Section 710 IAC 4-9-14 - Agency cross transactions for advisory clientsAuthority: IC 23-19-6-5
Affected: IC 23-19
Sec. 14.
(a) As used in this section, "agency cross transactions for an advisory client" means a transaction in which a person acts as an investment adviser in relation to a transaction in which that investment adviser, or any person: (3) under common control with that investment adviser; acts as broker-dealer or agent for both the advisory client and for another person on the other side of the transaction. When acting in this capacity, the person is required to be registered as a broker-dealer or agent in this state, unless excluded from the definition.
(b) An investment adviser registered under IC 23-19, or a person registered as a broker-dealer or agent under IC 23-19 that is controlling, controlled by, or under common control with a registered investment adviser, shall be deemed to be in compliance with section 15(a)(15) of this rule in effecting an agency cross transaction for an advisory client if the following conditions are met: (1) The advisory client executes a written consent prospectively authorizing the investment adviser or any other person relying on this section to effect agency cross transactions for the advisory clients.(2) Before obtaining written consent from the client, the investment adviser makes full written disclosure to the client that, with respect to agency cross transactions, the investment adviser or the other person will act as a broker-dealer or agent for, receive commissions from, and have a potentially conflicting division of loyalties and responsibilities regarding both parties to the transactions.(3) At or prior to the completion of each agency cross transaction, the investment adviser or any other person relying on this section sends to each client a written confirmation, which shall include the following: (A) A statement of the nature of the transaction.(B) The date the transaction took place.(C) An offer to furnish upon request the time when the transactions took place.(D) The source and amount of any other remuneration received or to be received by the investment adviser and any other person relying on this section in connection with the transaction.(E) In the case of a purchase, if the investment adviser or any other person relying on this section was not participating in a distribution, or, in the case of a sale, if the investment adviser or any other person relying on this section was not participating in a tender offer, the written confirmation may state the following:(i) Whether any other remuneration has been or will be received.(ii) That the source and amount of the remuneration will be furnished upon written request of that customer.(4) At least annually and with or as part of any written statement or summary of the account from the investment adviser or any other person relying on this section, the investment adviser sends to each client a written disclosure statement identifying the total number of the agency cross transactions during the period since the date of the last statement or summary, and the total amount of all commissions or other remuneration received or to be received by the investment adviser or any other person relying on this section in connection with the agency cross transactions during this period.(5) Each written disclosure and confirmation required by this section includes a conspicuous statement that the written consent referred to in subdivision (1) may be revoked at any time by the advisory client by written notice to the investment adviser or to any other person relying on this section.(6) No agency cross transaction may be effected in which the same investment adviser or an investment adviser and any person controlling, controlled by, or under common control with the investment adviser recommended the transaction to both any seller and any purchaser.(c) This section shall not relieve:(1) an investment adviser;(2) an investment adviser representative; or(3) another person relying on this section; from acting in the best interests of the advisory client, including fulfilling the duty with respect to the best price and execution for the particular transaction for the advisory client.
(d) This section shall not relieve:(1) an investment adviser;(2) an investment adviser representative; or(3) another person relying on this section; from any disclosure obligation that may be imposed by IC 23-19.
Securities Division; 710 IAC 4-9-14; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRAReadopted filed 5/12/2016, 1:47 p.m.: 20160608-IR-710160136RFAReadopted filed 11/30/2022, 4:01 p.m.: 20221228-IR-710220301RFA