No. 26676: R628-19. Requirements for the Use of Investment Advisers by Public Treasurers

DAR File No.: 26676
Filed: 12/15/2003, 05:06
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Money Management Council received comment from the Securities Division informing them that requiring federal investment advisers become licensed under the state of Utah caused problems for these advisers and in some instances, is not legal for them to be licensed in Utah.

 

Summary of the rule or change:

The requirement that any unlicensed investment adviser or adviser representative working with a public treasurer become licensed within 120 days has been deleted. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed amendment that was published in the October 15, 2003, issue of the Utah State Bulletin, on page 27. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

 

State statutory or constitutional authorization for this rule:

Section 61-1-13

 

Anticipated cost or savings to:

the state budget:

No changes beyond those noted in the original rule filing DAR No. 26676, published in the October 15, 2003, Utah State Bulletin.

 

local governments:

No changes beyond those noted in the original rule filing DAR No. 26676, published in the October 15, 2003, Utah State Bulletin.

 

other persons:

No changes beyond those noted in the original rule filing DAR No. 26676, published in the October 15, 2003, Utah State Bulletin.

 

Compliance costs for affected persons:

No changes beyond those noted in the original rule filing DAR No. 26676, published in the October 15, 2003, Utah State Bulletin.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no additional fiscal impact on businesses beyond those noted in the original filing of this rule, DAR No. 26676, published in the October 15, 2003, Utah State Bulletin.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Money Management Council
Administration
Room 215 STATE CAPITOL
350 N STATE ST
SALT LAKE CITY UT 84114-1103

 

Direct questions regarding this rule to:

Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

02/02/2004

 

This rule may become effective on:

02/03/2004

 

Authorized by:

Larry Richardson, Chair

 

 

RULE TEXT

R628. Money Management Council, Administration.

R628-19. Requirements for the Use of Investment Advisers by Public Treasurers.

R628-19-1. Authority.

This rule is issued pursuant to Section 51-7-18(2)(b).

 

R628-19-2. Scope.

This rule establishes basic requirements for public treasurers when using investment advisers.

 

R628-19-3. Purpose.

The purpose of this rule is to outline requirements for public treasurers who are considering utilizing investment advisers to invest public funds. These are minimum requirements and not exhaustive criteria to be used when choosing an adviser.

 

R628-19-4. Definitions.

(1) For purposes of this rule:

(a) Investment adviser as used in this rule has the same meaning as defined in Section 61-1-13(15).

(b) Investment adviser representative as used in this rule has the same meaning as defined in Section 61-1-13(16).

(c) Realized rate of return means: yield calculated by combining interest earned, discounts accreted and premiums amortized, plus any gains or losses realized during the month, less all fees, divided by the average daily balance during the reporting period. The realized return should then be annualized.

 

R628-19-5. General Rule.

When considering and using an investment adviser the public treasurer shall follow these minimum requirements:

(1) A person offering investment advisory services to a public treasurer shall at all times be licensed as an investment adviser or an investment adviser representative with the Utah Securities Division.[ Any unlicensed investment adviser or investment adviser representative currently serving a public treasurer has 120 days from the effective date of this rule to comply.]

(2) The public treasurer shall request and the investment adviser shall furnish, a clear and concise written explanation of any and all fees and the fee structure.

(3) The public treasurer shall request and the investment adviser shall furnish, examples of report formats which shall reflect at a minimum the following information:

(a) the realized rate of return on the funds under the advisers management reported monthly on an actual over 360 day basis; and

(b) a description of the security including the name, interest rate, maturity date and purchase date of the security.

(4) All transactions must be in full compliance with all aspects of the Money Management Act and Rules of the Council particularly those requirements governing safekeeping, utilizing certified dealers, qualified depositories and purchasing only the types of securities listed in 51-7-11., 51-7-12. and 51-7-13. as applicable.

(5) Transaction confirmations shall be provided on every trade transacted for the public entity, within five business days of trade date by the certified dealer, to the public treasurer.

 

R628-19-6. Reporting to the Council.

When a public treasurer has contracted with an investment adviser for the management of public funds, the public treasurer shall provide the detail of those investments to the Council, pursuant to Section 51-7-18.2.

 

KEY: securities, investment adviser, public funds

[2003]2004

51-7-18(2)(b)

61-1-13