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8000 - Miscellaneous Statutes and Regulations
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INVESTMENT ADVISERS ACT OF 1940
To provide for the registration and regulation of
investment companies and investment advisers, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
* * * * *
TITLE II—INVESTMENT ADVISERS
Findings
SEC. 201. Upon the basis of facts disclosed by the record and
report of the Securities and Exchange Commission made pursuant to
section 30 of the Public Utility Holding Company Act of 1935, and facts
otherwise disclosed and ascertained, it is hereby found that investment
advisers are of national concern, in that, among other things--
(1) their advice, counsel, publications, writings, analyses, and
reports are furnished and distributed, and their contracts,
subscription agreements, and other arrangements with clients are
negotiated and performed, by the use of the mails and means and
instrumentalities of interstate commerce;
(2) their advice, counsel, publications, writings, analyses, and
reports customarily relate to the purchase and sale of securities
traded on national securities exchanges and in interstate
over-the-counter markets, securities issued by companies engaged in
business in interstate commerce, and securities issued by national
banks and member banks of the Federal Reserve System; and
(3) the foregoing transactions occur in such volume as
substantially to affect interstate commerce, national securities
exchanges, and other securities markets, the national banking system
and the national economy.
[Codified to 15 U.S.C. 80b--1]
[Source: Section 201 of title II of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940]
Definitions
SEC. 202. (a) When used in this title, unless the context
otherwise requires, the following definitions shall apply:
(1) "Assignment" includes any direct or indirect transfer
or hypothecation of an investment advisory contract by the assignor or
of a controlling block of the assignor's outstanding voting securities
by a security holder of the assignor; but if the investment adviser is
a partnership, no assignment of an investment advisory contract shall
be deemed to result from the death or withdrawal of a minority of the
members of the investment adviser having only a minority interest in
the business of the investment adviser, or from the admission to the
investment adviser of one or more members who, after such admission,
shall be only a minority of the members and shall have only a minority
interest in the business.
(2) "Bank" means (A) a banking institution organized
under the laws of the United States, or a Federal savings association,
as defined in section 2(5) of the Home Owners' Loan Act (B) a member
bank of the Federal Reserve System, (C) any other banking institution,
savings association, as defined in section 2(4) of the Home Owners'
Loan Act, or trust company, whether incorporated or not, doing business
under the laws of any State or of the United States, a substantial
portion of the business of which consists of receiving deposits or
exercising fiduciary powers similar to those permitted to national
banks under the authority of the Comptroller of the Currency, and which
is supervised and examined by State or Federal authority having
supervision over banks or savings associations, and which is not
operated for the purpose of evading the provisions of this title, and
(D) a receiver, conservator, or other
{{12-29-06 p.9364}}liquidating agent
of any institution or firm included in clauses (A), (B), or (C) of this
paragraph.
(3) The term "broker" has the same meaning as given in
section 3 of the Securities
Exchange Act of 1934.
(4) "Commission" means the Securities and Exchange
Commission.
(5) "Company" means a corporation, a partnership, an
association, a joint-stock company, a trust, or any organized group of
persons, whether incorporated or not; or any receiver, trustee in a
case under title 11, or similar official, or any liquidating agent for
any of the foregoing, in his capacity as such.
(6) "Convicted" includes a verdict, judgment, or plea of
guilty, or a finding of guilt on a plea of nolo contendere, if such
verdict, judgment, plea, or finding has not been reversed, set aside,
or withdrawn, whether or not sentence has been imposed.
(7) The term "dealer" has the same meaning as given in
section 3 of the Securities Exchange Act of 1934, but does not include
an insurance company or investment company.
(8) "Director" means any director of a corporation or any
person performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(9) "Exchange" means any organization, association, or
group of persons, whether incorporated or unincorporated, which
constitutes, maintains, or provides a market place or facilities for
bringing together purchasers and sellers of securities or for otherwise
performing with respect to securities the functions commonly performed
by a stock exchange as that term is generally understood, and includes
the market place and the market facilities maintained by such exchange.
(10) "Interstate commerce" means trade, commerce,
transportation, or communication among the several States, or between
any foreign country and any State, or between any State and any place
or ship outside thereof.
(11) "Investment adviser" means any person who, for
compensation, engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in, purchasing, or
selling securities, or who, for compensation and as part of a regular
business, issues or promulgates analyses or reports concerning
securities; but does not include (A) a bank, or any bank holding
company as defined in the Bank Holding Company Act of 1956, which is
not an investment company, except that the term "investment
adviser" includes any bank or bank holding company to the extent
that such bank or bank holding company serves or acts as an investment
adviser to a registered investment company, but if, in the case of a
bank, such services or actions are performed through a separately
identifiable department or division, the department or division, and
not the bank itself, shall be deemed to be the investment adviser (B)
any lawyer, accountant, engineer, or teacher whose performance of such
services is solely incidental to the practice of his profession; (C)
any broker or dealer whose performance of such services is solely
incidental to the conduct of his business as a broker or dealer and who
receives no special compensation therefor; (D) the publisher of any
bona fide newspaper, news magazine or business or financial publication
of general and regular circulation; (E) any person whose advice,
analyses, or reports relate to no securities other than securities
which are direct obligations of or obligations guaranteed as to
principal or interest by the United States, or securities issued or
guaranteed by corporations in which the United States has a direct or
indirect interest which shall have been designated by the Secretary of
the Treasury, pursuant to section
3(a)(12) of the Securities Exchange Act of 1934, as exempted
securities for the purposes of that Act; (F) any nationally recognized
statistical rating organization, as that term is defined in section
3(a)(62) of the Securities Exchange Act of 1934, unless such
organization engages in issuing recommendations as to purchasing,
selling, or holding securities or in managing assets, consisting in
whole or in part of securities, on behalf of others; or (G) such other
persons not within the intent of this paragraph, as the Commission may
designate by rules and regulations or order.
(12) "Investment company," "affiliated person," and
"insurance company" have the same meanings as in the Investment
Company Act of 1940. "Control" means the power to
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controlling influence over the management or policies of a company,
unless such power is solely the result of an official position with
such company.
(13) "Investment supervisory services" means the giving of
continuous advice as to the investment of funds on the basis of the
individual needs of each client.
(14) "Means or instrumentality of interstate commerce"
includes any facility of a national securities exchange.
(15) "National securities exchange" means an exchange
registered under section 6 of
the Securities Exchange Act of 1934.
(16) "Person" means a natural person or a company.
(17) The term "person associated with an investment
adviser" means any partner, officer, or director of such investment
adviser (or any person performing similar functions), or any person
directly or indirectly controlling or controlled by such investment
adviser, including any employee of such investment adviser, except that
for the purposes of section
203 of this title (other than subsection (f) thereof), persons
associated with an investment adviser whose functions are clerical or
ministerial shall not be included in the meaning of such term. The
Commission may by rules and regulations classify, for the purposes of
any portion or portions of this title, persons, including employees
controlled by an investment adviser.
