CITE

    15 USC Sec. 80b-3                                           01/05/2009

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
    SUBCHAPTER II - INVESTMENT ADVISERS

HEAD

    Sec. 80b-3. Registration of investment advisers

STATUTE

    (a) Necessity of registration
      Except as provided in subsection (b) of this section and section
    80b-3a of this title, it shall be unlawful for any investment
    adviser, unless registered under this section, to make use of the
    mails or any means or instrumentality of interstate commerce in
    connection with his or its business as an investment adviser.
    (b) Investment advisers who need not be registered
      The provisions of subsection (a) of this section shall not apply
    to -
        (1) any investment adviser 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 who during the course of the
      preceding twelve months has had fewer than fifteen clients and
      who neither holds himself out generally to the public as an
      investment adviser nor acts as an investment adviser to any
      investment company registered under subchapter I of this chapter,
      or a company which has elected to be a business development
      company pursuant to section 80a-53 of this title and has not
      withdrawn its election. For purposes of determining the number of
      clients of an investment adviser under this paragraph, no
      shareholder, partner, or beneficial owner of a business
      development company, as defined in this subchapter, shall be
      deemed to be a client of such investment adviser unless such
      person is a client of such investment adviser separate and apart
      from his status as a shareholder, partner, or beneficial owner;
        (4) any investment adviser that is a charitable organization,
      as defined in section 3(c)(10)(D) of the Investment Company Act
      of 1940 [15 U.S.C. 80a-3(c)(10)(D)], or is a trustee, director,
      officer, employee, or volunteer of such a charitable organization
      acting within the scope of such person's employment or duties
      with such organization, whose advice, analyses, or reports are
      provided only to one or more of the following:
          (A) any such charitable organization;
          (B) a fund that is excluded from the definition of an
        investment company under section 3(c)(10)(B) of the Investment
        Company Act of 1940 [15 U.S.C. 80a-3(c)(10)(B)]; or
          (C) a trust or other donative instrument described in section
        3(c)(10)(B) of the Investment Company Act of 1940 [15 U.S.C.
        80a-3(c)(10)(B)], or the trustees, administrators, settlors (or
        potential settlors), or beneficiaries of any such trust or
        other instrument;
        (5) any plan described in section 414(e) of title 26, any
      person or entity eligible to establish and maintain such a plan
      under title 26, or any trustee, director, officer, or employee of
      or volunteer for any such plan or person, if such person or
      entity, acting in such capacity, provides investment advice
      exclusively to, or with respect to, any plan, person, or entity
      or any company, account, or fund that is excluded from the
      definition of an investment company under section 3(c)(14) of the
      Investment Company Act of 1940 [15 U.S.C. 80a-3(c)(14)]; or
        (6) 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 section 80b-2(a)(11) of this
      title, and that does not act as an investment adviser to -
          (A) an investment company registered under subchapter I of
        this chapter; or
          (B) a company which has elected to be a business development
        company pursuant to section 80a-53 of this title and has not
        withdrawn its election.
    (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 business office 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 section 80b-3a of this title. The Commission shall
    deny such registration if it does not make such a finding or if it
    finds that if the applicant were so registered, its registration
    would be subject to suspension or revocation under subsection (e)
    of this section.
    (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 [7 U.S.C. 1 et
        seq.] or any substantially equivalent statute or regulation;
          (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 chapter 25 or 47 of title 18, or a violation of (!1)
        substantially equivalent foreign statute.
        (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 [7 U.S.C. 1 et seq.] or any
      substantially equivalent statute or regulation, or as an
      affiliated person or employee of any investment company, bank,
      insurance company, foreign entity substantially equivalent to any
      of the above, or entity or person required to be registered under
      the Commodity Exchange Act or any substantially equivalent
      statute or regulation, or from engaging in or continuing any
      conduct or practice in connection with any such activity, or in
      connection with the purchase or sale of any security.
        (5) has willfully violated any provision of the Securities Act
      of 1933 [15 U.S.C. 77a et seq.], the Securities Exchange Act of
      1934 [15 U.S.C. 78a et seq.], the Investment Company Act of 1940
      [15 U.S.C. 80a-1 et seq.], this subchapter, the Commodity
      Exchange Act [7 U.S.C. 1 et seq.], or the rules or regulations
      under any such statutes or any rule of the Municipal Securities
      Rulemaking Board, or is unable to comply with any such provision.
        (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 [15 U.S.C. 77a et seq.],
      the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], the
      Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], this
      subchapter, the Commodity Exchange Act [7 U.S.C. 1 et seq.], the
      rules or regulations under any of such statutes, or the rules of
      the Municipal Securities Rulemaking Board, or has failed
      reasonably to supervise, with a view to preventing violations of
      the provisions of such statutes, rules and regulations, another
      person who commits such a violation, if such other person is
      subject to his supervision. For the purposes of this paragraph no
      person shall be deemed to have failed reasonably to supervise any
      person, if -
          (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 (12 U.S.C. 1813(q))), or the National
      Credit Union Administration, that -
          (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 twelve months or bar any such
    person from being associated with an investment adviser, 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) of this section or has been convicted
    of any offense specified in paragraph (2) or (3) of subsection (e)
    of this section 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)
    of this section. 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 section 80b-3a of this title, the
    Commission shall by order cancel the registration of such person.
    (i) Money penalties in administrative proceedings
      (1) Authority of Commission
        In any proceeding instituted pursuant to subsection (e) or (f)
      of this section against any person, the Commission may impose a
      civil penalty if it finds, on the record after notice and
      opportunity for hearing, that such person -
          (A) has willfully violated any provision of the Securities
        Act of 1933 [15 U.S.C. 77a et seq.], the Securities Exchange
        Act of 1934 [15 U.S.C. 78a et seq.], subchapter I of this
        chapter, or this subchapter, or the rules or regulations
        thereunder;
          (B) has willfully aided, abetted, counseled, commanded,
        induced, or procured such a violation by any other person;
          (C) 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
          (D) has failed reasonably to supervise, within the meaning of
        subsection (e)(6) of this section, 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;
      and that such penalty is in the public interest.
      (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) of this section;
          (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 section 80b-11(c) of this title,
        determines that notice and hearing prior to entry would be
        impracticable or contrary to the public interest. A temporary
        order shall become effective upon service upon the respondent
        and, unless set aside, limited, or suspended by the Commission
        or a court of competent jurisdiction, shall remain effective
        and enforceable pending the completion of the proceedings.
        (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 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
          Section 80b-13 of this title shall not apply to a temporary
        order entered pursuant to this section.
      (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.

