment adviser has been
registered under the Investment Advisers Act of l940 for at least
three years. If qualified, a mutual fund may claim the exemption
by submitting annually to the New Mexico Securities Division the
name and address of the issuer, the name of the securities to be
offered and $700.
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A Unit trust is exempt from registration if its principal
underwriter has been the principal underwriter for registered
investment companies with aggregate total assets in excess of
$l00,000,000 for at least three years. If qualified, a unit
trust may claim the exemption by submitting to the New Mexico
Securities Division, on a one-time basis, the name and address of
the issuer, the name of the securities to be offered and $200.
Claiming this exemption and paying the one-time fee will exempt
resales of the units of the unit trust.
New Mexico is the seventh state to adopt the blue chip
exemption. Attached is a copy of the new provision which is
effective immediately. The Division has indicated that it will
adopt a form on which to claim the exemption in the near future.
We will keep you advised of developments.
Natalie Shirley
Associate General Counsel
Attachment