A Registered Representative Has Recently Been Arrested. Which Of The Following Statements Is True?

Information for Newly-Registered Investment Directorate

November 23, 2010 [Update Currently in Progress]

Prepared by the Staff of the Securities and Exchange Committee's Division of Investment Management and Office of Compliance Inspections and Examinations^ane

This data sheet contains general information about sure provisions of the Investment Advisers Act of 1940 (also called the "Advisers Human action") and selected rules under the Advisers Human action. It is intended to assistance newly-registered investment advisers in understanding their compliance obligations with respect to these provisions. This information sheet also provides data about the resources available to investment advisers from the SEC to help advisers empathize and comply with these laws and rules.

As an adviser registered with the SEC, you lot have an obligation to comply with all of the applicative provisions of the Directorate Act and the rules that have been adopted by the SEC. This information sheet does not provide a complete description of all of the obligations of SEC-registered directorate nether the police. To access the Directorate Human action and rules and other information, visit the SEC'southward website at www.sec.gov (the Advisers Deed and rules are available at http://www.sec.gov/divisions/investment.shtml).ⁱⁱ

Investment Directorate Are Fiduciaries

As an investment adviser, you are a "fiduciary" to your advisory clients. This ways that y'all accept a fundamental obligation to act in the best interests of your clients and to provide investment communication in your clients' best interests. You owe your clients a duty of undivided loyalty and utmost skillful faith. You should not appoint in any activeness in conflict with the interest of whatsoever client, and y'all should accept steps reasonably necessary to fulfill your obligations. You must employ reasonable care to avert misleading clients and y'all must provide total and fair disclosure of all textile facts to your clients and prospective clients. By and large, facts are "material" if a reasonable investor would consider them to be important. Y'all must eliminate, or at least disclose, all conflicts of interest that might incline you — consciously or unconsciously — to render advice that is not disinterested. If you practice not avoid a disharmonize of interest that could affect the impartiality of your communication, y'all must fill up and frank disclosure of the disharmonize. You cannot use your clients' assets for your own benefit or the benefit of other clients, at least without customer consent. Departure from this fiduciary standard may constitute "fraud" upon your clients (nether Section 206 of the Advisers Act).

Investment Advisers Must Have Compliance Programs

As a registered investment adviser, you are required to adopt and implement written policies and procedures that are reasonably designed to prevent violations of the Advisers Act. The Commission has said that it expects that these policies and procedures would be designed to prevent, notice, and right violations of the Advisers Human action. You lot must review those policies and procedures at least annually for their capability and the effectiveness of their implementation, and designate a primary compliance officer ("CCO") to be responsible for administering your policies and procedures (under the "Compliance Rule" — Rule 206(4)-7).

Nosotros note that your policies and procedures are non required to incorporate specific elements. Rather, you should analyze your private operations and identify conflicts and other compliance factors that create risks for your house and and then pattern policies and procedures that address those risks. The Commission has stated that it expects your policies and procedures, at a minimum, to accost the following issues to the extent that they are relevant to your business organisation:

Portfolio management processes, including allocation of investment opportunities amidst clients and consistency of portfolios with clients' investment objectives, your disclosures to clients, and applicable regulatory restrictions;
The accuracy of disclosures fabricated to investors, clients, and regulators, including account statements and advertisements;
Proprietary trading by you and the personal trading activities of your supervised persons;
Safeguarding of client assets from conversion or inappropriate apply by your personnel;
The accurate creation of required records and their maintenance in a manner that secures them from unauthorized alteration or utilise and protects them from untimely devastation;
Safeguards for the privacy protection of client records and information;
Trading practices, including procedures by which you satisfy your best execution obligation, use client brokerage to obtain enquiry and other services (referred to as "soft dollar arrangements"), and allocate aggregated trades amid clients;
Marketing advisory services, including the use of solicitors;
Processes to value client holdings and assess fees based on those valuations; and
Business continuity plans.

