Current through Register Vol. 24-06, March 15, 2024
(1)
General requirements. Unless
otherwise provided in this rule, if you are an investment adviser registered or
required to be registered pursuant to
RCW
21.20.040, you must, in accordance with the
provisions of this section, deliver to each advisory client and prospective
advisory client:
(a) A brochure which may be
a copy of Part 2A of your Form ADV or written documents containing the
information required by Part 2A of Form ADV. The brochure must comply with the
language, organizational format and filing requirements specified in the
Instructions to Form ADV Part 2;
(b) A copy of your Part 2B brochure
supplement for each individual:
(i) Providing
investment advice and having direct contact with clients in this state;
or
(ii) Exercising discretion over
assets of clients in this state, even if no direct contact is
involved;
(c) A copy of
your Part 2A Appendix 1 wrap fee brochure if you sponsor or participate in a
wrap fee account;
(d) A summary of
material changes, which may be included in Form ADV Part 2 or given as a
separate document; and
(e) Such
other information as the director may require.
(2)
Delivery.
(a)
Initial delivery. Except as
provided in (c) of this subsection, you must deliver the materials required by
this section to an advisory client or prospective advisory client (i) not less
than forty-eight hours prior to entering into any investment advisory contract
with such client or prospective client, or (ii) at the time of entering into
any such contract, if the advisory client has a right to terminate the contract
without penalty within five business days after entering into the
contract.
(b)
Annual
delivery. Except as provided in (d) of this subsection, if there have
been any material changes that have taken place since the last summary and
brochure delivery to your clients, you must:
(i) Deliver within one hundred twenty days of
the end of your fiscal year a free, updated brochure and related brochure
supplements which include or are accompanied by a summary of the material
changes; or
(ii) Deliver a summary
of material changes that includes an offer to provide a copy of the updated
brochure and supplements and information on how the client may obtain a copy of
the brochure and supplements. You must mail or deliver any materials requested
by the client pursuant to such an offer within seven days of the receipt of the
request.
(c)
Other-than-annual delivery. If the instructions to Form ADV
require you to file an other-than-annual amendment, and if the amendment adds
disclosure of an event or materially revises information already disclosed
about an event in response to Item 9 of Part 2A of Form ADV, or Item 3 of Part
2B of Form ADV, you must promptly deliver the following to each client:
(i) The amended brochure or brochure
supplement, along with a statement describing the material change in
disciplinary information; or
(ii) A
statement describing the material change in disciplinary information and an
offer to deliver the amended brochure.
(d)
Exception for certain
clients. You are not required to deliver the materials set forth in (1)
of this section to:
(i) Clients receiving
advisory services solely pursuant to a contract for impersonal advisory
services requiring a payment of less than two hundred dollars;
(ii) An investment company registered under
the Investment Company Act of 1940; or
(iii) A business development company as
defined in the Investment Company Act of 1940 and whose advisory contract meets
the requirements of section 15c of that act.
(3)
Electronic delivery. You may
deliver the materials required by this section electronically if you:
(a) In the case of an initial delivery to a
potential client, obtain a verification that readable copies of the materials
were received by the client;
(b) In
the case of deliveries other than initial deliveries, obtain each client's
prior consent to provide the materials electronically;
(c) In the case of deliveries through a
passive delivery system such as a web site or portal, you notify the client
when the materials become available on the system;
(d) Prepare the electronically delivered
materials in the format prescribed in subsection (1) of this section and the
instructions to Form ADV Part 2;
(e) Deliver the materials in a format that
can be retained by the client in either electronic or paper form; and
(f) Establish procedures to supervise
personnel transmitting the materials and prevent violations of this
rule.
(4)
Delivery
to limited partners. If you are the adviser to a limited partnership, a
limited liability company, or a trust, then you must treat each of the
partnership's limited partners, the company's members, or the trust's
beneficial owners, as a client. For purposes of this section, a limited
liability partnership or limited liability limited partnership is a "limited
partnership."
(5)
Omission of
inapplicable information. If you render substantially different types of
investment advisory services to different advisory clients, you may provide
them with different disclosure materials, provided that each client receives
all applicable information about services and fees. The disclosure delivered to
a client may omit any information required by Part 2 of Form ADV if such
information is applicable only to a type of investment advisory service or fee
which is not rendered or charged, or proposed to be rendered or charged, to
that client or prospective client.
(6)
Other disclosure
obligations. Nothing in this section relieves you from any obligation to
disclose any information to your advisory clients or prospective advisory
clients not specifically required by this rule under chapter 21.20 RCW, the
rules and regulations thereunder, or any other federal or state law.
(7)
Definitions. For the
purposes of this rule:
(a) "Contract for
impersonal advisory services" means any contract relating solely to the
provision of investment advisory services:
(i)
By means of written material or oral statements which do not purport to meet
the objectives or needs of specific individuals or accounts;
(ii) Through the issuance of statistical
information containing no expression of opinion as to the investment merits of
a particular security; or
(iii) Any
combination of the foregoing services.
(b) "Entering into," in reference to an
investment advisory contract, does not include an extension or renewal without
material change of any such contract which is in effect immediately prior to
such extension or renewal.
Statutory Authority:
RCW
21.20.450 and
21.20.110(1)(g).
02-19-093, §
460-24A-145, filed 9/17/02,
effective 10/18/02. Statutory Authority:
RCW
21.20.450,
21.20.050,
21.20.100. 01-16-125, §
460-24A-145, filed 7/31/01,
effective 10/24/01. Statutory Authority: 1998 c 15 § 9. 99-03-052, §
460-24A-145, filed 1/15/99,
effective 2/15/99.