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July 23, 1990
TO: INVESTMENT ADVISER MEMBERS NO. 34-90
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 30-90
RE: RHODE ISLAND ADOPTS NEW INVESTMENT ADVISER LAW
__________________________________________________________
Effective July 12, 1990, new laws relating to the sale of
securities in Rhode Island were enacted, including provisions
regarding investment advisers and investment adviser
representatives. A copy of relevant provisions of the new
statute is attached.
The definition of investment adviser has been modified so
that the statutory exemption from registration for nonresident
advisers with 5 or fewer clients in Rhode Island is no longer
available. However, an exemption is now available for
nonresident investment advisers who direct business
communications to existing clients whose principal place of
residence is outside of Rhode Island. In addition, the
application fee for investment advisers has been increased to
$250.
Investment adviser representatives are now required to be
licensed. This provision is similar to the former requirement
relating to registration of investment adviser "agents" in Rhode
Island. The statute defines an investment adviser representative
as a person, other than an investment adviser, associated with an
investment adviser who (1) makes any recommendations or otherwise
renders advice regarding securities to clients, (2) manages
accounts or portfolios of clients, (3) determines which
recommendation or advice regarding securities should be given,
(4) solicits, offers or negotiates for the sale of or sells
investment advisory services or (5) supervises employees who
perform any of the foregoing. The application fee for investment
adviser representatives is $50.
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We understand that the Rhode Island Securities Department
has begun drafting regulations to implement the new laws. The
Institute is working with the Superintendent of Securities in an
effort to clarify the definition of investment adviser
representative under these regulations.
We will keep you informed of further developments.
W. Richard Mason
Assistant General Counsel
Attachment