Investment Directorate Are Required to Fix Certain Reports and to File Certain Reports with the SEC

Every bit a registered investment adviser, you are required to file an annual update of Part 1A of your registration class (Grade ADV) through the Investment Advisers Registration Depository (IARD). Yous must file an annual updating amendment to your Form ADV within ninety days afterward the end of your fiscal yr. In addition to making annual filings, you must promptly file an amendment to your Class ADV whenever certain data contained in your Class ADV becomes inaccurate (the Form ADV filing requirements are contained in Rule 204-1 of the Advisers Act, and in the instructions to the Course).

Make certain your Form ADV is complete and current. Inaccurate, misleading, or omitted Grade ADV disclosure is the near frequently cited finding from our examinations of investment advisers.
Please go on the eastward-mail address of your contact person current (Grade ADV, Part 1A, Detail 1J). We use this east-mail service address to go on you apprised of important developments (including when it's fourth dimension to file an subpoena to your Grade ADV).
Accurately study the amount of assets that yous have nether management (Grade ADV, Part 1A, Item 5F(2)). Directorate who take less than $25 million of assets under management, who are not otherwise eligible to maintain their registration with the SEC, or who stop doing concern as an investment adviser, should file a Form ADV-W through IARD to withdraw their registration.

With respect to Role 2A of your Form ADV, you lot are required to file it electronically through IARD. As with Office 1A, y'all must update Role 2 annually within 90 days of the end of your fiscal year and whenever it becomes materially inaccurate. Part 2B brochure supplements, are non required to be uploaded to IARD.

You may also be subject to other reporting obligations. For example, an adviser that exercises investment discretion (or that shares investment discretion with others) over certain equity securities (including convertible debt and options), which have a fair market value in the amass of $100 million or more, must file a Form 13F each quarter that discloses these holdings. "Discretionary dominance" means that yous accept the dominance to decide which securities to buy, sell, and/or retain for your clients.

You should also be aware that it is unlawful to make any untrue statement or omit whatsoever material facts in an awarding or a study filed with the SEC (under Department 207 of the Advisers Deed), including in Form ADV and Form ADV-W.

Investment Advisers Must Provide Clients and Prospective Clients with a Written Disclosure Statement

Registered investment advisers are required to provide their advisory clients and prospective clients with a written disclosure document (these requirements, and a few exceptions, are gear up forth in Rule 204-3 under the Directorate Act). Every bit a registered adviser, you comply with this requirement by providing advisory clients and prospective clients with Function ii of your Grade ADV. This written disclosure document should be delivered to your prospective clients earlier or at the fourth dimension of entering into an advisory contract (under sure conditions, you may comply with the delivery requirements through electronic media).

Each year, yous also need to evangelize Part 2 or summary of material changes to each customer, without charge. You are required to maintain a copy of each disclosure document and each amendment or revision to it that was given or sent to clients or prospective clients, along with a tape reflecting the dates on which such disclosure was given or offered to exist given to any client or prospective customer who subsequently became a client (under Rule 204-ii(a)(14)).

Investment Advisers Must Take a Code of Ethics Governing Their Employees and Enforce Certain Insider Trading Procedures

Equally a registered investment adviser, you lot are required to prefer a code of ethics (under the "Code of Ethics Rule" — Dominion 204A-1 under the Directorate Human activity). Your code of ethics should set forth the standards of business comport expected of your "supervised persons" (i.e., your employees, officers, directors and other people that you are required to supervise), and it must address personal securities trading by these people.

We note that you are not required to adopt a particular standard of concern ethics. Rather, the standard that you choose should reverberate your fiduciary obligations to your informational clients and the fiduciary obligations of the people you supervise, and crave compliance with the federal securities laws. In adopting a code of ethics, investment advisers may set up higher ethical standards than the requirements nether the constabulary.

