July 28, 1989
TO: INVESTMENT ADVISER MEMBERS NO. 41-89
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 40-89
RE: VIRGINIA ADOPTS INVESTMENT ADVISER RULES
__________________________________________________________
Effective July 1, 1989, the Division of Securities and Retail
Franchising of the Virginia State Corporation Commission adopted
rules affecting investment advisers and investment adviser
representatives. A copy of the relevant rules is attached.
The adopted rules concern renewals, updates and amendments,
termination of registration, investment adviser mergers or
consolidations, changing a connection from one investment adviser to
another, examinations and qualifications, recordkeeping, and
dishonest and unethical practices.
Under the examination/qualification rule, investment adviser
representatives are required to provide evidence of passing the
Uniform Investment Adviser Law Examination (Series 65) with a
minimum grade of 70%.
In the recordkeeping requirement area, the Virginia rules are
generally consistent with the federal books and records requirement
under Rule 204-2 of the Investment Advisers Act of 1940, including
the 1988 amendment to the Advisers Act which requires advisers to
keep their advertisements and data supporting any performance claims
made in those advertisements.
In the dishonest or unethical practices area, the rules for
investment advisers are generally consistent with those rules
adopted by the North American Securities Administrators Association,
Inc.'s Financial Planner/Investment Adviser Committee in 1987. In
addition to the investment adviser prohibited practices, investment
adviser representatives are subject to certain unethical practices,
including (i) disclosing the identity of any client to a third party
unless required by law to do so or consent is given by the client;
(ii) taking any action with regard to client funds or securities
where the investment adviser representative has custody of such
funds and when such action is not in compliance with the safekeeping
requirements of Rule 1200; and (iii) entering into or extending an
investment advisory contract unless the contract is in writing and
discloses the specific provisions of the contractual arrangement.
Robert L. Bunnen, Jr.
Assistant General Counsel
Attachment