UPDATE ON INVESTMENT ADVISER LEGISLATION IN CALIFORNIA, COLORADO, MARYLAND AND MISSOURI

June 25, 1992 TO: INVESTMENT ADVISER MEMBERS NO. 32-92 INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 24-92 RE: UPDATE ON INVESTMENT ADVISER LEGISLATION IN CALIFORNIA, COLORADO, MARYLAND AND MISSOURI __________________________________________________________ Set forth below is an update on the status of investment adviser legislation that was being considered in California, Colorado, Maryland and Missouri. California 1. Financial Planning Legislation - Legislation had been introduced in California relating to the regulation of financial planners. (See Memorandum to Investment Advisers Committee No. 16-92, dated April 17, 1992.) Under the bill, a separate board would have been established to regulate the financial planner industry, including investment advisers that engage in financial planning services. The Institute testified at a hearing in opposition to the bill. We are pleased to advise you that, in part because of the opposition expressed to the bill, no further action on the bill is anticipated. Colorado 1. Investment Advisers Legislation - Legislation had been introduced in Colorado to require all investment advisers to register with the Colorado Securities Commissioner. (See Memorandum to Investment Advisers Committee No. 13-92, dated March 12, 1992.) A number of exemptions from the registration requirement were included in the bill, one of which would exempt persons who have complied in all material respects with the disclosure requirements under the Investment Advisers Act. The bill was being considered by several committees, but action on the bill has been postponed indefinitely. Maryland 1. Maryland Securities Act - Several provisions of the Maryland Securities Act concerning the regulation of investment advisers have been amended. Among other things, the amendments: (a) authorize the Securities Commissioner to establish minimum financial and bonding requirements for investment advisers who require advance payment of fees; (b) expand the definition of "investment adviser representative" to include any person who "holds himself out as an investment adviser"; (c) clarify that certain application requirements apply to investment advisers; (d) expand the grounds on which the Commissioner may deny, suspend, or revoke the registration of certain persons; and (e) revise the exemption for certain professionals from the definition of "investment adviser". The final bill does not include clarification with respect to whether an individual holds himself out as an investment adviser by using the designation "ChFC". These amendments become effective on October 1, 1992. A copy of the bills relating to these amendments is attached. 2. Investment Adviser Guaranty Fund - Legislation had been introduced in Maryland to create an investment adviser guaranty fund. The Institute testified in opposition to the bill. (See Memorandum to Investment Advisers Committee No. 8-92, dated February 20, 1992.) We are pleased to inform you that the bill failed to be reported out of committee before the General Assembly adjourned. Missouri Legislation had been introduced in Missouri earlier this year to amend certain provisions of the Missouri Uniform Securities Act relating to investment advisers. (See Memorandum to Investment Advisers Committee No. 9-92, dated February 24, 1992.) Among other things, the bill would require investment adviser representatives to become registered in the state and would add a private right of action against investment advisers. We are pleased to inform you that the bill failed to be reported out of committee. * * * * If you have any questions about the legislation discussed above, please contact the undersigned at 202/955-3523. Amy B.R. Lancellotta Associate General Counsel Attachments