HF 1371

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; securities; regulating 
  1.3             disclosure of payment received for directing order 
  1.4             flow; amending Minnesota Statutes 1994, section 
  1.5             80A.06, subdivision 5. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1994, section 80A.06, 
  1.8   subdivision 5, is amended to read: 
  1.9      Subd. 5.  (a) Except as otherwise provided in paragraph 
  1.10  (b), no investment adviser who shall recommend the purchase or 
  1.11  sale of a security to a client, and no licensed broker-dealer 
  1.12  acting as a broker-dealer for a customer in the purchase or sale 
  1.13  of a security shall take or accept any remuneration or other 
  1.14  thing of value from any person other than the client or customer 
  1.15  in connection with the purchase or sale unless, prior to or 
  1.16  contemporaneously with the recommendation in the case of an 
  1.17  investment adviser and prior to or contemporaneously with the 
  1.18  confirmation of the transaction in the case of a licensed 
  1.19  broker-dealer so acting, written disclosure to the client or 
  1.20  customer is made of the acceptance or intended acceptance of the 
  1.21  remuneration or other thing of value and of the amount of it.  
  1.22  All charges made by an investment adviser for services and all 
  1.23  charges by a licensed broker-dealer for services rendered as a 
  1.24  broker-dealer or for advice with respect to securities shall be 
  1.25  reasonable, and except in compliance with rules adopted by the 
  2.1   commissioner, no charges shall be based upon or measured by 
  2.2   profits accrued or to accrue from transactions recommended or 
  2.3   carried out by an investment adviser, or licensed 
  2.4   broker-dealer.  This subdivision shall not be construed to 
  2.5   prohibit charges by an investment adviser based upon the total 
  2.6   value of the assets under management averaged over a definite 
  2.7   period, or as of definite dates, or taken as of a definite date, 
  2.8   nor charges based upon the performance of the managed assets as 
  2.9   compared to an established index in compliance with rules 
  2.10  adopted by the commissioner.  
  2.11     (b) Disclosure of payment received by a licensed investment 
  2.12  advisor or licensed broker-dealer for directing order flow need 
  2.13  not comply with paragraph (a) if the disclosure is made in 
  2.14  compliance with rules governing disclosure of payments for 
  2.15  directing order flow adopted by the securities and exchange 
  2.16  commission. 
  2.17     Sec. 2.  [EFFECTIVE DATE.] 
  2.18     Section 1 is effective the day following final enactment.