Page:United States Statutes at Large Volume 101 Part 2.djvu/277

 PUBLIC LAW 100-181—DEC. 4, 1987

101 STAT. 1263

SEC. 626. Section 55(a)(1)(B) of the Investment Company Act of 1940 (15 U.S.C. 80a-54(a)(l)(B)) is amended by striking out "described in sections" and inserting in lieu thereof "described in section". SEC. 627. Section 57(i) of the Investment Company Act of 1940 (15 U.S.C. 80a-56(i)) is amended by striking out "sections 17(a) and (d)" each place it appears and inserting in lieu thereof "subsections (a) and (d) of section 17". TITLE VII—AMENDMENTS TO THE INVESTMENT ADVISERS ACT OF 1940 SEC. 701. Section 202(a)(19) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(19)) is amended by striking out "the Canal Zone,". SEC. 702. Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended— (1) by inserting "transfer agent," after "fiduciary," in subsection (e)(2)(B); (2) by inserting "transfer agent," after "government securities dealer," in subsection (e)(3); (3) by striking out "or seeking to become associated" in the first sentence of subsection (f) and inserting in lieu thereof ", seeking to become associated, or, at the time of the alleged misconduct, associated or seeking to become associated"; and (4) by striking out "subsection (d)" in subsection (g) and inserting in lieu thereof "subsection (c) or subsection (e)". SEC. 703. Section 205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-5) is amended to read as follows: "INVESTMENT ADVISORY CONTRACTS

"SEC. 205. (a) No investment adviser, unless exempt from registration pursuant to section 203(b), shall make use of the mails or any means or instrumentality of interstate commerce, directly or indirectly, to enter into, extend, or renew any investment advisory contract, or in any way to perform any investment advisory contract entered into, extended, or renewed on or after the effective date of this title, if such contract— "(1) provides for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client; "(2) fails to provide, in substance, that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract; or "(3) fails to provide, in substance, that the investment adviser, if a partnership, will notify the other party to the contract of any change in the membership of such partnership within a reasonable time after such change. "(b) Paragraph (1) of subsection (a) shall not— "(1) be construed to prohibit an investment advisory contract < • which provides for compensation b£U3ed upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date; "(2) apply to an investment advisory contract with— "(A) an investment company registered under title I of this Act, or

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