SOURCE

    (Aug. 22, 1940, ch. 686, title II, Sec. 203, 54 Stat. 850; Pub. L.
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    29(1)-(4), June 4, 1975, 89 Stat. 166-169; Pub. L. 96-477, title
    II, Sec. 202, Oct. 21, 1980, 94 Stat. 2290; Pub. L. 99-571, title
    I, Sec. 102(m), Oct. 28, 1986, 100 Stat. 3220; Pub. L. 100-181,
    title VII, Sec. 702, Dec. 4, 1987, 101 Stat. 1263; Pub. L. 101-429,
    title IV, Sec. 401, Oct. 15, 1990, 104 Stat. 946; Pub. L. 101-550,
    title II, Sec. 205(b), (c), Nov. 15, 1990, 104 Stat. 2719, 2720;
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    290, title III, Secs. 303(b), (d), 305, title V, Sec. 508(d), Oct.
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    Sec. 301(d)(1), Nov. 3, 1998, 112 Stat. 3237; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Sec. 209(b)], Dec. 21, 2000, 114 Stat. 2763,
    2763A-436; Pub. L. 107-204, title VI, Sec. 604(b), (c)(2), July 30,
    2002, 116 Stat. 796; Pub. L. 109-291, Sec. 4(b)(3)(C), Sept. 29,
    2006, 120 Stat. 1337.)

