July 24, 1990
TO: INVESTMENT ADVISER MEMBERS NO. 35-90
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 31-90
RE: PROPOSED MARYLAND INVESTMENT ADVISER REGULATIONS
__________________________________________________________
The Maryland Securities Division recently released the
attached proposed regulations regarding investment adviser
registration. The Institute commented on the draft proposed
regulations on June 6, 1990 and is pleased that most of our
recommendations have been incorporated into the proposal. A copy
of the Institute's comment letter on the draft proposal is also
attached.
The proposed regulations generally follow Federal
regulations under the Investment Advisers Act of 1940 and the
requirements of SEC Form ADV regarding records and disclosure.
The regulations also require principals and investment adviser
representatives to pass the NASD series 65 examination by a score
of 70 percent. Exemptions to the series 65 examination are
available for individuals who have been accredited as Certified
Financial Planners, Chartered Financial Consultants or Accredited
Personal Financial Specialists by the State of Maryland. Also
exempted are advisers and representatives who, (1) for a period
of 2 years before October 1, 1990 engaged in business activities
which would have required registration in Maryland had
registration been required, (2) passed, within two years of the
date of the application for registration, NASD series 6, 7, 8 or
62 examinations or (3) had continuous experience as a registered
securities agent for 2 or more years before the application.
Applications for registration must be filed by April 1, 1991 in
order to be exempt from the series 65 requirement.
A registered adviser with custody of client funds or an
adviser who requires payment of fees 6 months or more in advance
and in excess or $500 per client is required to maintain a
minimum net capital of $20,000 or minimum tangible net assets of
$35,000 and be bonded in the amount of at least $10,000.
The regulations have an "emergency" effective date of
August 1, 1990 in order to allow advisers ample time to comply by
the October 1, 1990 registration deadline.
We will keep you informed of further developments.
W. Richard Mason
Assistant General Counsel
Attachment