44-3101. Definitions

(L04, Ch. 188, sec. 43. Eff. until 7/1/20)

In this chapter, unless the context otherwise requires:

1. " Closed-end company" means any management company other than an open-end company or unit investment trust.

2. " Depository institution" means a bank, savings and loan association or trust company whose business is supervised and regulated by an agency of this state or the United States, or an employee, as defined in title 10, chapter 1, of any such bank, savings and loan association or trust company while acting within the scope of the employee's employment.

3. " Federal covered adviser" means an investment adviser registered under the investment advisers act of 1940.

4. " IARD" means the investment adviser registration depository operated by the national association of securities dealers.

5. " Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. Investment adviser includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. Investment adviser does not include:

(a) An investment adviser representative.

(b) A depository institution.

(c) A lawyer, law firm, certified public accountant or accounting firm whose performance of the investment advisory services is solely incidental to the practice of the person's profession or who does not do any of the following:

(i) Exercise investment discretion with respect to the assets of clients or maintain custody of the assets of clients for the purpose of investing the assets, except if the person is acting in a bona fide fiduciary capacity such as an executor, trustee, personal representative, estate or trust agent, guardian or conservator.

(ii) Accept or receive directly or indirectly any commission, fee or other remuneration contingent on the purchase or sale of any specific security by a client of the person.

(iii) Give advice on the purchase or sale of specific securities other than advice about specific securities that is based on financial statement analysis or tax considerations that are reasonably related to and in connection with the person's profession.

(d) A publisher, employee or columnist of any newspaper, news column, newsletter, news magazine or business or financial publication or service, whether communicated in hard copy form, by electronic means or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client.

(e) An insurance company or insurance producer that is licensed or authorized by the department of insurance to transact the business of insurance, including the sale of annuities, whose performance of the investment advisory services is solely incidental to the conduct of business as an insurance company or insurance producer and that receives no special compensation for providing investment advisory services.

(f) A real estate salesperson or real estate broker who is licensed or authorized by the state real estate department to transact the business of real estate, whose performance as an investment adviser is solely incidental to the conduct of the individual's business as a broker or salesman and who receives no special compensation for providing investment advisory services.

(g) Any officer, director, partner or employee of an entity engaged in selling interest in entities that invest in real property, including partnerships, corporations or sole proprietorships, if such transactions are otherwise subject to the securities laws of the United States or this state.

(h) Mortgage brokers or mortgage bankers who are licensed by the department of financial institutions to transact the business of a mortgage broker or mortgage banker, and their employees, whose performance of any investment advisory service is solely incidental to the conduct of the business of a mortgage broker or mortgage banker and who receives no special compensation for providing investment advisory services.

6. " Investment adviser representative" means any partner, officer or director of an investment adviser, any individual who occupies a status or performs functions similar to a partner, officer or director of an investment adviser or any other individual who is employed by or associated with an investment adviser, except clerical or ministerial personnel, and who does any of the following:

(a) Makes any recommendations or otherwise renders advice regarding securities.

(b) Manages accounts or portfolios of clients.

(c) Determines which recommendation or advice regarding securities should be given to a client if the individual is a member of the investment adviser's investment committee that determines general investment advice to be given to clients or the individual determines general client advice if the investment adviser has no investment committee, except that if an investment adviser has more than five individuals who make recommendations or give advice, only the supervisors of those individuals are investment adviser representatives.

(d) Solicits, offers or negotiates for the sale of or sells investment advisory services.

(e) Directly supervises employees who perform any of the acts described in this paragraph.

7. " Investment advisers act of 1940" means the act of Congress known as the investment advisers act of 1940 (15 United States Code section 80b).

8. " Investment company" means any company that is registered under the investment company act of 1940.

9. " Investment company act of 1940" means the act of Congress known as the investment company act of 1940 (15 United States Code section 80a).

10. " Licensed investment adviser" means an investment adviser licensed under this chapter.

11. " Licensed investment adviser representative" means an investment adviser representative licensed under this chapter.

12. " Open-end company" means a management company that is offering for sale or has outstanding any redeemable security of which it is the issuer.

13. " Solely incidental to the practice of the person's profession" and " solely incidental to the conduct of the person's business" means that the person does not hold itself out to the public as a provider of investment advisory services, the investment advisory services are rendered in connection with and reasonably related to the professional services or business transactions being provided or consummated and the fee charged for the investment advisory services is based on the same factors used by the person to determine the fees for the person's professional or business services.

14. " Unit investment trust" means an investment company that is organized under a trust indenture, contract of custodianship or agency or similar instrument, that does not have a board of directors and that issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities, but does not include a voting trust.