Senior Financial Designations

Notice of Final Regulations

The Secretary of the Commonwealth adopted final regulations amending 950 CMR 12.200 (Registration of Broker-Dealer, Agents, Investment Adviser, Investment Adviser Representatives and Notice Filing Procedures for Federal Covered Advisers). The final regulations went into effect June 1, 2007.

Language of Final Regulation

The language below shall be included as 950 CMR 12.204(2)(i)[Dishonest and Unethical Practices in the Securities Business]:

(i) 1. Using a purported credential or professional designation that indicates or implies that a broker-dealer agent has special certification or training in advising or servicing senior investors, unless such credential or professional designation has been accredited by an accreditation organization recognized by the Secretary by rule or order. For the purposes of this subsection 12.204(2)(i), the term “senior investor” shall include a person 65 years of age or older.

2. In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a purported credential or professional designation indicating or implying that a broker-dealer agent has special certification or training in advising or servicing senior investors, factors to be considered shall include: (a) use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “chartered,” “adviser,”“specialist,” or like words in the name of the credential or professional designation; (b) how those words are combined; and (c) whether they are capitalized. Subsection 12.204(2)(i) is not intended to apply to job titles provided by a broker-dealer specifying one’s area of specialization within an organization unless the facts and circumstances associated with the provision or use of a job title indicate that it improperly suggests or implies certification or training beyond that which the titleholder possesses or that it otherwise misleads investors. It is also not intended to apply to job titles provided by a broker-dealer indicating seniority within an organization.

3. There shall be a grace period commencing on the effective date of subsection 12.204(2)(i) and running until two months after the date that at least one accreditation organization is recognized by the Secretary pursuant to subsection 12.204(2)(i)(5). In addition, there shall be a sixth month grace period with respect to any credential or professional designation that has been submitted to an accreditation organization described in subsection (1) above for accreditation, running from the date of such submission; provided, that the Secretary may, at his discretion (consistent with the public interest and protection of investors), increase such grace period by an additional period of up to twelve months upon a showing of substantial progress in the accreditation process and a showing that such additional time is needed to complete the accreditation process; however, if accreditation of such credential has been denied in a final decision of such accreditation organization, any grace period provided for in this subsection shall terminate on the date of such denial.

4. Subsection 12.204(2)(i) shall not apply to a degree or certificate evidencing completion of an academic program at an accredited institution of higher education unless the facts and circumstances associated with the provision or use of such degree or certificate indicate that it improperly suggests or implies certification or training beyond that which the degree holder or certificate holder possesses or that it otherwise misleads investors.

5. The Secretary may recognize any accreditation organization by rule or order. The Secretary shall consider any request for recognition by an accreditation organization. In determining whether to recognize an accreditation organization, the Secretary shall consider, among other factors that the Secretary deems appropriate in his discretion, whether or the extent to which the accreditation organization is nationally recognized and independent, whether it is for-profit or nonprofit, whether the primary purpose of the organization is to develop standards and implement methods for assuring competency and whether the organization has standards to address the status of designees who obtained the credential or designation prior to accreditation. The Secretary shall maintain a readily-accessible list, with contact information, of all accreditation organizations he recognizes.

The language below shall be included as 950 CMR 12.205(9)(c)(15)[Dishonest and Unethical Practices in the Securities Business]:

15. a. Using a purported credential or professional designation that indicates or implies that an investment adviser representative has special certification or training in advising or servicing senior citizens, unless such credential or professional designation has been accredited by an accreditation organization recognized by the Secretary by rule or order. For the purposes of this subsection 12.205(9)(c)(15), the term “senior citizen” shall include a person 65 years of age or older.

b. In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a purported credential or professional designation indicating or implying that an investment adviser representative has special certification or training in advising or servicing senior citizens, factors to be considered shall include: (1) use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “chartered,” “adviser,”“specialist,” or like words in the name of the credential or professional designation; (2) how those words are combined; and (3) whether they are capitalized. Subsection 12.205(9)(c)(15) is not intended to apply to job titles provided by an investment adviser specifying one’s area of specialization within an organization unless the facts and circumstances associated with the provision or use of a job title indicate that it improperly suggests or implies certification or training beyond that which the titleholder possesses or that it otherwise misleads investors. It is also not intended to apply to job titles provided by an investment adviser indicating seniority within an organization.

c. There shall be a grace period commencing on the effective date of subsection 12.205(9)(c)(15) and running until two months after the date that at least one accreditation organization is recognized by the Secretary pursuant to subsection 12.205(9)(c)(15)(e). In addition, there shall be a sixth month grace period with respect to any credential or professional designation that has been submitted to an accreditation organization described in subsection (a) above for accreditation, running from the date of such submission; provided, that the Secretary may, at his discretion (consistent with the public interest and protection of investors), increase such grace period by an additional period of up to twelve months upon a showing of substantial progress in the accreditation process and a showing that such additional time is needed to complete the accreditation process; however, if accreditation of such credential has been denied in a final decision of such accreditation organization, any grace period provided for in this subsection shall terminate on the date of such denial.

d. Subsection 12.205(9)(c)(15) shall not apply to a degree or certificate evidencing completion of an academic program at an accredited institution of higher education unless the facts and circumstances associated with the provision or use of such degree or certificate indicate that it improperly suggests or implies certification or training beyond that which the degree holder or certificate holder possesses or that it otherwise misleads investors.

e. The Secretary may recognize any accreditation organization by rule or order. The Secretary shall consider any request for recognition by an accreditation organization. In determining whether to recognize an accreditation organization, the Secretary shall consider, among other factors that the Secretary deems appropriate in his discretion, whether or the extent to which the accreditation organization is nationally recognized and independent, whether it is for-profit or nonprofit, whether the primary purpose of the organization is to develop standards and implement methods for assuring competency and whether the organization has standards to address the status of designees who obtained the credential or designation prior to accreditation. The Secretary shall maintain a readily-accessible list, with contact information, of all accreditation organizations he recognizes.