Under Section 205 of the Investment Advisers Act, an investment advisor registered with the U.S. Securities and Exchange Commission (“SEC”) cannot enter into, renew or renew an investment advisory contract or, in any way, an investment advisory contract… unless the investment advisory contract meets certain requirements set out in Section 205 (d) of Section 205 (d) of the Investment Advisory Act, which defines an investment advisory contract as “any contract or agreement by which a person undertakes to act as an investment advisor for or manage an investment or negotiation account of another person…” The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which came into effect on July 21, 2010, gives the U.S. Securities and Exchange Commission (“SEC”) the power to prohibit or grant conditions to the Investment Advisory Contracts Act 1940. The U.S. Securities and Exchange Commission (“SEC”) will conduct regular surveys of investment consultants. During the review process, the SEC will request certain information or documents that SEC auditors will verify as part of the audit process. As part of the review process, the investment advisor may consider that his or her company`s investment advisory agreements will be reviewed. Investment advisors may face similar regulatory breaches or breaches when the investment advisor`s advisory contracts do not comply with current SEC or state rules. In addition, the feasibility of a well-developed investment advisory contract or contract may help to limit the professional liability of an investment advisor. To help your investment advisor better understand client investment advisory contracts, RIA Compliance Consultants is hosting a webinar with the “Key Elements that Should Be Included in an Investment Advisory Client Contract – Presented by Bryan Hill Law.” (RIA Compliance Consultant is not a law firm.) This webinar covers issues related to advisory client contracts, including, but not limited to: Although the Investment Advisers Act of 1940 does not explicitly require the transcription of investment advisory contracts, Section 205 of the Investment Advisers Act requires all advisory contracts to include certain provisions and prohibit investment advisory contracts from including other provisions. Most government securities rules require written agreements between the investment advisor and each client.
Whether or not a written contract is required by the investment advisor`s lead regulator, the use of a written agreement with each client is generally considered good practice and in the best interests of the investment advisor and investment advisory client.