March 5, 1991
TO: BOARD OF GOVERNORS NO. 15-91
STATE LIAISON COMMITTEE NO. 6-91
UNIT INVESTMENT TRUST COMMITTEE NO. 8-91
RE: INSTITUTE TO APPEAL ADVERSE DECISION IN MINNESOTA LAWSUIT
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As you know, the Institute commenced a lawsuit in December
1987 against the State of Minnesota and the Commissioner of
Commerce challenging the constitutionality of Minnesota’s
disparate registration fee structure. The petition alleged that
the registration fee structure violates the due process, equal
protection and commerce clauses of the U.S. Constitution and the
due process and equal protection clauses of the Minnesota
Constitution. The Institute requested that the State be enjoined
from enforcing the provision in the Minnesota Securities Act that
prevents mutual funds and unit trusts from relying on the fee cap
provision used by all other issuers. (See Memorandum to Board of
Governors No. 66-87, State Securities Members No. 43-87 and Unit
Investment Trust Members No. 56-87, dated December 21, 1987.)
The parties submitted cross-motions for summary judgment
and a hearing was held on October 30, 1990. The Minnesota
District Court subsequently granted the State’s motion for
summary judgment, stating that "as a matter of law [the
Institute] cannot sustain its burden of proving beyond a
reasonable doubt that the statutory provision in question
violates the due process or equal protection clauses of the
United States or Minnesota Constitutions or the commerce clause
of the United States Constitution."
A copy of the court’s order is attached. The Institute
will be appealing the decision to the Minnesota Court of Appeals.
* * *
We will keep you informed of developments.
Patricia Louie
Assistant General Counsel
Attachment