Section 82.51. Investment advisory services

(a) An insurer may not enter into a contract under which a person undertakes, for a fee, to regularly furnish investment advice to the insurer with respect to any of its separate accounts maintained for variable life insurance policies unless one of the following conditions are met:

(1) The person providing the advice is registered as an investment advisor under 15 U.S.C.A. § § 80b-1—80b-21 under the Employe Retirement Income Security Act of 1974 (ERISA), the act of September 2, 1974 (Pub. L. 93-406, 88 Stat. 829).

(2) The insurer has filed with the Commissioner and continues to file annually the following information and statements concerning the advisory.

(i) The name and form of organization, state of organization and its principal place of business.

(ii) The names and addresses of its partners, officers, directors and persons performing similar functions or, if the investment advisor is an individual, of the individual.

(iii) A written standard of conduct, complying in substance with the requirements of § 82.49 (relating to standards of conduct), which has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors and affiliates.

(iv) A statement provided by the proposed advisor as to whether the advisor or a person associated therewith has been convicted within 10 years of a felony or misdemeanor arising out of that person’s conduct as an employe, salesman, officer or director of an insurance company, a bank, an insurance agent, a securities broker or an investment advisor, involving embezzlement, fraudulent conversion or misappropriation of funds or securities or involving the violation of 18 U.S.C. § § 1341, 1342 or 1343 (relating to frauds and swindles; fictitious name or address; or fraud by wire, radio or television); has been permanently or temporarily enjoined by order, judgment or decree of a court of competent jurisdiction from acting as an investment advisor, underwriter, broker or dealer or as an affiliated person or as an employe of an investment company, bank or insurance company or from engaging in or continuing conduct or practice in connection with that activity; has been found by Federal or State regulatory authorities to have willfully violated or has acknowledged willful violation of Federal or State securities laws or State insurance laws or of a rule or regulation under those laws; or has been censured, been denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of Federal or State regulatory authorities.

(b) The investment advisory contract shall be in writing and shall provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days’ written notice to the investment advisor.

(c) The Commissioner may, by order, after notice and opportunity for hearing, require the investment advisory contract to be terminated if the Commissioner deems continued operation thereunder to be hazardous to the public or the insurer’s policyholders.

The provisions of this § 82.51 adopted August 4, 1978, effective September 5, 1978, 8 Pa.B. 2171; amended April 28, 1989, effective April 29, 1989, 19 Pa.B. 1835; corrected May 25, 1989, effective April 29, 1989, 19 Pa.B. 2251; corrected June 30, 1989, effective retroactive to April 29, 1989, 19 Pa.B. 2754. Immediately preceding text appears at serial pages (137053) to (137055).

Notation

Cross References

This section cited in 31 Pa. Code § 82.13 (relating to filing for approval to do business in this Commonwealth); and 31 Pa. Code § 82.41 (relating to applicability).