In lodge to prevent unlawful trading and promote ethical carry past advisory employees, advisers' codes of ideals should include certain provisions relating to personal securities trading by advisory personnel. Your code of ideals must include the following requirements:

Your "access persons" must report their personal securities transactions to your CCO or to another designated person each quarter. "Access persons" are whatever of your supervised persons who accept access to not-public information regarding client transactions or holdings, make securities recommendations to clients or take access to such recommendations, and, for almost directorate, all officers, directors and partners.
Your access persons must submit a consummate report of the securities that they concord at the time they showtime become an access person, and then at least once each year later on that.³ Your code of ideals must too require that your access persons obtain your approving prior to investing in initial public offerings or private placements or other express offerings, including pooled investment vehicles (except if your firm has only ane admission person).
Your CCO or another person you designate in addition to your CCO must review these personal securities transaction reports.
Your supervised persons must promptly study violations of your code of ethics (i.e., including the federal securities laws) to the CCO or to another person you designate (provided your CCO also receives a report on such issues). You must too maintain a record of these breaches.

Also, as a registered investment adviser, you are required to constitute, maintain, and enforce written policies and procedures that are reasonably designed to forbid the misuse of material non-public information (under Section 204A of the Directorate Act). These policies and procedures must encompass your activities and those of your supervised persons. Directorate frequently include this prohibition on insider trading in their code of ethics.

Provide each of the people that y'all supervise with a copy of your lawmaking of ethics (and any amendments that yous subsequently make to it), and also obtain a written acknowledgement from the supervised person that he/she has received it. In addition, you must describe your lawmaking of ethics in your Class ADV, Part 2, Item 11 and provide a copy to your advisory clients, if they request it.

Investment Directorate are Required to Maintain Sure Books and Records

As a registered adviser, you must make and go along true, accurate and current certain books and records relating to your investment informational concern (under "the Books and Records Dominion" — Rule 204-2). The books and records that you lot must brand and keep are quite specific, and are described below in part:

Advisory business organization financial and accounting records, including: cash receipts and disbursements journals; income and expense business relationship ledgers; checkbooks; bank account statements; advisory business bills; and financial statements.
Records that pertain to providing investment advice and transactions in customer accounts with respect to such advice, including: orders to trade in customer accounts (referred to every bit "society memoranda"); trade confirmation statements received from broker-dealers; documentation of proxy vote decisions; written requests for withdrawals or documentation of deposits received from clients; and written correspondence you sent to or received from clients or potential clients discussing your recommendations or suggestions.
Records that document your authorization to conduct business in client accounts, including: a list of accounts in which you take discretionary authorisation; documentation granting you discretionary authority; and written agreements with clients, such every bit advisory contracts.
Advertising and performance records, including: newsletters; articles; and computational worksheets demonstrating performance returns.
Records related to the Lawmaking of Ideals Dominion, including those addressing personal securities transaction reporting by access persons.
Records regarding the maintenance and delivery of your written disclosure document and disclosure documents provided by sure solicitors who seek clients on your behalf.
Policies and procedures adopted and implemented under the Compliance Rule, including any documentation prepared in the form of your annual review.

Some advisers are required to maintain additional records. For example, advisers that accept custody and possession of clients' funds and/or securities must brand and go on boosted records that are described in the Books and Records Rule (Rule 204-2, paragraph (b)), and advisers who provide investment supervisory or direction services to any client must also make and keep specific additional records (which are described in Rule 204-two, paragraph (c)).

Yous must keep these records for specified periods of fourth dimension. By and large, well-nigh books and records must be kept for five years from the last day of the fiscal twelvemonth in which the last entry was made on the document or the document was disseminated. You may exist required to proceed certain records for longer periods, such as records that support operation calculations used in advertisements (as described in Dominion 204-2, paragraph (eastward)).

