Massachusetts Adopts New Regulation on the Use of Expert Network Services


On August 8, 2011, the Massachusetts Secretary of State’s Securities Division (the “Securities Division”) issued a new final regulation on the use of expert network services.1 The new regulation takes effect on December 1, 2011 and will require certain investment advisers who retain consulting services, for compensation that is paid either directly to the consultant or indirectly through a firm providing expert-network services, to obtain a signed certification from the consultant that (i) describes all confidentiality restrictions that the consultant has, or reasonably expects to have, regarding confidential information and (ii) affirmatively states that the consultant will not provide confidential information to the adviser. The Securities Division indicated that the new regulation is intended to address “the rising use of expert network firms by investment advisers to facilitate paid consultations between investment advisers and industry experts.”

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Published In: Administrative Agency Updates, Finance & Banking Updates, Securities Updates

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