Investment Advisers Act of 1940
Congress enacted the Investment Advisers Act of 1940 (“Advisers Act”) in conjunction with the Investment Company Act of 1940. The Advisers Act requires the registration of certain investment advisers with the SEC. An investment adviser is generally someone who, for compensation, advises others about the advisability of investing in, purchasing, or selling securities. In 1996, Congress amended the Advisers Act to provide that only advisers who have at least $25 million of assets under management or advise a registered investment company must register with the Commission. (States generally regulate other investment advisers.) The Advisers Act has rules covering matters such as:
- Record-keeping;
- Substantive content of advisory contracts;
- Advertising;
- Custody of client funds and assets; and
- Proxy voting.
In addition, the Advisers Act also imposes certain antifraud provisions upon all persons who meet the statute’s definition of investment adviser, even if the Advisers Act does not require those persons to register with the SEC.