Interpretive Order Concerning Broker-Dealers, Investment Advisers,
Broker-Dealer Agents And Investment Adviser Agents
Using The Internet For General Dissemination
Of Information On Products And Services
WHEREAS the Commissioner of Banking (the "Commissioner") is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act, (the "Act"), as amended by P.A. 97-220, and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act;
WHEREAS Section 36b-31(a) of the Act provides, in part, that "[t]he commissioner may from time to time make, amend and rescind such ... orders as are necessary to carry out the provisions of [the Act] ...;"
WHEREAS Section 36b-6(a) of the Act, as amended by P.A. 97-220, provides, in part that: "No person shall transact business in this state as a broker-dealer unless he is registered under ... [the Act]. No individual shall transact business as an agent in this state unless he is (1) registered as an agent of the broker-dealer ... whom he represents in transacting such business or (2) an associated person who represents a broker-dealer in effecting transactions described in subdivisions (2) and (3) of section 15(h) of the Securities Exchange Act of 1934;"
WHEREAS Section 36b-6(c) of the Act, as amended by P.A. 97-220, states, in part, that: "No person shall transact business as an investment adviser, within or from this state, unless registered as such by the commissioner as provided in sections 36b-2 to 36b-33, inclusive, or exempted pursuant to subsection (e) of this section. No individual shall transact business as an investment adviser agent, within or from this state unless he is registered as an investment adviser agent of the investment adviser for whom he acts in transacting such business."
WHEREAS the Commissioner acknowledges that the Internet, the World Wide Web, and similar proprietary or common carrier electronic systems (collectively, the "Internet") have facilitated greatly the ability of broker-dealers, investment advisers, broker-dealer agents and investment adviser agents to advertise and otherwise disseminate information on products and services to prospective customers and clients;
WHEREAS the Commissioner also acknowledges that certain communications made on the Internet are directed generally to anyone having access to the Internet and may be transmitted through postings on Bulletin Boards, displays on "Home Pages" or similar methods (hereinafter, "Internet Communications");
WHEREAS the Commissioner further acknowledges that in certain instances, by distributing information on available products and services through Internet Communications available to persons in this state, broker-dealers, investment advisers, their broker-dealer agents and their investment adviser agents could be construed as "transacting business" for purposes of Sections 36b-6(a) and 36b-6(c) of the Act so as to require registration in this state, since the Internet Communications would be received in this state regardless of the intent of the person originating such communication; and
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;
|NOW THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:|
|1.||Broker-dealers, investment advisers, broker-dealer agents (hereinafter "BD Agents") and investment adviser agents (hereinafter "IA Agents") who use the Internet, the World Wide Web, and similar proprietary or common carrier electronic systems (collectively, hereinafter the "Internet") to distribute information on available products and services through certain communications made on the Internet directed generally to anyone having access to the Internet, and transmitted through postings on Bulletin Boards, displays on "Home Pages" or similar methods (hereinafter, "Internet Communications") shall not be deemed to be "transacting business" in this state for purposes of Sections 36b-6(a) and 36b-6(c) of the Act based solely on that fact if the following conditions are observed:|
|2.||The position expressed in this Interpretive Order extends to state broker-dealer, investment adviser, BD Agent and IA Agent registration requirements only, and does not excuse compliance with applicable securities registration, antifraud or related provisions;|
|3.||Nothing in this Order shall be construed to affect the activities of any broker-dealer, investment adviser, BD Agent and IA Agent engaged in business in this state that is not subject to the jurisdiction of the Commissioner as a result of the National Securities Markets Improvements Act of 1996, as amended; and|
|4.||This Order shall remain in effect unless and until subsequently amended or rescinded.|
|So ordered at Hartford, Connecticut
this third day of October, 1997
|John P. Burke|