Current through Register Vol. 48, No. 12, March 22, 2024
a) General
Requirement
Unless otherwise provided in this Section, an investment
adviser, registered or required to be registered pursuant to Section 8.D of the
Act, shall, in accordance with the provisions of this Section, furnish each
advisory client and prospective advisory client with a written disclosure
statement required by
17 CFR
275.204-3 (May 31, 2011).
b) Delivery
1) An investment adviser, except as provided
in subsection (b)(2), shall deliver the statement required by this Section to
an advisory client or prospective advisory client:
A) not less than 48 hours prior to entering
into any written or oral investment advisory contract with a client or
prospective client; or
B) at the
time of entering into a contract, if the advisory client has a right to
terminate the contract without penalty within five business days after entering
into the contract.
2)
Delivery of the statement required by subsection (b)(1) need not be made in
connection with entering into:
A) an
investment company contract; or
B)
a contract for impersonal advisory services.
c) Offer to Deliver
1) An investment adviser, except as provided
in subsection (c)(2), annually shall, without charge, deliver or offer in
writing to deliver upon written request to each of its advisory clients the
statement required by this Section.
2) The delivery or offer required by
subsection (c)(1) need not be made to advisory clients receiving advisory
services solely pursuant to:
A) an investment
company contract; or
B) a contract
for impersonal advisory services requiring a payment of less than
$200.
3) With respect to
an advisory client entering into a contract or receiving advisory services
pursuant to a contract for impersonal advisory services which requires a
payment of $200 or more, an offer of the type specified in subsection (c)(1)
shall also be made at the time of entering into an advisory contract.
4) Any statement requested in writing by an
advisory client pursuant to an offer required by this subsection (c) must be
mailed or delivered within seven days after the receipt of the
request.
d) Omission of
Inapplicable Information
If an investment adviser renders substantially different
types of investment advisory services to different advisory clients, any
information required may be omitted from the statement furnished to an advisory
client or prospective advisory client if the information is applicable only to
a type of investment advisory service or fee that is not rendered or charged,
or proposed to be rendered or charged, to that client or prospective client as
provided by
17 CFR
275.204-3 (May 31, 2011).
e) Other Disclosures
Nothing in this Section shall relieve any investment adviser
from any obligation under the Act or this Part or other federal or State law to
disclose any information to its advisory clients or prospective advisory
clients not specifically required by this Section.
f) Definitions. For the purpose of this
Section:
1) "Contract for impersonal advisory
services" means any contract relating solely to the provision of investment
advisory services:
A) by means of written
material or oral statements that do not purport to meet the objectives or needs
of specific individuals or accounts;
B) through the issuance of statistical
information containing no expression of opinion as to the investment merits of
a particular security; or
C) any
combination of the services listed in subsections (f)(1)(A) and (B);
2) "Entering into," in reference
to an investment advisory contract, does not include an extension or renewal
without material change of any contract that is in effect immediately prior to
the extension or renewal; and
3)
"Investment company contract" means a contract with an investment company
registered under the Federal 1940 Investment Company Act that the requirements
of section 15(c) of that Act, as defined in Section
130.200
of this Part.