Laws & RegulationsQuestion 101 of 110
If an adviser delivers its brochure at the same time the advisory contract is signed rather than at least 48 hours before, the client generally must be given:
a.Nothing further; the timing is irrelevant
b.A performance-based fee discount
c.A guarantee against loss
d.A five-business-day period to rescind the contract without penalty
Explanation
The brochure delivery rule requires delivery at least 48 hours before entering the contract, or at the time of entering the contract if the client is given the right to rescind within five business days without penalty. This ensures the client has time to review disclosures. Advisers commonly use the five-day rescission option to meet the requirement.
Law Reference: Investment Advisers Act of 1940Practice all 110 questions free — no signup required.
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