(18) "Security" means any note, stock, treasury stock,
security future, bond, debenture, evidence of indebtedness, certificate
of interest or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option or privilege on any security (including a certificate
of deposit) or on any group or index of securities (including any
interest therein or based on the value thereof), or any put, call,
straddle, option, or privilege entered into on a national securities
exchange relating to foreign currency, or, in general, any interest or
instrument commonly known as a "security" or any certificate of
interest or participation in, temporary or interim certificate for,
receipt for, guaranty of, or warrant or right to subscribe to or
purchase any of the foregoing.
(19) "State" means any State of the United States, the
District of Columbia, Puerto Rico, the Virgin Islands, or any other
possession of the United States.
(20) "Underwriter" means any person who has purchased from
an issuer with a view to, or sells for an issuer in connection with,
the distribution of any security, or participates or has a direct or
indirect participation in any such undertaking, or participates or has
a participation in the direct or indirect underwriting of any such
undertaking; but such term shall not include a person whose interest is
limited to a commission from an underwriter or dealer not in excess of
the usual and customary distributor's or seller's commission. As used
in this paragraph the term "issuer" shall include in addition to
an issuer, any person directly or indirectly controlling or controlled
by the issuer, or any person under direct or indirect common control
with the issuer.
(21) "Securities Act of 1933", "Securities Exchange Act
of 1934", "Public Utility Holding Company Act of 1935", and
"Trust Indenture Act of 1939", mean those Acts, respectively, as
heretofore or hereafter amended.
(22) "Business development company" means any company which
is a business development company as defined in
section 2(a)(48) of this
title and which complies with section 54 of this title, except that--
(A) the 70 per centum of the value of the total assets condition
referred to in sections 2(a)(48) and 54 of this title shall be 60 per
centum for purposes of determining compliance therewith;
(B) such company need not be a closed-end company and need not
elect to be subject to the provisions of sections 54 through 64 of this
title; and
(C) the securities which may be purchased pursuant to
section 54(a) of this title may
be purchased from any person.
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For purposes of this paragraph, all terms in sections 2(a)(48) and 54
of this title shall have the same meaning set forth in subchapter I of
this chapter as if such company were a registered closed-end investment
company, except that the value of the assets of a business development
company which is not subject to the provisions of sections 54 through
64 of this title shall be determined as of the date of the most recent
financial statements which it furnished to all holders of its
securities, and shall be determined no less frequently than annually.
(23) "Foreign securities authority" means any foreign
government, or any governmental body or regulatory organization
empowered by a foreign government to administer or enforce its laws as
they relate to securities matters.
(24) "Foreign financial regulatory authority" means any (A)
foreign securities authority, (B) other governmental body or foreign
equivalent of a self-regulatory organization empowered by a foreign
government to administer or enforce its laws relating to the regulation
of fiduciaries, trusts, commercial lending, insurance, trading in
contracts of sale of a commodity for future delivery, or other
instruments traded on or subject to the rules of a contract market,
board of trade or foreign equivalent, or other financial activities, or
(C) membership organization a function of which is to regulate the
participation of its members in activities listed above.
(25) "Supervised person" means any partner, officer,
director (or other person occupying a similar status or performing
similar functions), or employee of an investment adviser, or other
person who provides investment advice on behalf of the investment
adviser and is subject to the supervision and control of the investment
adviser.
(26) The term "separately identifiable department or
division" of a bank means a unit--
(A) that is under the direct supervision of an officer or
officers designated by the board of directors of the bank as
responsible for the day-to-day conduct of the bank's investment
adviser activities for one or more investment companies, including the
supervision of all bank employees engaged in the performance of such
activities; and
(B) for which all of the records relating to its investment
adviser activities are separately maintained in or extractable from
such unit's own facilities or the facilities of the bank, and such
records are so maintained or otherwise accessible as to permit
independent examination and enforcement by the Commission of this Act
or the Investment Company Act of 1940 and rules and regulations
promulgated under this Act or the Investment Company Act of 1940.
(27) The terms "security future" and "narrow-based
security index" have the same meanings as provided in section
3(a)(55) of the Securities Exchange Act of 1934.
(28) The term "credit rating agency" has the same meaning
as in section 3 of the Securities Exchange Act of 1934.
(b) No provision in this title shall apply to, or be deemed to
include, the United States, a State, or any political subdivision of a
State, or any agency, authority, or instrumentality of any one or more
of the foregoing, or any corporation which is wholly owned directly or
indirectly by any one or more of the foregoing, or any officer, agent,
or employee of any of the foregoing acting as such in the course of his
official duty, unless such provision makes specific reference thereto.
(c) Consideration of Promotion of Efficiency, Competition, and
Capital Formation.--Whenever pursuant to this title the Commission
is engaged in rulemaking and is required to consider or determine
whether an action is necessary or appropriate in the public interest,
the Commission shall also consider, in addition to the protection of
investors, whether the action will promote efficiency, competition, and
capital formation.
[Codified to 15 U.S.C. 80b--2]
[Source: Section 202 of title II of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940, as
amended by section 12(c) of the Act of June 25, 1959 (Pub. L. No.
86--70; 73 Stat. 143), effective June 25, 1959; section 7(d) of the Act
of July 12, 1960 (Pub. L. No. 86--624; 74 Stat. 412), effective July
12, 1960; section 1 of the Act
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of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 885), effective
September 13, 1960; section 13(j) of the Act of July 1, 1966 (Pub. L.
No. 89--485; 80 Stat. 243), effective July 1, 1966; section 23 of the
Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1430),
effective December 14, 1970; section 311 of title III of the Act of
November 6, 1978 (Pub. L. No. 95--598; 92 Stat. 2672), effective
October 1, 1979; section 201 of title II of the Act of October 21, 1980
(Pub. L. No. 96--477; 94 Stat. 2289), effective October 21, 1980;
section 6 of the Act of October 13, 1982 (Pub. L. No. 97--303; 96 Stat.
1410), effective October 13, 1982; section 701 of title VII of the Act
of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1263), effective
December 4, 1987; and section 206(b) of title II of the Act of November
15, 1990 (Pub. L. No. 101--550; 104 Stat. 2720), effective November 15,
1990; section 303(c) of title III of the Act of October 11, 1996 (Pub.
L. No. 104--290; 110 Stat. 3438), effective April 9, 1997; sections
217, 218, 219 and 224 of title II of the Act of November 12, 1999 (Pub.
L. No. 106--102; 113 Stat. 1399, 1400 and 1402), effective May 12,
2001; sections 209(a)(2) and (4) of title II of the Act of December 21,
2000 (Pub. L. No. 106--554; 114 Stat. 2763A--435 and 436), effective
December 21, 2000; section 4(b)(3)(A) and (B) of the Act of September
29, 2006 (Pub. L. No. 109--291; 120 Stat. 1337), effective September
29, 2006; section 401(b)(1) of title IV of the Act of October 13, 2006
(Pub. L.No. 109--351; 120 Stat. 1973]
Registration of Investment
Advisers
SEC. 203. (a) Except as provided in subsection (b) and
section 203A, 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) The provisions of subsection (a) 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 not 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
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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,
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; or
(C) a trust or other donative instrument described in
section 3(c)(10)(B) of the
Investment Company Act of 1940, 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 the Internal Revenue
Code of 1986, any person or entity eligible to establish and maintain
such a plan under the Internal Revenue Code of 1986, 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; 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 202(a)(11) of this title, and that does not act
as an investment adviser to--
(A) an investment company registered under title I of this Act;
or
(B) a company which has elected to be a business development
company pursuant to section 54 of title I of this Act and has not
withdrawn its election.
