Final answer:
The correct statement is that the discounted fee arrangement offered by the investment adviser representative (IAR) to club members is an ethical practice.
Step-by-step explanation:
The correct statement in this scenario is option C) This is an ethical practice since the details of the discounts have been properly disclosed in the brochure and ADV Part 2.
Discounted fee arrangements are not a violation of the Uniform Securities Act as long as they are fully disclosed. In this case, the investment adviser representative (IAR) is offering discounted fees to club members as a benefit of their membership in the tennis club.
The IAR has made full disclosure of this arrangement in both the brochure and in its ADV Part 2, which is required to be provided to clients. Therefore, this practice is considered ethical because all relevant information has been properly disclosed.