Unit 6

in addition to the prior written consent, at or before the completion of each agency cross transaction, the client must be sent a written trade confirmation that includes:

-a statement of the nature of the transaction -the date, and if requested, the time of the transaction; and -the source and amount of any remuneration to be received by the IA (or IAR) in connection with the transaction

Part 2B brochure supplement required disclosure categories:

-cover page -educational background and business experience -disciplinary information -other business activities -additional compensation -supervision

typical broker-dealer fees

-issuance of a stock certificate -transferring an account -wiring funds -margin account interest -account maintenance fees -safekeeping of funds/securities -late settlement fee -postage and handling

both state and federal law will permit an adviser to engage in agency cross transactions provided the advisory client executes a written consent prospectively (in advance) authorizing the investment adviser to effect agency cross transactions for such clients and the adviser discloses the following:

-the adviser will be receiving commissions from both sides of the trade -there is a potential conflict of interest b/c of the division of loyalties to both sides -on at least an annual basis, the adviser will furnish a statement or summary of the account identifying the total number of such transactions and the total amount of all remuneration from these transactions -in a conspicuous manner, indicates that this arrangement may be terminated at any time -no transaction is effect in which the same investmet adviser or an investment adviser and any person controlling, controlled by, or under common control with that investment adviser recommended the transaction to both any seller and any purchaser

the solicitor's brochure disclosure document must include: (pg 129)

-the name of the solicitor, -the name of the investment adviser, and -the nature of the relationship between the solicitor and the investment adivser -in addition, it must include the fact that the solicitor will receive compensation, the terms of the compensation arrangement, and indicate whether the client will pay a specific charge or a higher advisory fee b/c a solicitor recommended the IA to the client

the investment advisory contract under both state and federal law, must disclose:

-the services to be provided, including custody if appropriate; -the term of the contract (contracts can be of any length, not necessarily annual, but all renewals under STATE law, just as with initial contracts, must be in writing); -the amount of the advisory fee of the formula for computing the fee; -the amount or manner of calculation of the amount of any prepaid fee to be returned in the event of contract termination; -whether the contract grants discretionary power to the adviser or its representatives; -that no assignment of the contract may be made by the adviser without the consent of the other party to the contract (the client); -that, if the adviser is organized as a partnership, any change to a minority interest in the firm will be communicated to advisory clients within a reasonable period of time. A change to a minority of the partnership interests would be considered and assignment