SUBCHAPTER II—INVESTMENT ADVISERS
§80b–1. Findings
Upon the basis of facts disclosed by the record and report of the Securities and Exchange Commission made pursuant to section 79z–4 1 of this title, and facts otherwise disclosed and ascertained, it is found that investment advisers are of national concern, in that, among other things—
(1) their advice, counsel, publications, writings, analyses, and reports are furnished and distributed, and their contracts, subscription agreements, and other arrangements with clients are negotiated and performed, by the use of the mails and means and instrumentalities of interstate commerce;
(2) their advice, counsel, publications, writings, analyses, and reports customarily relate to the purchase and sale of securities traded on national securities exchanges and in interstate over-the-counter markets, securities issued by companies engaged in business in interstate commerce, and securities issued by national banks and member banks of the Federal Reserve System; and
(3) the foregoing transactions occur in such volume as substantially to affect interstate commerce, national securities exchanges, and other securities markets, the national banking system and the national economy.
(Aug. 22, 1940, ch. 686, title II, §201,
Editorial Notes
References in Text
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
1 See References in Text note below.
§80b–2. Definitions
(a) In general
When used in this subchapter, unless the context otherwise requires, the following definitions shall apply:
(1) "Assignment" includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor or of a controlling block of the assignor's outstanding voting securities by a security holder of the assignor; but if the investment adviser is a partnership, no assignment of an investment advisory contract shall be deemed to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one or more members who, after such admission, shall be only a minority of the members and shall have only a minority interest in the business.
(2) "Bank" means (A) a banking institution organized under the laws of the United States or a Federal savings association, as defined in
(3) The term "broker" has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [
(4) "Commission" means the Securities and Exchange Commission.
(5) "Company" means a corporation, a partnership, an association, a joint-stock company, a trust, or any organized group of persons, whether incorporated or not; or any receiver, trustee in a case under title 11, or similar official, or any liquidating agent for any of the foregoing, in his capacity as such.
(6) "Convicted" includes a verdict, judgment, or plea of guilty, or a finding of guilt on a plea of nolo contendere, if such verdict, judgment, plea, or finding has not been reversed, set aside, or withdrawn, whether or not sentence has been imposed.
(7) The term "dealer" has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [
(8) "Director" means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated.
(9) "Exchange" means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.
(10) "Interstate commerce" means trade, commerce, transportation, or communication among the several States, or between any foreign country and any State, or between any State and any place or ship outside thereof.
(11) "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; but does not include (A) a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [
(12) "Investment company", affiliated person, and "insurance company" have the same meanings as in the Investment Company Act of 1940 [
(13) "Investment supervisory services" means the giving of continuous advice as to the investment of funds on the basis of the individual needs of each client.
(14) "Means or instrumentality of interstate commerce" includes any facility of a national securities exchange.
(15) "National securities exchange" means an exchange registered under section 6 of the Securities Exchange Act of 1934 [
(16) "Person" means a natural person or a company.
(17) The term "person associated with an investment adviser" means any partner, officer, or director of such investment adviser (or any person performing similar functions), or any person directly or indirectly controlling or controlled by such investment adviser, including any employee of such investment adviser, except that for the purposes of
(18) "Security" means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing.
(19) "State" means any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, or any other possession of the United States.
(20) "Underwriter" means any person who has purchased from an issuer with a view to, or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission. As used in this paragraph the term "issuer" shall include in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.
(21) "Securities Act of 1933" [
(22) "Business development company" means any company which is a business development company as defined in
(A) the 70 per centum of the value of the total assets condition referred to in
(B) such company need not be a closed-end company and need not elect to be subject to the provisions of
(C) the securities which may be purchased pursuant to
For purposes of this paragraph, all terms in
(23) "Foreign securities authority" means any foreign government, or any governmental body or regulatory organization empowered by a foreign government to administer or enforce its laws as they relate to securities matters.
(24) "Foreign financial regulatory authority" means any (A) foreign securities authority, (B) other governmental body or foreign equivalent of a self-regulatory organization empowered by a foreign government to administer or enforce its laws relating to the regulation of fiduciaries, trusts, commercial lending, insurance, trading in contracts of sale of a commodity for future delivery, or other instruments traded on or subject to the rules of a contract market, board of trade or foreign equivalent, or other financial activities, or (C) membership organization a function of which is to regulate the participation of its members in activities listed above.
(25) "Supervised person" means any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.
(26) The term "separately identifiable department or division" of a bank means a unit—
(A) that is under the direct supervision of an officer or officers designated by the board of directors of the bank as responsible for the day-to-day conduct of the bank's investment adviser activities for one or more investment companies, including the supervision of all bank employees engaged in the performance of such activities; and
(B) for which all of the records relating to its investment adviser activities are separately maintained in or extractable from such unit's own facilities or the facilities of the bank, and such records are so maintained or otherwise accessible as to permit independent examination and enforcement by the Commission of this subchapter or the Investment Company Act of 1940 [
(27) The terms "security future" and "narrow-based security index" have the same meanings as provided in section 3(a)(55) of the Securities Exchange Act of 1934 [
(28) The term "credit rating agency" has the same meaning as in section 3 of the Securities Exchange Act of 1934 [
(29) 2 The term "private fund" means an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (
(30) The term "foreign private adviser" means any investment adviser who—
(A) has no place of business in the United States;
(B) has, in total, fewer than 15 clients and investors in the United States in private funds advised by the investment adviser;
(C) has aggregate assets under management attributable to clients in the United States and investors in the United States in private funds advised by the investment adviser of less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this subchapter; and
(D) neither—
(i) holds itself out generally to the public in the United States as an investment adviser; nor
(ii) acts as—
(I) an investment adviser to any investment company registered under the Investment Company Act of 1940 [
(II) a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940 (
(29) 3 The terms "commodity pool", "commodity pool operator", "commodity trading advisor", "major swap participant", "swap", "swap dealer", and "swap execution facility" have the same meanings as in
(b) Applicability to Federal or State government, agency, or instrumentality, or to officers, agents, or employees thereof
No provision in this subchapter shall apply to, or be deemed to include, the United States, a State, or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned directly or indirectly by any one or more of the foregoing, or any officer, agent, or employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto.
(c) Consideration of promotion of efficiency, competition, and capital formation
Whenever pursuant to this subchapter the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.
(Aug. 22, 1940, ch. 686, title II, §202,
Editorial Notes
References in Text
The Bank Holding Company Act of 1956, referred to in subsec. (a)(11)(A), is act May 9, 1956, ch. 240,
The Investment Company Act of 1940, referred to in subsec. (a)(12), (26)(B), (30)(D)(ii)(I), is title I of act Aug. 22, 1940, ch. 686,
The Securities Act of 1933, referred to in subsec. (a)(21), is act May 27, 1933, ch. 38, title I,
The Securities Exchange Act of 1934, referred to in subsec. (a)(21), is act June 6, 1934, ch. 404,
The Trust Indenture Act of 1939, referred to in subsec. (a)(21), is title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939, ch. 411,
This subchapter, referred to in subsec. (a)(26)(B), was in the original "this Act" and was translated as reading "this title", meaning title II of act Aug. 22, 1940, ch. 686, known as the Investment Advisers Act of 1940, to reflect the probable intent of Congress.
Amendments
2010—Subsec. (a)(11)(G), (H).
Subsec. (a)(21).
Subsec. (a)(29).
Subsec. (a)(30).
2006—Subsec. (a)(2)(A).
Subsec. (a)(2)(C).
Subsec. (a)(11)(F), (G).
Subsec. (a)(28).
2000—Subsec. (a)(18).
Subsec. (a)(27).
1999—Subsec. (a)(3).
Subsec. (a)(7).
Subsec. (a)(11)(A).
Subsec. (a)(26).
Subsec. (c).
1996—Subsec. (a).
