S-212                 _______________________________________________

                                                   SENATE BILL NO. 3050

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Senator Moore

Read first time 1/15/85 and referred to Committee on Financial Institutions.

AN ACT Relating to investment advisers; amending RCW 21.20.100; and adding a new section to chapter 21.20 RCW.

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

        Sec. 1.  Section 10, chapter 282, Laws of 1959 and RCW 21.20.100 are each amended to read as follows:

(1) Every registered broker-dealer and investment adviser shall make and keep such accounts and other records, except with respect to securities exempt under RCW  21.20.310(1), which accounts and other records shall be prescribed by the director.  All records so required shall be preserved for three years unless the director prescribes otherwise for particular types of records.  All the records of a registered broker-dealer or investment adviser are subject at any time or from time to time to such reasonable periodic, special or other examinations by representatives of the director, within or without this state, as the director deems necessary or appropriate in the public interest or for the protection of investors.

(2) The director shall require every investment adviser to keep accounts and records covering the total value of all clients' assets under management for each calendar year, including a full description of any investment inventory and the total value of all assets at the beginning of the calendar year, any investment transactions during the calendar year, and the investment inventory and the total value of all assets at the end of the calendar year.  The record shall show the results of the investment adviser's effective earnings on clients' assets.  The director shall develop methods and assure the methods are fair and accurate in the representation of effective earnings.

These records maintained under this subsection are to be at the investment adviser's principal place of business and shall be available for examination and inspection by the director during routine business hours.

NEW SECTION. Sec. 2.  A new section is added to chapter 21.20 RCW to read as follows:

          (1) Each investment adviser doing business in this state shall furnish the last annual report of the investment advisor to each prospective client advising the client of the investment adviser's history and the adviser's success or lack of success in conducting the advisory business.

          (2) The annual report required by subsection (1) of this section shall be in a form prescribed by the director.  The report shall not disclose the identity of any client, and the director shall adopt rules to insure such confidentiality.