N.J. Admin. Code § 13:29-3.12

Current through Register Vol. 56, No. 21, November 4, 2024

Section 13:29-3.12 - Commissions, performance fees and referral fees

(a) A performance fee is compensation to a licensee on the basis of a share of the capital gains upon, or the capital appreciation of, the funds or any portion of the funds of a client.

(b) A licensee in public practice shall not receive a commission or performance fee for recommending or referring to a client any product or service, or receive a commission or performance fee for recommending or referring any product or service to be supplied by a client, or receive a commission or performance fee, when the licensee or the licensee's firm also performs for that client the following:

1. An audit or review of a financial statement;

2. A compilation of a financial statement accompanied by a report; or

3. An examination of prospective financial information.

(c) The prohibition set forth in (b) above applies during the period in which the licensee is engaged to perform any of the listed services, and the period covered by any historical financial statements involving those services.

(d) A licensee in public practice who is not prohibited by this section from performing services for or receiving a commission or performance fee and who is paid or expects to be paid a commission or performance fee shall disclose that fact to any person or entity to whom the licensee recommends or refers a product or service to which the commission or performance fee relates.

(e) Any licensee in public practice who accepts a referral fee for recommending or referring any service of a licensee to any person or entity or who pays a referral fee to obtain a client shall disclose such acceptance or payment to the client.

(f) All disclosures in (d) and (e) above shall:

1. Be made in writing contemporaneously with or prior to the referral or recommendation; and

2. Shall be signed and dated by the person or entity to whom the licensee makes the referral or recommendation and by the person or entity who was referred by the licensee.

(g) A licensee in public practice who is not prohibited by this section from performing services for or receiving a commission or performance fee shall comply with all applicable Federal and State securities laws, rules promulgated thereunder, and registration requirements, including, but not limited to, the Investment Advisers Act of 1940 ( 15 U.S.C. §§ 80b-1 et seq.), the Uniform Securities Law (1997), the Securities Act of 1933 ( 15 U.S.C. §§ 77a et seq.), and the Securities Exchange Act of 1934 ( 15 U.S.C. §§ 78a et seq.).

N.J. Admin. Code § 13:29-3.12

As amended, R.1982 d.407, eff. 11/15/1982.
See: 14 N.J.R. 895(a), 14 N.J.R. 1309(b).
Deleted old text concerning recruiting and added new text concerning commissions.
Repeal and New Rule, R.1998 d.531, effective 11/16/1998.
See: 29 N.J.R. 4737(a), 30 N.J.R. 4055(b).
Section was "Commissions".
Amended by R.2011 d.132, effective 5/16/2011.
See: 42 N.J.R. 2720(a), 43 N.J.R. 1260(b).
In (f)2, substituted the second occurrence of "and" for ", or" and the third occurrence of "by" for the second occurrence of "to".