Subsec. (a)(25).
1990—Subsec. (a)(23), (24).
1987—Subsec. (a)(19).
1982—Subsec. (a)(18).
1980—Subsec. (a)(22).
1978—Subsec. (a)(5).
1970—Subsec. (a)(2).
Subsec. (a)(17) to (21).
1966—Subsec. (a)(11)(A).
1960—Subsec. (a)(12).
Subsec. (a)(18).
1959—Subsec. (a)(18).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 986(d) of
[For definitions of "investment adviser" and "Commission" as used in section 419 of
Amendment by section 770 of
Effective Date of 1999 Amendment
Amendment by
Effective Date of 1996 Amendment
Section 308(a) of title III of
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Regulations; Construction
"(b)
"(1) is consistent with the previous exemptive policy of the Commission, as reflected in exemptive orders for family offices in effect on the date of enactment of this Act [July 21, 2010], and the grandfathering provisions in paragraph (3);
"(2) recognizes the range of organizational, management, and employment structures and arrangements employed by family offices; and
"(3) does not exclude any person who was not registered or required to be registered under the Investment Advisers Act of 1940 [
"(A) natural persons who, at the time of their applicable investment, are officers, directors, or employees of the family office who—
"(i) have invested with the family office before January 1, 2010; and
"(ii) are accredited investors, as defined in Regulation D of the Commission (or any successor thereto) under the Securities Act of 1933 [
"(B) any company owned exclusively and controlled by members of the family of the family office, or as the Commission may prescribe by rule;
"(C) any investment adviser registered under the Investment Adviser[s] Act of 1940 [
"(c)
[For definitions of "Commission" and "investment adviser" as used in section 409(b), (c) of
Definitions
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
2 So in original. Another par. (29) is set out after par. (30).
3 So in original. Another par. (29) is set out preceding par. (30).
§80b–3. Registration of investment advisers
(a) Necessity of registration
Except as provided in subsection (b) and
(b) Investment advisers who need not be registered
The provisions of subsection (a) shall not apply to—
(1) any investment adviser, other than an investment adviser who acts as an investment adviser to any private fund, all of whose clients are residents of the State within which such investment adviser maintains his or its principal office and place of business, and who does not furnish advice or issue analyses or reports with respect to securities listed or admitted to unlisted trading privileges on any national securities exchange;
(2) any investment adviser whose only clients are insurance companies;
(3) any investment adviser that is a foreign private adviser;
(4) any investment adviser that is a charitable organization, as defined in
(A) any such charitable organization;
(B) a fund that is excluded from the definition of an investment company under
(C) a trust or other donative instrument described in
(5) any plan described in
(6)(A) any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading advisor whose business does not consist primarily of acting as an investment adviser, as defined in
(i) an investment company registered under subchapter I of this chapter; or
(ii) a company which has elected to be a business development company pursuant to
(B) any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading advisor and advises a private fund, provided that, if after July 21, 2010, the business of the advisor should become predominately the provision of securities-related advice, then such adviser shall register with the Commission;
(7) any investment adviser, other than any entity that has elected to be regulated or is regulated as a business development company pursuant to
(A) small business investment companies that are licensees under the Small Business Investment Act of 1958 [
(B) entities that have received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the Small Business Investment Act of 1958, which notice or license has not been revoked; or
(C) applicants that are affiliated with 1 or more licensed small business investment companies described in subparagraph (A) and that have applied for another license under the Small Business Investment Act of 1958, which application remains pending; or
(8) any investment adviser, other than an entity that has elected to be regulated or is regulated as a business development company pursuant to
(A) rural business investment companies (as defined in
(B) companies that have submitted to the Secretary of Agriculture an application in accordance with
(i) have received from the Secretary of Agriculture a letter of conditions, which has not been revoked; or
(ii) are affiliated with 1 or more rural business investment companies described in subparagraph (A).
(c) Procedure for registration; filing of application; effective date of registration; amendment of registration
(1) An investment adviser, or any person who presently contemplates becoming an investment adviser, may be registered by filing with the Commission an application for registration in such form and containing such of the following information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors:
(A) the name and form of organization under which the investment adviser engages or intends to engage in business; the name of the State or other sovereign power under which such investment adviser is organized; the location of his or its principal office, principal place of business, and branch offices, if any; the names and addresses of his or its partners, officers, directors, and persons performing similar functions or, if such an investment adviser be an individual, of such individual; and the number of his or its employees;
(B) the education, the business affiliations for the past ten years, and the present business affiliations of such investment adviser and of his or its partners, officers, directors, and persons performing similar functions and of any controlling person thereof;
(C) the nature of the business of such investment adviser, including the manner of giving advice and rendering analyses or reports;
(D) a balance sheet certified by an independent public accountant and other financial statements (which shall, as the Commission specifies, be certified);
(E) the nature and scope of the authority of such investment adviser with respect to clients' funds and accounts;
(F) the basis or bases upon which such investment adviser is compensated;
(G) whether such investment adviser, or any person associated with such investment adviser, is subject to any disqualification which would be a basis for denial, suspension, or revocation of registration of such investment adviser under the provisions of subsection (e) of this section; and
(H) a statement as to whether the principal business of such investment adviser consists or is to consist of acting as investment adviser and a statement as to whether a substantial part of the business of such investment adviser, consists or is to consist of rendering investment supervisory services.
(2) Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents) the Commission shall—
(A) by order grant such registration; or
(B) institute proceedings to determine whether registration should be denied. Such proceedings shall include notice of the grounds for denial under consideration and opportunity for hearing and shall be concluded within one hundred twenty days of the date of the filing of the application for registration. At the conclusion of such proceedings the Commission, by order, shall grant or deny such registration. The Commission may extend the time for conclusion of such proceedings for up to ninety days if it finds good cause for such extension and publishes its reasons for so finding or for such longer period as to which the applicant consents.
The Commission shall grant such registration if the Commission finds that the requirements of this section are satisfied and that the applicant is not prohibited from registering as an investment adviser under
(d) Other acts prohibited by subchapter
Any provision of this subchapter (other than subsection (a) of this section) which prohibits any act, practice, or course of business if the mails or any means or instrumentality of interstate commerce are used in connection therewith shall also prohibit any such act, practice, or course of business by any investment adviser registered pursuant to this section or any person acting on behalf of such an investment adviser, irrespective of any use of the mails or any means or instrumentality of interstate commerce in connection therewith.
(e) Censure, denial, or suspension of registration; notice and hearing
The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, suspend for a period not exceeding twelve months, or revoke the registration of any investment adviser if it finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or revocation is in the public interest and that such investment adviser, or any person associated with such investment adviser, whether prior to or subsequent to becoming so associated—
(1) has willfully made or caused to be made in any application for registration or report required to be filed with the Commission under this subchapter, or in any proceeding before the Commission with respect to registration, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which is required to be stated therein.
(2) has been convicted within ten years preceding the filing of any application for registration or at any time thereafter of any felony or misdemeanor or of a substantially equivalent crime by a foreign court of competent jurisdiction which the Commission finds—
(A) involves the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, perjury, burglary, any substantially equivalent activity however denominated by the laws of the relevant foreign government, or conspiracy to commit any such offense;
(B) arises out of the conduct of the business of a broker, dealer, municipal securities dealer, investment adviser, bank, insurance company, government securities broker, government securities dealer, fiduciary, transfer agent, credit rating agency, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act [
(C) involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities or substantially equivalent activity however denominated by the laws of the relevant foreign government; or
(D) involves the violation of section 152, 1341, 1342, or 1343 or
(3) has been convicted during the 10-year period preceding the date of filing of any application for registration, or at any time thereafter, of—
(A) any crime that is punishable by imprisonment for 1 or more years, and that is not described in paragraph (2); or
(B) a substantially equivalent crime by a foreign court of competent jurisdiction.
