Code of Massachusetts Regulations › 950 CMR - OFFICE OF THE SECRETARY OF THE COMMONWEALTH › Title 950 CMR 12.200 - Registration of Broker-Dealer, Agents, Investment Adviser, Investment Adviser Representatives and Notice of Filing Procedures for Federal Covered Advisers › Section 12.205 - Investment Advisers and Federal Covered Advisers

Current through Register 1525, July 5, 2024
(1)
Definition of Investment
			 Adviser.
(a)950 CMR 12.205(1)
			 shall cover the exclusions from the definition of investment adviser, as set
			 forth in M.G.L. c. 110A, § 401(m) (
Note:
These definitions
			 cover only the exclusions from the definition of investment adviser and do not
			 pertain to other parts of the regulations):
1.
Incidental
shall mean occurring as a fortuitous or
			 minor concomitant.
2. An investment
			 adviser exercises investment discretion with respect to an account if, directly
			 or indirectly, the investment adviser:
a. Is
			 authorized to determine what securities or other property shall be purchased or
			 sold by or for the account; or
b.
			 Makes decisions as to what securities or other property shall be purchased or
			 sold by or for the account even though some other person (including the client)
			 may have responsibility for those investment decisions.
3.
The Registered Broker-dealer
			 Agent
exclusion from the definition of "investment adviser" shall
			 apply only to activities performed within the scope of the agency relationship,
i.e.
, to activities of the agent performed under the control
			 and supervision of the broker-dealer.
Note
: If an agent conducts
			 an investment advisory business outside the control and supervision of the
			 registered broker-dealer, that agent cannot claim the exclusion from the
			 definition of investment adviser by virtue of being a registered agent of such
			 broker-dealer.
4.
Qualified Institutional Buyer
shall be defined as set
			 forth in
			 17 CFR
			 230.144A(a)(1).
5.
Affiliate
of a
			 qualified institutional buyer (QIB) means a person that directly, or
			 indirectly, through one or more intermediaries, controls, or is controlled by,
			 or is under common control with, the QIB.
6.
Institutional
			 Buyer
, for the purposes of M.G.L. c. 110A, § 401(m), shall
			 include any of the following:
a. An
			 organization described in Section 501(c)(3) of the Internal Revenue Code with a
			 securities portfolio of more than $25 million.
b. An investing entity:
i. whose only investors are accredited
			 investors as defined in Rule 501(a) under the Securities Act of 1933 (
			 17 CFR
			 230.501(a) ) each of whom
			 has invested a minimum of $50,000; and
ii. the subject fund existed prior to
			 February 3, 2012; and
iii. as of
			 February 3, 2012, the subject fund ceased to accept new beneficial
			 owners.
iv.950 CMR 12.205(1)(a)6.b.
			 shall be enforced as of August 3, 2012.
c. An investing entity whose only investors
			 are financial institutions and institutional buyers as set forth in M.G.L. c.
			 110A, § 401(m) and 950 CMR 12.205(1)(a)6.a. or 950 CMR
			 12.205(1)(a)6.b.
7.
Solicitation
. A registered broker-dealer or agent
			 shall not be deemed to be soliciting, offering or negotiating for the sale or
			 selling investment advisory services if it refers its customers as part of a
			 wrap-fee, asset allocation, market-timing program or otherwise to a registered
			 investment adviser.