17-12a403.   Investment adviser registrationrequirement and exemptions.(a) Registration requirement. It is unlawful fora person to transact business in this state as an investment adviserunless the person is registered under this act as an investmentadviser or is exempt from registration as an investment adviserunder subsection (b).

      (b)   Exemptions from registration. The following persons areexempt from the registration requirement of subsection (a):

      (1)   A person without a place of business in this state that isregistered under the securities act of the state in which the personhas its principal place of business if its only clients in thisstate are:

      (A)   Federal covered investment advisers, investment advisersregistered under this act, or broker-dealers registered under thisact;

      (B)   institutional investors;

      (C)   bona fide preexisting clients whose principal places ofresidence are not in this state if the investment adviser isregistered under the securities act of the state in which theclients maintain principal places of residence; or

      (D)   any other client exempted by rule adopted or order issuedunder this act;

      (2)   a person without a place of business in this state if theperson has had, during the preceding 12 months, not more than fiveclients that are resident in this state in addition to thosespecified under paragraph (1); or

      (3)   any other person exempted by rule adopted or order issuedunder this act.

      (c)   Limits on employment or association. It is unlawful foran investment adviser, directly or indirectly, to employ orassociate with an individual to engage in an activity related toinvestment advice in this state if the registration of theindividual is suspended or revoked or the individual is barred from employmentor association with an investment adviser, federalcovered investment adviser, or broker-dealer by an order under thisact, the securities and exchange commission, or a self-regulatoryorganization, unless the investment adviser did not know, and in theexercise of reasonable care could not have known, of the suspension,revocation, or bar. Upon request from the investment adviser andfor good cause, the administrator, by order, may waive, in whole orin part, the application of the prohibitions of this subsection tothe investment adviser.

      (d)   Investment adviser representative registration required.It is unlawful for an investment adviser to employ or associate withan individual required to be registered under this act as aninvestment adviser representative who transacts business in thisstate on behalf of the investment adviser unless the individual isregistered underK.S.A. 17-12a404(a), and amendments thereto, or isexempt from registration underK.S.A. 17-12a404(b), and amendmentsthereto.

      History:   L. 2004, ch. 154, § 20; July 1, 2005.