S-0240.1                   _______________________________________________

                                                     SENATE BILL 5183

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State of Washington                              53rd Legislature                             1993 Regular Session

By Senator Moore

Read first time 01/15/93.  Referred to Committee on Labor & Commerce.

Forbidding the breach of fiduciary duty in securities advising.

          AN ACT Relating to breaches of fiduciary duty in securities advising; and amending RCW 21.20.020.

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

        Sec. 1.  RCW 21.20.020 and 1959 c 282 s 2 are each amended to read as follows:

          It is unlawful for any person who receives any consideration from another party primarily for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise:

          (1) To employ any device, scheme, or artifice to defraud the other person; ((or))

          (2) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person; or

(3) To breach the fiduciary duty owed by the advisor to the client.  Fiduciary duty exists if:

(a) The client's account is a discretionary one; or

(b) The advisor has substantial control and influence over the exercise of investment decision making and judgment by the client.

Fiduciary duty includes the obligations to act in good faith with the highest duty of care, honesty, and integrity, and to fully disclose all known material information regarding the subject investment.

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