(4) is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction, including any foreign court of competent jurisdiction, from acting as an investment adviser, underwriter, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, transfer agent, credit rating agency, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act [
(5) has willfully violated any provision of the Securities Act of 1933 [
(6) has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any provision of the Securities Act of 1933 [
(A) there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person, and
(B) such person has reasonably discharged the duties and obligations incumbent upon him by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with.
(7) is subject to any order of the Commission barring or suspending the right of the person to be associated with an investment adviser;
(8) has been found by a foreign financial regulatory authority to have—
(A) made or caused to be made in any application for registration or report required to be filed with a foreign securities authority, or in any proceeding before a foreign securities authority with respect to registration, any statement that was at the time and in light of the circumstances under which it was made false or misleading with respect to any material fact, or has omitted to state in any application or report to a foreign securities authority any material fact that is required to be stated therein;
(B) violated any foreign statute or regulation regarding transactions in securities or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade; or
(C) aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any foreign statute or regulation regarding transactions in securities or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade, or has been found, by the foreign finanical 2 regulatory authority, to have failed reasonably to supervise, with a view to preventing violations of statutory provisions, and rules and regulations promulgated thereunder, another person who commits such a violation, if such other person is subject to his supervision; or
(9) is subject to any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (
(A) bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or
(B) constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct.
(f) Bar or suspension from association with investment adviser; notice and hearing
The Commission, by order, shall censure or place limitations on the activities of any person associated, seeking to become associated, or, at the time of the alleged misconduct, associated or seeking to become associated with an investment adviser, or suspend for a period not exceeding 12 months or bar any such person from being associated with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person has committed or omitted any act or omission enumerated in paragraph (1), (5), (6), (8), or (9) of subsection (e) or has been convicted of any offense specified in paragraph (2) or (3) of subsection (e) within ten years of the commencement of the proceedings under this subsection, or is enjoined from any action, conduct, or practice specified in paragraph (4) of subsection (e). It shall be unlawful for any person as to whom such an order suspending or barring him from being associated with an investment adviser is in effect willfully to become, or to be, associated with an investment adviser without the consent of the Commission, and it shall be unlawful for any investment adviser to permit such a person to become, or remain, a person associated with him without the consent of the Commission, if such investment adviser knew, or in the exercise of reasonable care, should have known, of such order.
(g) Registration of successor to business of investment adviser
Any successor to the business of an investment adviser registered under this section shall be deemed likewise registered hereunder, if within thirty days from its succession to such business it shall file an application for registration under this section, unless and until the Commission, pursuant to subsection (c) or subsection (e) of this section, shall deny registration to or revoke or suspend the registration of such successor.
(h) Withdrawal of registration
Any person registered under this section may, upon such terms and conditions as the Commission finds necessary in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission. If the Commission finds that any person registered under this section, or who has pending an application for registration filed under this section, is no longer in existence, is not engaged in business as an investment adviser, or is prohibited from registering as an investment adviser under
(i) Money penalties in administrative proceedings
(1) Authority of Commission
(A) In general
In any proceeding instituted pursuant to subsection (e) or (f) against any person, the Commission may impose a civil penalty if it finds, on the record after notice and opportunity for hearing, that such penalty is in the public interest and that such person—
(i) has willfully violated any provision of the Securities Act of 1933 [
(ii) has willfully aided, abetted, counseled, commanded, induced, or procured such a violation by any other person;
(iii) has willfully made or caused to be made in any application for registration or report required to be filed with the Commission under this subchapter, or in any proceeding before the Commission with respect to registration, any statement which was, at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which was required to be stated therein; or
(iv) has failed reasonably to supervise, within the meaning of subsection (e)(6), with a view to preventing violations of the provisions of this subchapter and the rules and regulations thereunder, another person who commits such a violation, if such other person is subject to his supervision; 3
(B) Cease-and-desist proceedings
In any proceeding instituted pursuant to subsection (k) against any person, the Commission may impose a civil penalty if the Commission finds, on the record, after notice and opportunity for hearing, that such person—
(i) is violating or has violated any provision of this subchapter, or any rule or regulation issued under this subchapter; or
(ii) is or was a cause of the violation of any provision of this subchapter, or any rule or regulation issued under this subchapter.
(2) Maximum amount of penalty
(A) First tier
The maximum amount of penalty for each act or omission described in paragraph (1) shall be $5,000 for a natural person or $50,000 for any other person.
(B) Second tier
Notwithstanding subparagraph (A), the maximum amount of penalty for each such act or omission shall be $50,000 for a natural person or $250,000 for any other person if the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
(C) Third tier
Notwithstanding subparagraphs (A) and (B), the maximum amount of penalty for each such act or omission shall be $100,000 for a natural person or $500,000 for any other person if—
(i) the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
(ii) such act or omission directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons or resulted in substantial pecuniary gain to the person who committed the act or omission.
(3) Determination of public interest
In considering under this section whether a penalty is in the public interest, the Commission may consider—
(A) whether the act or omission for which such penalty is assessed involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;
(B) the harm to other persons resulting either directly or indirectly from such act or omission;
(C) the extent to which any person was unjustly enriched, taking into account any restitution made to persons injured by such behavior;
(D) whether such person previously has been found by the Commission, another appropriate regulatory agency, or a self-regulatory organization to have violated the Federal securities laws, State securities laws, or the rules of a self-regulatory organization, has been enjoined by a court of competent jurisdiction from violations of such laws or rules, or has been convicted by a court of competent jurisdiction of violations of such laws or of any felony or misdemeanor described in subsection (e)(2);
(E) the need to deter such person and other persons from committing such acts or omissions; and
(F) such other matters as justice may require.
(4) Evidence concerning ability to pay
In any proceeding in which the Commission may impose a penalty under this section, a respondent may present evidence of the respondent's ability to pay such penalty. The Commission may, in its discretion, consider such evidence in determining whether such penalty is in the public interest. Such evidence may relate to the extent of such person's ability to continue in business and the collectability of a penalty, taking into account any other claims of the United States or third parties upon such person's assets and the amount of such person's assets.
(j) Authority to enter order requiring accounting and disgorgement
In any proceeding in which the Commission may impose a penalty under this section, the Commission may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.
(k) Cease-and-desist proceedings
(1) Authority of Commission
If the Commission finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this subchapter, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any other person.
(2) Hearing
The notice instituting proceedings pursuant to paragraph (1) shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served.
(3) Temporary order
(A) In general
Whenever the Commission determines that the alleged violation or threatened violation specified in the notice instituting proceedings pursuant to paragraph (1), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest, including, but not limited to, losses to the Securities Investor Protection Corporation, prior to the completion of the proceedings, the Commission may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest as the Commission deems appropriate pending completion of such proceedings. Such an order shall be entered only after notice and opportunity for a hearing, unless the Commission, notwithstanding
(B) Applicability
This paragraph shall apply only to a respondent that acts, or, at the time of the alleged misconduct acted, as a broker, dealer, investment adviser, investment company, municipal securities dealer, government securities broker, government securities dealer, or transfer agent, or is, or was at the time of the alleged misconduct, an associated person of, or a person seeking to become associated with, any of the foregoing.
(4) Review of temporary orders
(A) Commission review
At any time after the respondent has been served with a temporary cease-and-desist order pursuant to paragraph (3), the respondent may apply to the Commission to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior Commission hearing, the respondent may, within 10 days after the date on which the order was served, request a hearing on such application and the Commission shall hold a hearing and render a decision on such application at the earliest possible time.
(B) Judicial review
Within—
(i) 10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior Commission hearing, or
(ii) 10 days after the Commission renders a decision on an application and hearing under subparagraph (A), with respect to any temporary cease-and-desist order entered without a prior Commission hearing,
the respondent may apply to the United States district court for the district in which the respondent resides or has its principal office or place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior Commission hearing may not apply to the court except after hearing and decision by the Commission on the respondent's application under subparagraph (A) of this paragraph.