REFERENCES IN TEXT

      The Commodity Exchange Act, referred to in subsec. (e)(2)(B), (4)-
    (6), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended,
    which is classified generally to chapter 1 (Sec. 1 et seq.) of
    Title 7, Agriculture. For complete classification of this Act to
    the Code, see section 1 of Title 7 and Tables.
      The Securities Act of 1933, referred to in subsecs. (e)(5), (6)
    and (i)(1)(A), is act May 27, 1933, ch. 38, title I, 48 Stat. 74,
    as amended, which is classified generally to subchapter I (Sec. 77a
    et seq.) of chapter 2A of this title. For complete classification
    of this Act to the Code, see section 77a of this title and Tables.
      The Securities Exchange Act of 1934, referred to in subsecs.
    (e)(5), (6) and (i)(1)(A), is act June 6, 1934, ch. 404, 48 Stat.
    881, as amended, which is classified generally to chapter 2B (Sec.
    78a et seq.) of this title. For complete classification of this Act
    to the Code, see section 78a of this title and Tables.
      The Investment Company Act of 1940, referred to in subsec.
    (e)(5), (6), is title I of act Aug. 22, 1940, ch. 686, 54 Stat.
    789, as amended, which is classified generally to subchapter I
    (Sec. 80a-1 et seq.) of this chapter. For complete classification
    of this Act to the Code, see section 80a-51 of this title and
    Tables.

