All registered investment advisers must deliver to all clients or prospective clients a written disclosure statement that may be:

1. (1) either Part II of Form ADV, Uniform Application for Investment Adviser Registration, or another disclosure statement which contains at least the information disclosed on Part II of Form ADV (17 Code of Federal Regulations §279.1) as made effective in Release Number IA-991 and corrected in Release Number IA-991A; or
2. (2) a disclosure statement containing at least the information required by Schedule H of Form ADV, Uniform Application for Investment Adviser Registration, if the investment adviser is the sponsor, or the sponsor and the portfolio manager, of a wrap fee program that the client will enter into.

3. (3) The disclosure statement shall be delivered to a client or prospective client either:

   1. (A) not less than 48 hours prior to entering into any written or oral investment advisory contract with such client or prospective client; or
   2. (B) at the time of entering into any such contract, if the advisory client has the right to terminate the contract without penalty within five business days after entering into the contract.
4. (4) On an annual basis, the Part II of Form ADV or other disclosure statement satisfying the requirements of paragraph (1) or (2) of this section must be provided to all customers, or in the alternative, the investment adviser must offer the client the right to receive such Part II of Form ADV or other disclosure statement.

Source Note:The provisions of this §116.11 adopted to be effective August 12, 2001, 26 TexReg 5799.