Virginia Administrative Code › Title 21 - SECURITIES AND RETAIL FRANCHISING › Agency 5 - STATE CORPORATION COMMISSION › Chapter 80 - INVESTMENT ADVISORS › Part III - Investment Advisor, Federal Covered Advisor, and Investment Advisor Representative Regulations › Section 21VAC5-80-150 - Agency cross transactions

Current through Register Vol. 40, No. 24, July 15, 2024
A. For purposes of this section, "agency
				  cross transaction" means a transaction in which an investment advisor, or any
				  person controlling, controlled by, or under common control with such investment
				  advisor, including an investment advisor representative, acts as a
				  broker-dealer for both the advisory client and the person on the other side of
				  the transaction.
B. An investment
				  advisor effecting an agency cross transaction for an advisory client shall
				  comply with the following conditions; provided, that an investment advisor
				  having its principal place of business outside this Commonwealth and registered
				  or licensed, and in compliance with the applicable books and records
				  requirements, in the state where its principal place of business is located,
				  shall only be required to make, keep current, maintain and preserve such of the
				  following required books, ledgers and records as are not in addition to those
				  required under the laws of the state in which it maintains its principal place
				  of business:
1. Obtain from the advisory
				  client a written consent prospectively authorizing the investment advisor to
				  effect agency cross transactions for such client.
2. Before obtaining such written consent from
				  the client, disclose to the client in writing that, with respect to agency
				  cross transactions, the investment advisor will act as broker-dealer for,
				  receive commissions from and have a potentially conflicting division of
				  loyalties and responsibilities regarding both parties to the
				  transactions.
3. At or before the
				  completion of each agency cross transaction, send the client a written
				  confirmation. The written confirmation shall include (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 the investment advisor
				  received or will receive in connection with the transaction. In the case of a
				  purchase, if the investment advisor was not participating in a distribution,
				  or, in the case of a sale, if the investment advisor was not participating in a
				  tender offer, the written confirmation may state whether the investment advisor
				  has been receiving or will receive any other remuneration and that the
				  investment advisor will furnish to the client the source and amount of such
				  remuneration upon the client's written request.
4. At least annually, and with or as part of
				  any written statement or summary of the account from the investment advisor,
				  send each client a written disclosure statement identifying (i) the total
				  number of agency cross transactions during the period since the date of the
				  last such statement or summary and (ii) the total amount of all commissions or
				  other remuneration the investment advisor received or will receive in
				  connection with agency cross transactions during the period.
5. Each written disclosure and confirmation
				  required by this section must include a conspicuous statement that the client
				  may revoke the written consent required under subdivision B1 of this section at
				  any time by providing written notice of revocation to the investment
				  advisor.
6. No agency cross
				  transaction may be effected in which the same investment advisor recommended
				  the transaction to both any seller and any purchaser.