On September 24, 2019, in response to a request for clarification by certain industry groups, the Indiana Attorney General’s Office issued a Memorandum of Legal Guidance (the “MLG”) confirming that the amendments to the Indiana Telephone Solicitations law, Ind. Code § 24-5-12-0.1 et seq., will be interpreted in conjunction with its companion statute, the Indiana Telephone Solicitation of Consumers law, Ind. Code § 24-4.7-1-1 et seq., and that the exemptions enumerated in that statute would be considered exemptions from the Telephone Solicitations law.
In our alert “Who’s Calling the Hoosiers?” we discussed the amendment to the Indiana Telephone Solicitations law, effective July 1, 2019, which required that any “seller” making a “solicitation” in Indiana must first register with the Attorney General’s Office and pay the applicable registration fee. “Seller” is broadly defined as “a person who, personally, through salespersons, or through the use of an automated dialing and answering device, makes a solicitation.” Ind. Code § 24-5-12-8. A “solicitation” is defined as “a telephone conversation or attempted telephone conversation in which the seller offers, or attempts to offer, an item to another person in exchange for money or other consideration.” See Ind. Code § 24-5-12-9. We noted that there were no express exemptions to the registration requirement in the Indiana Telephone Solicitations law; however, the companion statute, the Indiana Telephone Solicitation of Consumers law, exempts insurance solicitors and other financial institutions and persons licensed in Indiana. The Indiana Attorney General agreed that Chapter 12 Telephone Solicitations and Article 4.7 Telephone Solicitations of Consumers should, as argued by the insurance industry, be read together, and that the exemptions in Article 4.7 should also apply to Chapter 12, thus exempting individuals soliciting an application for insurance or negotiating a policy of insurance on behalf of an insurer from the registration requirement.
In issuing the MLG, the Attorney General acknowledged that although further legislative action “may be necessary in defining the mutual relationship” between the Telephone Solicitor Act and the Telephone Solicitation of Consumers statute, entities that are exempt from the Telephone Solicitation of Consumers statute are exempt from the registration requirement under Chapter 12.
The question of whether broker-dealers and investment advisers will also be exempted from the Telephone Solicitations law was not addressed in the MLG; however, we note that the Attorney General based its opinion that entities exempt from the provisions of the Telephone Solicitation of Consumers statute should be exempt from the registration requirement under the Telephone Solicitations Act in part on the rationale that exemption for “certain licensed entities” is appropriate because “such licensed entities are already highly regulated by the State of Indiana, and are already subject to administrative rules and oversight by various Indiana Departments and licensing authorities.”
Like insurance producers, broker-dealers and investment advisers are already highly regulated by the State of Indiana. Accordingly, we believe that although there is no express exemption for broker-dealers or investment advisors from either the Telephone Solicitations Act or the Telephone Solicitation of Consumers statute, requiring broker-dealers and investment advisors to register separately with the Attorney General’s Office and to file materials used for solicitation is unnecessary because broker-dealers and investment advisors are already subject to regulation and registration with the Indiana Securities Division or the U.S. Securities and Exchange Commission and FINRA, and arguably, requiring broker-dealers and investment advisors to register separately under the Telephone Solicitations law goes beyond the intention of the legislators in enacting the amendments to the Telephone Solicitations law. As a result, we believe that the Indiana Attorney General’s Office may grant relief to broker-dealers and investment advisers from the application of the registration requirement similar to the relief being offered to other financial services firms.