Investment Advisors Act of 1940
What is an Investment Adviser?
- A person who, for compensation, engages in the
business of advising others, either directly or indirectly, as to the
advisability and merit of purchasing or selling securities - Any person who, in the regular course of his or
her business, issues reports or analyses concerning securities
Basically:
- They provide advice, analysis, or reports
concerning securities - Provide these services as regular course of
their business - Receive compensation for those services
Excluded from the definition of Investment adviser:
- Banks, savings institutions, or trust companies
- Professionals, such as lawyers, accountants,
teachers, and engineers, whose investment advice is an incidental portion of
their business practice - Broker/dealers or its agents whose advice is
incidental to their normal business and there is no special compensation - Employees of investment advisers who are
registered as investment adviser representatives - Publishers, their employees, and columnists of
newspapers, magazines, or business periodicals who do not render advice about
specific investment situations of individual clients
What is an Investment Adviser Representative?
- Natural person under the supervision of an
investment adviser - Includes any partner, officer, director, officer
who does any of the following: - Manages accounts for others
- Makes recommendations or gives advice regarding
securities - Determines which recommendations or advice
should be given concerning securities - Solicits, offers, or negotiates the sale of
investment advisory services - Supervises employees who perform any of the
above functions
Excluded from the definition of Investment advisor representative:
- Employees who perform clerical or administrative
duties