Section 11.24. Commissions and referral fees

(a) General. A licensee engaged in public practice is permitted to receive commissions and accept or pay referral fees subject to the requirements in section 12(p) of the act (63 P. S. § 9.12(p)) and this section.

(b) Notification to Board. A licensee who receives or intends to receive commissions shall report this fact on the application for biennial renewal of the license.

(c) Cooperation with peer reviewer. A licensee who receives commissions and who is subject to peer review under section 8.9 of the act (63 P. S. § 9.8i) shall furnish peer reviewers with compensation records for purposes of verifying compliance with section 12(p)(1) of the act.

(d) Related licensure/registration. Prior to receiving commissions, a licensee shall acquire and maintain in good standing any license or registration required by another governmental or private standard-setting body for the purpose of receiving commissions. Examples of bodies that may regulate the receipt of commissions are:

(1) The Pennsylvania Securities Commission (sale of securities).

(2) The National Association of Securities Dealers (sale of securities).

(3) The Insurance Department (sale of insurance).

(4) The State Real Estate Commission (sale of real estate).

(e) Disclosure to client. A licensee who receives a commission or who accepts or pays a referral fee shall make the disclosures required by section 12(p)(4) of the act in an engagement or representation letter that is signed by the client.

(f) Workpapers. A licensee who receives a commission shall maintain workpapers that document discussions regarding the client’s investment needs, the investment strategies considered, and the basis for the investment strategy recommended by the licensee.

The provisions of this § 11.24 adopted December 11, 1970, effective December 12, 1970, 1 Pa.B. 636; amended August 15, 1980, effective August 16, 1980, 10 Pa.B. 3354; amended January 12, 2001, effective January 13, 2001, 31 Pa.B. 151. Immediately preceding text appears at serial page (261697).

Notation

Authority

The provisions of this § 11.24 issued under section 506 of The Administrative Code of 1929 (71 P. S. § 186); and section 3(10)—(12) of the CPA Law (63 P. S. § 9.3 (10)—(12)); amended under section 3(a)(11) and (12) of The CPA Law (63 P. S. § 9.3(a)(11) and (12)).