(C) No automatic stay of temporary order
The commencement of proceedings under subparagraph (B) of this paragraph shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.
(D) Exclusive review
(5) Authority to enter order requiring accounting and disgorgement
In any cease-and-desist proceeding under paragraph (1), the Commission may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.
(l) Exemption of venture capital fund advisers
(1) In general
No investment adviser that acts as an investment adviser solely to 1 or more venture capital funds shall be subject to the registration requirements of this subchapter with respect to the provision of investment advice relating to a venture capital fund. Not later than 1 year after July 21, 2010, the Commission shall issue final rules to define the term "venture capital fund" for purposes of this subsection. The Commission shall require such advisers to maintain such records and provide to the Commission such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.
(2) Advisers of SBICS
For purposes of this subsection, a venture capital fund includes an entity described in subparagraph (A), (B), or (C) of subsection (b)(7) (other than an entity that has elected to be regulated or is regulated as a business development company pursuant to
(3) Advisers of RBICS
For purposes of this subsection, a venture capital fund includes an entity described in subparagraph (A) or (B) of subsection (b)(8) (other than an entity that has elected to be regulated as a business development company pursuant to
(m) Exemption of and reporting by certain private fund advisers
(1) In general
The Commission shall provide an exemption from the registration requirements under this section to any investment adviser of private funds, if each of 4 such investment adviser acts solely as an adviser to private funds and has assets under management in the United States of less than $150,000,000.
(2) Reporting
The Commission shall require investment advisers exempted by reason of this subsection to maintain such records and provide to the Commission such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.
(3) Advisers of SBICS
For purposes of this subsection, the assets under management of a private fund that is an entity described in subparagraph (A), (B), or (C) of subsection (b)(7) (other than an entity that has elected to be regulated or is regulated as a business development company pursuant to
(4) Advisers of RBICS
For purposes of this subsection, the assets under management of a private fund that is an entity described in subparagraph (A) or (B) of subsection (b)(8) (other than an entity that has elected to be regulated or is regulated as a business development company pursuant to
(n) Registration and examination of mid-sized private fund advisers
In prescribing regulations to carry out the requirements of this section with respect to investment advisers acting as investment advisers to mid-sized private funds, the Commission shall take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk, and shall provide for registration and examination procedures with respect to the investment advisers of such funds which reflect the level of systemic risk posed by such funds.
(Aug. 22, 1940, ch. 686, title II, §203,
Editorial Notes
References in Text
The Small Business Investment Act of 1958, referred to in subsec. (b)(7), is
The Commodity Exchange Act, referred to in subsec. (e)(2)(B), (4)–(6), is act Sept. 21, 1922, ch. 369,
The Securities Act of 1933, referred to in subsecs. (e)(5), (6) and (i)(1)(A)(i), is act May 27, 1933, ch. 38, title I,
The Securities Exchange Act of 1934, referred to in subsecs. (e)(5), (6) and (i)(1)(A)(i), is act June 6, 1934, ch. 404,
Amendments
2019—Subsec. (b)(6)(B).
Subsec. (b)(8).
Subsec. (l)(3).
Subsec. (m)(4).
2015—Subsec. (l).
Subsec. (m)(3).
2010—Subsec. (b)(1).
Subsec. (b)(3).
Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (b)(7).
Subsec. (c)(1)(A).
Subsec. (f).
Subsec. (i)(1).
Subsec. (k)(4)(B).
Subsec. (l).
Subsecs. (m), (n).
2006—Subsec. (e)(2)(B), (4).
2002—Subsec. (e)(7).
Subsec. (e)(9).
Subsec. (f).
2000—Subsec. (b)(6).
1998—Subsec. (e)(8)(B).
1996—Subsec. (a).
Subsec. (b)(5).
Subsec. (c)(2).
Subsec. (e)(3) to (5).
Subsec. (e)(6).
Subsec. (e)(7), (8).
Subsec. (f).
Subsec. (h).
Subsec. (i)(1)(D).
1995—Subsec. (b)(4).
1990—Subsec. (e)(2).
Subsec. (e)(2)(A).
Subsec. (e)(2)(B).
Subsec. (e)(2)(C).
Subsec. (e)(2)(D).
Subsec. (e)(3).
Subsec. (e)(5).
Subsec. (e)(7).
Subsec. (f).
Subsecs. (i) to (k).
1987—Subsec. (e)(2)(B).
Subsec. (e)(3).
Subsec. (f).
Subsec. (g).
1986—Subsec. (e)(2)(B).
Subsec. (e)(3).
Subsec. (e)(4).
1980—Subsec. (b)(3).
1975—Subsec. (c).
Subsec. (e).
Subsec. (f).
Subsecs. (g), (h).
1970—Subsec. (b).
Subsec. (c)(1)(F).
Subsecs. (d), (e).
Subsec. (f).
Subsec. (g).
Subsecs. (h), (i).
1960—Subsec. (c)(1)(F).
Subsec. (c)(2).
Subsec. (d).
Subsec. (e).
Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by sections 925(b), 929P(a)(4), and 985(e)(1) of
Amendment by sections 403, 407, and 408 of
Effective Date of 1996 Amendment
Amendment by sections 303(b), (d) and 305 of
Effective Date of 1995 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1975 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
1 So in original. Probably should be "of a".
2 So in original. Probably should be "financial".
3 So in original. The semicolon probably should be a period.
4 So in original. The word "of" probably should not appear.
§80b–3a. State and Federal responsibilities
(a) Advisers subject to State authorities
(1) In general
No investment adviser that is regulated or required to be regulated as an investment adviser in the State in which it maintains its principal office and place of business shall register under
(A) has assets under management of not less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this subchapter; or
(B) is an adviser to an investment company registered under subchapter I of this chapter.
(2) Treatment of mid-sized investment advisers
(A) In general
No investment adviser described in subparagraph (B) shall register under
(B) Covered persons
An investment adviser described in this subparagraph is an investment adviser that—
(i) is required to be registered as an investment adviser with the securities commissioner (or any agency or office performing like functions) of the State in which it maintains its principal office and place of business and, if registered, would be subject to examination as an investment adviser by any such commissioner, agency, or office; and
(ii) has assets under management between—
(I) the amount specified under subparagraph (A) of paragraph (1), as such amount may have been adjusted by the Commission pursuant to that subparagraph; and
(II) $100,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this subchapter.
(3) "Assets under management" defined
For purposes of this subsection, the term "assets under management" means the securities portfolios with respect to which an investment adviser provides continuous and regular supervisory or management services.
(b) Advisers subject to Commission authority
(1) In general
No law of any State or political subdivision thereof requiring the registration, licensing, or qualification as an investment adviser or supervised person of an investment adviser shall apply to any person—
(A) that is registered under
(B) that is not registered under
(C) that is not registered under
(D) that is not registered under
(2) Limitation
Nothing in this subsection shall prohibit the securities commission (or any agency or office performing like functions) of any State from investigating and bringing enforcement actions with respect to fraud or deceit against an investment adviser or person associated with an investment adviser.
(c) Exemptions
Notwithstanding subsection (a), the Commission, by rule or regulation upon its own motion, or by order upon application, may permit the registration with the Commission of any person or class of persons to which the application of subsection (a) would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of this section.
(d) State assistance
Upon request of the securities commissioner (or any agency or officer performing like functions) of any State, the Commission may provide such training, technical assistance, or other reasonable assistance in connection with the regulation of investment advisers by the State.
(Aug. 22, 1940, ch. 686, title II, §203A, as added
Editorial Notes
References in Text
The Investment Company Act of 1940, referred to in subsec. (a)(2)(A), is title I of act Aug. 22, 1940, ch. 686,
Amendments
2019—Subsec. (b)(1)(D).
