Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The Minnesota Department of Commerce recently conducted a series of routine exams of investment adviser firms registered in Minnesota to analyze their compliance with certain regulations applicable to investment advisers. Common deficiencies noted during the exams are as follows:

  • Form ADV Annual Renewal and Updates: Failure to file an annual updating amendment to Form ADV within 90 days of the end of the investment adviser’s fiscal year, or more frequently if the information in the ADV is or becomes inaccurate or incomplete, failure to file an ADV Part 2A and 2B and failure to file an update as required by Minn. Stat. § 80A.61 (d), Minn. Rule 2876.4061 and the Form ADV instructions.
  • Bonding Requirements: For investment advisers that have custody or discretionary authority over client funds or securities, failure to post with the administrator a surety bond or an irrevocable letter of credit with the administrator as required by Minn. Rule 2876.4115.
  • Custody Safeguards: Failure to send invoices to clients and custodians at the time fees are directly deducted from clients’ accounts as required by Minn. Rule 2876.4116, subp.1.F.
  • IAR Registration: Failure to register individuals that meet the definition of “investment adviser representatives” in Minn. Stat. § 80A.41 (17) and that are not exempt from registration.