| DIVISION OF
CONSUMER AFFAIRS
NEW JERSEY STATE BOARD
OF ACCOUNTANCY
Contingent Fees; Commissions,
Performance Fees
and Referral Fees
N.J.A.C. 13:29-3.8 and
3.12
Adopted November 16, 1998
13:29-3.8 Contingent
fees
a.A contingent fee is
a fee established for the
performance of any service
pursuant to an
arrangement in which no fee
will be charged unless a
specified finding or result
is attained, or in which the
amount of the fee is otherwise
dependent upon the
finding or result of such
service.
b.For the purposes of
this section, a fee is not
contingent if:
1.It is fixed
by a court or other public authority; or
2.In tax matters,
it is determined based on the
results of a judicial
proceeding or the findings of
a governmental agency.
c.A licensee in public
practice shall not receive a
contingent fee for performing
any professional
services from a client for
whom the licensee or the
licensee’s firm performs:
1.An audit or
review of a financial statement;
2.A compilation
of a financial statement
accompanied by a report;
or
3.An examination
of prospective financial
information.
d.The prohibition set
forth in (c) above applies during the
period in which the licensee
or the licensee’s firm is
engaged to perform any of
the services listed, and the
period covered by any historical
financial statements
involved in the listed services.
e.A licensee in public
practice shall not receive a
contingent fee for preparing
an original or amended
tax return or claim for a
tax refund for any client.
f.Any licensee who receives
a contingent fee pursuant
to this section shall comply
with all applicable Federal
and State securities laws,
rules promulgated
thereunder, and registration
requirements, including,
but not limited to, the Investment
Advisers Act of 1940
(15 U.S.C. *0b-1 et seq.),
the Uniform Securities Law
(1997) (N.J.S.A. 49:3-47
et seq.), the Securities Act of
1933 (15 U.S.C. *7a et seq.),
and the Securities
Exchange Act of 1934 (15
U.S.C. *8a et seq.).
13:29-3.12 Commissions,
performance fees and
referral fees
a.A performance fee
is compensation to a licensee on
the basis of a share of the
capital gains upon, or the
capital appreciation of,
the funds or any portion of the
funds of a client.
b.A licensee in public
practice shall not receive a
commission or performance
fee for recommending or
referring to a client any
product or service, or receive a
commission or performance
fee for recommending or
referring any product or
service to be supplied by a
client, or receive a commission
or performance fee,
when the licensee or the
licensee’s firm also performs
for that client the following:
1.An audit or
review of a financial statement;
2.A compilation
of a financial statement
accompanied by a report;
or
3.An examination
of prospective financial
information.
c.The prohibition set
forth in (b) above applies during
the period in which the licensee
is engaged to perform
any of the listed services,
and the period covered by
any historical financial
statements involving those
services.
d.A licensee in public
practice who is not prohibited by
this section from performing
services for or receiving a
commission or performance
fee and who is paid or
expects to be paid a commission
or performance fee
shall disclose that fact
to any person or entity to whom
the licensee recommends or
refers a product or
service to which the commission
or performance fee
relates.
e.Any licensee in public
practice who accepts a referral
fee for recommending or referring
any service of a
licensee to any person or
entity or who pays a referral
fee to obtain a client shall
disclose such acceptance
or payment to the client.
f.All disclosures in
(d) and (e) above shall:
1.Be made in writing
contemporaneously with or
prior to the referral
or recommendation; and
2.Shall be signed
and dated by the person or
entity to whom the
licensee makes the referral or
recommendation, or
by the person or entity who
was referred to the
licensee.
g.A licensee in public
practice who is not prohibited by
this section from performing
services for or receiving a
commission or performance
fee shall comply with all
applicable Federal and State
securities laws, rules
promulgated thereunder, and
registration
requirements, including,
but not limited to, the
Investment Advisers Act of
1940 (15 U.S.C. *0b-1 et
seq.), the Uniform Securities
Law (1997), the
Securities Act or 1933 (15
U.S.C. *7a et seq.), and
the Securities Exchange Act
of l934 (15 U.S.C. *8a et
seq.). |