2015—Subsec. (b)(1)(C).
2010—Subsec. (a)(2), (3).
2006—Subsecs. (d), (e).
"(1) to file with the Commission any fee, application, report, or notice required by this subchapter or by the rules issued under this subchapter through any entity designated by the Commission for that purpose; and
"(2) to pay the reasonable costs associated with such filing."
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date
Section effective 270 days after Oct. 11, 1996, see section 308(a) of
Continued State Authority
"(a)
"(b)
"(c)
"(1)
"(2)
1 So in original. The word "or" probably should not appear.
§80b–4. Reports by investment advisers
(a) In general
Every investment adviser who makes use of the mails or of any means or instrumentality of interstate commerce in connection with his or its business as an investment adviser (other than one specifically exempted from registration pursuant to
(b) Records and reports of private funds
(1) In general
The Commission may require any investment adviser registered under this subchapter—
(A) to maintain such records of, and file with the Commission such reports regarding, private funds advised by the investment adviser, as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk by the Financial Stability Oversight Council (in this subsection referred to as the "Council"); and
(B) to provide or make available to the Council those reports or records or the information contained therein.
(2) Treatment of records
The records and reports of any private fund to which an investment adviser registered under this subchapter provides investment advice shall be deemed to be the records and reports of the investment adviser.
(3) Required information
The records and reports required to be maintained by an investment adviser and subject to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser, a description of—
(A) the amount of assets under management and use of leverage, including off-balance-sheet leverage;
(B) counterparty credit risk exposure;
(C) trading and investment positions;
(D) valuation policies and practices of the fund;
(E) types of assets held;
(F) side arrangements or side letters, whereby certain investors in a fund obtain more favorable rights or entitlements than other investors;
(G) trading practices; and
(H) such other information as the Commission, in consultation with the Council, determines is necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk, which may include the establishment of different reporting requirements for different classes of fund advisers, based on the type or size of private fund being advised.
(4) Maintenance of records
An investment adviser registered under this subchapter shall maintain such records of private funds advised by the investment adviser for such period or periods as the Commission, by rule, may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.
(5) Filing of records
The Commission shall issue rules requiring each investment adviser to a private fund to file reports containing such information as the Commission deems necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk.
(6) Examination of records
(A) Periodic and special examinations
The Commission—
(i) shall conduct periodic inspections of the records of private funds maintained by an investment adviser registered under this subchapter in accordance with a schedule established by the Commission; and
(ii) may conduct at any time and from time to time such additional, special, and other examinations as the Commission may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.
(B) Availability of records
An investment adviser registered under this subchapter shall make available to the Commission any copies or extracts from such records as may be prepared without undue effort, expense, or delay, as the Commission or its representatives may reasonably request.
(7) Information sharing
(A) In general
The Commission shall make available to the Council copies of all reports, documents, records, and information filed with or provided to the Commission by an investment adviser under this subsection as the Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund.
(B) Confidentiality
The Council shall maintain the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality established for the Commission pursuant to paragraph (8). The Council shall be exempt from
(8) Commission confidentiality of reports
Notwithstanding any other provision of law, the Commission may not be compelled to disclose any report or information contained therein required to be filed with the Commission under this subsection, except that nothing in this subsection authorizes the Commission—
(A) to withhold information from Congress, upon an agreement of confidentiality; or
(B) prevent 2 the Commission from complying with—
(i) a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction; or
(ii) an order of a court of the United States in an action brought by the United States or the Commission.
(9) Other recipients confidentiality
Any department, agency, or self-regulatory organization that receives reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with the level of confidentiality established for the Commission under paragraph (8).
(10) Public information exception
(A) In general
The Commission, the Council, and any other department, agency, or self-regulatory organization that receives information, reports, documents, records, or information from the Commission under this subsection, shall be exempt from the provisions of
(B) Proprietary information
For purposes of this paragraph, proprietary information includes sensitive, non-public information regarding—
(i) the investment or trading strategies of the investment adviser;
(ii) analytical or research methodologies;
(iii) trading data;
(iv) computer hardware or software containing intellectual property; and
(v) any additional information that the Commission determines to be proprietary.
(11) Annual report to Congress
The Commission shall report annually to Congress on how the Commission has used the data collected pursuant to this subsection to monitor the markets for the protection of investors and the integrity of the markets.
(c) Filing depositories
The Commission may, by rule, require an investment adviser—
(1) to file with the Commission any fee, application, report, or notice required to be filed by this subchapter or the rules issued under this subchapter through any entity designated by the Commission for that purpose; and
(2) to pay the reasonable costs associated with such filing and the establishment and maintenance of the systems required by subsection (c).
(d) Access to disciplinary and other information
(1) Maintenance of system to respond to inquiries
(A) In general
The Commission shall require the entity designated by the Commission under subsection (b)(1) to establish and maintain a toll-free telephone listing, or a readily accessible electronic or other process, to receive and promptly respond to inquiries regarding registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information required by law or rule to be reported) involving investment advisers and persons associated with investment advisers.
(B) Applicability
This subsection shall apply to any investment adviser (and the persons associated with that adviser), whether the investment adviser is registered with the Commission under
(2) Recovery of costs
An entity designated by the Commission under subsection (b)(1) may charge persons making inquiries, other than individual investors, reasonable fees for responses to inquiries described in paragraph (1).
(3) Limitation on liability
An entity designated by the Commission under subsection (b)(1) shall not have any liability to any person for any actions taken or omitted in good faith under this subsection.
(e) Records of persons with custody or use
(1) In general
Records of persons having custody or use of the securities, deposits, or credits of a client, that relate to such custody or use, are subject at any time, or from time to time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection of investors.
(2) Certain persons subject to other regulation
Any person that is subject to regulation and examination by a Federal financial institution regulatory agency (as such term is defined under
(f) Data standards for reports filed under this section
(1) Requirement
The Commission shall, by rule, adopt data standards for all reports filed by investment advisers with the Commission under this section.
(2) Consistency
The data standards required under paragraph (1) shall incorporate, and ensure compatibility with (to the extent feasible), all applicable data standards established in the rules promulgated under
(Aug. 22, 1940, ch. 686, title II, §204,
Editorial Notes
Amendments
2022—Subsecs. (d), (e).
Subsec. (f).
2010—Subsecs. (b), (c).
Subsec. (d).
2006—
1975—
1960—
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 929Q(b) of
Amendment by section 404 of
Effective Date of 1975 Amendment
Amendment by
Rule of Construction—No New Disclosure Requirements
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
1 So in original. The quotation marks and period probably should not appear.
2 So in original. Probably should be preceded by "to".
§80b–4a. Prevention of misuse of nonpublic information
Every investment adviser subject to
(Aug. 22, 1940, ch. 686, title II, §204A, as added
Editorial Notes
References in Text
The Securities Exchange Act of 1934, referred to in text, is act June 6, 1934, ch. 404,
Statutory Notes and Related Subsidiaries
Effective Date
Section not applicable to actions occurring before Nov. 19, 1988, see section 9 of
§80b–5. Investment advisory contracts
(a) Compensation, assignment, and partnership-membership provisions
No investment adviser registered or required to be registered with the Commission shall enter into, extend, or renew any investment advisory contract, or in any way perform any investment advisory contract entered into, extended, or renewed on or after November 1, 1940, 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) Compensation prohibition inapplicable to certain compensation computations
Paragraph (1) of subsection (a) shall not—
(1) 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;
(2) apply to an investment advisory contract with—
(A) an investment company registered under subchapter I of this chapter, or
(B) any other person (except a trust, governmental plan, collective trust fund, or separate account referred to in
if the 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;
(3) apply with respect to any investment advisory contract between an investment adviser and a business development company, as defined in this subchapter, if (A) the compensation provided for in such contract does not exceed 20 per centum of the realized capital gains upon the funds of the business development company over a specified period or as of definite dates, computed net of all realized capital losses and unrealized capital depreciation, and the condition of
(4) apply to an investment advisory contract with a company excepted from the definition of an investment company under
(5) apply to an investment advisory contract with a person who is not a resident of the United States.
