Sec.36b-31-5c. Disclosures to advisory clients

(a) As used in 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 which do not purport to meet the objectives or needs of specific individuals or accounts, (B) through the issuance of statistical information containing no expression or opinion as to the investment merits of a particular security, or (C) by means of any combination of the foregoing services; (2) "entering into," in reference to an investment advisory contract, does not include an extension or renewal without material change to any such contract which is in effect immediately prior to such extension or renewal; and (3) "investment company contract" means a contract with an investment company registered under the Investment Company Act of 1940 which meets the requirements of Section 15 (c) of that act.

(b) Unless otherwise provided in this section, an investment adviser registered or required to be registered shall, in accordance with this section, furnish each investment advisory client and prospective investment advisory client with a written disclosure statement which may be a copy of Part II of the investment adviser’s Form ADV or a written document containing at least the information then so required by Part II of Form ADV. The disclosure statement shall include such other information as the commissioner may require.

(c) (1) Except as provided in subdivision (2) of this subsection, an investment adviser shall deliver the statement required by this section to an investment advisory client or prospective investment advisory client (A) not less than 48 hours before entering into any written or oral investment advisory contract with the client or prospective client or (B) at the time of entering into any such contract, if the 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 subdivision (1) of this subsection need not be made in connection with entering into (A) an investment company contract or (B) a contract for impersonal advisory services.

(d) (1) Except as provided in subdivision (2) of this subsection, an investment adviser annually shall, without charge, deliver or offer in writing to deliver upon written request, to each of its clients the statement required by this section. (2) The delivery or offer required by subdivision (1) of this subsection need not be made to a client receiving investment 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 a client entering into a contract or receiving investment 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 subdivision (1) of this subsection shall also be made at the time of entering into the investment advisory contract. (4) Any statement requested in writing by a client pursuant to an offer required by this subsection shall be mailed or delivered within seven days following receipt of the request.

(e) Nothing in this section shall relieve any investment adviser from any obligation under the Act or sections 36b-31-2 to 36b-31-33, inclusive, of the regulations or under any other federal or state law to disclose any information to its clients or prospective clients not specifically required by this section.

(Effective August 22, 1994; TransferredJuly 3, 1995)