Request for Public Comment Regarding a Proposed Model Rule Amendment to the Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers Model Rule to Include Investment Adviser Account Access Under the Uniform Securities Acts of 1956 and 2002

July 25, 2017

The North American Securities Administrators Association, Inc. (NASAA) is requesting public comment on a proposed model rule amendment to the NASAA model rule on Unethical Business Practices of Investment Advisers and Investment Adviser Representatives and Federal Covered Advisers to address investment advisers accessing client accounts with the client’s own unique identifying information (such as username and password).

Background

The purpose of this Proposed Rule Amendment is to address the practice of investment advisers and investment adviser representatives accessing various client accounts with the client’s own unique identifying information (such as username and password), rather than accessing these accounts through a separate log-in created for the adviser. As many investment advisers need access to a host of different client retirement accounts, brokerage accounts, and other online accounts to inform their advice, some advisers accept or specifically ask clients for the clients’ own usernames and passwords to access the clients’ accounts online. When an investment adviser accesses a client’s account in this manner, the investment adviser is in effect impersonating this client and has the same access to the account as the client. There are multiple concerns with this type of access, including but not limited to custody and recordkeeping obligations as well as violations of the clients’ own user agreements and fraud protection policies with the online companies.

Public Comment Period

Comments are due on or before August 25, 2017. To facilitate consideration of comments, please send comments to Andrea Seidt (Andrea.Seidt@com.state.oh.us), Investment Adviser Section Chair; Elizabeth Smith (Elizabeth.Smith@dfi.wa.gov), Investment Adviser Regulatory Policy and Review Project Group Chair; and A.Valerie Mirko (nasaacomments@nasaa.org), NASAA General Counsel. We encourage, but do not require, comments to be submitted by e-mail.

Hard copy comments can be submitted at the address below:
NASAA Legal Department
A.Valerie Mirko, General Counsel
NASAA
750 First Street, NE, Suite 1140
Washington, DC 20002

Note: After the comment period has closed, NASAA will post to its website the comments it receives as submitted by the authors. Parties should therefore only submit information that they wish to make publicly available. Further, the following notice will appear on NASAA’s website where comments are posted: NASAA, its agents, and employees accept no responsibility for the content of the comments posted on this Web page. The views, expressions, and opinions expressed in the comments are solely those of the author(s).

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NASAA Proposals, Regulatory Activity, Request for Comment