Utah Administrative Code
Topic - Commerce
Title R164 - Securities
Rule R164-2 - Investment Adviser - Unlawful Acts
Section R164-2-7 - Additional Disclosure Requirement
Current through Bulletin 2024-18, September 15, 2024
Before entering into an advisory contract and in addition to the requirements of SEC Form ADV - Uniform Application for Investment Adviser Registration, an investment adviser must disclose in writing to the client all material information concerning the proposed advisory arrangement, including the following:
(1) that the fee arrangement may create an incentive for the investment adviser to make investments that are riskier or more speculative than would be the case in the absence of a performance fee;
(2) where relevant, that the investment adviser may receive increased compensation with regard to unrealized appreciation as well as realized gains in the client's account;
(3) the periods which will be used to measure investment performance throughout the contract and their significance in the computation of the fee;
(4) the nature of any index which will be used as a comparative measure of investment performance, the significance of the index, and the reason the investment adviser believes that the index is appropriate; and
(5) where the investment adviser's compensation is based in part on the unrealized appreciation of securities for which market quotations are not readily available within the meaning of Rule 2a-4(a)(1) under the Investment Company Act of 1940, how the securities will be valued and the extent to which the valuation will be independently determined.
