Indiana Code 23-19-4-13. Third party solicitor; required written disclosures; restrictions; exemptions
(1) An investment adviser.
Terms Used In Indiana Code 23-19-4-13
- Contract: A legal written agreement that becomes binding when signed.
- Federal covered investment adviser: means a person registered under the Investment Advisers Act of 1940. See Indiana Code 23-19-1-2
- Fiduciary: A trustee, executor, or administrator.
- Investment adviser: means a person that, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. See Indiana Code 23-19-1-2
- Investment adviser representative: means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, or supervises employees who perform any of the foregoing. See Indiana Code 23-19-1-2
- Third party solicitor: means a person that, for compensation, directly or indirectly, solicits a client for or refers a client to an investment adviser, a federal covered investment adviser, or an investment adviser representative. See Indiana Code 23-19-1-2
(3) An investment adviser representative.
(b) A third party solicitor shall provide a copy of the third party solicitor’s written disclosure document to a client at the time a solicitation is made.
(c) A third party solicitor’s written disclosure document must include the following:
(1) The names of the third party solicitor and the adviser who have entered into an agreement for solicitation services.
(2) The nature of the relationship between the third party solicitor and the adviser, including any affiliation.
(3) A statement that the adviser will compensate the third party solicitor for solicitation services.
(4) A statement that the adviser will charge the client for:
(A) the solicitation services; and
(B) the adviser’s fee.
(5) The amount of any difference in the adviser’s fee if:
(A) the client is charged an adviser’s fee that is greater than the adviser’s fee charged to other clients; and
(B) the difference is attributable to the third party solicitor and the adviser’s arrangement for solicitation services.
(d) Except as provided in subsection (e), an adviser who is employed by or associated with an investment adviser shall not, directly or indirectly, compensate a third party solicitor for solicitation services performed in Indiana.
(e) An adviser may compensate a third party solicitor for solicitation services performed in Indiana if all of the following apply:
(1) The adviser is properly registered with the division or exempted from registration under this article.
(2) The adviser receives from the client, before entering into an investment advisory contract, a signed and dated acknowledgment that the client received:
(A) a Form ADV Part II, or any successor brochure form required to be filed under:
(i) 17 CFR 203-1(a); or
(ii) rules promulgated under this article; or
a written disclosure statement including all the information required by a Form ADV Part II; and
(B) the third party solicitor’s written disclosure document.
(3) The adviser makes a good faith effort to ascertain whether the third party solicitor complies with the written agreement.
(4) The adviser has a reasonable basis for believing that the third party solicitor has complied with the written agreement.
(5) The third party solicitor is compensated under a written agreement that the adviser is a party to.
(6) The third party solicitor is not the subject of an order listed by IC 23-19-4-12(d)(5).
(7) The adviser and the third party solicitor have entered into a written agreement that:
(A) describes the third party solicitor’s:
(i) services on behalf of the adviser; and
(ii) compensation for the services;
(B) contains the third party solicitor’s agreement to perform the third party solicitor’s duties consistent with:
(i) the adviser’s instructions; and
(ii) this article; and
(C) requires the third party solicitor, when performing solicitation services described in the agreement, to provide the client with:
(i) a current copy of the adviser’s Form ADV Part II, or any successor form; and
(ii) a copy of the third party solicitor’s written disclosure document.
(f) This section does not relieve an adviser of any fiduciary or other obligations under any law.
As added by P.L.158-2022, SEC.6.