I seem to be getting conflicting information concerning an investment ...

Some individuals and small firms solicit new business on behalf of an investment adviser. The regulators call such persons solicitors. To use a solicitor, the adviser must be registered; there can be no outstanding order suspending, limiting, or barring the solicitor’s activities; and there must be a written agreement between the solicitor and the adviser. Also, the following conditions must be met:

• The agreement between the adviser and the solicitor must describe the solicitation activities and the compensation arrangement.
• The solicitor must provide the client with the adviser’s disclosure brochure and a separate solicitor disclosure document.
• The adviser must receive a signed acknowledgment from the client that he/she received both the
• RIA’s and the solicitor’s disclosure documents

The adviser must obtain a signed acknowledgment from the client that both disclosure brochures were received. Also, if the solicitor were some shady character, the adviser would not be able to stand back shrugging off responsibility to the regulators. The adviser is expected to do due diligence on the solicitors they use, and if an adviser knew the individual was a convicted felon and hired the solicitor anyway, the adviser would face regulatory action.

Is the solicitor required to be registered? Not by the SEC and not by all the state securities Administrators. The important point is that the adviser must be registered, must oversee the solicitor, and the solicitor cannot be someone ineligible for registration because of criminal or regulatory events.

Most states call a “solicitor” an “investment adviser representative” and make him—or them—register as such. But not all states feel that way.