June 7, 1989
TO: INVESTMENT ADVISER MEMBERS NO. 33-89
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 33-89
RE: NORTH DAKOTA PASSES INVESTMENT ADVISER LEGISLATION
__________________________________________________________
North Dakota has enacted North Dakota Senate Bills 2246 and
2175 affecting investment advisers and investment adviser
representatives effective July 1, 1989. A copy of the amendments
to the North Dakota Code are attached.
The amendments contained in North Dakota Senate Bill No.
2246 include numerous provisions concerning registration and post
registration requirements for advisers and investment adviser
representatives. Some of the more important provisions include an
amended definition of investment adviser and a new definition of
investment adviser representative, a registration requirement for
investment adviser representatives, an exemption from regis-
tration for investment advisers which advise only investment
companies, an examination requirement, registration fees, dis-
honest or unethical practices, and a requirement for advisers
maintaining custody of client funds. Post registration provisions
include recordkeeping requirements, a requirement that financial
reports be submitted to the Securities Commissioner, supervisory
responsibility requirements, and civil liability provisions.
The amendments contained in North Dakota Senate Bill No.
2175 affect only post registration provisions. They require that
all books, records and financial reports prescribed by rule be
submitted to the Securities Commissioner, correcting amendments
for any required document be filed promptly, and all records be
subject to examination by the Securities Commissioner. In
addition, the amendments provide that the Securities Commissioner
may compel an investment adviser or investment adviser
representative to provide copies of its books and records to the
Commissioner.
Many of these statutory requirements, including the
definition of investment adviser representative and the
registration exemptions, were amended as a result of Institute and
Institute member recommendations that were based on the North
American Administrators Association, Inc.'s model investment
adviser provisions.
We will inform you of any rules proposed under the
amendments.
Robert L. Bunnen, Jr.
Assistant General Counsel
Attachments