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A Better Partnership


Sep 2009
September 30, 2009

Michigan's Securities Law is Changing on October 1, 2009

Michigan's securities law is changing on October 1, 2009. The old securities law, enacted in 1964, is being replaced by an entirely new law. While most of the substance of the old law is contained in the law, many technical changes have been made. Click here for an article that Shane Hansen co-authored from the Michigan Bar Journal that highlights some of the important changes. The new Uniform Securities Act is available on the Michigan Legislature's Web site at: http:/

For investment advisers—both SEC-registered and state-registered—an important change will be the registration of investment adviser representatives (IARs) on the WebCRD/IARD System. Under the Transition Order Administering the Michigan Uniform Securities Act issued by the Office of Financial and Insurance Regulation (OFIR) on September 1, 2009, firms will have until July 1, 2010, to complete those registrations, though firms are encouraged to initiate those registrations in January 2010 due to the anticipated volume the OFIR expects to process.

As a prerequisite to registration, IARs must have passed the Uniform State Investment Adviser Exam, Series 65, or a combination of the Series 66 and Series 7 exams, administered by the FINRA within the last two years, unless they qualify for an exam waiver. Exam waivers are available to an individual who has been registered as an investment adviser representative in another state within the preceding two years and anyone who has been awarded and currently holds in good standing one of the following professional designations: a Certified Financial Planner awarded by the Certified Financial Planners Board of Standards; the Chartered Financial Consultant or Masters of Science and Financial Services awarded by the American College; the Chartered Financial Analyst awarded by the Institute of Chartered Financial Analysts; the Personal Financial Specialist awarded by the American Institute of Certified Public Accountants; or the Chartered Investment Counselor awarded by the Investment Adviser Association.

For firms operating as both a broker-dealer and an investment adviser in Michigan, it is important to note that the exemption for Michigan-registered broker-dealers from investment adviser registration or notice filing does not exist under the new law. Under the new law, state investment adviser registration or notice filing for SEC-registered firms, as applicable, is required for most broker-dealers having a place of business and providing investment advisory services in Michigan.

The OFIR will be promulgating new rules to implement various provisions of the new law, though the rulemaking process is not anticipated to be completed until mid 2010. The OFIR has issued a Transition Order and may issue additional orders before final rules are in place. The OFIR's Bulletin 2009-14-SEC, including the first Transition Order, is available on its Web site at: http:/,1607,7-154-10555_12900---,00.html.

Michigan has also enacted the Uniform Prudent Management of Institutional Funds Act, effective September 10, 2009. This new act requires, among other things, an institution managing and investing an institutional fund to consider the institution's charitable purposes and the purposes of the fund. It establishes a good faith and prudent person standard for each person responsible for managing and investing an institutional fund. It provides guidance with respect to the delegation of management or investment authority to agents, including investment advisers. An adviser who accepts management or investment authority owes a duty to the institution to exercise reasonable care in carrying out the scope and terms of the delegation. Click here for an article written by a fellow partner, Jeff Power, explaining the new law. The new Uniform Prudent Management of Institutional Funds Act is available on the Michigan Legislature's Web site at: http:/

We would be pleased to talk with you about these two important new Michigan laws, and to assist you in all aspects of your firm's on-going legal and compliance needs. Warner Norcross & Judd LLP is a full service law firm with offices in Grand Rapids, Holland, Lansing, Muskegon, Southfield, Sterling Heights. Our Broker-Dealer and Investment Adviser Practice Group is an interdisciplinary team of attorneys and paralegals who regularly advise and assist firms with the full range of legal and compliance matters. More information about our firm, our practice group, and our services is available on our Web site at: /.

Please do not hesitate to call any member of our team if you have any questions.

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