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23-42-307. Unlawful acts by investment advisers.
Arkansas Code — all titles (historical 2020) · legal_authorities
23-42-307. Unlawful acts by investment advisers.
(a) It is unlawful for any investment adviser or representative:
(1) To employ any device, scheme, or artifice to defraud the other person;
(2) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person; or
(3) To make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading.
(b) It is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing that:
(1) Except as may be permitted by rule or order of the Securities Commissioner, the investment adviser shall not be compensated on the basis of a share of capital gains upon, or capital appreciation of, the funds or any portion of the funds of the client. This subdivision (b)(1) does not prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date;
(2)(A) No assignment of the contract may be made by the investment adviser without the consent of the other party to the contract.
(B) “Assignment”, as used in this subdivision (b)(2), includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor, or of a controlling block of the assignor's outstanding voting securities, by a security holder of the assignor.
(C) However, if the investment adviser is a partnership, no assignment of an investment advisory contract is considered to result from the death or withdrawal of a minority of the members of the investment advi
Source: Arkansas Code — historical release 78 (November 6, 2020) · 23-42-307
Stored review status: Historical 2020-11-06 source release; later amendments not reconciled; machine-extracted, not independently legally reviewed; source heading status: text_in_historical_source. A text match is a research starting point; applicability is not established.
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Stable record: arkansas_code:legal_authorities:23-42-307
Source file: gov.ar.code.title.23.odt
Pages: Not recorded – Not recorded
Passage SHA-256: 82d67cfc6264233c3df3e3fed1ae1e5495bc12c6d88b9012ac27456919376f9d
Source location: content.xml paragraph 20776
Stored source content
23-42-307. Unlawful acts by investment advisers.
(a) It is unlawful for any investment adviser or representative:
(1) To employ any device, scheme, or artifice to defraud the other person;
(2) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person; or
(3) To make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading.
(b) It is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing that:
(1) Except as may be permitted by rule or order of the Securities Commissioner, the investment adviser shall not be compensated on the basis of a share of capital gains upon, or capital appreciation of, the funds or any portion of the funds of the client. This subdivision (b)(1) does not prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date;
(2)(A) No assignment of the contract may be made by the investment adviser without the consent of the other party to the contract.
(B) “Assignment”, as used in this subdivision (b)(2), includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor, or of a controlling block of the assignor's outstanding voting securities, by a security holder of the assignor.
(C) However, if the investment adviser is a partnership, no assignment of an investment advisory contract is considered to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one (1) or more members who, after admission, will be only a minority of the members and will have only a minority interest in the business; and
(3) The investment adviser, if a partnership, shall notify the other party to the contract of any change in the membership of the partnership within a reasonable time after the change.
(c) It is unlawful for any investment adviser to take or have custody of any securities or funds of any client if:
(1) The commissioner by rule prohibits custody; or
(2) In the absence of rule, the investment adviser fails to notify the commissioner that he or she has or may have custody.
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