WSR 07-15-011

PREPROPOSAL STATEMENT OF INQUIRY

DEPARTMENT OF

FINANCIAL INSTITUTIONS
(Securities Division)

[ Filed July 9, 2007, 12:29 p.m. ]

Subject of Possible Rule Making: The securities division is considering amending its rules to clarify that a person who uses a professional designation or otherwise conducts himself in a manner that would lead a reasonable person to believe that he offers financial planning services or advice may be holding himself out as a financial planner and subject to investment adviser registration in accordance with RCW 21.20.005(6) and 21.20.040(3).

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 21.20.450.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The division notes the growth in the use of professional designations which state or imply that a person has special expertise, certification, or training in financial planning. The division has also learned of other activities by persons who are not registered as investment advisers that may lead a reasonable person to believe that the unregistered person offers financial planning services or advice. It appears that rule making is necessary in order to clarify that the use of these designations and other conduct may necessitate registration as an investment adviser in accordance with RCW 21.20.005(6) and 21.20.040(3).

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: Broker-dealers, investment advisers and their representatives are subject to regulation by the Securities and Exchange Commission (SEC) under federal law. Broker-dealers and their representatives are also subject to regulation by the NASD, a self-regulatory organization authorized under federal law. The only direct regulation of the use of designations by the SEC or the NASD pertains to the use of the term "investment counsel."

Process for Developing New Rule: The division is soliciting comments from interested persons.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Faith L. Anderson, Department of Financial Institutions, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, phone (360) 725-7825, fax (360) 704-6480, e-mail fanderson@dfi.wa.gov.

July 6, 2007

Michael E. Stevenson

Director of Securities

Washington State Code Reviser's Office