(c)(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 or registration
of such investment adviser under the provision 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
{{12-29-06 p.9368}}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 203A. 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) Any provision of this title (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) 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 title, 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 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, United States Code, or a violation of substantially
equivalent foreign statute.
{{12-29-06 p.9369}}
(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 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, the Securities Exchange Act of 1934, the Investment Company Act
of 1940, this title, the Commodity Exchange Act, 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, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, this title, the Commodity Exchange Act,
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 or 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 financial 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
{{12-29-06 p.9370}}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) The Commission, by order, shall censure or place limitations on
the activities of any person 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) within ten years of the commencement of the proceedings
under this subsection, or is enjoined from any action, conduct, or
practice specified in paragraph (4) of subsection (e). It shall be
unlawful for any person as to whom such an order suspending or barring
him from being associated with an investment adviser is in effect
willfully to become, or to be, associated with an investment adviser
without the consent of the Commission, and it shall be unlawful for any
investment adviser to permit such a person to become, or remain, a
person associated with him without the consent of the Commission, if
such investment adviser knew, or in the exercise of reasonable care,
should have known, of such order.
(g) 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) 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 203A, 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) 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, the Securities Exchange Act of 1934, the Investment Company Act
of 1940, or this title, 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 title, 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), with a view to preventing violations of the
provisions of this title 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.
{{12-29-06 p.9371}}
(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 section 203(e)(2) of this title;
(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 an Order Requiring an 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 THE 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
title, 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
{{12-29-06 p.9372}}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 211(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.
{{2-29-08 p.9373}}
(D) Exclusive
review.--Section 213 of
this title shall not apply to a temporary order entered pursuant to
this section.
(5) Authority to enter an order requiring an 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.
[Codified to 15 U.S.C. 80b--3]
[Source: Section 203 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 850), effective November 1, 1940, as amended
by sections 2--5 of the Act of September 13, 1960 (Pub. L. No. 86--750;
74 Stat. 885, 886), effective September 13, 1960; section 24 of the Act
of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1430), effective
December 14, 1970, except section 203(b) which effective date is
December 14, 1971; section 29(1)--(4) of the Act of June 4, 1975 (Pub.
L. No. 94--29; 89 Stat. 166--169), effective June 4, 1975; section 202
of title II of the Act of October 21, 1980 (Pub. L. No. 96--477; 94
Stat. 2290), effective October 21, 1980; section 102(m) of title I of
the Act of October 28, 1986 (Pub. L. No. 99--571; 100 Stat. 3220),
effective July 25, 1987; section 702 of title VII of of the Act of
December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1263), effective
December 4, 1987; and section 401 of title IV of the Act of October 15,
1990 (Pub. L. No. 101--429; 104 Stat. 946), effective October 15, 1990;
sections 205(b) and (c) of title II of the Act of November 15, 1990
(Pub. L. No. 101--550; 104 Stat. 2719), effective November 15, 1990;
section 5 of the Act of December 8, 1995 (Pub. L. No. 104--62; 109
Stat. 685), effective December 8, 1995; sections 303(b) and (d) and 305
of title III and section 508(d) of title V of the Act of October 11,
1996 (Pub. L. No. 104--290; 110 Stat. 3438 and 3448, respectively),
effective April 9, 1997, except that the amendments made to subsection
(b)(3)--(5) by section 508(d) are effective October 11, 1996; section
301(d)(1) of title III of the Act of November 3, 1998 (Pub. L. No.
105--353; 112 Stat. 3237), effective November 3, 1998; section 209(b)
of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114
Stat. 2763A--436), effective December 21, 2000; sections 604(b) and
604(c)(2) of title VI of the Act of July 30, 2002 (Pub. L. No.
107--204; 116 Stat. 796), effective July 30, 2002; section 4(b)(3)(C)
of the Act of September 29, 2006 (Pub. L. No. 109--291; 120 Stat.
1337), September 29, 2006]
SEC. 203A. STATE AND FEDERAL RESPONSIBILITIES.
(a) ADVISERS SUBJECT TO STATE AUTHORITIES.--
(1) IN GENERAL.--No investment adviser that is regulated
or required to be regulated as an investment adviser in the State in
which it maintains its principal office and place of business shall
register under section 203, unless the investment adviser--
(A) has assets under management of not less than $25,000,000, or
such higher amount as the Commission may, by rule, deem appropriate in
accordance with the purposes of this title; or
(B) is an adviser to an investment company registered under title
I of this Act.
(2) DEFINITION.--For purposes of this subsection, the
term "assets under management" means the securities portfolios
with respect to which an investment adviser provides continuous and
regular supervisory or management services.
(b) ADVISERS SUBJECT TO COMMISSION AUTHORITY.--
(1) IN GENERAL.--No law of any State or political
subdivision thereof requiring the registration, licensing, or
qualification as an investment adviser or supervised person of an
investment adviser shall apply to any person--
(A) that is registered under section 203 as an investment
adviser, or that is a supervised person of such person, except that a
State may license, register, or otherwise qualify any investment
adviser representative who has a place of business located within that
State; or
{{2-29-08 p.9374}}
(B) that is not registered under section 203 because that person
is excepted from the definition of an investment adviser under
section 202(a)(11).
(2) LIMITATION.--Nothing in this subsection shall
prohibit the securities commission (or any agency or office performing
like functions) of any State from investigating and bringing
enforcement actions with respect to fraud or deceit against an
investment adviser or person associated with an investment adviser.
(c) EXEMPTIONS.--Notwithstanding subsection (a), the
Commission, by rule or regulation upon its own motion, or by order upon
application, may permit the registration with the Commission of any
person or class of persons to which the application of subsection (a)
would be unfair, a burden on interstate commerce, or otherwise
inconsistent with the purposes of this section.
(d) STATE ASSISTANCE.--Upon request of the securities
commissioner (or any agency or officer performing like functions) of
any State, the Commission may provide such training, technical
assistance, or other reasonable assistance in connection with the
regulation of investment advisers by the State.
[Codified to 15 U.S.C. 80b--3a]
[Source: Section 203A of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 850), effective November 1, 1940, as added
by section 303(a) of title III of the Act of October 11, 1996 (Pub. L.
No. 104--290; 110 Stat. 3437), effective April 9, 1997; section 7(b)(1)
of the Act of September 29, 2006 (Pub. L. No. 109--290; 120 Stat.
