Investment Advisers Using Matching or Expert Network Services - Dishonest or Unethical Conduct in the Securities Business

Add the following new subsection (16) to 950 CMR 12.205(9)(c) (non-exclusive list of practices by an investment adviser which shall be deemed "dishonest or unethical conduct or practices in the securities business"):

16. a. To retain consulting services, for compensation that is provided either directly to the consultant or indirectly through a Matching or Expert Network Service, unless the adviser obtains a written certification, signed by the consultant that:

(i) describes all confidentiality restrictions that the consultant has, or reasonably expects to have, regarding Confidential Information; and

(ii) affirmatively states that the consultant will not provide any Confidential Information to the adviser.

b. Notwithstanding section (a) an investment adviser who comes into possession of material Confidential Information through a consultation is precluded from trading any relevant security until such time as the Confidential Information is made public.

c. Definitions. For purposes of this section:

(i) "Confidential Information" means any non-public information, which one is bound by a confidentiality agreement or fiduciary (or similar) duty not to disclose.

(ii) "Matching or Expert Network Service" means a firm that for compensation matches consultants with investment advisers.

View Comments on the Proposed Rule

Submit a Comment