(c) Measurement of changes in compensation
For purposes of paragraph (2) of subsection (b), the point from which increases 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.
(d) "Investment advisory contract" defined
As used in paragraphs (2) and (3) of subsection (a), "investment advisory contract" means any contract or agreement whereby a person agrees to act as investment adviser to or to manage any investment or trading account of another person other than an investment company registered under subchapter I of this chapter.
(e) Exempt persons and transactions
The Commission, by rule or regulation, 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 subsection (a)(1), if and to the extent that the exemption relates to an investment advisory contract with any person that the Commission determines does not need the protections of subsection (a)(1), on the basis of such factors as financial sophistication, net worth, knowledge of and experience in financial matters, amount of assets under management, relationship with a registered investment adviser, and such other factors as the Commission determines are consistent with this section. With respect to any factor used in any rule or regulation by the Commission in making a determination under this subsection, if the Commission uses a dollar amount test in connection with such factor, such as a net asset threshold, the Commission shall, by order, not later than 1 year after July 21, 2010, and every 5 years thereafter, adjust for the effects of inflation on such test. Any such adjustment that is not a multiple of $100,000 shall be rounded to the nearest multiple of $100,000.
(f) Authority to restrict mandatory pre-dispute arbitration
The Commission, by rule, may prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any investment adviser to arbitrate any future dispute between them arising under the Federal securities laws, the rules and regulations thereunder, or the rules of a self-regulatory organization if it finds that such prohibition, imposition of conditions, or limitations are in the public interest and for the protection of investors.
(Aug. 22, 1940, ch. 686, title II, §205,
Editorial Notes
Amendments
2018—Subsec. (b)(3).
2010—Subsec. (a).
Subsec. (e).
Subsec. (f).
1996—Subsec. (b)(4), (5).
Subsec. (e).
1987—
1980—
1970—
1960—
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by sections 921(b) and 928 of
Amendment by section 418 of
Effective Date of 1970 Amendment
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–6. Prohibited transactions by investment advisers
It shall be unlawful for any investment adviser by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly—
(1) to employ any device, scheme, or artifice to defraud any client or prospective client;
(2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;
(3) acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an investment adviser in relation to such transaction; or
(4) to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules and regulations define, and prescribe means reasonably designed to prevent, such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.
(Aug. 22, 1940, ch. 686, title II, §206,
Editorial Notes
Amendments
2010—Par. (3).
1960—
Par. (4).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
§80b–6a. Exemptions
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 subchapter 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 subchapter.
(Aug. 22, 1940, ch. 686, title II, §206A, as added
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Dec. 14, 1970, see section 30 of
§80b–7. Material misstatements
It shall be unlawful for any person willfully to make any untrue statement of a material fact in any registration application or report filed with the Commission under
(Aug. 22, 1940, ch. 686, title II, §207,
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–8. General prohibitions
(a) Representations of sponsorship by United States or agency thereof
It shall be unlawful for any person registered under
(b) Statement of registration under Securities Exchange Act of 1934 provisions
No provision of subsection (a) shall be construed to prohibit a statement that a person is registered under this subchapter or under the Securities Exchange Act of 1934 [
(c) Use of name "investment counsel" as descriptive of business
It shall be unlawful for any person registered under
(d) Use of indirect means to do prohibited act
It shall be unlawful for any person indirectly, or through or by any other person, to do any act or thing which it would be unlawful for such person to do directly under the provisions of this subchapter or any rule or regulation thereunder.
(Aug. 22, 1940, ch. 686, title II, §208,
Editorial Notes
References in Text
The Securities Exchange Act of 1934, referred to in subsec. (b), is act June 6, 1934, ch. 404,
Amendments
1960—
Subsec. (c).
Subsec. (d).
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–9. Enforcement of subchapter
(a) Investigation
Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this subchapter or of any rule or regulation prescribed under the authority thereof, have been or are about to be violated by any person, it may in its discretion require, and in any event shall permit, such person to file with it a statement in writing, under oath or otherwise, as to all the facts and circumstances relevant to such violation, and may otherwise investigate all such facts and circumstances.
(b) Administration of oaths and affirmations, subpena of witnesses, etc.
For the purposes of any investigation or any proceeding under this subchapter, any member of the Commission or any officer thereof designated by it is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records which are relevant or material to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in any State or in any Territory or other place subject to the jurisdiction of the United States at any designated place of hearing.
(c) Jurisdiction of courts of United States
In case of contumacy by, or refusal to obey a subpena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoranda, contracts, agreements, and other records. And such court may issue an order requiring such person to appear before the Commission or member or officer designated by the Commission, there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found. Any person who without just cause shall fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in his or its power so to do, in obedience to the subpena of the Commission, shall be guilty of a misdemeanor, and upon conviction shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year, or both.
(d) Action for injunction
Whenever it shall appear to the Commission that any person has engaged, is engaged, or is about to engage in any act or practice constituting a violation of any provision of this subchapter, or of any rule, regulation, or order hereunder, or that any person has aided, abetted, counseled, commanded, induced, or procured, is aiding, abetting, counseling, commanding, inducing, or procuring, or is about to aid, abet, counsel, command, induce, or procure such a violation, it may in its discretion bring an action in the proper district court of the United States, or the proper United States court of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this subchapter or any rule, regulation, or order hereunder. Upon a showing that such person has engaged, is engaged, or is about to engage in any such act or practice, or in aiding, abetting, counseling, commanding, inducing, or procuring any such act or practice, a permanent or temporary injunction or decree or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning any violation of the provisions of this subchapter, or of any rule, regulation, or order thereunder, to the Attorney General, who, in his discretion, may institute the appropriate criminal proceedings under this subchapter.
(e) Money penalties in civil actions
(1) Authority of Commission
Whenever it shall appear to the Commission that any person has violated any provision of this subchapter, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to
(2) Amount of penalty
(A) First tier
The amount of the penalty shall be determined by the court in light of the facts and circumstances. For each violation, the amount of the penalty shall not exceed the greater of (i) $5,000 for a natural person or $50,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation.
(B) Second tier
Notwithstanding subparagraph (A), the amount of penalty for each such violation shall not exceed the greater of (i) $50,000 for a natural person or $250,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
(C) Third tier
Notwithstanding subparagraphs (A) and (B), the amount of penalty for each such violation shall not exceed the greater of (i) $100,000 for a natural person or $500,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if—
(I) the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
(II) such violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.
(3) Procedures for collection
(A) Payment of penalty to Treasury
A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in
(B) Collection of penalties
If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court's order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.
(C) Remedy not exclusive
The actions authorized by this subsection may be brought in addition to any other action that the Commission or the Attorney General is entitled to bring.
(D) Jurisdiction and venue
For purposes of
(4) Special provisions relating to violation of cease-and-desist order
In an action to enforce a cease-and-desist order entered by the Commission pursuant to
(f) Aiding and abetting
For purposes of any action brought by the Commission under subsection (e), any person that knowingly or recklessly has aided, abetted, counseled, commanded, induced, or procured a violation of any provision of this subchapter, or of any rule, regulation, or order hereunder, shall be deemed to be in violation of such provision, rule, regulation, or order to the same extent as the person that committed such violation.
(Aug. 22, 1940, ch. 686, title II, §209,
Editorial Notes
Amendments
2010—Subsec. (e)(3)(A).
Subsec. (f).
2002—Subsec. (e)(3)(A).
1990—Subsec. (e).
1987—Subsecs. (d), (e).