1321), effective September 29, 2006]
Annual and Other Reports
SEC. 204. (a) IN GENERAL.--Every investment adviser who
makes use of the mails or of any means or instrumentality of interstate
commerce in connection with his or its business as an investment
adviser (other than one specifically exempted from registration
pursuant to section 203(b) of this title), shall make and keep for
prescribed periods such records (as defined in
section 3(a) (37) of the
Securities Exchange Act of 1934), furnish such copies thereof, and make
and disseminate such reports as the Commission, by rule, may prescribe
as necessary or appropriate in the public interest or for the
protection of investors. All records (as so defined) of such investment
advisers are subject at any time, or from time to time, to such
reasonable periodic, special, or other examinations by representatives
of the Commission as the Commission deems necessary or appropriate in
the public interest or for the protection of investors.
(b) FILING DEPOSITORIES.--The Commission may, by rule,
require an investment adviser--
(1) to file with the Commission any fee, application, report, or
notice required to be filed by this title or the rules issued under
this title through any entity designated by the Commission for that
purpose; and
(2) to pay the reasonable costs associated with such filing and
the establishment and maintenance of the systems required by subsection
(c).
(c) ACCESS TO DISCIPLINARY AND OTHER INFORMATION.--
(1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES.--
(A) IN GENERAL.--The Commission shall require the entity
designated by the Commission under subsection (b)(1) to establish and
maintain a toll-free telephone listing, or a readily accessible
electronic or other process, to receive and promptly respond to
inquiries regarding registration information (including disciplinary
actions, regulatory, judicial, and arbitration proceedings, and other
information required by law or rule to be reported) involving
investment advisers and persons associated with investment advisers.
(B) APPLICABILITY.--This subsection shall apply to any
investment adviser (and the persons associated with that adviser),
whether the investment adviser is registered with the Commission under
section 203 or regulated solely by a State, as described in section
203A.
(2) RECOVERY OF COSTS.--An entity designated by the
Commission under subsection (b)(1) may charge persons making inquiries,
other than individual investors, reasonable fees for responses to
inquiries described in paragraph (1).
{{2-29-08 p.9374.01}}
(3) LIMITATION ON LIABILITY.--An entity designated by
the Commission under subsection (b)(1) shall not have any liability to
any person for any actions taken or omitted in good faith under this
subsection.
[Codified to 15 U.S.C. 80b--4]
[Source: Section 204 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as amended
by section 6 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74
Stat. 886), effective September 13, 1960; and section 29(5) of the Act
of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 169), effective June 4,
1975; section 7 of the Act of September 29, 2006 (Pub. L. No.
109--290; 120 Stat. 1321), effective September 29,
2006]
Prevention of Misuse of Nonpublic
Information
SEC. 204A. IN GENERAL.--Every investment adviser subject
to section 204 of this title shall establish, maintain, and enforce
written policies and procedures reasonably designed, taking into
consideration the nature of such investment adviser's business, to
prevent the misuse in violation of this Act or the Securities Exchange
Act of 1934, or the rules or regulations thereunder, of material,
nonpublic information by such investment adviser or any person
associated with such investment adviser. The Commission, as it deems
necessary or appropriate in the public interest or for the protection
of investors, shall adopt rules or regulations to require specific
policies or procedures reasonably designed to prevent misuse in
violation of this Act or the Securities Exchange Act of 1934 (or the
rules or regulations thereunder) of material, nonpublic information.
(b) FILING DEPOSITORIES.--The Commission may, by rule,
require an investment adviser--
(1) to file with the Commission any fee, application, report, or
notice required to be filed by this title or the rules issued under
this title through any entity designated by the Commission for that
purpose; and
(2) to pay the reasonable costs associated with such filing and
the establishment and maintenance of the systems required by subsection
(c).
(c) ACCESS TO DISCIPLINARY AND OTHER INFORMATION.--
(1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES.--
(A) IN GENERAL.--The Commission shall require the entity
designated by the Commission under subsection (b)(1) to establish and
maintain a toll-free telephone listing, or a readily accessible
electronic or other process, to receive and promptly respond to
inquiries regarding registration information (including disciplinary
actions, regulatory, judicial, and arbitration proceedings, and other
information required by law or rule to be reported) involving
investment advisers and persons associated with investment advisers.
(B) APPLICABILITY.--This subsection shall apply to any
investment adviser (and the persons associated with that adviser),
whether the investment adviser is registered with the Commission under
section 203 or regulated solely by a State, as described in section
203A.
(2) RECOVERY OF COSTS.--An entity designated by the
Commission under subsection (b)(1) may charge persons making inquiries,
other than individual investors, reasonable fees for responses to
inquiries described in paragraph (1).
(3) LIMITATION ON LIABILITY.--An entity designated by the
Commission under subsection (b)(1) shall not have any liability to any
person for any actions taken or omitted in good faith under this
subsection.
[Codified to 15 U.S.C. 80b--4a]
[Source: Section 204A of title II of the Act of August
22, 1940 (Pub. L. No. 768), as added by section 3(b)(2) of the Act of
November 19, 1988 (Pub. L. No. 100--704; 102 Stat. 4680), effective
November 19, 1988; section 7(a) of the Act of September 29, 2006 (Pub.
L. No. 109--290; 120 Stat. 1321), effective September 29,
2006]
{{2-29-08 p.9374.02}}
Investment Advisory
Contracts
SEC. 205. (a) No investment adviser, unless exempt from
registration pursuant to section
203(b), shall make use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly, to
enter into, extend, or renew any investment advisory contract, or in
any way to perform any investment advisory contract entered into,
extended, or renewed on or after the effective date of this title, if
such contract--
(1) provides for compensation to the investment adviser on the
basis of a share of capital gains upon or capital appreciation of the
funds or any portion of the funds of the client;
(2) fails to provide, in substance, that no assignment of such
contract shall be made by the investment adviser without the consent of
the other party to the contract; or
(3) fails to provide, in substance, that the investment adviser,
if a partnership, will notify the other party to the contract of any
change in the membership of such partnership within a reasonable time
after such change.
(b) Paragraph (1) of subsection (a) shall not--
(1) be construed to prohibit an investment advisory contract
which provides for compensation based upon the total value of a fund
averaged over a definite period, or as of definite dates, or taken as
of a definite date;
(2) apply to an investment advisory contract with--
(A) an investment company registered under title I of this Act,
or
(B) any other person (except a trust, governmental plan,
collective trust fund, or separate account referred to in
section 3(c)(11) of title I of
this Act), provided that the contract relates to the investment of
assets in excess of $1 million,
if the contract provides for compensation based on the asset value of
the company or fund under management averaged over a specified period
and increasing and decreasing proportionately with the investment
performance of the company or fund over a specified period in relation
to the investment record of an appropriate index of securities prices
or such other measure of investment performance as the Commission by
rule, regulation, or order may specify;
(3) apply with respect to any investment advisory contract
between an investment adviser and a business development company, as
defined in this title, if (A) the compensation provided for in such
contract does not exceed 20 per centum of the realized capital gains
upon the funds of the business development company over a specified
period or as of definite dates, computed net of all realized capital
losses and unrealized capital depreciation, and the condition of
section 61(a)(3)(B)(iii) of
title I of this Act is satisfied, and (B) the business development
company does not have outstanding any option, warrant, or right issued
pursuant to section 61(a)(3)(B) of title I of this Act and does not
have a profit-sharing plan described in
section 57(n) of title I of
this Act; and
(4) apply to an investment advisory contract with a company
excepted from the definition of an investment company under section
3(c)(7) of title I of this Act; or
(5) apply to an investment advisory contract with a person who is
not a resident of the United States.
