March 11, 1993
TO: INVESTMENT ADVISERS COMMITTEE NO. 5-93
MISSOURI INVESTMENT ADVISER ASSOCIATE MEMBERS
RE: LEGISLATION INTRODUCED IN MISSOURI TO AMEND INVESTMENT
ADVISER REGULATION
__________________________________________________________
Legislation has been introduced in Missouri to amend
certain provisions of the Missouri Uniform Securities Act
relating to investment advisers. The bill is substantially
similar to the bill considered by the Missouri legislature last
year. (See Memorandum to Investment Advisers Committee No. 9-92
and Missouri Investment Adviser Associate Members, dated February
24, 1992.) A copy of the bill is attached.
Summarized below are several significant changes proposed
in the legislation.
Investment Adviser Representatives
Investment adviser representatives would be required to
register under the Act. The initial and renewal registration
fees 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.)
Fraudulent Activities
The legislation will expand the list of activities in which
it is unlawful for an investment adviser to engage, including:
(1) engaging in principal or agency cross-transactions; and (2)
holding himself out as a "financial planner", "financial
adviser", "financial consultant" or using terms descriptive of
these activities unless he is covered by one of the exceptions
provided therein.
Minimum Financial Requirements; Surety Bond
The Securities Commissioner would be authorized to
establish minimum financial requirements for investment advisers,
which could vary depending upon whether an adviser has custody of
or discretionary authority over funds or securities.
The Commissioner's existing authority to require investment
advisers to post a surety bond would be limited to those advisers
who have custody of or discretionary authority over client funds
or securities.
Disclosure
The bill would authorize the Securities Commissioner to
require that certain information be furnished or disseminated as
necessary or appropriate in the public interest or for the
protection of clients.
Private Right of Action
A private right of action similar to the one included in
the NASAA Model Amendments to the Uniform Securities Act would be
included in the Act for fraudulent activities and for violations
of certain provisions of the Act relating to investment advisers
(including provisions dealing with prohibited activities,
registration requirements, unlawful representations concerning
registration or exemption and filing of sales and advertising
literature).
Status
The bill is expected to be reported out of Committee this
week without significant changes and to be considered by the full
House shortly. It is our understanding that comparable
legislation has not been introduced in the Senate.
* * *
If you have any comments on the Missouri legislation,
please call the undersigned at 202/955-3523 or Tom Selman at
202/955-6251. We will keep you informed of developments on the
bill.
Amy B.R. Lancellotta
Associate Counsel
Attachment