Investment advisory businesses in the United States are regulated by the Investment Advisers Act of 1940 (IAA) and rules of the Securities and Exchange Commission (SEC). The purpose of the IAA and related SEC rules is to protect investors from the fraudulent practices of unscrupulous investment professionals. The IAA regulates, among other things, the activities of parties offering investment advice to others, investment adviser registration (or exemption therefrom), fiduciary obligations of investments advisers, marketing of investment services, client solicitation arrangements, adviser compensation and custody of client assets. States also have statutes regulating investment advisory activity that must be considered. An integral part of any successful investment advisory business is full compliance with the IAA and SEC rules or state laws, if applicable.
Duane Morris attorneys have served the investment management industry for many years, counseling investment firms on all aspects of federal and state regulation of investment advisers. Duane Morris has assisted a wide spectrum of investment advisers, including separate account managers, fund-of-funds advisers, hedge fund and private equity advisers, broker-dealers, research companies and financial planners in complying with the laws governing the activities of investment professionals. Recent changes in federal securities law and related rules have created opportunities for investment management professionals to avoid full registration as investment advisers if their business qualifies for one of the “exempt reporting adviser” categories. Duane Morris has advised numerous clients in this process.