1 Miss. Code. R. 14-6.31 - Solicitor Rule

A. The following definitions apply for purposes of this Rule:

1. Solicitor means any individual, person, or entity with a place of business in this state who directly or indirectly receives a cash fee or any other economic benefit for soliciting, referring, offering, or otherwise negotiating for the sale or selling of investment advisory services to clients on behalf of an investment adviser.

2. Client includes any prospective client.

B. It shall be unlawful for any investment adviser registered or required to be registered under the Act to pay a cash fee or any other economic benefit, directly or indirectly, in connection with solicitation activities unless:

1. The solicitor is registered as an investment adviser representative.

2. The solicitor to whom a cash fee or any other economic benefit is paid for such referral is not a person:

a. Subject to an order of the SEC issued under Section 203(f) of the Investment Advisers Act of 1940, 15.U.S.C. § 80b-3(f);

b. Subject to an order of the Mississippi Secretary of State, the securities administrator of any other state, the SEC, or any self-regulatory organization denying, suspending, or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative barring the person from the securities or advisory industry or associating or affiliating with the securities or advisory industry, entered after notice and opportunity for hearing;

c. Convicted within the previous ten (10) years of any felony;

d. Convicted within the previous ten (10) years of any misdemeanor involving conduct described in Section 203(e)(2)(A) through (D) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-3(e)(2)(A) to -(D);

e. Convicted within the previous ten (10) years of any misdemeanor involving conduct described in Section 75-71-412(d)(3) of the Act;

f. Found by the SEC to have engaged, or has been convicted of engaging in, any of the conduct specified in Section 203(e)(1), (5), or (6) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-3(e)(1), (5), (6);

g. Found by the Secretary of State to have engaged, or has been convicted of engaging in, any of the conduct specified in Sections 75-71-412(d)(1), (2), and (6) of the Act;

h. Subject to an order, judgment, or decree described in Section 203(e)(4) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-3(e)(4); or

i. Subject to an order, judgment, or decree described in Section 75-71-412(d)(4) of the Act.

3. The cash fee or any other economic benefit is paid by the investment adviser with respect to solicitation activities that are impersonal in nature in that they are provided solely by means of:

a. Written material or oral statements which do not purport to meet the objectives or needs of the specific client;

b. Statistical information containing no expressions of opinions as to the merits of particular securities or investment advisers; or

c. Any combination of the foregoing services.

4. The cash fee or any other economic benefit is paid pursuant to a written agreement to which the investment adviser is a party and all of the following conditions are met:

a. The written agreement:

i. Describes the solicitation or referral activities to be engaged in by the solicitor on behalf of the investment adviser and the cash fee or any other economic benefit to be received for such activities;

ii. Contains an undertaking by the solicitor to perform its duties under the agreement in a manner consistent with the instructions of the investment adviser and the provisions of the Act and Rules thereunder; and

iii. Requires that the solicitor, at the time of any solicitation or referral activities for which a cash fee or any other economic benefit is paid or to be paid by the investment adviser, provide the client with a current copy of the investment adviser's disclosure document required under Subsection (B)(4)(b) of this Rule and a separate disclosure statement as described in Subsection (C) of this Rule.

b. The investment adviser receives from the client, prior to or at the time of entering into any written investment advisory contract, a signed and dated acknowledgment of receipt of both the investment adviser's written disclosure statement and the solicitor's written disclosure document.

c. The investment adviser makes a bona fide effort and has a reasonable basis for believing that the solicitor has complied with the agreement.

d. The foregoing requirements of Subsections (B)(4)(a), (b), and (c) of this Rule shall not apply where the solicitor is:

i. A partner, officer, director, or employee of such investment adviser; or

ii. A partner, officer, director, or employee of a person that controls, is controlled by, or is under common control with such investment adviser, provided the status of the solicitor is disclosed to the client at the time of the solicitation or referral.

C. The separate written disclosure document required to be furnished by the solicitor to the client pursuant to Subsection (B)(4)(b) of this Rule shall contain the following information:

1. The name of the solicitor;

2. The name of the investment adviser;

3. The nature of the relationship, including any affiliation, between the solicitor and the investment adviser;

4. A statement that the solicitor will be compensated for solicitation or referral services by the investment adviser;

5. The terms of the compensation arrangement, including a description of the cash fee or any other economic benefit paid or to be paid to the solicitor; and

6. The amount of compensation the client will pay, if any, in addition to the advisory fees, and whether the cash fee or any other economic benefit paid to the solicitor will be added to the advisory fee, creating a differential with respect to the amount charged to other advisory clients who are not subject to the solicitor compensation arrangement.

D. Nothing in this Rule shall be deemed to relieve any person of any fiduciary or other obligation to which such person may be subject under any law.

Notes

1 Miss. Code. R. 14-6.31

Miss. Code Ann. § 75-71-411(f) (2020).

Amended 6/3/2018 Amended 4/18/2022 Amended 1/29/2024 Amended 3/14/2024