Minnesota Session Laws - 1992, Regular Session

  

                         Laws of Minnesota 1992 

                        CHAPTER 427-H.F.No. 1416 
           An act relating to commerce; modifying the regulation 
          of interest rate advertising; amending Minnesota 
          Statutes 1990, section 45.025, subdivisions 1 and 2; 
          repealing Minnesota Statutes 1990, section 45.025, 
          subdivision 7. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 45.025, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section only, the following terms have the meanings given them: 
    (a) "Advertisement" includes: 
    (1) printed or published material, audio visual material, 
and descriptive literature of an issuer or agent used in direct 
mail, newspapers, magazines, other periodicals, radio scripts, 
television scripts, billboards, and other similar displays, 
excluding advertisements prepared for the sole purpose of 
obtaining employees, agents, or agencies; 
    (2) descriptive literature and sales aids of all kinds 
issued by an issuer or agent for presentation to members of the 
public, including but not limited to circulars, leaflets, 
booklets, depictions, illustrations, and form letters; 
    (3) prepared sales talks, presentations, and materials for 
use by issuers and agents and representations made by issuers 
and agents in accordance with these talks, presentations, and 
materials; and 
     (4) statements, written or oral, by an agent or issuer.  
     (b) "Agent" is a person who effects or attempts to effect 
or assist in the purchase or sale of an investment product.  
     (c) "Commissioner" means the commissioner of commerce.  
     (d) "Effective annual yield" is the annualized income 
expressed as a simple interest rate per annum based on the 
initial investment principal. 
     (e) "Effective net annual yield" means the effective annual 
yield, based on a hypothetical $1,000 investment, minus any 
annual fee or similar regular periodic charges.  
     (f) "Investment product" includes but is not limited to:  
     (1) certificate of deposits, deposits, or fiduciary funds 
entrusted to banks, savings associations, trust companies, 
credit unions, savings banks, industrial loan and thrift 
companies, and any other financial institution whether or not 
licensed by or registered with the department of commerce; 
     (2) annuities, endowment policies, or other life insurance 
products; 
     (3) securities, including:  a note; stock; treasury stock; 
bond; debenture; evidence of indebtedness; certificate of 
interest or participation in any profit sharing agreement; 
collateral trust certificate; preorganizational certificate or 
subscription; transferable shares; investment contract, 
including but not limited to metals, gems, and coins; voting 
trust certificate; certificate of deposit for a security; 
certificate of interest or participation in an oil, gas, or 
mining right, title or lease, or in payments out of production 
under the right, title or lease; or, in general, any interest or 
instrument commonly known as a security, or any certificate of 
interest or participation in, temporary or interim certificate 
for, receipt for guarantee of, or warrant or right to subscribe 
to or purchase, any of the securities listed in this clause. 
     (g) "Issuer" includes but is not limited to:  banks, 
savings associations, trust companies, credit unions, savings 
banks, industrial loan and thrift companies, insurance 
companies, investment companies, trusts, or a person who issues 
an investment product.  
    (h) "Person" means an individual, corporation, a 
partnership, an association, a joint stock company, a trust 
where the interests of the beneficiaries are evidenced by a 
security, an unincorporated organization, a government, a 
political subdivision of a government, or any other entity.  
     (i) "Yield to maturity" means the discount rate which, when 
applied to all future principal and interest payments to be 
received from an investment product assuming the investment 
product is held to maturity, results in a present value exactly 
equal to the price of the investment product. 
    Sec. 2.  Minnesota Statutes 1990, section 45.025, 
subdivision 2, is amended to read: 
    Subd. 2.  [GENERAL RESTRICTION.] A person may not advertise 
the interest rate of an investment product unless: (1) the yield 
to maturity if the investment product is a note, bond, or 
debenture that bears interest at a fixed rate and has a stated 
maturity; or (2) the effective net annual yield if the 
investment product does not bear interest at a fixed rate or has 
an indefinite life, is disclosed in an equally prominent manner. 
    The name and address of the issuer, or a person from whom 
the name and address of the issuer may be obtained, and any 
prepayment expense, surrender charge, or withdrawal penalty 
charged by the issuer must also be disclosed in a prominent 
manner.  If the expense, charge, or penalty varies according to 
the length of time the product is held, the advertisement must 
disclose the expense, fee, or penalty imposed if surrendered or 
terminated within one year. 
    Sec. 3.  [REPEALER.] 
    Minnesota Statutes 1990, section 45.025, subdivision 7, is 
repealed. 
    Presented to the governor April 6, 1992 
    Signed by the governor April 9, 1992, 4:15 p.m.