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Securities Advisory Releases
Advisory Release AR-11-01:
Amended Rules Pertaining to Investment Advisers and their Management
On March 30, 2011, rule amendments promulgated by the Commissioner of Securities pertaining to, among other things, certain requirements for investment advisers will go into effect. Currently, investment advisers are required to designate an “investment adviser qualifying officer” in their application for registration. The qualifying officer is required to take and pass specific examinations, including the Series 7 examination. The new rules will instead require that investment advisers designate a “chief compliance officer.”
These amendments reflect a continuing effort to maximize uniformity between Missouri securities law and other state and federal regulations. These rules are being amended to, among other things, use the term “chief compliance officer” because it is the term used in federal securities law to designate a person responsible for administering compliance policies and procedures for investment advisers required to be registered under the Investment Advisers Act of 1940.
Under the amended rules, the term “chief compliance officer” will be used to designate a person responsible for administering compliance policies and procedures for investment advisers required to be registered under the Missouri Securities Act of 2003. Upon final promulgation, each investment adviser will be required to designate a chief compliance officer on its application for registration as required by MO 15 CSR 30-51.020. The “chief compliance officer” must be registered as an investment adviser representative of the investment adviser, and must take the examinations required for investment adviser representative registration.
The specific rule amendments are:
MO 15 CSR 30-50.010 Definitions. The Commissioner is amending MO 15 CSR 30-50.010 by removing definition (L) for “investment adviser qualifying officer” and adding new definitions at (G) and (U), defining “chief compliance officer” and “supervised person,” respectively.
MO 15 CSR 30-51.020 Applications for Registration or Notice Filings. The Commissioner is amending MO 15 CSR 30-51.020 to require investment advisers to designate their chief compliance officer in their initial registration application. The amendment also clarifies and adds to the list of items required to be filed with the investment adviser application.
MO 15 CSR 30-51.030 Examination Requirement. This amendment by the Commissioner removes reference to required examinations and examination waivers for qualifying officers.
MO 15 CSR 30-51.173 Supervision Guidelines for Investment Advisers. This amendment updates the supervision guidelines to contemplate a chief compliance officer and supervised persons—both terms being added in an amendment to MO 15 CSR 30-50.010. These terms better describe the roles of individuals associated with an investment adviser and the supervisory structure that should be in place. This amendment also removes phrases that are not related to investment advisers and adds phrases that comport with the type of activities that need to be supervised in an investment adviser firm.
This release is for informational purposes only and does not offer analysis on or applicability to any particular set of facts. If you have any questions, please contact the Securities Division at (573) 751-4136.
March 1, 2011