# KRS § 292.320: 292.320 Fraudulent and other prohibited practices > Kentucky · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.320 ## Section - **Citation:** KRS § 292.320 - **Heading:** 292.320 Fraudulent and other prohibited practices - **Jurisdiction:** Kentucky - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** KY Code / Title XXV / Chapter 292 / Section 292.320 ## Text 292.320 Fraudulent and other prohibited practices. (1) It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly: (a) To employ any device, scheme, or artifice to defraud; (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. (2) It is unlawful for any person who receives any consideration from another person primarily for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise: (a) To employ any device, scheme, or artifice to defraud the other person; or (b) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other person. (3) It is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing: (a) That the investment adviser shall not be compensated on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client unless the client is an "accredited investor," as defined by Rule 501 of the Securities Act of 1933; (b) That no assignment of the contract may be made by the investment adviser without the consent of the other party to the contract; and (c) That the investment adviser, if a partnership, shall notify the other party to the contract of any change in the membership of the partnership within a reasonable time after the change. (4) Paragraph (a) of subsection (3) of this section does not prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates or taken as of a definite date. "Assignment", as used in paragraph (b) of subsection (3) of this section includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor or of a controlling block of the assignor's outstanding voting securities by a security holder of the assignor; but, if the investment adviser is a partnership, no assignment of an investment advisory contract is considered to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one (1) or more members who, after admission, will be only a minority of the members and will have only a minority interest in the business. (5) Subsection (3)(a) of this section shall also not apply to a contract with any person or class of persons that the commissioner by rule or regulation or by order upon application determines does not need the protections of subsection (3)(a) of this section. The commissioner may grant a conditional or unconditional exemption based on factors which include the person's or persons' financial sophistication, net worth, knowledge of and experience in financial matters, amount of assets under management, relationship with a registered investment adviser, or other factors as the commissioner determines are consistent with this section. ## Nearby sections - [KRS § 292.310 292.310 Definitions for chapter](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.310.md) - [KRS § 292.313 292.313 Applicability of specified provisions to sales transactions](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.313.md) - [KRS § 292.320 292.320 Fraudulent and other prohibited practices](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.320.md) - [KRS § 292.322 292.322 Securities fraud prosecution and prevention fund](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.322.md) - [KRS § 292.325 292.325 Filing of prospectus, pamphlet, or other advertising communication by order of commissioner](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.325.md) - [KRS § 292.327 292.327 Filing of documents with respect to covered securities -- Fees](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.327.md) - [KRS § 292.330 292.330 Registration of broker-dealers, agents, investment advisers, and investment adviser representatives](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.330.md) - [KRS § 292.331 292.331 Application for registration -- Contents -- Conditions -- Requirements](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.331.md) - [KRS § 292.332 292.332 Notice filing by covered adviser -- Contents -- Exemptions -- Renewal](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.332.md) - [KRS § 292.333 292.333 Successor broker-dealers and investment advisers -- New application for or amendment to registration or notice filing -- Name change by registrant](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.333.md) - [KRS § 292.334 292.334 Notice of termination of employment or association -- Termination of registration or application by commissioner -- Temporary registration -- Withdrawal of registration or notice filing](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.334.md) - [KRS § 292.335 292.335 Fees for initial or renewal registration or notice filing](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.335.md) - [KRS § 292.336 292.336 Recordkeeping and reporting requirements -- Examination by commissioner -- Administrative regulations -- Central depository system for documents -- Investment advisers -- Required policies and procedures](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.336.md) - [KRS § 292.337 292.337 Grounds for denial, suspension, limitation, or revocation of registration and for disciplinary action -- Summary order -- Emergency hearing -- Order in accordance with KRS Chapter 13B](https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.337.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_KY_TXXV_C292_S292.320. Check the current official text before relying on it. Not legal advice.