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Solicitors

A person who "solicits, offers or negotiates for the sale of or sells investment advisory services" comes within the Oregon definition of an investment adviser representative (IAR). ORS 59.015(8)(a) applies to individuals employed by or associated with a state investment adviser, and OAR 441-175-0046 applies to individuals employed by or associated with a federal covered investment adviser.


A solicitor, or one who receives referral fees, is therefore defined as an IAR, and Oregon law (ORS 59.165(3)) prohibits both a state investment adviser and a federal covered investment adviser from employing an IAR to act in this state unless the IAR is licensed to that employer. Along with the obligation to license the individual is the responsibility to supervise that individual. Supervision issues include, but are not limited to, knowing and controlling what the individual tells the potential client about the firm's background, past performance, expertise, fees, and clientele.


The Director has authority to designate by rule or order any individual to be excluded from the definition of an IAR. A part of the rule promulgated by the Director addresses receipt of compensation. This rule excludes from the definition of an IAR only those individuals where the referral fee is paid regardless of whether the referred person becomes a client of the firm. For example, paying a flat fee of $100 per name referred by an individual would fit within this exclusion. Any referral fee that is based on a percentage split of fees to be earned does not fit within this exclusion.