You are required to keep your records in an hands accessible location. In addition, for the beginning ii of these years, you lot must continue your records in your office(s). If you maintain some of your original books and records somewhere other than your primary office and place of concern, yous must annotation this practise and identify the alternative location on your Grade ADV (in Section 1K of Schedule D). Many advisers store indistinguishable copies of their advisory records in a location split up from their master office in order to ensure the continuity of their business in the instance of a disaster.

You may store your original books and records by using either micrographic media or electronic media. These media by and large include microfilm or digital formats (e.g., electronic text, digital images, proprietary and off-the-shelf software, and email). If y'all use email or instant messaging to make and continue the records that are required under the Advisers Act, you should proceed the e-mail, including all attachments that are required records, as examiners may request a re-create of the complete record. In dealing with electronic records, you must also take precautions to ensure that they are secure from unauthorized access and theft or unintended destruction (similar safeguarding provisions regarding client information obtained by you is required past Regulation S-P under the Gramm-Leach-Bliley Act). In general, you should be able to promptly (mostly within 24 hours) produce required electronic records that may exist requested by the SEC staff, including email. In order to do and then, the Advisers Act requires that you lot arrange and index required electronic records in a way that permits easy location, access, and retrieval of any particular electronic record.

Investment Advisers Must Seek to Obtain the All-time Price and Execution for Their Clients' Securities Transactions

As a fiduciary, you are required to deed in the best interests of your informational clients, and to seek to obtain the best price and execution for their securities transactions. The term "best execution" means seeking the best price for a security in the marketplace as well as ensuring that, in executing client transactions, clients do not incur unnecessary brokerage costs and charges. You lot are not obligated to get the everyman possible committee cost, but rather, y'all should determine whether the transaction represents the best qualitative execution for your clients. In addition, whenever trading may create a alien interest betwixt you and your clients, yous have an obligation, earlier engaging in the activity, to obtain the informed consent from your clients later on providing full and off-white disclosure of all textile facts. The Commission has described the requirement for advisers to seek best execution in various situations.

In selecting a banker-dealer, y'all should consider the total range and quality of the services offered by the broker-dealer, including the value of the inquiry provided, the execution capability, the commission rate charged, the broker-dealer's financial responsibility, and its responsiveness to you. To seek to ensure that you lot are obtaining the best execution for your clients' securities trades, you must periodically evaluate the execution performance of the broker-dealers y'all use to execute clients' transactions.

Yous may determine that it is reasonable for your clients to pay commission rates that are college than the lowest commission rate available in order to obtain certain products or services from a broker-dealer (i.e., soft dollar organisation). To qualify for a "rubber harbor" from possible charges that you have breached your fiduciary duty by causing your clients to pay more than the lowest committee rate, y'all must use clients' brokerage commissions to pay for certain defined "brokerage or research" products and services, use such products and services in making investment decisions, brand a expert faith decision that the commissions that clients will pay are reasonable in relation to the value of the products and services received, and disclose these arrangements.

The SEC staff has stated that, in directing orders for the purchase or auction of securities, you may amass or "bunch" orders on behalf of two or more than client accounts, so long as the bunching is washed for the purpose of achieving all-time execution, and no client is systematically advantaged or disadvantaged by the bunching. The SEC staff has too said that, if you decide non to amass orders for customer accounts, you should disclose to your clients that you volition non aggregate and the potential consequences of not aggregating orders.

If your clients impose limitations on how you volition execute securities transactions on their behalf, such as by directing you to exclusively use a specific broker-dealer to execute their securities transactions, you take an obligation to fully disclose the effects of these limitations to the client. For example, if you negotiate volume commission discounts on bunched orders, a client that has directed you lot to use a specific broker should be informed that he/she will forego any benefit from savings on execution costs that yous might obtain for your other clients through this practice.

