Cal. Code Regs. tit. 10 § 260.234

Current through Register 2024 Notice Reg. No. 36, September 6, 2024

Section 260.234 - Compensation Based on Capital Gains

The provisions of Section 25234 (a)(1) of the Code shall not apply:

(a) to any investment adviser registered under the Investment Advisers Act of 1940; or

(b) to any investment adviser, provided all of the following are met:

(1) the only clients entering into the investment advisory contract are "qualified clients" as defined in paragraph (d) of Rule 205-3 (17 CFR 275.205-3(d)) under the Investment Advisers Act of 1940 (Section 80 b-1 et seq.),

(2) the condition in paragraph (b) of Rule 205-3 (17 CFR 275.205-3(b)) is satisfied (for purposes of this subsection (b), the definition in paragraph (d) of Rule 205-3 shall apply), and

(3) full disclosure of all material information regarding the proposed compensation arrangement is provided to each qualified client prior to entering into the contract; or

(c) to an investment advisory contract with an institutional investor as defined in subdivision (i) of Section 25102 of the Code or in Section 260.102.10 or Section 260.105.14 of these Rules, excluding for the purposes of this section any pension or profit sharing plan with gross assets of less than $100,000,000 according to its most recent audited financial statement; or

(d) to the extension, renewal or performance of any investment advisory contract which, at the time it was entered into met the conditions of this Section 260.234 as then in effect or which was approved by order of the Commissioner.

Cal. Code Regs. Tit. 10, § 260.234

1. Amendment of form filed 5-14-69; effective thirtieth day thereafter (Register 69, No. 20).
2. Amendment filed 7-13-70; effective thirtieth day thereafter (Register 70, No. 29).
3. Editorial correction filed 11-9-82 (Register 82, No. 46).
4. Amendment filed 1-7-88; operative 2-6-88 (Register 88, No.4).
5. Amendment of subsection (a), new subsections (b)-(b)(3) and subsection relettering filed 1-23-2001; operative 1-23-2001 pursuant to Government Code section 11343.4(c) (Register 2001, No. 4).

Note: Authority cited: Sections 25234(a) and 25610, Corporations Code. Reference: Section 25234, Corporations Code.

1. Amendment of form filed 5-14-69; effective thirtieth day thereafter (Register 69, No. 20).
2. Amendment filed 7-13-70; effective thirtieth day thereafter (Register 70, No. 29).
3. Editorial correction filed 11-9-82 (Register 82, No. 46).
4. Amendment filed 1-7-88; operative 2-6-88 (Register 88, No.4).
5. Amendment of subsection (a), new subsections (b)-(b)(3) and subsection relettering filed 1-23-2001; operative 1-23-2001 pursuant to Government Code section 11343.4(c) (Register 2001, No. 4).