1970—Subsec. (d).
1960—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Savings Provision
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–10. Disclosure of information by Commission
(a) Information available to public
The information contained in any registration application or report or amendment thereto filed with the Commission pursuant to any provision of this subchapter shall be made available to the public, unless and except insofar as the Commission, by rules and regulations upon its own motion, or by order upon application, finds that public disclosure is neither necessary nor appropriate in the public interest or for the protection of investors. Photostatic or other copies of information contained in documents filed with the Commission under this subchapter and made available to the public shall be furnished to any person at such reasonable charge and under such reasonable limitations as the Commission shall prescribe.
(b) Disclosure of fact of examination or investigation; exceptions
Subject to the provisions of subsections (c) and (d) of
(1) in the case of any hearing which is public under the provisions of
(2) in the case of a resolution or request from either House of Congress.
(c) Disclosure by investment adviser of identity of clients
No provision of this subchapter shall be construed to require, or to authorize the Commission to require any investment adviser engaged in rendering investment supervisory services to disclose the identity, investments, or affairs of any client of such investment adviser, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its object the enforcement of a provision or provisions of this subchapter or for purposes of assessment of potential systemic risk.
(Aug. 22, 1940, ch. 686, title II, §210,
Editorial Notes
Amendments
2010—Subsec. (c).
Subsec. (d).
1990—Subsec. (b).
1960—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 929I(c) of
Amendment by section 405 of
Study on Improved Investor Access to Information on Investment Advisers and Broker-Dealers
"(a)
"(1)
"(2)
"(A) identification of those data pertinent to investors; and
"(B) the identification of the method and format for displaying and publishing such data to enhance accessibility by and utility to investors.
"(b)
[For definitions of terms used in section 919B of
Investor Access to Information
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–10a. Consultation
(a) Examination results and other information
(1) The appropriate Federal banking agency shall provide the Commission upon request the results of any examination, reports, records, or other information to which such agency may have access—
(A) with respect to the investment advisory activities of any—
(i) bank holding company or savings and loan holding company;
(ii) bank; or
(iii) separately identifiable department or division of a bank,
that is registered under
(B) in the case of a bank holding company or savings and loan holding company or bank that has a subsidiary or a separately identifiable department or division registered under that section, with respect to the investment advisory activities of such bank or bank holding company or savings and loan holding company.
(2) The Commission shall provide to the appropriate Federal banking agency upon request the results of any examination, reports, records, or other information with respect to the investment advisory activities of any bank holding company or savings and loan holding company, bank, or separately identifiable department or division of a bank, which is registered under
(3) Notwithstanding any other provision of law, the Commission and the appropriate Federal banking agencies shall not be compelled to disclose any information provided under paragraph (1) or (2). Nothing in this paragraph shall authorize the Commission or such agencies to withhold information from Congress, or prevent the Commission or such agencies from complying with a request for information from any other Federal department or agency or any self-regulatory organization requesting the information for purposes within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States, the Commission, or such agencies. For purposes of
(b) Effect on other authority
Nothing in this section shall limit in any respect the authority of the appropriate Federal banking agency with respect to such bank holding company or savings and loan holding company (or affiliates or subsidiaries thereof), bank, or subsidiary, department, or division or a bank under any other provision of law.
(c) Definition
For purposes of this section, the term "appropriate Federal banking agency" shall have the same meaning as given in
(Aug. 22, 1940, ch. 686, title II, §210A, as added
Editorial Notes
Amendments
2006—Subsecs. (a), (b).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective 18 months after Nov. 12, 1999, see section 225 of
§80b–11. Rules, regulations, and orders of Commission
(a) Power of Commission
The Commission shall have authority from time to time to make, issue, amend, and rescind such rules and regulations and such orders as are necessary or appropriate to the exercise of the functions and powers conferred upon the Commission elsewhere in this subchapter, including rules and regulations defining technical, trade, and other terms used in this subchapter, except that the Commission may not define the term "client" for purposes of paragraphs (1) and (2) of
(b) Effective date of regulations
Subject to the provisions of
(c) Orders of Commission after notice and hearing; type of notice
Orders of the Commission under this subchapter shall be issued only after appropriate notice and opportunity for hearing. Notice to the parties to a proceeding before the Commission shall be given by personal service upon each party or by registered mail or certified mail or confirmed telegraphic notice to the party's last known business address. Notice to interested persons, if any, other than parties may be given in the same manner or by publication in the Federal Register.
(d) Good faith compliance with rules and regulations
No provision of this subchapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or order of the Commission, notwithstanding that such rule, regulation, or order may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.
(e) Disclosure rules on private funds
The Commission and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after July 21, 2010, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under subsection 1 80b–4(b) of this title and with the Commodity Futures Trading Commission by investment advisers that are registered both under this subchapter and the Commodity Exchange Act [
(g) 2 Standard of conduct
(1) In general
The Commission may promulgate rules to provide that the standard of conduct for all brokers, dealers, and investment advisers, when providing personalized investment advice about securities to retail customers (and such other customers as the Commission may by rule provide), shall be to act in the best interest of the customer without regard to the financial or other interest of the broker, dealer, or investment adviser providing the advice. In accordance with such rules, any material conflicts of interest shall be disclosed and may be consented to by the customer. Such rules shall provide that such standard of conduct shall be no less stringent than the standard applicable to investment advisers under section 80b–6(1) and (2) of this title when providing personalized investment advice about securities, except the Commission shall not ascribe a meaning to the term "customer" that would include an investor in a private fund managed by an investment adviser, where such private fund has entered into an advisory contract with such adviser. The receipt of compensation based on commission or fees shall not, in and of itself, be considered a violation of such standard applied to a broker, dealer, or investment adviser.
(2) Retail customer defined
For purposes of this subsection, the term "retail customer" means a natural person, or the legal representative of such natural person, who—
(A) receives personalized investment advice about securities from a broker, dealer, or investment adviser; and
(B) uses such advice primarily for personal, family, or household purposes.
(h) Other matters
The Commission shall—
(1) facilitate the provision of simple and clear disclosures to investors regarding the terms of their relationships with brokers, dealers, and investment advisers, including any material conflicts of interest; and
(2) examine and, where appropriate, promulgate rules prohibiting or restricting certain sales practices, conflicts of interest, and compensation schemes for brokers, dealers, and investment advisers that the Commission deems contrary to the public interest and the protection of investors.
(i) Harmonization of enforcement
The enforcement authority of the Commission with respect to violations of the standard of conduct applicable to an investment adviser shall include—
(1) the enforcement authority of the Commission with respect to such violations provided under this subchapter; and
(2) the enforcement authority of the Commission with respect to violations of the standard of conduct applicable to a broker or dealer providing personalized investment advice about securities to a retail customer under the Securities Exchange Act of 1934 [
the Commission shall seek to prosecute and sanction violators of the standard of conduct applicable to an investment adviser under this subchapter to same extent as the Commission prosecutes and sanctions violators of the standard of conduct applicable to a broker or dealer providing personalized investment advice about securities to a retail customer under the Securities Exchange Act of 1934 [
(Aug. 22, 1940, ch. 686, title II, §211,
Editorial Notes
References in Text
The Commodity Exchange Act, referred to in subsec. (e), is act Sept. 21, 1922, ch. 369,
The Securities Exchange Act of 1934, referred to in subsec. (i), is act June 6, 1934, ch. 404,
Amendments
2010—Subsec. (a).
Subsec. (e).
Subsecs. (g), (h).
Subsec. (i).
1987—Subsec. (b).