AMENDMENTS

      2006 - Subsec. (e)(2)(B), (4). Pub. L. 109-291 inserted "credit
    rating agency," after "transfer agent,".
      2002 - Subsec. (e)(7). Pub. L. 107-204, Sec. 604(b)(1), added
    par. (7) and struck out former par. (7) which read as follows: "is
    subject to an order of the Commission entered pursuant to
    subsection (f) of this section barring or suspending the right of
    such person to be associated with an investment adviser which order
    is in effect with respect to such person."
      Subsec. (e)(9). Pub. L. 107-204, Sec. 604(b)(2), (3), added par.
    (9).
      Subsec. (f). Pub. L. 107-204, Sec. 604(c)(2), substituted "(8),
    or (9)" for "or (8)" and inserted "or (3)" after "paragraph (2)".
      2000 - Subsec. (b)(6). Pub. L. 106-554 added par. (6).
      1998 - Subsec. (e)(8)(B). Pub. L. 105-353 inserted "or" after
    semicolon at end.
      1996 - Subsec. (a). Pub. L. 104-290, Sec. 303(d), which directed
    substitution of "subsection (b) of this section and section 80b-3a
    of this title" for "subsection (b) of this section", was executed
    by making the substitution for "subsection (b)" to reflect the
    probable intent of Congress.
      Subsec. (b)(5). Pub. L. 104-290, Sec. 508(d), added par. (5).
      Subsec. (c)(2). Pub. L. 104-290, Sec. 303(b)(1), inserted "and
    that the applicant is not prohibited from registering as an
    investment adviser under section 80b-3a of this title" after
    "satisfied" in closing provisions.
      Subsec. (e)(3) to (5). Pub. L. 104-290, Sec. 305(a), added par.
    (3) and redesignated former pars. (3) and (4) as (4) and (5),
    respectively. Former par. (5) redesignated (6).
      Subsec. (e)(6). Pub. L. 104-290, Sec. 305(b)(1), substituted
    "this paragraph" for "this paragraph (5)".
      Pub. L. 104-290, Sec. 305(a)(1), redesignated par. (5) as (6).
    Former par. (6) redesignated (7).
      Subsec. (e)(7), (8). Pub. L. 104-290, Sec. 305(a)(1),
    redesignated pars. (6) and (7) as (7) and (8), respectively.
      Subsec. (f). Pub. L. 104-290, Sec. 305(b)(2), substituted
    "paragraph (1), (5), (6), or (8) of subsection (e) of this section"
    for "paragraph (1), (4), (5), or (7) of subsection (e) of this
    section" and "paragraph (4)" for "paragraph (3)" and substituted
    "subsection (e)" for "said subsection (e)" in two places.
      Subsec. (h). Pub. L. 104-290, Sec. 303(b)(2), substituted
    "existence," for "existence or" and inserted "or is prohibited from
    registering as an investment adviser under section 80b-3a of this
    title," after "investment adviser,".
      Subsec. (i)(1)(D). Pub. L. 104-290, Sec. 305(b)(3), substituted
    "subsection (e)(6) of this section" for "subsection (e)(5) of this
    section".
      1995 - Subsec. (b)(4). Pub. L. 104-62 added par. (4).
      1990 - Subsec. (e)(2). Pub. L. 101-550, Sec. 205(b)(1), inserted
    "or of a substantially equivalent crime by a foreign court of
    competent jurisdiction" after "misdemeanor".
      Subsec. (e)(2)(A). Pub. L. 101-550, Sec. 205(b)(2), inserted "any
    substantially equivalent activity however denominated by the laws
    of the relevant foreign government," after "burglary,".
      Subsec. (e)(2)(B). Pub. L. 101-550, Sec. 205(b)(3), inserted
    "foreign person performing a function substantially equivalent to
    any of the above," after "transfer agent," and "or any
    substantially equivalent statute or regulation" after "Commodity
    Exchange Act".
      Subsec. (e)(2)(C). Pub. L. 101-550, Sec. 205(b)(4), inserted "or
    substantially equivalent activity however denominated by the laws
    of the relevant foreign government" after "securities".
      Subsec. (e)(2)(D). Pub. L. 101-550, Sec. 205(b)(5), inserted ",
    or a violation of substantially equivalent foreign statute" after
    "title 18".
      Subsec. (e)(3). Pub. L. 101-550, Sec. 205(b)(3), (6), inserted
    "foreign person performing a function substantially equivalent to
    any of the above," after "transfer agent,", "or any substantially
    equivalent statute or regulation" after "Commodity Exchange Act"
    wherever appearing, ", including any foreign court of competent
    jurisdiction", and "foreign entity substantially equivalent to any
    of the above," after "insurance company,".
      Subsec. (e)(5). Pub. L. 101-550, Sec. 205(b)(7), inserted "the
    Commodity Exchange Act" after "this subchapter,".
      Subsec. (e)(7). Pub. L. 101-550, Sec. 205(b)(8), added par. (7).
      Subsec. (f). Pub. L. 101-550, Sec. 205(c), substituted "paragraph
    (1), (4), (5), or (7)" for "paragraph (1), (4), or (5)".
      Subsecs. (i) to (k). Pub. L. 101-429 added subsecs. (i) to (k).
      1987 - Subsec. (e)(2)(B). Pub. L. 100-181, Sec. 702(1), inserted
    "transfer agent," after "fiduciary,".
      Subsec. (e)(3). Pub. L. 100-181, Sec. 702(2), inserted "transfer
    agent," after "government securities dealer,".
      Subsec. (f). Pub. L. 100-181, Sec. 702(3), inserted ", seeking to
    become associated, or, at the time of the alleged misconduct,
    associated" before "or seeking to become associated".
      Subsec. (g). Pub. L. 100-181, Sec. 702(4), substituted
    "subsection (c) or subsection (e)" for "subsection (d)".
      1986 - Subsec. (e)(2)(B). Pub. L. 99-571, Sec. 102(m)(1),
    substituted "government securities broker, government securities
    dealer, fiduciary, or entity or person required to be registered
    under the Commodity Exchange Act" for "or fiduciary".
      Subsec. (e)(3). Pub. L. 99-571, Sec. 102(m)(2), inserted par. (3)
    and struck out former par. (3) which read as follows: "is
