February 15, 1989
TO: INVESTMENT ADVISER MEMBERS NO. 12-89
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 11-89
RE: MONTANA ADOPTS UNETHICAL PRACTICES RULES FOR INVESTMENT
ADVISERS
__________________________________________________________
Effective January 16, 1989, the State Auditor and
Commissioner of Securities of the state of Montana has adopted
rules concerning unethical practices by investment advisers. A
copy of both the proposed rules and the adopted rules are
attached for your convenience.
These rules include provisions that prohibit, among other
things, recommending certain securities without believing such a
recommendation is suitable for the client, exercising
discretionary power for a client unless written authority is
obtained first, borrowing money or securities from a client
unless that client is a broker-dealer, an affiliate of the
investment adviser, or a financial institution engaged in the
business of loaning funds, charging a client an unreasonable
advisory fee, entering into or renewing an investment advisory
contract unless the contract is in writing, and failing to make
certain disclosures about financial or disciplinary problems the
adviser may have had.
These unethical practice rules are consistent with the
North American Securities Administrators Association, Inc.'s
model rules as adopted by NASAA during 1988.
Robert L. Bunnen, Jr.
Assistant General Counsel
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