WASHINGTON SECURITIES DIVISION PROPOSES AMENDMENTS TO RULES GOVERNING INVESTMENT ADVISERS

June 23, 1995 TO: INVESTMENT ADVISERS COMMITTEE No. 28-95 Washington Investment Adviser Associate Members RE: WASHINGTON SECURITIES DIVISION PROPOSES AMENDMENTS TO RULES GOVERNING INVESTMENT ADVISERS ______________________________________________________________________________ The Washington Securities Division has issued for comment amendments to rules under the Washington Securities Act (“the Act”) governing investment advisers. The proposed amendments include provisions that would: (1) permit Schedule H of Form ADV to satisfy wrap fee disclosure requirements under the Act ; (2) delete the Series 6, Investment Company Products/Variable Contracts) from the list of qualifying examinations for investment adviser representatives; and (3) substantially increase the delinquency fees charged to investment advisers that fail to timely renew their registrations. The Institute has submitted a comment letter on the DivisionGs proposal. In our comment letter, we support adoption of the DivisionGs rule that would permit Schedule H to satisfy the ActGs wrap fee disclosure requirements inasmuch as the rule would provide for greater uniformity between state and federal law. We recommend that the Division not delete the Series 6 as a qualifying examination for investment adviser salespersons. Should this rule be adopted, investment adviser salespersons would have to pass a general securities representative examination (i.e., the Series 7). As stated in our letter, we believe it is unduly burdensome and inappropriate to require persons that limit their investment advice to products covered by the Series 6 to have to take a general securities representative examination. Finally, the InstituteGs letter notes that, if the proposed increase in delinquency fees is adopted, it would be more expensive to renew late than to initially register. Because processing an initial registration is presumably more burdensome to Division staff than processing a late renewal, the Institute recommends that the Division reconsider the amount of the delinquency fees and establish an amount that is more reasonable. A copy of the DivisionGs proposed rules and our comment letter to the Division are attached. Tamara K. Cain Assistant Counsel Attachments