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Order Exempting Connecticut-Registered Investment Advisers
From the Filing of Advertising Material
WHEREAS, the Banking Commissioner ("Commissioner") is charged with administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act ("Act"), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies ("Regulations") promulgated under the Act;
WHEREAS, Section 36b-31(a) of the Act provides, in pertinent part, that:
"[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of . . . [the Act] . . . . For the purpose of . . . orders, the commissioner may classify securities, persons and matters within his jurisdiction, and prescribe different requirements for different classes";
WHEREAS, Section 36b-31(b) of the Act provides, in pertinent part, that: "[n]o
. . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of . . . [the Act]";
WHEREAS, the Commissioner finds that the issuance of this Order is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
WHEREAS, Section 36b-22 of the Act provides that:  “The commissioner may, by regulation adopted, in accordance with chapter 54, or order, require the filing of any prospectus, pamphlet, circular, form letter, advertisement or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser registered or required to be registered under sections 36b-2 to 36b-33, inclusive, unless the security or transaction is (1) exempted by subsection (a) or (b) of section 36b-21, except for transactions exempted by subdivision (13) of subsection (b) of said section 36b-21, or (2) a covered security”;
WHEREAS, Section 36b-31-22(c) of the Regulations states that “[u]nless an investment adviser is registered under the Investment Advisers Act of 1940, any prospectus, pamphlet, circular, form letter, advertisement or other sales literature or advertising communication addressed or intended for distribution to clients or prospective clients shall be filed with the commissioner prior to distribution”;
WHEREAS, Section 36b-24(a) of the Act provides, in part, that:  “Neither (1) the fact that an application for registration under sections 36b-6 to 36b-15, inclusive . . . has been filed or (2) the fact that a person . . . is effectively registered constitutes a finding by the commissioner that any document filed under . . . [the Act] is true, complete and not misleading . . . . “;
WHEREAS, with the development of the Internet and other electronic communications, the amount of investment advisory advertising filed with the Commissioner has proliferated;
WHEREAS, Section 36b-5(a) of the Act and Section 36b-31-5a of the Regulations proscribe specific practices, including fraud, in connection with the distribution of advertising and, in so doing, 1) provide investment advisory applicants, registrants and their legal counsel with clear guidance concerning prohibited conduct; and 2) subject investment advisory applicants and registrants to enforcement sanctions for violations of Section 36b-5(a) of the Act and Section 36b-31-5a of the Regulations;
WHEREAS, Section 36b-14(a) of the Act and Section 36b-31-14b(b)(4) of the Regulations require that investment advisers registered under the Act keep and maintain at their principal place of business, open to inspection by the Commissioner, “[a] separate file containing copies of all advertising published, circulated or broadcast in or from Connecticut by the investment adviser in the conduct of its investment advisory business”, and Section 36b-31-14b(d)(10) of the Regulations requires that similar advertising records be maintained at each Connecticut investment advisory branch office;
WHEREAS, 36b-31-31c of the Regulations provides that: "[t]he commissioner may exempt a person, security or transaction from a specified provision of sections 36b-31-2 to 36b-31-33, inclusive, of the regulations upon a finding that such exemption is in the public interest";
WHEREAS, the Commissioner finds that requiring Connecticut-registered investment advisers to file with the Commissioner the sales literature or advertising communications described in Section 36b-22 of the Act and Section 36b-31-22(c) of the Regulations (“Advertising Material”) is unnecessarily duplicative since the very same materials must be produced to Division staff during the course of an examination under Section 36b-14(a) of the Act and Sections 36b-31-14b(b)(4) and 36b-14b(d)(10) of the Regulations;
AND WHEREAS, the Commissioner further finds that the exemption provided by this Order is in the public interest.
NOW THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:
  1. An investment adviser that is registered under the Act shall be exempt from the Advertising Material filing requirement in Section 36b-31-22(c) of the Regulations;

  2. Nothing in this Order shall preclude the Division from requiring the filing of
    Advertising Material by Connecticut-registered investment advisers on a
    case-by-case basis as circumstances may warrant, nor shall this Order exempt initial applicants for investment adviser registration from the filing requirement in Section 36b-31-22(c) of the Regulations; and

  3. This Order shall remain in effect until amended or rescinded by the
    Commissioner or other lawful authority.
So ordered at Hartford, Connecticut    ________/s/________________
this 3rd day of November 2005.          John P. Burke
                                                    Banking Commissioner