(c) For purposes of paragraph (2) of subsection (b), the point from
which increases and decreases in compensation are measured shall be the
fee which is paid or earned when the investment performance of such
company or fund is equivalent to that of the index or other measure of
performance, and an index of securities prices shall be deemed
appropriate unless the Commission by order shall determine otherwise.
(d) As used in paragraphs (2) and (3) of subsection (a),
"investment advisory contract" means any contract or agreement
whereby a person agrees to act as investment adviser to or to manage
any investment or trading account of another person other than an
investment company registered under title I of this Act.
(e) The Commission, by rule or regulation, upon its own motion, or
by order upon application, may conditionally or unconditionally exempt
any person or transaction, or any class or classes of person or
transactions, from subsection (a)(1), if and to the extent that the
exemption relates to an investment advisory contract with any person
that the Commission determines does not need the protections of
subsection (a)(1), on the basis of such factors as financial
sophistication, net worth, knowledge of and experience in
financial
{{2-29-08 p.9374.03}}matters, amount
of assets under management, relationship with a registered investment
adviser, and such other factors as the Commission determines as
consistent with this section.
[Codified to 15 U.S.C. 80b--5]
[Source: Section 205 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as amended
by section 7 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74
Stat. 887), effective September 13, 1960; section 25 of the Act of
December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1432), effective
December 14, 1971; section 203 of title II of the Act of October 21,
1980 (Pub. L. No. 96--477; 94 Stat. 2290), effective October 21, 1980;
and section 703 of title VII of the Act of December 4, 1987 (Pub. L.
No. 100--181; 101 Stat. 1263), effective December 4, 1987; section 210
of title II of the Act of October 11, 1996 (Pub. L. No. 104--290; 110
Stat. 3436), effective October 11, 1996]
Prohibited Transactions by Investment
Advisers
SEC. 206. It shall be unlawful for any investment adviser, by use
of the mails or any means or instrumentality of interstate commerce,
directly or indirectly--
(1) to employ any device, scheme, or artifice to defraud any
client or prospective client;
(2) to engage in any transaction, practice, or course of business
which operates as a fraud or deceit upon any client or prospective
client;
(3) acting as principal for his own account, knowingly to sell
any security to or purchase any security from a client, or acting as
broker for a person other than such client,
{{10-31-07 p.9375}}knowingly to
effect any sale or purchase of any security for the account of such
client, without disclosing to such client in writing before the
completion of such transaction the capacity in which he is acting and
obtaining the consent of the client to such transaction. The
prohibitions of this paragraph (3) shall not apply to any transaction
with a customer of a broker or dealer if such broker or dealer is not
acting as an invesment adviser in relation to such
transaction;
(4) to engage in any act, practice, or course of business which
is fraudulent, deceptive, or manipulative. The Commission shall, for
the purposes of this paragraph (4) by rules and regulations define, and
prescribe means reasonably designed to prevent, such acts, practices,
and courses of business as are fraudulent, deceptive, or manipulative.
[Codified to 15 U.S.C. 80b--6]
[Source: Section 206 of title II of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as
amended by sections 8 and 9 of the Act of September 13, 1960 (Pub. L.
No. 86--750; 74 Stat. 887), effective September 13, 1960]
Exemptions
SEC. 206A. The Commission, by rules and regulations, upon its own
motion, or by order upon application, may conditionally or
unconditionally exempt any person or transaction, or any class or
classes of persons, or transactions, from any provision or provisions
of this title or of any rule or regulation thereunder, if and to the
extent that such exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of this title.
[Codified to 15 U.S.C. 80b--6a]
[Source: Section 206A of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as added
by section 26 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84
Stat. 1433), effective December 14, 1970]
Material Misstatements
SEC. 207. It shall be unlawful for any person willfully to make any
untrue statement of a material fact in any registration application or
report filed with the Commission under
section 203 or
204, or willfully to omit to
state in any such application or report any material fact which is
required to be stated therein.
[Codified to 15 U.S.C. 80b--7]
[Source: Section 207 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940]
General Prohibitions
SEC. 208. (a) It shall be unlawful for any person registered under
section 203 of this title to
represent or imply in any manner whatsoever that such person has been
sponsored, recommended, or approved, or that his abilities or
qualifications have in any respect been passed upon by the United
States or any agency or any officer thereof.
(b) No provision of subsection (a) shall be construed to prohibit a
statement that a person is registered under this title or under the
Securities Exchange Act of 1934, if such statement is true in fact and
if the effect of such registration is not misrepresented.
(c) It shall be unlawful for any person registered under section
203 of this title to represent that he is an investment counsel or to
use the name "investment counsel" as descriptive of his business
unless
(1) his or its principal business consists of acting as
investment advisor, and
(2) a substantial part of his or its business consists of
rendering investment supervisory services.
{{10-31-07 p.9376}}
(d) It shall be unlawful for any person indirectly, or through or
by any other person, to do any act or thing which it would be unlawful
for such person to do directly under the provisions of this title or
any rule or regulation thereunder.
[Codified to 15 U.S.C. 80b--8]
[Source: Section 208 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as amended
by sections 10 and 11 of the Act of September 13, 1960 (Pub. L. No.
86--750; 74 Stat. 887), effective September 13, 1960]
Enforcement of Title
SEC. 209. (a) Whenever it shall appear to the Commission, either
upon complaint or otherwise, that the provisions of this title or of
any rule or regulation prescribed under the authority thereof, have
been or are about to be violated by any person, it may in its
discretion require, and in any event shall permit, such person to file
with it a statement in writing, under oath or otherwise, as to all the
facts and circumstances relevant to such violation, and may otherwise
investigate all such facts and circumstances.
(b) For the purposes of any investigation or any proceeding under
this title, any member of the Commission or any officer thereof
designated by it is empowered to administer oaths and affirmations,
subpena witnesses, compel their attendance, take evidence, and require
the production of any books, papers, correspondence, memoranda,
contracts, agreements, or other records which are relevant or material
to the inquiry. Such attendance of witnesses and the production of any
such records may be required from any place in any State or in any
Territory or other place subject to the jurisdiction of the United
States at any designated place of hearing.
(c) In case of contumacy by, or refusal to obey a subpena issued
to, any person, the Commission may invoke the aid of any court of the
United States within the jurisdiction of which such investigation or
proceeding is carried on, or where such person resides or carries on
business, in requiring the attendance and testimony of witnesses and
the production of books, papers, correspondence, memoranda, contracts,
agreements, and other records. And such court may issue an order
requiring such person to appear before the Commission or member or
officer designated by the Commission, there to produce records, if so
ordered, or to give testimony touching the matter under investigation
or in question; and any failure to obey such order of the court may be
punished by such court as a contempt thereof. All process in any such
case may be served in the judicial district whereof such person is an
inhabitant or wherever he may be found. Any person who without just
cause shall fail or refuse to attend and testify or to answer any
lawful inquiry or to produce books, papers, correspondence, memoranda,
contracts, agreements, or other records, if in his or its power so to
do, in obedience to the subpena of the Commission, shall be guilty of a
misdemeanor, and upon conviction shall be subject to a fine of not more
than $1,000 or to imprisonment for a term of not more than one year, or
both.