Y'all should too seek to obtain the best price and execution when you lot enter into transactions for clients on a "master" or "agency cross" basis. If you accept acted as a principal for your own business relationship by buying securities from, or selling securities to, a client, you must disembalm the system and the conflicts of involvement in this practice (in writing) and also obtain the customer'south consent for each transaction prior to the time that the trade settles. At that place are also explicit conditions nether which you may cantankerous your advisory clients' transactions in securities with securities transactions of others on an agency basis (nether Rule 206(3)-ii). For example, you must obtain accelerate written authorization from the client to execute such transactions, and also provide clients with specific written disclosures. Compliance with Rule 206(iii)-2 is generally not required for transactions internally crossed or effected between two or more than clients yous advise and for which you receive no additional compensation (i.eastward., commissions or transaction-based compensation); nevertheless, full disclosure regarding this do should exist made to your clients.

Requirements for Investment Advisers' Contracts with Clients

Every bit a registered investment adviser, your contracts with your advisory clients must include some specific provisions (which are set along in Section 205 of the Advisers Act). Your advisory contracts (whether oral or written) must convey that the advisory services that you provide to the client may non be assigned by yous to any other person without the prior consent of the client. With limited exceptions, contracts cannot include provisions providing for your bounty to be based on the operation of the client'south account. In addition, the SEC staff has stated that an adviser should not enter into contracts with clients, except with certain sophisticated clients, that contain terms or clauses commonly referred to every bit a "hedge clause" because such clauses or provisions are likely to lead other clients to believe that they have waived their rights of legal action, whether under the federal securities laws or common police.

Investment Advisers May be Examined past the SEC Staff

As a registered investment adviser, your books and records are subject field to compliance examinations by the SEC staff (nether Department 204 of the Directorate Act). The purpose of SEC examinations is to protect investors by determining whether registered firms are complying with the constabulary, adhering to the disclosures that they have provided to their clients, and maintaining appropriate compliance programs to ensure compliance with the law. If you are examined, you lot are required to provide examiners with admission to all requested informational records that y'all maintain (nether certain conditions, documents may remain individual under the attorney-customer privilege).

More information about examinations by the SEC and the examination process is provided in the brochure, "Exam Information for Banker-Dealers, Transfer Agents, Clearing Agencies, Investment Advisers and Investment Companies," which is available on the SEC'due south website at http://www.sec.gov/almost/offices/ocie/ocie_exambrochure.pdf.

Requirements for Investment Directorate that Vote Proxies of Clients' Securities

As a registered investment adviser, if you have voting authority over proxies for clients' securities, you must adopt policies and procedures reasonably designed to ensure that you: vote proxies in the best interests of clients; disclose data to clients about those policies and procedures; and describe to clients how they may obtain data nearly how you accept voted their proxies (these requirements are in Dominion 206(iv)-half dozen under the Directorate Act).

If you lot vote proxies on behalf of your clients, you must also retain certain records. You must keep: your proxy voting policies and procedures; the proxy statements you received regarding your client'south securities (the Rule provides some alternative arrangements); records of the votes you cast on behalf of your clients; records of client requests for proxy voting information; and whatsoever documents that y'all prepared that were material to making a decision equally to how to vote or that memorialized the basis for your conclusion (these requirements are described in Directorate Act Dominion 204-ii(c)(2)).

Requirements for Investment Advisers that Annunciate their Services

To protect investors, the SEC prohibits certain types of advertising practices by advisers. An "advertisement" includes whatsoever advice addressed to more than than one person that offers whatever investment advisory service with regard to securities (nether "the Advert Rule" — Rule 206(iv)-1). An advertisement could include both a written publication (such every bit a website, newsletter or marketing brochure) likewise equally oral communications (such as an annunciation made on radio or television).

Advertisement must not exist false or misleading and must not comprise any untrue statement of a fabric fact. Advertising, like all statements made to advisory clients and prospective clients, is subject to the general prohibition on fraud (Department 206 as well as other anti-fraud provisions nether the federal securities laws). Specifically prohibited are: testimonials; the use of by specific recommendations that were assisting, unless the adviser includes a listing of all recommendations made during the past yr; a representation that whatsoever graph, nautical chart, or formula can in and of itself exist used to determine which securities to purchase or sell; and advertisements stating that whatever report, analysis, or service is gratuitous, unless information technology actually is free.

