December 7, 1993
TO: INVESTMENT ADVISERS COMMITTEE NO. 36-93
ARKANSAS INVESTMENT ADVISER ASSOCIATE MEMBERS
RE: PROPOSED AMENDMENTS TO ARKANSAS INVESTMENT ADVISER RULES
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The Arkansas Securities Commissioner (the "Commissioner") has issued for
comment proposed amendments to the rules under the Arkansas Securities Act
governing the activities of investment advisers. A copy of the proposed
amendments is attached.
The proposed amendments would require an applicant for registration as an
investment adviser to file with the Commissioner: a corporate resolution, other
than the Form U2-A; copies of its articles of incorporation and bylaws or its
partnership agreement, as appropriate; a statement signed by an officer or
partner of the investment adviser affirming that all litigation and
administrative proceedings by regulatory agencies during the past twelve months
against the adviser or any of its control affiliates have been disclosed on Form
ADV; and, audited financial statements. (See Rule 302.02B). These amendments
also codify a previously issued policy statement of the Commissioner which
requires investment adviser representatives to pass the Series 65 examination
with a score of at least 80% unless exempt. The exemptions under current law
from this examination requirement have been retained.
The financial statement requirements would be amended to revise the types
of financial statements that must be filed annually and to require investment
advisers who hold customer funds or securities to file statements in addition to
those filed by other advisers.
Finally, the amendments would add several new provisions. These include
a brochure rule, a rule permitting performance based compensation, a rule
governing the activities of an adviser which has custody of customer funds or
securities, and a list of dishonest or unethical practices. Each of these new
rules is uniform with the provisions of the Uniform Securities Act and the Model
Amendments thereto as well as with rules of the Securities and Exchange
Commission under the Investment Advisers Act of 1940.
Comments on these proposed regulations must be submitted by Tuesday
December 21, 1993. If you have any comments on the proposed rules, please
provide them to me by Tuesday December 14, 1993. My direct dial number is
202/955-8432.
Tamara K. Cain
Assistant Counsel
Attachment