Rule 5.8 Dealing in Investment Products: Prohibitions and Restrictions
Chapter 81: Rules of Professional Conduct
Rule Text
(a) A lawyer shall not broker, offer to sell, sell, or place any investment product unless separately licensed to do so.
(b) A lawyer shall not recommend or offer an investment product to a client or any person with whom the lawyer has a fiduciary relationship, or invest funds belonging to such a person in an investment product, if the lawyer or a person related to the lawyer:
(1) has an interest in compensation paid or provided by a person other than the client or person with whom the lawyer has a fiduciary relationship; or
(2) has an ownership interest in the entity that sponsors, insures, underwrites, manages, or issues the investment product.
(c) For purposes of this Rule:
(1) the term ‘‘investment product’’ includes: an annuity contract; a life insurance contract; a commodity; a swap; an investment fund, including but not limited to a collective trust fund, a common trust fund, a real estate investment fund, and registered investment company; a security, whether or not the security is registered with any federal or state securities regulator; or an investment adviser’s, bank’s, trust company’s, insurance company’s, or other financial institution’s service as an investment manager or investment adviser;
(2) ‘‘person related to the lawyer’’ includes a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer maintains a close familial relationship; and
(3) the term ‘‘ownership interest’’ does not include shares of an issuer that has registered the shares under federal securities laws, the issuer’s shares are traded on a securities exchange that is registered under federal securities laws, and the lawyer’s aggregate interest in shares of all classes is less than one percent of the issuer’s outstanding common shares.
Amendment history: The provisions of this Rule 5.8 adopted December 30, 2014, effective in 60 days, 45 Pa.B. 279.