Investment advisors exempt from certain postregistration requirements

A bill for an act

relating to commerce; exempting investment advisers from certain postregistration

requirements; amending Minnesota Statutes 2025 Supplement, section 80A.66.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 80A.66, is amended to read:

80A.66 SECTION 411; POSTREGISTRATION REQUIREMENTS.

(a)
Financial requirements.
Subject to Section 15(h) of the Securities Exchange Act

of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940

(15 U.S.C. Section 80b-22), a rule adopted or order issued under this chapter may establish

minimum financial requirements for broker-dealers registered or required to be registered

under this chapter and investment advisers registered or required to be registered under this

chapter.

(b)
Financial reports.
Subject to Section 15(h) of the Securities Exchange Act of 1934

(15 U.S.C. Section 78o(h)) or Section 222(b) of the Investment Advisers Act of 1940 (15

U.S.C. Section 80b-22), a broker-dealer registered or required to be registered under this

chapter and an investment adviser registered or required to be registered under this chapter

shall file such financial reports as are required by a rule adopted or order issued under this

chapter. If the information contained in a record filed under this subsection is or becomes

inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting

amendment.

(c)
Record keeping.
Subject to Section 15(h) of the Securities Exchange Act of 1934

(15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15

U.S.C. Section 80b-22):

(1) a broker-dealer registered or required to be registered under this chapter and an

investment adviser registered or required to be registered under this chapter shall make and

maintain the accounts, correspondence, memoranda, papers, books, and other records

required by rule adopted or order issued under this chapter;

(2) broker-dealer records required to be maintained under paragraph (1) may be

maintained in any form of data storage acceptable under Section 17(a) of the Securities

Exchange Act of 1934 (15 U.S.C. Section 78q(a)) if they are readily accessible to the

administrator; and

(3) investment adviser records required to be maintained under paragraph (d)(1) may

be maintained in any form of data storage required by rule adopted or order issued under

this chapter.

(d)
Records and reports of private funds.

(1)
In general.
An investment adviser to a private fund shall maintain such records of,

and file with the administrator such reports and amendments thereto, that an exempt reporting

adviser is required to file with the Securities and Exchange Commission pursuant to SEC

Rule 204-4, Code of Federal Regulations, title 17, section 275.204-4.

(2)
Treatment of records.
The records and reports of any private fund to which an

investment adviser provides investment advice shall be deemed to be the records and reports

of the investment adviser.

(3)
Required information.
The records and reports required to be maintained by an

investment adviser, which are subject to inspection by a representative of the administrator

at any time, shall include for each private fund advised by the investment adviser, a

description of:

(A) the amount of assets under management;

(B) the use of leverage, including off-balance-sheet leverage, as to the assets under

management;

(C) counterparty credit risk exposure;

(D) trading and investment positions;

(E) valuation policies and practices of the fund;

(F) types of assets held;

(G) side arrangements or side letters, whereby certain investors in a fund obtain more

favorable rights or entitlements than other investors;

(H) trading practices; and

(I) such other information as the administrator determines is necessary and appropriate

in the public interest and for the protection of investors, which may include the establishment

of different reporting requirements for different classes of fund advisers, based on the type

or size of the private fund being advised.

(4)
Filing of records.
A rule or order under this chapter may require each investment

adviser to a private fund to file reports containing such information as the administrator

deems necessary and appropriate in the public interest and for the protection of investors.

(e)
Audits or inspections.
The records of a broker-dealer registered or required to be

registered under this chapter and of an investment adviser registered or required to be

registered under this chapter, including the records of a private fund described in paragraph

(d) and the records of investment advisers to private funds, are subject to such reasonable

periodic, special, or other audits or inspections by a representative of the administrator,

within or without this state, as the administrator considers necessary or appropriate in the

public interest and for the protection of investors. An audit or inspection may be made at

any time and without prior notice. The administrator may copy, and remove for audit or

inspection copies of, all records the administrator reasonably considers necessary or

appropriate to conduct the audit or inspection. The administrator may assess a reasonable

charge for conducting an audit or inspection under this subsection.

(f)
Custody and discretionary authority bond or insurance.
Subject to Section 15(h)

of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the

Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued

under this chapter may require a broker-dealer or investment adviser that has custody of or

discretionary authority over funds or securities of a customer or client to obtain insurance

or post a bond or other satisfactory form of security in an amount of at least $25,000, but

not to exceed $100,000. The administrator may determine the requirements of the insurance,

bond, or other satisfactory form of security. Insurance or a bond or other satisfactory form

of security may not be required of a broker-dealer registered under this chapter whose net

capital exceeds, or of an investment adviser registered under this chapter whose minimum

financial requirements exceed, the amounts required by rule or order under this chapter.

The insurance, bond, or other satisfactory form of security must permit an action by a person

to enforce any liability on the insurance, bond, or other satisfactory form of security if

instituted within the time limitations in section 80A.76(j)(2).

(g)
Requirements for custody.
Subject to Section 15(h) of the Securities Exchange Act

of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940

(15 U.S.C. Section 80b-22), an agent may not have custody of funds or securities of a

customer except under the supervision of a broker-dealer and an investment adviser

representative may not have custody of funds or securities of a client except under the

supervision of an investment adviser or a federal covered investment adviser. A rule adopted

or order issued under this chapter may prohibit, limit, or impose conditions on a broker-dealer

regarding custody of funds or securities of a customer and on an investment adviser regarding

custody of securities or funds of a client.

(h)
Investment adviser brochure rule.
With respect to an investment adviser registered

or required to be registered under this chapter, a rule adopted or order issued under this

chapter may require that information or other record be furnished or disseminated to clients

or prospective clients in this state as necessary or appropriate in the public interest and for

the protection of investors and advisory clients.

(i)
Continuing education.
A rule adopted or order issued under this chapter may require

an individual registered under section 80A.57 or
80A.58
to participate in a continuing

education program approved by the Securities and Exchange Commission and administered

by a self-regulatory organization, the North American Securities Administrators Association,

or the commissioner.

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(j)
Exemption.
An investment adviser who does not have one or more employees is not

required to file written supervisory procedures with the administrator.

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