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withdrawn its election.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.
86-750, Secs. 2-5, Sept. 13, 1960, 74 Stat. 885, 886; Pub. L. 91-
547, Sec. 24, Dec. 14, 1970, 84 Stat. 1430; Pub. L. 94-29, Sec.
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;
Pub. L. 104-62, Sec. 5, Dec. 8, 1995, 109 Stat. 685; Pub. L. 104-
290, title III, Secs. 303(b), (d), 305, title V, Sec. 508(d), Oct.
11, 1996, 110 Stat. 3438, 3439, 3448; Pub. L. 105-353, title III,
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".