February 24, 1992
TO: INVESTMENT ADVISERS COMMITTEE NO. 9-92
MISSOURI INVESTMENT ADVISER ASSOCIATE MEMBERS
RE: MISSOURI PROPOSES LEGISLATION TO AMEND INVESTMENT ADVISER
PROVISIONS
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Legislation was recently introduced in Missouri to amend
certain provisions of the Missouri Uniform Securities Act
relating to investment advisers. A copy of the bill (H.R. 1500)
is attached. Summarized below are several significant changes
proposed in the legislation.
Fraudulent Activities
The legislation will expand the list of activities in which
it is unlawful for an investment adviser to engage to include:
(1) principal transactions; and (2) holding himself out as a
"financial planner", "financial adviser", "financial consultant"
or to use terms descriptive of these activities unless registered
as an investment adviser or investment adviser representative, or
licensed by another state agency (e.g., a CPA, a lawyer, an
insurance agent), subject to certain conditions regarding
compensation.
Investment Adviser Representatives
Investment adviser representatives will be required to
registered under the Act. The initial and renewal registration
fee for IA representatives is proposed to be $50. (The renewal
fee for investment advisers will be increased from $100 to $200,
which is the initial registration fee.)
Minimum Financial Requirements
The Commissioner will be authorized to establish minimum
financial requirements for investment advisers, which may vary
depending upon factors such as whether the adviser has custody of
client assets or has discretionary authority.
Examination Waivers
The bill allows the Commissioner to waive the examination
requirement for a class of persons if it is determined that the
examination is not necessary for the protection of advisory
clients.
Private Right of Action
A private right of action will be included in the Act for
fraudulent activities and for violations of certain provisions of
the Uniform Securities Act relating to investment advisers
(including provisions on prohibited activities, registration
requirements, unlawful representations concerning registration or
exemption and filing of sales and advertising literature). Under
this provision, an investor could recover the consideration paid
for the investment advice and any loss due to such advice,
together with interest at 8% per year from the date of payment of
the consideration plus costs and reasonable attorneys' fees, less
the amount of any income received from such advice.
Status
A hearing was held before the Commerce Committee on this
bill on February 19. In addition, a bill to amend the Act to
include financial planners within the definition of "investment
adviser" (which is also included in H.R. 1500) was also
considered at that hearing. (See Memorandum to Investment
Advisers Committee No. 7-92 and Missouri Investment Adviser
Associate Members, dated February 10, 1992). These bills have
not yet been reported out of Committee.
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The Institute is considering submitting written comments to
the Missouri legislature on H.R. 1500. Please provide me with
your comments on the bill for possible inclusion in the
Institute's submission by March 4, 1992. My direct number is
202/955-3523.
We will keep you informed of developments.
Amy B.R. Lancellotta
Associate General Counsel
Attachment