TITLE 30

CORPORATIONS

CHAPTER 14

UNIFORM SECURITIES ACT (2004)

PART 5.

FRAUD AND LIABILITIES

30-14-502.  Prohibited conduct in providing investment advice. (a) Fraud in providing investment advice. It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing or selling securities or that, for compensation and as part of a regular business, issues or promulgates analyses or reports relating to securities:

(1)  To employ a device, scheme, or artifice to defraud another person;

(2)  To engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person; or

(3)  To divert investor money to the personal use of the issuer, offeror or seller, or to pay prior investors without specifically disclosing that use before receiving the investor’s money.

(b)  Rules defining fraud. A rule adopted under this chapter may define an act, practice, or course of business of an investment adviser or an investment adviser representative, as fraudulent, deceptive or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive or manipulative.

(c)  Rules specifying contents of advisory contract. A rule adopted or an order issued under this chapter may specify the contents of an investment advisory contract entered into, extended or renewed by an investment adviser.

History:

[30-14-502, added 2004, ch. 45, sec. 2, p. 209; am. 2012, ch. 65, sec. 7, p. 185.]