Washington Administrative Code › Title 460 - Financial Institutions, Department of (Securities Division) › Chapter 460-24A - Investment advisers › Section 460-24A-130 - Contents of investment advisory contract

Current through Register Vol. 24-14, July 15, 2024
If you are an investment adviser registered or required to be
				registered under
				RCW
				 21.20.040, it is unlawful under
				RCW
				 21.20.020 and
				21.20.030 for you to provide investment advice unless you have a written investment
				advisory contract with the person you are advising. Further, it is unlawful
				under
				RCW
				 21.20.020 and
				21.20.030 for you to enter into, extend, or renew any investment advisory contract unless
				the contract provides in writing:
(1)
			 The services to be provided, the term of the contract, the investment advisory
			 fee, the formula for computing the fee, the amount of prepaid fee to be
			 returned in the event of termination or nonperformance of the contract, and
			 whether and the extent to which the contract grants discretionary authority to
			 you and any limits on such authority. The contract must describe these items
			 with specificity;
(2) A statement
			 that you will make no direct or indirect assignment or transfer of the contract
			 without the written consent of the client or other party to the contract. You
			 may not assign a contract through implied or negative consent;
(3) A statement that you will not be
			 compensated on the basis of a share of capital gains upon or capital
			 appreciation of the funds or any portion of the funds of the client except as
			 permitted under WAC
			 460-24A-150;
(4) A statement that if you are a
			 partnership, you must notify the client or other party to the investment
			 contract of any change in the membership of the partnership within a reasonable
			 time after the change;
(5) A
			 statement that if you are an investment adviser who has custody as a
			 consequence of your authority to make withdrawals from client accounts to pay
			 your advisory fee, the contract gives you the authority to deduct your advisory
			 fees from the account held with the qualified custodian;
(6) The nature and extent to which you are
			 granted proxy voting authority with respect to client securities;
(7) The terms for termination of the
			 contract;
(8) The nature and extent
			 to which you may deliver electronically the documents specified in WAC
			 460-24A-145,
			 account statements, fee invoices, and other documents and the extent and manner
			 in which a client may opt out of receiving documents electronically;
(9) A statement that you must deliver the
			 brochure required by WAC
			 460-24A-150
			 to an advisory client or prospective advisory client not less than forty-eight
			 hours prior to entering into any investment advisory contract with such client
			 or prospective client. Alternately, if you will provide the brochure at the
			 time of entering into any such contract, the investment advisory contract must
			 provide that the advisory client has a right to terminate the contract without
			 penalty within five business days after entering into the contract;
(10) A statement that the investment adviser
			 must obtain the client's written consent in order to revise any material terms
			 of the investment advisory contract;
(11) The full legal name of the investment
			 adviser, the contact information for the investment adviser, and an indication
			 of the preferred method for clients to contact the investment
			 adviser;
(12) A statement that the
			 investment adviser owes the client a fiduciary duty; and if the investment
			 adviser manages a pooled investment vehicle, a statement that each investor in
			 the pooled investment vehicle is a client of the investment adviser;
			 and
(13) For clients residing in
			 Washington, the advisory contract must not waive or limit compliance with, or
			 require indemnification for any violations of, any provision of the Securities
			 Act of Washington, chapter 21.20 RCW, or the rules adopted
			 thereunder.