Minnesota Session Laws - 1995, Regular Session

                            CHAPTER 148-H.F.No. 1371 
                  An act relating to commerce; securities; regulating 
                  disclosure of payment received for directing order 
                  flow; amending Minnesota Statutes 1994, section 
                  80A.06, subdivision 5. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 80A.06, 
        subdivision 5, is amended to read: 
           Subd. 5.  (a) Except as otherwise provided in paragraph 
        (b), no investment adviser who shall recommend the purchase or 
        sale of a security to a client, and no licensed broker-dealer 
        acting as a broker-dealer for a customer in the purchase or sale 
        of a security shall take or accept any remuneration or other 
        thing of value from any person other than the client or customer 
        in connection with the purchase or sale unless, prior to or 
        contemporaneously with the recommendation in the case of an 
        investment adviser and prior to or contemporaneously with the 
        confirmation of the transaction in the case of a licensed 
        broker-dealer so acting, written disclosure to the client or 
        customer is made of the acceptance or intended acceptance of the 
        remuneration or other thing of value and of the amount of it.  
        All charges made by an investment adviser for services and all 
        charges by a licensed broker-dealer for services rendered as a 
        broker-dealer or for advice with respect to securities shall be 
        reasonable, and except in compliance with rules adopted by the 
        commissioner, no charges shall be based upon or measured by 
        profits accrued or to accrue from transactions recommended or 
        carried out by an investment adviser, or licensed 
        broker-dealer.  This subdivision shall not be construed to 
        prohibit charges by an investment adviser based upon the total 
        value of the assets under management averaged over a definite 
        period, or as of definite dates, or taken as of a definite date, 
        nor charges based upon the performance of the managed assets as 
        compared to an established index in compliance with rules 
        adopted by the commissioner.  
           (b) Disclosure of payment received by a licensed investment 
        advisor or licensed broker-dealer for directing order flow need 
        not comply with paragraph (a) if the disclosure is made in 
        compliance with rules governing disclosure of payments for 
        directing order flow adopted by the securities and exchange 
        commission. 
           Sec. 2.  [EFFECTIVE DATE.] 
           Section 1 is effective the day following final enactment. 
           Presented to the governor May 9, 1995 
           Signed by the governor May 10, 1995, 10:36 a.m.