    permanently or temporarily enjoined by order, judgment, or decree
    of any court of competent jurisdiction from acting as an investment
    adviser, underwriter, broker, dealer, or municipal securities
    dealer, or as an affiliated person or employee of any investment
    company, bank, or insurance company, or from engaging in or
    continuing any conduct or practice in connection with any such
    activity, or in connection with the purchase or sale of any
    security."
      Subsec. (e)(4). Pub. L. 99-571, Sec. 102(m)(3), inserted
    reference to Commodity Exchange Act.
      1980 - Subsec. (b)(3). Pub. L. 96-477 required investment
    advisers to business development companies to register under this
    section and provided that for purposes of determining the number of
    clients of an investment adviser under par. (3), no shareholders,
    partners, or beneficial owners of business development companies
    were to be deemed to be clients of an investment adviser unless
    such person qualified as a client apart from his status in
    connection with the business development company.
      1975 - Subsec. (c). Pub. L. 94-29, Sec. 29(1), inserted provision
    authorizing the Commission to require a balance sheet certified by
    an independent public accountant and other financial statements
    which, as the Commission specifies, may be certified, and
    substituted provisions directing the Commission either to grant the
    registration within forty-five days or institute proceedings to
    determine whether registration should be denied, directing the
    Commission to grant registration if it finds that the requirements
    of this section are satisfied, and requiring the Commission to deny
    registration if it does not make such a finding or finds that if
    the applicant were registered its registration would be subject to
    suspension or revocation for provisions directing that registration
    be effective thirty days after receipt of the application by the
    Commission except as otherwise provided and making allowances for
    amendment of the application.
      Subsec. (e). Pub. L. 94-29, Sec. 29(2), added the placing of
    limitations on the activities of investment advisers to the
    enumeration of sanctions available to the Commission as set out in
    the provisions preceding par. (1), inserted references in par.
    (2)(A) to the taking of a false oath, the making of a false report,
    bribery, perjury, burglary, and conspiracy to commit such offenses,
    expanded par. (2)(B) to include municipal securities dealers,
    banks, insurance companies, and fiduciaries, inserted references in
    par. (2)(C) to larceny, theft, robbery, extortion, forgery,
    counterfeiting, and fraudulent concealment, inserted references in
    par. (2)(D) to section 152 and chapters 25 and 47 of title 18, and
    inserted reference to the rules of the Municipal Securities
    Rulemaking Board in pars. (4) and (5).
      Subsec. (f). Pub. L. 94-29, Sec. 29(3), added the placing of
    limitations on the activities of persons associated or seeking to
    become associated with an investment adviser to the enumeration of
    sanctions available to the Commission.
      Subsecs. (g), (h). Pub. L. 94-29, Sec. 29(4), redesignated
    subsecs. (h) and (i) as (g) and (h), respectively. Former subsec.
    (g), covering the postponement of the effective day of registration
    by the commencement of a proceeding to deny registration, was
    struck out.
      1970 - Subsec. (b). Pub. L. 91-547, Sec. 24(a), struck out
    "investment companies and" before "insurance companies" in par. (2)
    and struck out "does not hold" after "clients and who" and inserted
    "neither hold" and "nor acts as an investment adviser to any
    investment company registered under subchapter I of this chapter"
    in par. (3).
      Subsec. (c)(1)(F). Pub. L. 91-547, Sec. 24(b), substituted "any
    person associated with such investment adviser" for "any partner,
    officer, director thereof, or any person performing similar
    functions, or any person directly or indirectly controlling or
    controlled by such investment adviser" and reference to subsec.
    "(e)" for "(d)".
      Subsecs. (d), (e). Pub. L. 91-547, Sec. 24(c), (d), added subsec.
    (d), redesignated former subsec. (d) as (e), and in amending its
    provisions, inserted reference to "censure" in two places and
    substituted "such investment adviser or any person associated with
    such investment adviser" for "(1) such investment adviser, whether
    prior or subsequent to becoming such, or (2) any partner, officer,
    or director thereof, or any person performing similar functions, or
    (3) any person directly or indirectly controlling or controlled by
    such investment adviser, whether prior or subsequent to becoming
    such," in introductory text preceding par. (1), formerly cl. (A),
    redesignated as pars. (1) to (5) former cls. (A) to (E),
    redesignated as items (A) to (D) of par. (2) former items (i) to
    (iv), striking out ", as heretofore or hereafter amended" after
    "Title 18", substituted in par. (3) "an affiliated person" for "as
    an affiliated person", in par. (4) included reference to subchapter
    I of this chapter and struck out "as any of such statutes
    heretofore have been or hereafter may be amended" after "this
    subchapter", in par. (5) included reference to subchapter I of this
    chapter, struck out "as any of such statutes heretofore have been
    or hereafter may be amended" after "this subchapter", inserted
