Title 15-ELECTED OFFICIALS
Division 30-Secretary of State
Chapter 51-Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives

PROPOSED AMENDMENT

15 CSR 30-51.180 Exemptions from Registration for Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives

PURPOSE: This amendment makes changes to a rule that, due to Federal law changes, has been effectively mooted. Current 15 CSR 30-51.180(6) exempts certain investment advisers from the registration requirements of the Missouri Securities Act of 2003. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") repealed a Federal exemption that the current 15 CSR 30-51.180(6) relied upon to exempt those investment advisers. The Dodd-Frank Act put in place other, statutorily different exemptions for some investment advisers. This amendment modifies 15 CSR 30-51.180(6) to rely upon the new Federal exemptions and allow Missouri's previously-exempt investment advisers to continue operating.

(6) Exemption for investment advisers to private funds.

(A) Definitions. For purposes of this regulation, the following definitions shall apply:

  1. "Private fund adviser" means an investment adviser who provides investment advice solely to one or more qualifying private funds.
  2. "Qualifying private fund" means a private fund that meets the definition of a qualifying private fund in SEC Rule 203(m)-1, 17 C.F.R. 275.203(m)-1.
  3. "3(c)(1) fund" means a qualifying private fund that is eligible for the exclusion from the definition of an investment company under section 3(c)(1) of the Investment Company Act of 1940, 15 U.S.C. 80a-3(c)(1).
  4. "Venture capital fund" means a private fund that meets the definition of a venture capital fund in SEC Rule 203(l)-1, 17 C.F.R. 275.203(l)-1.

(B) A private fund adviser is exempt from registering as an investment adviser under section 409.4-403 if:

  1. neither the private fund adviser nor any of its advisory affiliates are subject to a disqualification as described in Rule 262 of SEC Regulation A, 17 C.F.R. 230.262;
  2. the private fund adviser files with the commissioner each report and amendment thereto that an exempt reporting adviser is required to file with the SEC pursuant to SEC Rule 204-4, 17 C.F.R. 275.204-4; and
  3. in the event the private fund adviser advises at least one (3)(c)(1) fund that is not a venture capital fund, then the private fund adviser also:
  4. "Venture capital fund" means a private fund that meets the definition of a venture capital fund in SEC Rule 203(l)-1, 17 C.F.R. 275.203(l)-1.
  1. reasonably believes that those 3(c)(1) funds (other than venture capital funds) are beneficially owned by persons that qualify as either:
  2. (I)
    an "accredited investor" as defined by 17 CFR 230.501(a)(1), (2), (3), (4), (5), (7), or (8). For purposes of this section, an "accredited investor" under 17 CFR 230.501(a)(8) excludes any entity which has an equity owner that only qualifies as an accredited investor under 17 CFR 230.501(a)(6); or
    (II)
    a "qualified client" as defined by 17 CFR 275.205-3(d)(1)(iii);
  3. discloses to each beneficial owner of a 3(c)(1) fund in writing and at the time of purchase the following:
  4. (I)
    all services, if any, to be provided to individual beneficial owners;
    (II)
    all duties, if any, the investment adviser owes to the beneficial owners; and
    (III)
    any other material information affecting the rights or responsibilities of the beneficial owners; and
  5. delivers or causes to be delivered annually to each beneficial owner of the fund financial statements of each 3(c)(1) fund that is not a venture capital fund.

(C)The report filings described in paragraph (b)(2) above shall be made electronically through the IARD. For purposes of this section, a report is filed when the report is accepted by the IARD on the state's behalf.

(D)The above notwithstanding, a private fund adviser includes an investment adviser that:

  1. before the effective date of this rule, was exempt from registration in reliance on 15 CSR 30-51.180(6);
  2. advises a fund that:
  1. the private fund adviser advised before the effective date of this rule;
  2. has one or more owners who, before the effective date of this rule, the private fund adviser reasonably believed qualified as an "accredited investor" as defined by 17 CFR 230.501(a)(6); and
  3. after the effective date of this rule, only sells its securities to persons who qualify as either:
  4. (I)
    an "accredited investor" as defined by 17 CFR 230.501(a)(1), (2), (3), (4), (5), or (7), or (8). For purposes of this section, an "accredited investor" under 17 CFR 230.501(a)(8) excludes any entity which has an equity owner that only qualifies as an accredited investor under 17 CFR 230.501(a)(6); or
    (II)
    a "qualified client" as defined by 17 CFR 275.205-3(d)(1)(iii); and
    (III)
    any other material information affecting the rights or responsibilities of the beneficial owners; and
  1. otherwise complies with the requirements of this rule.

AUTHORITY: sections 409.4-401(d) 409.4-402(b)(9), 409.4-403(b)(3), 409.4-404(b)(2), and 409.6-605, RSMo Supp. 2006.* Original rule filed Dec. 28, 2001, effective July 30, 2002. Emergency amendment filed Aug. 27, 2003, effective Sept. 12, 2003, expired March 9, 2004. Amended: Filed Aug. 28, 2003, effective Feb. 29, 2004. Amended: Filed May 26, 2004, effective Nov. 30, 2004. Emergency amendment filed Feb. 2, 2007, effective Feb. 12, 2007, terminated March 5, 2007. Emergency amendment filed Feb. 23, 2007, effective March 5, 2007, expired Aug. 10, 2007. Amended: Filed Feb. 2, 2007, effective July 30, 2007.

*Original authority: 409.4-401, RSMo 2003; 409.4-402, RSMo 2003; 409.4-403, RSMo 2003; 409.4-404, RSMo 2003; 409.6-605, RSMo 2003.

*Original authority: 409.4-401, RSMo 2003; 409.4-402, RSMo 2003; 409.4-403, RSMo 2003; 409.4-404, RSMo 2003; 409.6-605, RSMo 2003.

PRIVATE COST: This proposed amendment will not cost private entities more than five hundred dollars ($500) in the aggregate.