March 12, 1992
TO: INVESTMENT ADVISER MEMBERS NO. 10-92
RE: INVESTMENT ADVISER REGULATIONS ADOPTED IN INDIANA
__________________________________________________________
As we previously informed you, the Indiana Securities
Commission had proposed rules regarding investment adviser
registration and regulation, which would become effective on
January 1, 1992. (See Memorandum to Investment Adviser Members
No. 38-91 and Investment Adviser Associate Members No. 41-91,
dated September 11, 1991.) Attached is a copy of the final
rules.
Under the rules, an investment adviser and an investment
adviser representative must pass the Series 65 exam or the Series
7 and Series 63 exams, unless the applicant was properly
registered with the Commissioner as an investment adviser prior
to October 1, 1991 or listed on Schedule D to Form ADV of a
registered adviser as of October 1, 1991, whichever is
applicable. In addition, an applicant may submit a written
request to the Commissioner for a waiver from the examination
requirement.
Several of the final rules are modeled after rules under
the Investment Advisers Act, including the rule governing the
books and recordkeeping requirements (Rule 204-2), the brochure
rule (Rule 204-3), the performance fee rule (Rule 205-3), the
rule governing custody arrangements (Rule 206(4)-2) and the
agency cross transaction rule (Rule 206(3)-2). The rules also
include a list of dishonest or unethical practices similar to
that contained in the NASAA Model Rules under the Uniform
Securities Act.
In addition, the Indiana rules require all advisers to
file financial statements, which must be certified if the adviser
has custody or requires payment of advisory fees six months in
advance and in excess of five hundred dollars. Advisers are also
required to maintain written supervisory procedures.
Finally, several investment adviser rules have been
repealed, including the "holding out" provision adopted in 1989.
Amy B.R. Lancellotta
Associate General Counsel
Attachment