(d) Whenever it shall appear to the Commission that any person has
engaged, is engaged, or is about to engage in any act or practice
constituting a violation of any provision of this title, or of any
rule, regulation, or order hereunder, or that any person has aided,
abetted, counseled, commanded, induced, or procured, is aiding,
abetting, counseling, commanding, inducing, or procuring, or is about
to aid, abet, counsel, command, induce, or procure such a violation, it
may in its discretion bring an action in the proper district court of
the United States, or the proper United States court of any Territory
or other place subject to the jurisdiction of the United States, to
enjoin such acts or practices and to enforce compliance with this title
or any rule, regulation, or order hereunder. Upon a showing that such
person has engaged, is engaged, or is about to engage in any such act
or practice, or, in aiding, abetting, counseling, commanding, inducing,
or procuring any such act or practice, a permanent or temporary
injunction or decree or restraining order shall be granted without
bond. The Commission may transmit such evidence as may be available
concerning any violation of the provisions of this title, or of any
rule, regulation, or order
{{10-31-07 p.9377}}thereunder, to
the Attorney General, who in his discretion, may institute the
appropriate criminal proceedings under this title.
(e) MONEY PENALTIES IN CIVIL ACTIONS.--
(1) AUTHORITY OF COMMISSION.--Whenever it shall appear
to the Commission that any person has violated any provision of this
title, the rules or regulations thereunder, or a cease-and-desist order
entered by the Commission pursuant to section 203(k) of this title, the
Commission may bring an action in a United States district court to
seek, and the court shall have jurisdiction to impose, upon a proper
showing, a civil penalty to be paid by the person who committed such
violation.
(2) AMOUNT OF PENALTY.--
(A) FIRST TIER.--The amount of the penalty shall be
determined by the court in light of the facts and circumstances. For
each violation, the amount of the penalty shall not exceed the greater
of (i) $5,000 for a natural person or $50,000 for any other person, or
(ii) the gross amount of pecuniary gain to such defendant as a result
of the violation.
(B) SECOND TIER.--Notwithstanding subparagraph (A), the
amount of penalty for each such violation shall not exceed the greater
of (i) $50,000 for a natural person or $250,000 for any other person,
or (ii) the gross amount of pecuniary gain to such defendant as a
result of the violation, if the violation described in paragraph (1)
involved fraud, deceit, manipulation, or deliberate or reckless
disregard of a regulatory requirement.
(C) THIRD TIER.--Notwithstanding subparagraphs (A) and
(B), the amount of penalty for each such violation shall not exceed the
greater of (i) $100,000 for a natural person or $500,000 for any other
person, or (ii) the gross amount of pecuniary gain to such defendant as
a result of the violation, if--
(I) the violation described in paragraph (1) involved fraud,
deceit, manipulation, or deliberate or reckless disregard of a
regulatory requirement; and
(II) such violation directly or indirectly resulted in
substantial losses or created a significant risk of substantial losses
to other persons.
(3) PROCEDURES FOR COLLECTION.--
(A) PAYMENT OF PENALTY TO TREASURY.--A penalty imposed
under this section shall be payable into the Treasury of the United
States, except as otherwise provided in section 308 of the
Sarbanes-Oxley Act of 2002.
(B) COLLECTION OF PENALTIES.--If a person upon whom such
a penalty is imposed shall fail to pay such penalty within the time
prescribed in the court's order, the Commission may refer the matter to
the Attorney General who shall recover such penalty by action in the
appropriate United States district court.
(C) REMEDY NOT EXCLUSIVE.--The actions authorized by
this subsection may be brought in addition to any other action that the
Commission or the Attorney General is entitled to bring.
(D) JURISDICTION AND VENUE.--For purposes of
section 214 of this title,
actions under this paragraph shall be actions to enforce a liability or
a duty created by this title.
(4) Special provisions relating to a violation of a
cease-and-desist order.--In an action to enforce a cease-and-desist
order entered by the Commission pursuant to
section 203(k), each separate
violation of such order shall be a separate offense, except that in the
case of a violation through a continuing failure to comply with the
order, each day of the failure to comply shall be deemed a separate
offense.
[Codified to 15 U.S.C. 80b--9]
[Source: Section 209 of title II of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as
amended by section 12 of the Act of September 13, 1960 (Pub. L. No.
86--750; 74 Stat. 887), effective September 13, 1960, section 216 of
title II of the Act of October 15, 1970 (Pub. L. No. 91--452; 84 Stat.
929), effective October 15, 1970; and section 704 of title VII of the
Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264),
effective December 4, 1987; and section 402 of title IV of the Act of
October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 949), effective
October 15, 1990; section 308(d)(5) of title III of the Act of July 30,
2002 (Pub. L. No. 107--204; 116 Stat. 785), effective July 30,
2002]
{{10-31-07 p.9378}}
Publicity
SEC. 210. (a) The information contained in any registration
application or report or amendment thereto filed with the Commission
pursuant to any provision of this title shall be made available to the
public, unless and except insofar as the Commission, by rules and
regulations upon its own motion, or by order upon application, finds
that public disclosure is neither necessary nor appropriate in the
public interest or for the protection of investors. Photostatic or
other copies of information contained in documents filed with the
Commission under this title and made available to the public shall be
furnished to any person at such reasonable charge and under such
reasonable limitations as the Commission shall
prescribe.
(b) Subject to the provisions of subsections (c) and (d) of section
209 of this title and section
24(c) of the Securities Exchange Act of 1934, the Commission,
or any member, officer, or employee thereof, shall not make public the
fact that any examination or investigation under this title is being
conducted, or the results of or any facts ascertained during any such
examination or investigation; and no member, officer, or employee of
the Commission shall disclose to any person other than a member,
officer, or employee of the Commission any information obtained as a
result of any such examination or investigationexcept with
the approval of the Commission. The provisions of this subsection shall
not apply--
(1) in the case of any hearing which is public under the
provisions of section 212; or
(2) In the case of a resolution or request from either House of
Congress.
(c) No provision of this title shall be construed to require, or to
authorize the Commission to require any investment adviser engaged in
rendering investment supervisory services to disclose the identity,
investments, or affairs of any client of such investment adviser,
except insofar as such disclosure may be necessary or appropriate in a
particular proceeding or investigation having as its object the
enforcement of a provision or provisions of this title.
