September 10, 1992
TO: INVESTMENT ADVISERS COMMITTEE NO. 32-92
WISCONSIN ASSOCIATE MEMBERS
RE: WISCONSIN PROPOSES RULE AMENDMENTS
__________________________________________________________
The Office of the Wisconsin Securities Commissioner
recently proposed several revisions to the Administrative Rules
of the Wisconsin Commissioner of Securities. The following is a
summary of the provisions affecting investment advisers:
1. SEC 4.01(10) (p. 12) This new provision would require
agents of broker-dealers who provide investment advisory services
to meet the state examination requirements for investment adviser
representatives.
2. SEC 5.01(3) and (4) (pp. 17-18) - The amendments to
these provisions would require an applicant for an initial
license as an investment adviser or for qualification as an
investment adviser representative after January 1, 1993 (and each
applicant whose application has not become effective by that
date) to pass a Series 65 Investment Adviser Examination. The
amendments would provide waivers for an applicant who has (1)
passed (or received a waiver from) the Series 2, 7, or 24
Examinations and has passed the Series 63 Examination; (2) been
licensed as an investment adviser or qualified as an investment
adviser representative within 2 years prior to the date the
application is filed; or (3) otherwise received a waiver from the
commissioner.
3. SEC 5.02(3) (p. 19) - This new provision would permit
the commissioner to exempt an investment adviser from the net
capital requirement.
4. SEC 5.03(1) and SEC 5.05(7) (p. 20, pp. 21-22) - The
amendments to these provisions would require an investment
adviser to prepare and keep current, at its principal office or a
designated office, books and records relating to its business.
The investment adviser also would be required to designate a
supervisor at that location.
5. SEC 5.03(6) (pp. 20-21) - This new provision would
require an investment adviser that keeps its required books and
records outside of the United States to enter into a memorandum
of understanding acceptable to the commissioner. The MOU would
have to describe how the records will be accessible for
examination by the commissioner and require a surety bond for
payment of the commissioner’s expenses in examining the adviser’s
activities or books and records in a foreign country.
6. SEC 5.05(9) (p. 22) - This new provision would require
every investment adviser that participates in a wrap fee
arrangement with a broker-dealer to disclose to each customer
under the arrangement the portion of the wrap fee that is
attributable to advisory services.
* * *
A copy of the proposed rules is attached. Written comments
on the proposed rules may be submitted to the commissioner
through September 30, 1992. A hearing on the rule proposals will
be held on Thursday, October 1, 1992 at 10:00 a.m. in Madison,
Wisconsin. Please contact me at 202/955-6251 with any comments
you would like incorporated in the Institute’s comment letter by
Monday, September 21, 1992. In my absence, please provide your
comments to Amy Lancellotta at 202/955-3523.
Thomas M. Selman
Assistant Counsel
Attachment