The SEC staff has said that, if you advertise your past investment performance record, you should disclose all cloth facts necessary to avoid any unwarranted inference. For example, SEC staff has indicated that it may view performance data to be misleading if it:

does not disclose prominently that the results portrayed chronicle only to a select group of the adviser's clients, the basis on which the selection was made, and the effect of this do on the results portrayed, if cloth;
does not disclose the effect of fabric market or economic conditions on the results portrayed (e.g., an advertizement stating that the accounts of the adviser'south clients appreciated in value 25% without disclosing that the market generally appreciated forty% during the aforementioned period);
does not reflect the deduction of advisory fees, brokerage or other commissions, and whatever other expenses that accounts would have or actually paid;
does not disclose whether and to what extent the results portrayed reverberate the reinvestment of dividends and other earnings;
suggests or makes claims about the potential for turn a profit without also disclosing the possibility of loss;
compares model or actual results to an index without disclosing all material facts relevant to the comparison (east.g., an advertizement that compares model results to an index without disclosing that the volatility of the alphabetize is materially different from that of the model portfolio); and
does non disclose whatsoever fabric conditions, objectives, or investment strategies used to obtain the results portrayed (east.g., the model portfolio contains equity stocks that are managed with a view towards capital appreciation).

In addition, equally a registered adviser, you lot may not imply that the SEC or another agency has sponsored, recommended or approved y'all, based upon your registration (under Department 208 of the Directorate Act). Y'all should not employ the term "registered investment adviser" unless you are registered, and you should non use this term to imply that every bit a registered adviser, you take a level of professional competence, education or special training. For example, the SEC staff has stated that advisers should not apply the term "RIA" after a person'southward name because using initials later on a name usually indicates a degree or a licensed professional person position for which in that location are certain qualifications; however, at that place are no federal qualifications for condign an SEC-registered adviser.

Requirements for Investment Advisers that Pay Others to Solicit New Clients

Registered investment advisers may pay cash compensation to others to seek out new clients on their behalf, normally called "solicitors" or "finders," if they run into certain conditions (under Rule 206(iv)-3 of the Advisers Act):

The solicitor is non subject to certain disciplinary deportment.
The fee is paid pursuant to a written agreement to which y'all are a party and (with express exceptions) the agreement must: describe the solicitor's activities and compensation organization; require that the solicitor perform the duties you assign and in compliance with the Advisers Act; require the solicitor to provide clients with a current copy of your disclosure document; and, if seeking clients for personalized advisory services, require the solicitor to provide clients with a split written disclosure document containing specific information.
You receive from the solicited client, prior to or at the fourth dimension you lot enter into an agreement, a signed and dated detect confirming that he/she was provided with your disclosure certificate and, if required, the solicitor's disclosure document.
You have a reasonable basis for believing that the solicitor has complied with the terms of your agreement.

Requirements for Investment Directorate that have Custody or Possession of Clients' Funds or Securities

Registered investment advisers that have "custody" or "possession" of client assets must take specific measures to protect client assets from loss or theft (under "the Custody Rule" — Dominion 206(4)-ii under the Advisers Act).

The outset footstep is to decide whether you take custody or possession of client assets. "Custody" is defined as "holding, directly or indirectly, customer funds or securities, or having any authority to obtain possession of them." This includes situations in which you:

accept physical possession of client funds or securities, even temporarily;
enter into arrangements (including a general power of attorney) authorizing yous to withdraw funds or securities from the client's account (note that if you lot are authorized to deduct your advisory fees or other expenses directly from clients' accounts, yous take custody); and
serve in a capacity that gives you or a supervised person legal ownership or access to client funds or securities (notation that if y'all are a full general partner to a privately-offered pooled investment vehicle, yous accept custody).
If you are a trustee, yous may take custody.

