A proposed set of administrative rules under the Michigan Uniform Securities Act (2002) (MUSA) has been published (click here) by The Michigan Department of Licensing and Regulatory Affairs (LARA), Corporations, Securities, and Commercial Licensing Bureau (Bureau). Most of the proposed rules are based on model state rules developed by the North American Securities Administrators Association (NASAA) (click here). Public comments on the proposed rules can be submitted to the Bureau until Tuesday, April 3, 2018.
Proposed rules of special interest include:
The proposed MUSA rules will supersede all existing rules under the prior state securities act. The new rules cover substantially all aspects of state securities regulation in Michigan, including the following subjects among others:
Securities Offerings; Secondary Public Trading
Broker-dealers and their Agents
Investment Advisers, Representatives, and Private Fund Advisers
Michigan Investment Markets (secondary trading of intrastate securities)
The MUSA was amended in 2014 to add Chapter 4A, Michigan Investment Markets, a type of intrastate broker-dealer that would act as a market or exchange for transactions involving securities previously issued in intrastate offerings. Rule 4.8 lays out the extensive requirements to apply for this type of Michigan-only registration, including proof of compliance with Sections 5, 6, and 15 of the Securities Exchange Act of 1934 (e.g., an SEC no-action letter). Rule 4.16 prescribes minimum financial requirements for a Michigan investment market and customer protection rules based on SEC broker-dealer requirements.
Other Topics
Transition and Effective Date
A date for LARA’s adoption of the new ruleset is not yet known, but it is anticipated by late Summer or Fall 2018—the effective date will be 180 days later. Generally, there are no rule-specific transitional periods. Compliance with some of the rules’ requirements within the 180-day period may be challenging, so early preparations for these new rules is strongly encouraged. When effective, these MUSA rules will replace the six “Transition Orders” issued in 2009, 2010, and 2011 (click here) to implement the MUSA that became effective on October 1, 2009 (click here).
Public Comments
Public comments on any or all of the proposed MUSA rules may be submitted to LARA by 4:30 P.M. on Tuesday, April 3, 2018, electronically or in paper to:
Department of Licensing and Regulatory Affairs
Corporation, Securities, and Commercial Licensing Bureau
Attention: Stephen Brey
P.O. Box 30018
Lansing, MI 48909-7518
Phone: 517-241-9212
Fax: 517-241-7539
E-mail: breys@michigan.gov
LARA is also holding a public hearing to receive comments starting at 8:30 AM on March 27, 2018, at:
Library of Michigan
Forum, 1st Floor
702 W. Kalamazoo Street
Lansing, Michigan 48915
This rulemaking process commenced in 2015. LARA’s MUSA rulemaking history is available (click here) and its Regulatory Impact Statement and Cost Benefit Analysis (as amended) is available (click here).
We have been proactively engaged in the rulemaking process working cooperatively with the Bureau through the Securities Committee of the Business Law Section of the State Bar of Michigan. The Committee submitted extensive comments on prior drafts of these rules (click here) and the Bureau incorporated the overwhelming majority of those suggested changes.
We encourage you to carefully review the proposed MUSA rules. If you have questions or would like assistance in submitting public comments on the proposed rules, please contact any member of our Funds and Investment Services Practice Group.
