Compilation of Rules and Regulations of the State of Georgia › Department 590 - RULES OF OFFICE OF SECRETARY OF STATE › Chapter 590-4 - COMMISSIONER OF SECURITIES › Subject 590-4-4 - INVESTMENT ADVISERS AND REPRESENTATIVES › Rule 590-4-4-.19 - Prohibited Conduct in Providing Investment Advice

Current through Rules and Regulations filed through June 27, 2024
A person who is an investment adviser, an investment adviser
				 representative or a federal covered investment adviser is a fiduciary and has a
				 duty to act primarily for the benefit of its clients. The provisions of this
				 subsection apply to federal covered investment advisers to the extent that the
				 conduct alleged is fraudulent, deceptive, or as otherwise permitted by the
				 National Securities Markets Improvement Act of 1996. While the extent and
				 nature of this duty varies according to the nature of the relationship between
				 an investment adviser, an investment adviser representative or a federal
				 covered investment adviser and its clients and the circumstances of each case,
				 an investment adviser, an investment adviser representative or a federal
				 covered investment adviser shall not engage in prohibited fraudulent,
				 deceptive, or manipulative conduct, including but not limited to the
				 following:
(1) Recommending to a
				client to whom investment advisory services are provided the purchase, sale or
				exchange of any security without reasonable grounds to believe that the
				recommendation is suitable for the client on the basis of information furnished
				by the client after reasonable inquiry concerning the client's investment
				objectives, financial situation and needs, and any other information known by
				the investment adviser, investment adviser representative or federal covered
				investment adviser.
(2) Exercising
				any discretionary authority in placing an order for the purchase or sale of
				securities for a client without obtaining written discretionary authority from
				the client within ten (10) business days after the date of the first
				transaction placed pursuant to oral discretionary authority, unless the
				discretionary authority relates solely to the price at which, or the time when,
				an order involving a definite amount of a specified security shall be executed,
				or both.
(3) Inducing trading in a
				client's account that is excessive in size or frequency in view of the
				financial resources, investment objectives and character of the
				account.
(4) Placing an order to
				purchase or sell a security for the account of a client without authority to do
				so.
(5) Placing an order to
				purchase or sell a security for the account of a client upon instruction of a
				third party without first having obtained a written third-party trading
				authorization from the client.
(6)
				Borrowing money or securities from a client unless the client is a
				broker-dealer, an affiliate of the investment adviser or a financial
				institution engaged in the business of loaning funds.
(7) Loaning money or securities to a client
				unless the investment adviser is a financial institution engaged in the
				business of loaning funds or the client is an affiliate of the investment
				adviser.
(8) Misrepresenting to any
				client, or prospective client, the qualifications of the investment adviser,
				investment adviser representative, federal covered investment adviser, or any
				employee, or person affiliated with the investment adviser, investment adviser
				representative or federal covered investment adviser, or misrepresenting the
				nature of the advisory services being offered or fees to be charged for such
				service, or to omit to state a material fact necessary to make the statements
				made regarding qualifications, services or fees, in light of the circumstances
				under which they are made, not misleading.
(9) Providing a report or recommendation to
				any client prepared by someone other than the investment adviser, investment
				adviser representative or federal covered investment adviser without disclosing
				that fact. This prohibition does not apply to a situation where the investment
				adviser, investment adviser representative or federal covered investment
				adviser uses published research reports or statistical analyses to render
				advice or where an investment adviser, investment adviser representative or
				federal covered investment adviser orders such a report in the normal course of
				providing service.
(10) Charging a
				client an unreasonable fee.
(11)
				Failing to disclose to clients in writing before any advice is rendered any
				material conflict of interest relating to the investment adviser, investment
				adviser representative or federal covered investment adviser, or any of its
				employees, or affiliated persons which could reasonably be expected to impair
				the rendering of unbiased and objective advice including but not limited to:
(a) Compensation arrangements connected with
				investment advisory services to clients which are in addition to compensation
				from such clients for such services; and
(b) Charging a client an investment advisory
				fee for rendering investment advice when compensation for effecting securities
				transactions pursuant to such advice will be received by the investment
				adviser, investment adviser representative or federal covered investment
				adviser or its employees, or affiliated persons.