Lawsuit Filed Against Montana for Discriminatory Investment Adviser Representative Registration Fees

January 13, 2024

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Litigation Alert

According to the Daily Montanan, a class-action lawsuit has been filed against the State of Montana. This lawsuit challenges the constitutionality of a licensing fee structure imposed on non-resident investment adviser representatives and securities salespersons, alleging it violates the privileges and immunities clause of the United States Constitution.

Background of the Case

The lawsuit, as reported by the Daily Montanan, centers around state legislation in 2019 which increased the licensing fees of investment adviser representatives and securities salespersons but permitted Montana residents to apply for a refund, while out-of-state investment adviser representatives and securities salespersons were ineligible.

This differential rate is noted on the website of the Montana Commissioner of Securities and Insurance, which states that “[i]f you are a Montana [investment adviser representative], you will first fund the account and then request a refund of $50….” See .

Constitutional Concerns

The Daily Montanan notes that this legislative measure was controversial from the outset of its proposal with lawmakers and witnesses raising concerns about its constitutionality under the privileges and immunities clause of the U.S. Constitution which prohibits states from discriminating against residents of other states in favor of their own residents. The plaintiffs in the class-action lawsuit assert that the Montana Supreme Court has previously upheld this clause, emphasizing the right of nonresidents to work in the state without facing discrimination based on state residency. The lawsuit argues that Montana’s fee structure for nonresident investment adviser representatives and securities salespersons does not align with any substantial state interest, thus violating this constitutional provision.


The lawsuit seeks a declaratory judgment that the statutory provision (Mont. Code Ann. Section 30-10-209(2)(i)) is unconstitutional, an injunction prohibiting the State of Montana from charging a different fee for non-resident investment adviser representatives and securities salespersons, damages incurred by the lead plaintiff and class and reasonable attorney fees.


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The information contained in this blog post is general in nature, intended for educational purposes only and is not intended to be a comprehensive analysis of this topic. This is merely a summary of the new article and underlying lawsuit.  Please read the article in the Daily Montanan in its entirety and the linked Class-Action Complaint at . RIA Compliance Consultants, Inc. has not verified the accuracy of the article or the allegations within the underlying lawsuit.  This post is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation. RIA Compliance Consultants, Inc. is not a law firm and does not provide legal services. This blog post should not be considered legal advice. For more information about the limitations of this blog post and information on our website, please see our Disclosures webpage.

Posted by Bryan Hill
Labels: Investment Adviser Rep Continuing Education, Investment Adviser Representative, Montana