Brochure rule

Brochure rule,

Definition of Brochure rule:

  1. Under the auspices of the Investment Advisor Act of 1940, investment brokers must inform their clients about changes to their investment policies during the term life of the investment.

  2. The brochure rule is a requirement under the Investment Advisers Act of 1940 that requires investment advisers to provide a written disclosure statement to their clients. The rule, officially known as rule 204-3, applies to all federally registered investment advisers and specifies times during the advisory process at which they must provide the materials.

  3. The U.S Securities and Exchange Commission specifies two ways in which an adviser can satisfy the brochure rule: 1) The adviser can provide such disclosure by giving the client Form ADV Part 2A (brochure) and Part 2B (brochure supplement). 2) The adviser can provide an actual brochure that contains the same information that would be found in Form ADV Part 2A and 2B.

Meaning of Brochure rule & Brochure rule Definition