Pennsylvania Code & Bulletin
COMMONWEALTH OF PENNSYLVANIA

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10 Pa. Code § 404.010. Advertisements by investment advisers and investment adviser representatives.

§ 404.010. Advertisements by investment advisers and investment adviser representatives.

 (a)  The Department will consider the direct or indirect publication, circulation or distribution of an advertisement by an investment adviser or investment adviser representative to be a fraudulent, deceptive or manipulative act, practice or course of conduct within the meaning of section 404 of the act (70 P.S. §  1-404) if the advertisement:

   (1)  Refers, directly or indirectly, to any testimonial of any kind concerning the investment adviser or investment adviser representative concerning any advice, analysis, report or other service given to the customer by the investment adviser or investment adviser representative.

   (2)  Refers, directly or indirectly, to past specific recommendations of the investment adviser or investment adviser representative which were or would have been profitable to any person except that an advertisement setting forth or offering to furnish a list of all recommendations made by the investment adviser or investment adviser representative for the 12-month period immediately preceding the date of the publication of the advertisement is not prohibited if the advertisement:

     (i)   Includes the name of each security recommended, the date and nature of each recommendation including whether to buy sell or hold, the market price at the time, the price at which the recommendation was to be acted on, and the current market price of each security.

     (ii)   Contains the following cautionary legend prominently displayed on the first page in print or type as large as the largest print or type used in the body or text stating: “IT SHOULD NOT BE ASSUMED THAT RECOMMENDATIONS MADE IN THE FUTURE WILL BE PROFITABLE OR WILL EQUAL THE PERFORMANCE OF THE SECURITIES IN THIS LIST.”

   (3)  Represents, directly or indirectly, that any graph, chart, formula or other device being offered:

     (i)   Can in and of itself be used to determine which securities to buy or sell, or when to buy or sell them.

     (ii)   Will assist any person in making decisions as to which securities to buy or sell, or when to buy or sell them, without prominently disclosing in the advertisement the limitations and the difficulties with respect to its use.

   (4)  Contains any statement that any report, analysis or other service will be furnished free or without charge, unless the report, analysis or other service actually is or will be furnished absolutely without condition or obligation.

   (5)  Contains any untrue statement of a material fact, or which is otherwise false or misleading in any material respect, including the failure to disclose compensation, including free or discounted securities, received directly or indirectly in connection with making a recommendation concerning a specific security.

   (6)  Recommends the purchase or sale of any security unless the investment adviser or investment adviser representative simultaneously offers to furnish to any person on request a tabular presentation of:

     (i)   The total number of shares or other units of the security held by the investment adviser or investment adviser representative for its own account or for the account of officers, directors, trustees, partners or affiliates of the investment adviser or for discretionary accounts of the investment adviser or investment adviser representative maintained for clients.

     (ii)   The price or price range at which the securities listed in subparagraph (i) were purchased.

     (iii)   The date or range of dates during which the securities listed in response to subparagraph (i) were purchased.

 (b)  This section does not apply to Federally covered advisers unless the conduct otherwise is actionable under section 401(a) or (c) of the act (70 P.S. §  1-401(a) and (c)) or section 404 of the act.

Authority

   The provisions of this §  404.010 amended under sections 404(a) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. § §  1-404(a) and 1-609(a)); section 202.C of the Department of Banking and Securities Code (71 P.S. §  733-202.C); and section 9(b) of the Takeover Disclosure Law (70 P.S. §  79(b)).

Source

   The provisions of this §  404.010 adopted March 29, 1974, effective March 30, 1974, 4 Pa.B. 582; amended September 1, 2000, effective September 2, 2000, 30 Pa.B. 4551; transferred and renumbered from 64 Pa. Code §  404.010, December 14, 2012, effective December 15, 2012, 42 Pa.B. 7533; amended January 12, 2018, effective January 13, 2018, 48 Pa.B. 389. Immediately preceding text appears at serial pages (364785) to (364787).

Cross References

   This section cited in 10 Pa. Code §  102.021 (relating to definitions).



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