Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part XIII - Investment Securities › Subpart 1 - Securities › Chapter 12 - Dishonest or Unethical Practices › Section XIII-1205 - Investment Advisers and Investment Adviser Representatives

Current through Register Vol. 50, No. 6, June 20, 2024
A.
1. Investment Advisers and Investment Adviser
				  Representatives - includes the following actions:
a. recommending to a client to whom
				  investment supervisory, management or consulting services are provided the
				  purchase, sale or exchange of a 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 or investment adviser representative;
b. exercising any discretionary power in
				  placing an order for the purchase or sale of securities for a client without
				  obtaining written discretionary authority from the client within 10 business
				  days after the date of the first transaction placed under oral discretionary
				  authority, unless the discretionary power 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;
c.
				  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;
d. placing an order to
				  purchase or sell a security for the account of a client without authority to do
				  so;
e. 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;
f. borrowing money
				  or securities from a client unless the client is a dealer, an affiliate of the
				  investment adviser, or a financial institution engaged in the business of
				  loaning funds;
g. loaning money 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;
h. misrepresenting to an
				  advisory client, or prospective advisory client, the qualifications of the
				  investment adviser, investment adviser representative, or an employee of the
				  investment adviser; misrepresenting the nature of the advisory services being
				  offered; or misrepresenting fees to be charged for the 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;
i.
				  providing a report or recommendation to an advisory client prepared by someone
				  other than the investment adviser or investment adviser representative without
				  disclosing that fact. This prohibition does not apply to a situation where the
				  investment adviser or investment adviser representative uses published research
				  reports or statistical analyses to render advice or where an investment adviser
				  or investment adviser representative orders the report in the normal course of
				  providing advice;
j. charging a
				  client an unreasonable advisory fee in light of the type of service to be
				  provided; the experience and expertise of the investment adviser; or the
				  sophistication or bargaining power of the client; or without notice to the
				  client, dividing or otherwise splitting the advisory fee or other compensation
				  derived from the advisory services;
k. failing to disclose to clients in writing
				  before advice is rendered a material conflict of interest relating to the
				  investment adviser, the investment adviser representative or an employee of the
				  investment adviser which could reasonably be expected to impair the rendering
				  of unbiased and objective advice including:
i.
				  compensation arrangements connected with advisory services to clients which are
				  in addition to compensation from the clients for the services;
ii. charging a client an advisory fee for
				  rendering advice when a commission for executing securities transactions
				  pursuant to the advice will be received by the investment adviser, the
				  investment adviser representative or an employee of the investment
				  adviser;
l. guaranteeing
				  a client that a specific result will be achieved, gain or no loss, with advice
				  which will be rendered;
m.
				  publishing, circulating or distributing an advertisement which does not comply
				  with Rule 206(4)-1 under the Investment Advisers Act of 1940 (15 U.S.C.A.
				  §§80b-1 - 80b-21);
n.
				  disclosing the identity, affairs or investments of a client unless required by
				  law to do so, or unless consented to by the client;
o. entering into, extending or renewing an
				  investment advisory contract unless the contract is in writing and discloses,
				  in substance, the services to be provided, the term of the contract, the
				  advisory fee, the formula for computing the fee, the amount of a prepaid fee to
				  be returned in the event of contract termination or nonperformance, whether the
				  contract grants discretionary power to the adviser and that no assignment of
				  the contract shall be made by the investment adviser without the consent of the
				  other party to the contract;
p.
				  failing to establish, maintain and enforce written policies and procedures
				  reasonably designed to prevent the misuse of material nonpublic information
				  contrary to the provisions of section 204a of the Investment Advisers Act of
				  1940 (15 U.S.C.A. §
													80b-4a) and the rules and regulations of the United
				  States Securities and Exchange Commission promulgated thereunder;
q. entering into, extending, or renewing any
				  advisory contract contrary to the provisions of section 205 of the Investment
				  Advisers Act of 1940 (15 U.S.C.A. §
													80b-5) and the rules and regulations of
				  the United States Securities and Exchange Commission promulgated thereunder.
				  This applies to all investment advisers and investment adviser representatives
				  registered under
				  section
				  703 of the LSL notwithstanding
				  whether the investment adviser is exempt from registration with the United
				  States Securities and Exchange Commission under section 203(b) of the
				  Investment Advisers Act of 1940 (15 U.S.C.A. §
													80b-3);
r. to indicate, in an advisory contract, any
				  condition, stipulation or provision binding any person to waive compliance with
				  any provision of the LSL or any other language which may lead a client to
				  believe that legal rights have been restricted or waived;
s. engaging in any act, practice or course of
				  business which is fraudulent, deceptive or manipulative or contrary to the
				  provisions of section 206(4) of the Investment Advisers Act of 1940 ( 15
				  U.S.C.A. §80b-6(4)  and the rules and regulations of the United States
				  Securities and Exchange Commission promulgated thereunder. This applies to all
				  investment advisers and investment adviser representatives registered under
				  section
				  703 of the LSL notwithstanding
				  whether the investment adviser is exempt from registration with the United
				  States Securities and Exchange Commission under section 203(b) of the
				  Investment Advisers Act of 1940;
t.
				  engaging in conduct or committing any act, directly, indirectly or through or
				  by another person, which would be unlawful for the person to do directly under
				  the provisions of the LSL or any rule, regulation or order issued thereunder,
				  or engaging in other conduct such as nondisclosure, incomplete disclosure or
				  deceptive practices shall be deemed an unethical practice.