1960—Subsec. (a).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 913(g)(2), (h)(2) of
Amendment by section 406 of
Study on Enhancing Investment Adviser Examinations
"(a)
"(1)
"(2)
"(A) the number and frequency of examinations of investment advisers by the Commission over the 5 years preceding the date of the enactment of this subtitle [July 21, 2010];
"(B) the extent to which having Congress authorize the Commission to designate one or more self-regulatory organizations to augment the Commission's efforts in overseeing investment advisers would improve the frequency of examinations of investment advisers; and
"(C) current and potential approaches to examining the investment advisory activities of dually registered broker-dealers and investment advisers or affiliated broker-dealers and investment advisers.
"(b)
[For definitions of terms used in section 914 of
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
1 So in original. Probably should be "section".
2 So in original. No subsec. (f) has been enacted.
§80b–12. Hearings
Hearings may be public and may be held before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.
(Aug. 22, 1940, ch. 686, title II, §212,
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–13. Court review of orders
(a) Petition; jurisdiction; findings of Commission; additional evidence; finality
Any person or party aggrieved by an order issued by the Commission under this subchapter may obtain a review of such order in the United States court of appeals within any circuit wherein such person resides or has his principal office or place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or set aside in whole or in part. A copy of such petition shall be forthwith transmitted by the clerk of the court to any member of the Commission, or any officer thereof designated by the Commission for that purpose, and thereupon the Commission shall file in the court the record upon which the order complained of was entered, as provided in
(b) Stay of Commission's order
The commencement of proceedings under subsection (a) shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.
(Aug. 22, 1940, ch. 686, title II, §213,
Editorial Notes
Amendments
2010—Subsec. (a).
1987—Subsec. (a).
1958—Subsec. (a).
Statutory Notes and Related Subsidiaries
Change of Name
Act June 25, 1948, eff. Sept. 1, 1948, as amended by act May 24, 1949, substituted "court of appeals" for "circuit court of appeals".
Effective Date of 2010 Amendment
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–14. Jurisdiction of offenses and suits
(a) In general
The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have jurisdiction of violations of this subchapter or the rules, regulations, or orders thereunder, and, concurrently with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by, or to enjoin any violation of this subchapter or the rules, regulations, or orders thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by, or to enjoin any violation of this subchapter or rules, regulations, or orders thereunder, may be brought in any such district or in the district wherein the defendant is an inhabitant or transacts business, and process in such cases may be served in any district of which the defendant is an inhabitant or transacts business or wherever the defendant may be found. In any action or proceeding instituted by the Commission under this subchapter in a United States district court for any judicial district, a subpoena issued to compel the attendance of a witness or the production of documents or tangible things (or both) at a hearing or trial may be served at any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued under the preceding sentence. Judgments and decrees so rendered shall be subject to review as provided in
(b) Extraterritorial jurisdiction
The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of
(1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the violation is committed by a foreign adviser and involves only foreign investors; or
(2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.
(Aug. 22, 1940, ch. 686, title II, §214,
Editorial Notes
References in Text
The Federal Rules of Civil Procedure, referred to in subsec. (a), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure.
Amendments
2010—
1990—
1987—
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–15. Validity of contracts
(a) Waiver of compliance as void
Any condition, stipulation, or provision binding any person to waive compliance with any provision of this subchapter or with any rule, regulation, or order thereunder shall be void.
(b) Rights affected by invalidity
Every contract made in violation of any provision of this subchapter and every contract heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of any provision of this subchapter, or any rule, regulation, or order thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, regulation, or order, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision.
(Aug. 22, 1940, ch. 686, title II, §215,
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–16. Omitted
Editorial Notes
Codification
Section, act Aug. 22, 1940, ch. 686, title II, §216,
§80b–17. Penalties
Any person who willfully violates any provision of this subchapter, or any rule, regulation, or order promulgated by the Commission under authority thereof, shall, upon conviction, be fined not more than $10,000, imprisoned for not more than five years, or both.
(Aug. 22, 1940, ch. 686, title II, §217,
Editorial Notes
Amendments
1975—
1960—
Statutory Notes and Related Subsidiaries
Effective Date of 1975 Amendment
Amendment by
§80b–18. Hiring and leasing authority of Commission
The provisions of
(1) to appoint and fix the compensation of such other employees as may be necessary for carrying out its functions under this subchapter, and
(2) to lease and allocate such real property as may be necessary for carrying out its functions under this subchapter.
(Aug. 22, 1940, ch. 686, title II, §218,
Editorial Notes
Amendments
1990—
1949—Act Oct. 28, 1949, substituted "Classification Act of 1949" for "Classification Act of 1923".
Statutory Notes and Related Subsidiaries
Repeals
Act Oct. 28, 1949, ch. 782, cited as a credit to this section, was repealed (subject to a savings clause) by
Executive Documents
Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§1, 2, eff. May 24, 1950, 15 F.R. 3175,
§80b–18a. State regulation of investment advisers
(a) Jurisdiction of State regulators
Nothing in this subchapter shall affect the jurisdiction of the securities commissioner (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this subchapter or the rules and regulations thereunder.
(b) Dual compliance purposes
No State may enforce any law or regulation that would require an investment adviser to maintain any books or records in addition to those required under the laws of the State in which it maintains its principal office and place of business, if the investment adviser—
(1) is registered or licensed as such in the State in which it maintains its principal office and place of business; and
(2) is in compliance with the applicable books and records requirements of the State in which it maintains its principal office and place of business.
(c) Limitation on capital and bond requirements
No State may enforce any law or regulation that would require an investment adviser to maintain a higher minimum net capital or to post any bond in addition to any that is required under the laws of the State in which it maintains its principal office and place of business, if the investment adviser—
(1) is registered or licensed as such in the State in which it maintains its principal office and place of business; and
(2) is in compliance with the applicable net capital or bonding requirements of the State in which it maintains its principal office and place of business.
(d) National de minimis standard
No law of any State or political subdivision thereof requiring the registration, licensing, or qualification as an investment adviser shall require an investment adviser to register with the securities commissioner of the State (or any agency or officer performing like functions) or to comply with such law (other than any provision thereof prohibiting fraudulent conduct) if the investment adviser—
(1) does not have a place of business located within the State; and
(2) during the preceding 12-month period, has had fewer than 6 clients who are residents of that State.
(Aug. 22, 1940, ch. 686, title II, §222, as added
Editorial Notes
Amendments
2010—Subsecs. (b), (c).
1998—Subsec. (b)(2).
1996—
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
§80b–18b. Custody of client accounts
An investment adviser registered under this subchapter shall take such steps to safeguard client assets over which such adviser has custody, including, without limitation, verification of such assets by an independent public accountant, as the Commission may, by rule, prescribe.
(Aug. 22, 1940, ch. 686, title II, §223, as added
Statutory Notes and Related Subsidiaries
Effective Date
Section effective 1 year after July 21, 2010, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission, and except as otherwise provided, see section 419 of
§80b–18c. Rule of construction relating to the Commodities Exchange Act
Nothing in this subchapter shall relieve any person of any obligation or duty, or affect the availability of any right or remedy available to the Commodity Futures Trading Commission or any private party, arising under the Commodity Exchange Act (
(Aug. 22, 1940, ch. 686, title II, §224, as added
Editorial Notes
References in Text
The Commodity Exchange Act, referred to in text, is act Sept. 21, 1922, ch. 369,
Statutory Notes and Related Subsidiaries
Effective Date
Section effective 1 year after July 21, 2010, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission, and except as otherwise provided, see section 419 of
§80b–19. Separability
If any provision of this subchapter or the application of such provision to any person or circumstances shall be held invalid, the remainder of the subchapter and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby.
(Aug. 22, 1940, ch. 686, title II, §219,
§80b–20. Short title
This subchapter may be cited as the "Investment Advisers Act of 1940".
(Aug. 22, 1940, ch. 686, title II, §220,
Statutory Notes and Related Subsidiaries
Short Title of 2019 Amendment
Short Title of 2010 Amendment
Short Title of 1996 Amendment
§80b–21. Effective date
This subchapter shall become effective on November 1, 1940.