California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2 - Corporate Securities › Article 10 - Licensing and Regulation of Investment Advisers › Section 260.235.3 - Agency Cross Transactions for Advisory Clients

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) A licensed investment adviser, or a
				  person licensed as a broker-dealer and controlling, controlled by or under
				  common control with a licensed investment adviser, shall be deemed in
				  compliance with the provisions of subdivision (c) of Section
				  25235 of the Code in effecting an
				  agency cross transaction for an advisory client, if:
(1) The advisory client has executed a
				  written consent prospectively authorizing the adviser, or any other person
				  relying on this rule, to effect agency cross transactions for the advisory
				  client, provided that the written consent is obtained after full written
				  disclosure that with respect to agency cross transactions the adviser or other
				  person will act as a broker-dealer for, receive commissions from, and have a
				  potentially conflicting division of loyalties and responsibilities regarding,
				  both parties to the transactions;
(2)
(A) The
				  adviser, or any other person relying on this rule, sends to each client a
				  written confirmation at or before the completion of each transaction, which
				  confirmation includes (i) a statement of the nature of the transaction, (ii)
				  the date the transaction took place, (iii) an offer to furnish upon request the
				  time when the transaction took place, and (iv) the source and amount of any
				  other remuneration received or to be received by the adviser and any other
				  person relying on this rule in connection with the transaction.
(B) Provided, however, that if, (i) in the
				  case of a purchase, neither the adviser nor any other person relying on this
				  rule was participating in a distribution, or (ii) in the case of a sale,
				  neither the adviser nor any other person relying on this rule was participating
				  in a tender offer, then the written confirmation may state whether any other
				  remuneration has been or will be received and that the source and amount of any
				  other remuneration will be furnished upon written request of the
				  customer;
(3) The
				  adviser, or any other person relying on this rule, sends to each client, at
				  least annually, and with or as part of any written statement or summary of the
				  account from the adviser or other person (A) written disclosure statement
				  identifying the total number of the transactions during the period since the
				  date of the last statement or summary and (B) the total amount of all
				  commissions or other remuneration received or to be received by the adviser or
				  any other person relying on this rule in connection with the transactions
				  during the period;
(4) Each written
				  disclosure and confirmation required by this rule includes a conspicuous
				  statement that the written consent referred to in subsection (a)(1) of this
				  rule may be revoked at any time by written notice to the adviser, or to any
				  other person relying on this rule, from the advisory client; and
(5) No transaction is effected in which the
				  same adviser or an adviser and any person controlling, controlled by or under
				  common control with the adviser, recommended the transaction to both any seller
				  and any purchaser.