June 25, 1992
TO: INVESTMENT ADVISER MEMBERS NO. 30-92
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 22-92
RE: ADMENDMENTS TO SOUTH CAROLINA INVESTMENT ADVISER STATUTE
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The Governor of South Carolina signed into law on June 15th
legislation which amends several provisions of the statute
regulating investment advisers. A copy of the bill is attached.
Specifically, the legislation (1) lowers the bonding
requirement from $50,000 to $10,000 for investment advisers who
do not have custody or control of their clients’ money; (2)
restricts principal transactions (similar to Section 206(3) of
the Advisers Act); (3) prohibits dishonest or unethical
practices, as the Commissioner may define by rule; (4) grants the
Commissioner rulemaking authority in connection with the
prohibition against performance fees and assignment of the
contract without consent; and (5) adds financial planners (and
those who hold themselves out as providing advisory services) to
the definition of "investment adviser."
Pursuant to this legislation, the Securities Division has
issued a regulation to adopt NASAA Model Rule 102(a)(4)-1 dealing
with dishonest or unethical practices by investment advisers. In
South Carolina, Securities Division regulations must be approved
by the legislature. This regulation, which is labeled a "final"
regulation, has not yet been so approved. Therefore, we were
advised that it should be treated as an official policy statement
of the Securities Division, pending approval by the legislature,
which does not convene again until next January. A copy of the
regulation is attached.
We will keep you informed of developments.
Amy B.R. Lancellotta
Associate General Counsel
Attachments