84 STAT. ]
PUBLIC LAW 91-547-DEC. 14, 1970
1433
"(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. Paragraph (1) of this section shall not (A) be construed to prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date, or (B) apply to an investment advisory contract with— " (i) an investment company registered under title I of this Act, or "(ii) any other person (except a trust, collective trust fund or separate account referred to in section 3(c) (11) of title I of this ^"'®' P- ^'*Act), provided that the contract relates to the investment of assets in excess of $1 million, which contract provides for compensation based on the asset value of the company or fund under management averaged over a specified period and increasing and decreasing proportionately with the investment performance of the company or fund over a specified period in relation to the investment record of an appropriate index of securities prices or such other measure of investment performance as the Commission by rule, regulation, or order may specify. For purposes of clause (B) of the preceding sentence, the point from which mcreases and decreases in compensation are measured shall be the fee which is paid or earned when the investment performance of such company or fund is equivalent to that of the index or other measure of performance, and an index of securities prices shall be deemed appropriate unless the Commission by order shall determine otherwise. As used "investment in paragraphs (2) and (3) of this section, 'investment advisory con- contract," tract' means any contract or agreement whereby a person agrees to act as investment adviser or to manage any investment or trading account of another person other than an investment company registered under title I of this Act." SEC. 26. The Investment Advisers Act of 1940 (15 U.S.C. 80b-l-21) 54 Stat. 847; is further amended by inserting immediately after section 206 a new ^ifusc sob-e. section as follows: "EXEMPTIONS
"SEC. 206A. The Commission, by rules and regulations, upon its own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or any class or classes of persons, or transactions, from any provision or provisions of this title or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title." SEC. 27. (a) Section 2 of the Securities Act of 1933 (15 U.S.C. 77b) 68 Stat. 6 8 3. ^°^ Jl^^'^J^^' is amended by adding at the end thereof two new paragraphs as follows: 'Insurance "(13) The term 'insurance company' means a company which is company. " organized as an insurance company, whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies, and which is subject to supervision by the insurance commissioner, or a similar official or agency, of a State or territory or the District of Columbia; or any receiver or similar official or any liquidating agent for such company, in his capacity as such.
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