Oregon Administrative Rules › Chapter 441 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, FINANCE AND SECURITIES REGULATION › Division 205 - DENIAL, SUSPENSION, OR REVOCATION OF LICENSE › Section 441-205-0145 - Unethical Business Practices of State Investment Advisers and Their Investment Adviser Representatives

Current through Register Vol. 63, No. 7, July 1, 2024
(1) A
			 person who is a State Investment Adviser or an Investment Adviser
			 Representative for a State Investment Adviser is a fiduciary and has a duty to
			 act primarily for the benefit of the Adviser's clients. The provisions of this
			 rule apply to state investment advisers and their investment adviser
			 representatives. While the extent and nature of this duty varies according to
			 the nature of the relationship between an investment adviser and its clients
			 and the circumstances of each case, a state investment adviser or its
			 investment adviser representatives shall not engage in unethical business
			 practices, including the following:
(a)
			 Recommending to a client to whom investment supervisory, management or
			 consulting 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.
(b) Exercising any discretionary power in
			 placing an order for the purchase or sale of securities for a client without
			 first obtaining written discretionary authority from the client 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 if that
			 adviser in such situations can directly benefit from the number of securities
			 transactions effected in a client's 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 broker-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 any
			 advisory client, or prospective advisory client, the qualifications of the
			 investment adviser or any employee of the investment adviser, or
			 misrepresenting the nature of the advisory services being offered or fees to be
			 charged for such service, or omitting 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
			 any advisory client prepared by someone other than the adviser without
			 disclosing that fact. This prohibition does not apply to a situation where the
			 adviser uses published research reports or statistical analyses to render
			 advice or where an adviser orders such a report in the normal course of
			 providing service.
(j) Charging a
			 client an unreasonable advisory fee.
(k) Failing to disclose to clients in writing
			 before any advice is rendered any material conflict of interest relating to the
			 adviser or any of its employees which could reasonably be expected to impair
			 the rendering of unbiased and objective advice including:
(A) Compensation arrangements connected with
			 advisory services to clients which are in addition to compensation from such
			 clients for such services; or
(B)
			 Charging a client an advisory fee for rendering advice when a commission for
			 executing securities transactions pursuant to such advice will be received by
			 the adviser or its employees.
(l) Guaranteeing a client that a specific
			 result will be achieved (gain or no loss) with advice which will be
			 rendered.
(m) Disclosing the
			 identity, affairs, or investments of any client unless required by law to do
			 so, or unless consented to by the client.
(n) Entering into, extending or renewing any
			 investment advisory contract unless such 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 prepaid fee to
			 be returned in the event of contract termination or non-performance, and
			 whether the contract grants discretionary power to the adviser.
(o) Engaging in conduct or any act,
			 indirectly or through or by any other person, which would be unlawful for such
			 person to do directly under the provisions of this rule or the Oregon
			 Securities Law.
(p) Indicating, in
			 an advisory contract, any condition, stipulation, or provisions binding any
			 person to waive compliance with any provision of the Oregon Securities Law,
			 this rule, or the Investment Advisers Act of 1940.