Subd. 1. Advisory activities and principal transactions.

1. (a) It is unlawful for any person who receives, directly or indirectly, any consideration from another primarily for advising the other as to the value of securities or their purchase or sale:

   1. (1) to employ any device, scheme, or artifice to defraud the other; or
   2. (2) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other.
2. (b) It is unlawful for an investment adviser to knowingly sell any security to or purchase any security from a client while acting as principal for the person's own account or knowingly effect any sale or purchase of any security for the account of a client while acting as broker for one other than the client, unless the person discloses to the client in writing before the execution of the transaction the capacity in which the person is acting and obtains the consent of the client to the transaction.

Subd. 1a. Solicitation activities.

In the solicitation of advisory clients, it is unlawful for any person to make any untrue statements of material facts, or, in light of the circumstances under which they are made, to omit to state material facts necessary in order to make the statements made not misleading.

Subd. 2. Contract activities.

It is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract the terms of which are in contravention of rules the commissioner prescribes as necessary or appropriate in the public interest or for the protection of investors.

Subd. 3. Activities as custodian of certain funds.

It is unlawful for any investment adviser to take or have custody of any securities or funds of any client in contravention of rules the commissioner prescribes as necessary or appropriate in the public interest or for the protection of investors.