[Codified to 15 U.S.C. 80b--10]
[Source: Section 210 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 854), effective November 1, 1940, as amended
by section 13 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74
Stat. 887), effective September 13, 1960; section 202(b)(2) of title II
of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2715),
effective November 15, 1990]
SEC. 210A. CONSULTATION
(a) EXAMINATION RESULTS AND OTHER INFORMATION.--
(1) The appropriate Federal banking agency shall provide the
Commission upon request the results of any examination, reports,
records, or other information to which such agency may have access--
(A) with respect to the investment advisory activities of any--
(i) bank holding company or savings and loans holding company;
(ii) bank; or
(iii) separately identifiable department or division of a bank,
that is registered under section
203 of this title; and
(B) in the case of a bank holding company or savings and loans
holding company or bank that has a subsidiary or a separately
identifiable department or division registered under that section, with
respect to the investment advisory activities of such bank or bank
holding company or savings and loans holding company.
(2) The Commission shall provide to the appropriate Federal
banking agency upon request the results of any examination, reports,
records, or other information with respect to the investment advisory
activities of any bank holding company or savings and loans holding
company, bank, or separately identifiable department or division of a
bank, which is registered under section 203 of this title.
(3) Notwithstanding any other provision of law, the Commission
and the appropriate Federal banking agencies shall not be compelled to
disclose any information provided under paragraph (1) or (2). Nothing
in this paragraph shall authorize the Commission or such agencies to
withhold information from Congress, or prevent the Commission or
such
{{12-29-06 p.9378.01}}agencies
from complying with a request for information from any other Federal
department or agency or any self-regulatory organization requesting the
information for purposes within the scope of its jurisdiction, or
complying with an order of a court of the United States in an action
brought by the United States, the Commission, or such agencies. For
purposes of section 552 of title
5, United States Code, this paragraph shall be considered a
statute described in subsection (b)(3)(B) of such section 552.
(b) EFFECT ON OTHER AUTHORITY.--Nothing in this section
shall limit in any respect the authority of the appropriate Federal
banking agency with respect to such bank holding company or savings and
loans holding company (or affiliates or subsidiaries thereof), bank, or
subsidiary, department, or division or a bank under any other provision
of law.
(c) DEFINITION.--For purposes of this section, the term
"appropriate Federal banking agency" shall have the same meaning
as given in section 3 of the Federal Deposit Insurance Act.
[Codified to 15 U.S.C. 80b--10a]
[Source: Section 210A of the Act of August 22, 1940 (Pub. L. No.
768; 54 Stat. 854), effective November 1, 1940, as added by section 220
of the Act of November 12, 1999 (Pub. L. No. 106--102; 113 Stat. 1400),
effective May 12, 2001; section 401(b) of title IV of the Act of
October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1973), effective
October 13, 2006]
Rules, Regulations, and
Orders
SEC. 211. (a) The Commission shall have authority from time to
time to make, issue, amend, and rescind such rules and regulations and
such orders as are necessary or appropriate to the exercise of the
functions and powers conferred upon the Commission elsewhere in this
title. For the purposes of its rules or regulations the Commission may
classify persons and matters within its jurisdiction and prescribe
different requirements for different classes of persons or matters.
(b) Subject to the provisions of chapter 15 of title 44, United
States Code, and regulations prescribed under the authority thereof,
the rules and regulations of the Commission under this title, and
amendments thereof, shall be effective upon publication in the manner
which the Commission shall prescribe, or upon such later date as may be
provided in such rules and regulations.
(c) Orders of the Commission under this title shall be issued only
after appropriate notice and opportunity for hearing. Notice to the
parties to a proceeding before the Commission shall be given by
personal service upon each party or by registered mail or certified
mail or confirmed telegraphic notice to the party's last known business
address. Notice to interested persons, if any, other than parties may
be given in the same manner or by publication in the Federal Register.
(d) No provision of this title imposing any liability shall apply
to any act done or omitted in good faith in conformity with any rule,
regulation, or order of the Commission, notwithstanding that such rule,
regulation, or order may, after such act or ommission, be amended or
rescinded or be determined by judicial or other authority to be invalid
for any reason.
[Codified to 15 U.S.C. 80b--11]
[Source: Section 211 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat 855), effective November 1, 1940, as amended
by section 1(16) of the Act of June 11, 1960 (Pub. L. No. 86--507; 74
Stat. 201), effective June 11, 1960; section 14 of the Act of September
13, 1960 (Pub. L. No. 86--750; 74 Stat. 888), effective September 13,
1960; and section 705 of title VII of the Act of December 4, 1987 (Pub.
L. No. 100--181; 101 Stat. 1264), effective December 4,
1987]
Hearings
SEC. 212. Hearings may be public and may be held before the
Commission, any member or members thereof, or any officer or officers
of the Commission designated by it, and appropriate records thereof
shall be kept.
{{2-28-02 p.9379}}
[Codified to 15 U.S.C. 80b-12]
[Source: Section 212 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 855), effective November 1, 1940]
Court Review of Orders
SEC. 213. (a) Any person or party aggrieved by an order issued by
the Commission under this title may obtain a review of such order in
the United States Court of Appeals within any circuit wherein such
person resides or has his principal place of business, or in the United
States Court of Appeals for the District of Columbia, by filing in such
court, within sixty days after the entry of such order, a written
petition praying that the order of the Commission be modified or set
aside in whole or in part. A copy of such petition shall be forthwith
transmitted by the clerk of the court to any member of the Commission,
or any officer thereof designated by the Commission for that purpose,
and thereupon the Commission shall file in the court the record upon
which the order complained of was entered, as provided in section 2112
of title 28, United States Code. Upon the filing of such petition such
court shall have jurisdiction, which upon the filing of the record
shall be exclusive, to affirm, modify, or set aside such order, in
whole or in part. No objection to the order of the Commission shall be
considered by the court unless such objection shall have been urged
before the Commission or unless there were reasonable grounds for
failure so to do. The findings of the Commission as to the facts, if
supported by substantial evidence, shall be conclusive. If application
is made to the court for leave to adduce additional evidence, and it is
shown to the satisfaction of the court that such additional evidence is
material and that there were reasonable grounds for failure to adduce
such evidence in the proceeding before the Commission, the court may
order such additional evidence to be taken before the Commission and to
be adduced upon the hearing in such manner and upon such terms and
conditions as to the court may seem proper. The Commission may modify
its findings as to the facts by reason of the additional evidence so
taken, and it shall file with the court such modified or new findings,
which, if supported by substantial evidence, shall be conclusive, and
its recommendation, if any, for the modification or setting aside of
the original order. The judgement and decree of the court affirming,
modifying, or setting aside, in whole or in part, any such order of the
Commission shall be final, subject to review by the Supreme Court of
the United States upon certiorari or certification as provided in
section 1254 of title 28, United States Code.
(b) The commencement of proceedings under subsection (a) shall not,
unless specifically ordered by the court, operate as a stay of the
Commission's order.
