Section R164-2-7 - Additional Disclosure Requirement Before entering into an advisory contract and in addition to the requirements of SEC Form ADV - Uniform Application for Investment Adviser Registration, an investment adviser must disclose in writing to the client all material information concerning the proposed advisory arrangement, including the following:
(1) that the fee arrangement may create an incentive for the investment adviser to make investments that are riskier or more speculative than would be the case in the absence of a performance fee;(2) where relevant, that the investment adviser may receive increased compensation with regard to unrealized appreciation as well as realized gains in the client's account;(3) the periods which will be used to measure investment performance throughout the contract and their significance in the computation of the fee;(4) the nature of any index which will be used as a comparative measure of investment performance, the significance of the index, and the reason the investment adviser believes that the index is appropriate; and(5) where the investment adviser's compensation is based in part on the unrealized appreciation of securities for which market quotations are not readily available within the meaning of Rule 2a-4(a)(1) under the Investment Company Act of 1940, how the securities will be valued and the extent to which the valuation will be independently determined.Utah Admin. Code R164-2-7
Adopted by Utah State Bulletin Number 2022-07, effective 3/11/2022