Okla. Admin. Code § 660:11-7-43

Current through Vol. 42, No. 7, December 16, 2024

Section 660:11-7-43 - Disclosure requirements

(a)Disclosure delivery requirement. In furtherance of compliance with the standards of ethical practices specified in 660:11-7-42, every investment adviser, registered or required to be registered under the Securities Act shall, in accordance with the provisions of this Section, furnish each advisory client and prospective advisory client with:

(1) a brochure that may be a copy of Part 2A of its Form ADV or a written document containing the information required by Part 2A of Form ADV;

(2) a copy of its Part 2B brochure supplement for each individual

(A) providing investment advice and having direct contact with clients in this state; or

(B) exercising discretion over assets of clients in this state, even if no direct contact is involved;

(3) a copy of any Part 2A Appendix 1 wrap fee brochure if the investment adviser sponsors or participates in wrap fee accounts;

(4) a summary of material changes, if any, which may be included in Form ADV Part 2 or given as a separate document; and

(5) such other information as the Administrator may require.

(b)Brochure compliance with Form ADV. Any brochure or brochure supplement required by (a) of this Section must comply with the language, organizational format, and filing requirements specified in the Instructions to Form ADV, Part 2, except that a change in an advisory fee constitutes a material change that triggers the need to file an amendment to the Form ADV Part 2A.

(c)Delivery.

(1)Initial delivery. An investment adviser shall deliver the documents required by (a) of this Section to an advisory client or prospective advisory client:

(A) not less than 48 hours prior to entering into any written investment advisory contract with such client or prospective client, or

(B) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

(2)Annual delivery. An investment adviser, except as provided in (3) of this subsection, must:

(A) Deliver within 120 days of the end of its fiscal year free copies of any updated brochure and brochure supplement that include or are accompanied by a summary of material changes; or

(B) Deliver a summary of material changes that includes an offer to provide a copy of any updated brochure and brochure supplement and information on how the client may obtain a copy of such documents. Should a client request a copy of any updated brochures or brochure supplements under this subsection, the requested documents must be mailed or delivered within seven (7) days of the receipt of the request.

(3)Exceptions. Delivery of any documents required by (1) and (2) of this subsection need not be made to:

(A) a client who is an officer, employee or other person related to the adviser that would be a qualified client of the adviser under 17 CFR § 275.205-3(d)(1)(iii);

(B) clients who receive only impersonal advice and who pay less than $500 in fees per year;

(C) an investment company registered under the 1940 Act; or

(D) a business development company as defined in the 1940 Act and whose advisory contract meets the requirements of section 15(c) of that Act.

(4)Electronic delivery. Delivery of any brochure and brochure supplement may be made electronically if the investment adviser:

(A) in the case of an initial delivery to a potential client, obtains a verification that a readable copy of the documents were received by the client;

(B) in the case of other than initial deliveries, obtains each client's prior consent to provide the documents electronically;

(C) prepares the electronically delivered documents in the format prescribed in (a) of this Section and instructions to Form ADV Part 2;

(D) delivers the documents in a format that can be retained by the client in either electronic or paper form; and

(E) establishes procedures to supervise personnel transmitting the brochure and any supplements and prevents violations of this Section.

(d)Other disclosures. Nothing in this Section shall relieve any investment adviser from any obligation pursuant to any provision of the Securities Act or the rules thereunder or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this Section.

(e)"Entering into" exclusion. For purposes of this Section, "entering into" does not include an extension or renewal without material change of any investment advisory contract which is in effect immediately prior to such extension or renewal.

Okla. Admin. Code § 660:11-7-43

Added at 21 Ok Reg 2532, eff 7-1-04; Amended at 30 Ok Reg 2084, eff 8-1-13

Amended by Oklahoma Register, Volume 35, Issue 24, September 4, 2018, eff. 11/1/2018