[Codified to 15 U.S.C. 80b--13]
[Source: Section 213 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 855), effective November 1, 1940, as amended
by section 32(a) of the Act of June 25, 1948; (Pub. L. No. 773; 62
Stat. 991), effective June 25, 1948; section 127 of the Act of May 24,
1949 (Pub. L. No. 72; 63 Stat. 107), effective May 24, 1949; section 26
of the Act of August 28, 1958 (Pub. L. No. 85--791; 72 Stat. 949),
effective August 28, 1958; and section 706 of title VII of the Act of
December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264), effective
December 4, 1987]
Jurisdiction of Offenses and
Suits
SEC. 214. The district courts of the United States and the United
States courts of any Territory or other place subject to the
jurisdiction of the United States shall have jurisdiction of violations
of this title or the rules, regulations, or orders thereunder, and,
concurrently with State and Territorial courts, of all suits in equity
and actions at law brought to enforce any liability or duty created by,
or to enjoin any violation of this title or the rules, regulations, or
orders thereunder. Any criminal proceeding may be brought in the
district wherein any act or transaction constituting the violation
occurred. Any suit or action to enforce any liability or duty created
by, or to enjoin any violation of this title or
{{2-28-02 p.9380}}rules,
regulations, or orders thereunder, may be brought in any such district
or in the district wherein the defendant is an inhabitant or transacts
business, and process in such cases may be served in any district of
which the defendant is an inhabitant or transacts business or wherever
the defendant may be found. Judgments and decrees so rendered shall be
subject to review as provided in sections 1254, 1291, 1292, and 1294 of
title 28, United States Code. No costs shall be assessed for or against
the Commission in any proceeding under this title brought by or against
the Commission in any court.
[Codified to 15 U.S.C. 80b--14]
[Source: Section 214 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 856), effective November 1, 1940, as amended
by section 707 of title VII of the Act of December 4, 1987 (Pub. L. No.
100--181; 101 Stat. 1264), effective December 4, 1987; and section 403
of title IV of the Act of October 15, 1990 (Pub. L. No. 101--429; 104
Stat. 951), effective October 15, 1990]
Validity of Contracts
SEC. 215. (a) Any condition, stipulation, or provision binding any
person to waive compliance with any provision of this title or with any
rule, regulation, or order thereunder shall be void.
(b) Every contract made in violation of any provision of this title
and every contract heretofore or hereafter made, the performance of
which involves the violation of, or the continuance of any relationship
or practice in violation of any provision of this title, or any rule,
regulation, or order thereunder, shall be void (1) as regards the
rights of any person who, in violation of any such provision, rule,
regulation, or order, shall have made or engaged in the performance of
any such contract, and (2) as regards the rights of any person who, not
being a party to such contract, shall have acquired any right
thereunder with actual knowledge of the facts by reason of which the
making or performance of such contract was in violation of any such
provision.
[Codified to 15 U.S.C. 80b--15]
[Source: Section 215 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 856), effective November 1,
1940]
Annual Reports of Commission
SEC. 216. The Commission shall submit annually a report to the
Congress covering the work of the Commission for the preceding year and
including such information, data, and recommendations for further
legislation in connection with the matters covered by this title as it
may find advisable.
[Codified to 15 U.S.C. 80b--16]
[Source: Section 216 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]
Penalties
SEC. 217. Any person who willfully violates any provision of this
title, or any rule, regulation, or order promulgated by the Commission
under authority thereof, shall, upon conviction, be fined not more than
$10,000, imprisoned for not more than five years, or both.
[Codified to 15 U.S.C. 80b--17]
[Source: Section 217 of title II of the Act of August 22,
1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940, as
amended by section 15 of the Act of September 13, 1960 (Pub. L. No.
86--750; 74 Stat. 888), effective September 13, 1960; and section 27(f)
of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 163),
effective June 4, 1975]
{{2-26-99 p.9381}}
Hiring and Leasing Authority of the
Commission
SEC. 218. The provisions of section
4(b) of the Securities Exchange Act of 1934 shall be applicable
with respect to the power of the Commission--
(1) to appoint and fix the compensation of such other employees
as may be necessary for carrying out its functions under this title,
and
(2) to lease and allocate such real property as may be necessary
for carrying out its functions under this title.
[Codified to 15 U.S.C. 80b--18]
[Source: Section 218 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940, as amended
by section 1106(a) of title XI of the Act of October 28, 1949 (Pub. L.
No. 429; 63 Stat. 972), effective October 28, 1949; section 104(d) of
title I of the Act of November 15, 1990 (Pub. L. No. 101--550; 104
Stat. 2714), effective November 15, 1990]
Separability of Provisions
SEC. 219. If any provision of this title or the application of such
provision to any person or circumstances shall be held invalid, the
remainder of the title and the application of such provision to persons
or circumstances other than those as to which it is held invalid shall
not be affected thereby.
[Codified to 15 U.S.C. 80b--19]
[Source: Section 219 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]
Short Title
SEC. 220. This title may be cited as the "Investment Advisers
Act of 1940."
[Codified to 15 U.S.C. 80b--20]
[Source: Section 220 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]
Effective Date
SEC. 221. This title shall become effective on November 1, 1940.
[Codified to 15 U.S.C. 80b--21]
[Source: Section 221 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]
STATE REGULATION OF INVESTMENT
ADVISERS
SEC. 222. (a) JURISDICTION OF STATE REGULATORS.--Nothing
in this title shall affect the jurisdiction of the securities
commissioner (or any agency or officer performing like functions) of
any State over any security or any person insofar as it does not
conflict with the provisions of this title or the rules and regulations
thereunder.
(b) DUAL COMPLIANCE PURPOSES.--No State may enforce any
law or regulation that would require an investment adviser to maintain
any books or records in addition to those required under the laws of
the State in which it maintains its principal place of business, if the
investment adviser--
{{2-26-99 p.9382}}
(1) is registered or licensed as such in the State in which it
maintains its principal place of business; and
(2) is in compliance with the applicable books and records
requirements of the State in which it maintains its principal place of
business.
(c) LIMITATION ON CAPITAL AND BOND REQUIREMENTS.--No State
may enforce any law or regulation that would require an investment
adviser to maintain a higher minimum net capital or to post any bond in
addition to any that is required under the laws of the State in which
it maintains its principal place of business, if the investment
adviser--
(1) is registered or licensed as such in the State in which it
maintains its principal place of business; and
(2) is in compliance with the applicable net capital or bonding
requirements of the State in which it maintains its principal place of
business.
(d) NATIONAL DE MINIMIS STANDARD.--No law of any State or
political subdivision thereof requiring the registration, licensing, or
qualification as an investment adviser shall require an investment
adviser to register with the securities commissioner of the State (or
any agency or officer performing like functions) or to comply with such
law (other than any provision thereof prohibiting fraudulent conduct)
if the investment adviser--
(1) does not have a place of business located within the State;
and
(2) during the preceding 12-month period, has had fewer than 6
clients who are residents of that State.
[Codified to 15 U.S.C. 80b--18a]
[Source: Section 222 of title II of the Act of August 22, 1940
(Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940, as added
by section 16 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74
Stat. 888), effective September 13, 1960; as amended by section 304 of
title III of the Act of October 11, 1996 (Pub. L. No. 104--290; 110
Stat. 3438), effective April 9, 1997; section 301(d)(2) of title III of
the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3237),
effective November 3, 1998]
[The page following this is 9385.]
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