    provision respecting disciplining an investment adviser for failure
    reasonably to supervise, with a view to preventing violations of
    statutes, rules, and regulations, another person who commits such a
    violation if such other person is subject to his supervision,
    including subpars. (A) and (B) respecting failure to supervise a
    person, and inserted par. (6). Former subsec. (e) redesignated (g).
      Subsec. (f). Pub. L. 91-547, Sec. 24(e), inserted subsec. (f).
    Former subsec. (f) redesignated (h).
      Subsec. (g). Pub. L. 91-547, Sec. 24(c), redesignated former
    subsec. (e) as (g). Former subsec. (g) redesignated (i).
      Subsecs. (h), (i). Pub. L. 91-547, Sec. 24(e), redesignated
    former subsecs. (f) and (g) as (h) and (i), respectively.
      1960 - Subsec. (c)(1)(F). Pub. L. 86-750, Sec. 2, substituted "or
    any person performing similar functions, or any person directly or
    indirectly controlling or controlled by 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 (d)" for "person
    performing similar function or controlling person thereof (i)
    within ten years of the filing of such application has been
    convicted of any felony or misdemeanor of the character described
    in paragraph (1) of subsection (d) of this section, or (ii) is
    permanently or temporarily enjoined by an order, judgment or decree
    of the character described in paragraph (2) of said subsection (d)
    and in each case the facts relating to such conviction or
    injunction".
      Subsec. (c)(2). Pub. L. 86-750, Sec. 3(a), substituted "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" for "a statement as to whether
    such investment adviser is engaged or is to engage primarily in the
    business of rendering investment supervisory services".
      Subsec. (d). Pub. L. 86-750, Sec. 3(b), among other changes,
    limited the period of suspension to twelve months, included people
    controlled by the adviser, provided that the ten year period within
    which convictions are counted be measured from the filing of the
    application or after specified felonies or misdemeanors, increased
    the number of offenses by including willful, false or misleading
    statements as to any material fact, or omissions thereof, in any
    application for registration or report filed with the Commission,
    embezzlement, fraudulent conversion, and misappropriation of funds
    or securities, violations of sections 1341, 1342 or 1343 of title
    18, willful violations of, or aiding, abetting, counseling,
    commanding, inducing or procuring the violation of the Securities
    Act of 1933, or of the Securities Exchange Act of 1934, or of this
    title, and any amendment or rule or regulation thereunder.
      Subsec. (e). Pub. L. 86-750, Sec. 4, substituted provisions
    postponing the effective date of registration for ninety days at
    commencement of a proceeding to deny registration, or until final
    determination whether such registration should be denied, whichever
    was first, and authorizing the Commission after notice and
    opportunity for hearing, to postpone said effective date beyond the
    ninety-day period or final determination, provided that upon
    request of any interested party, made more than ninety days after
    such postponement, the Commission shall consider the postponement's
    continuation, for provisions prohibiting postponement of the
    effective date of registration upon a proceeding to deny
    registration, unless the Commission found it in the public interest
    to do so, and which limited said postponement to three months.
      Subsec. (g). Pub. L. 86-750, Sec. 5, substituted "existence" for
    "business".
                     EFFECTIVE DATE OF 1996 AMENDMENT
      Amendment by sections 303(b), (d) and 305 of Pub. L. 104-290
    effective 270 days after Oct. 11, 1996, see section 308(a) of Pub.
    L. 104-290, as amended, set out as a note under section 80b-2 of
    this title.
                     EFFECTIVE DATE OF 1995 AMENDMENT
      Amendment by Pub. L. 104-62 applicable as defense to any claim in
    administrative and judicial actions pending on or commenced after
    Dec. 8, 1995, that any person, security, interest, or participation
    of type described in Pub. L. 104-62 is subject to the Securities
    Act of 1933, the Securities Exchange Act of 1934, the Investment
    Company Act of 1940, the Investment Advisers Act of 1940, or any
    State statute or regulation preempted as provided in section 80a-3a
    of this title, except as specifically provided in such statutes,
    see section 7 of Pub. L. 104-62, set out as a note under section
    77c of this title.
                     EFFECTIVE DATE OF 1990 AMENDMENT
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.
                     EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.
                     EFFECTIVE DATE OF 1975 AMENDMENT
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.
                     EFFECTIVE DATE OF 1970 AMENDMENT
      Amendment by Pub. L. 91-547 effective Dec. 14, 1970, except that
    amendment by section 24(a) of Pub. L. 91-547 effective on
    expiration of one year after Dec. 14, 1970, see section 30
    (introductory text and par. (1)) of Pub. L. 91-547, set out as a
    note under section 80a-52 of this title.

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, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

FOOTNOTE

    (!1) So in original. Probably should be "of a".
    (!2) So in original. Probably should be "financial".
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