If you have custody, with limited exceptions, you must maintain these client funds and securities at a "qualified custodian." Generally, qualified custodians include most banks and insured savings associations, SEC-registered banker-dealers, Article Exchange Act-registered futures commission merchants, and certain foreign financial institutions. With a limited exception, for client accounts over which yous have custody, y'all must take a reasonable basis, subsequently due inquiry, for assertive that the customer (or a designated representative) receives periodic reports straight from the custodian that contain specific data with respect to the funds and securities in custody. With respect to pooled investment vehicles over which you have custody, the qualified custodian must send account statements for the pooled vehicle directly to each investor.

If you have custody of client funds or securities that are held at an unrelated, contained qualified custodian, then you lot must take a "surprise verification" by an independent public accountant. The independent public accountant must verify the funds and securities in your custody or possession at to the lowest degree once each calendar twelvemonth, and must then promptly file a "document of accounting" with Form ADV-East electronically through IARD.⁴

If you have custody of customer funds or securities that y'all or a related person maintains as a qualified custodian, then you must besides have an internal command study completed by an independent public accountant registered with, and subject to regular inspection past, the Public Company Bookkeeping Oversight Board.

Staff answers to oft asked questions regarding the custody rule may be plant at http://world wide web.sec.gov/divisions/investment/custody_faq_030510.htm.

Requirements for Investment Advisers to Disclose Certain Financial and Disciplinary Information

Registered investment advisers may be required to disclose sure financial and disciplinary information (under Rule 206(4)-four under the Advisers Deed). These requirements are described below.

Registered directorate that have custody or discretionary authority over customer funds or securities, or that require prepayment vi months or more in advance of more $1,200 in advisory fees, must promptly disclose to clients and whatever prospective clients any financial conditions that are reasonably likely to impair their power to meet their contractual commitments to their clients.

All registered advisers must likewise promptly disclose any legal or disciplinary events that would be cloth to a client's or a prospective client's evaluation of the adviser'due south integrity or its power to meet its commitments to clients (regardless of whether the adviser has custody or requires prepayment of fees). The types of legal and disciplinary events that may exist material include:

Criminal or civil actions, where the adviser or a management person of the adviser was bedevilled, pleaded guilty or "no contest," or was field of study to certain disciplinary actions with respect to conduct involving investment-related businesses, statutes, regulations, or activities; fraud, imitation statements, or omissions; wrongful taking of property; or bribery, forgery, counterfeiting, or extortion.
Authoritative proceedings earlier the SEC, other federal regulatory agencies, or whatever land agency where the adviser'due south or a management person'due south activities were found to accept caused an investment-related business to lose its potency to do business organization or where such person was involved in a violation of an investment-related statute or regulation and was the subject of specific disciplinary deportment taken by the agency.
Self-regulatory arrangement (SRO) proceedings in which the adviser or a management person was constitute to have caused an investment-related business concern to lose its authorization to practice business; or was found to have been involved in a violation of the SRO'south rules and was the subject of specific disciplinary actions taken past the organization.

Informational Resources Available From the SEC

The SEC provides a bang-up deal of helpful information most the compliance obligations of investment directorate on the SEC's website at https://www.sec.gov/investment. This information includes links to relevant laws and rules, staff guidance and studies, enforcement cases, and staff no-action and interpretive letters (generally from 2001 — nowadays). In addition, the SEC's website contains a list of the source materials that were used in preparing this information canvas.

To assist chief compliance officers of investment advisers and investment companies in meeting their compliance responsibilities and to aid enhance compliance in the securities industry, the SEC has established the "CCOutreach Program." This program includes regional and national seminars on compliance issues of business organisation to CCOs. Data about CCOutreach and any scheduled events is available at http://edgarfeed.sec.gov/info/complianceoutreach.htm.

Finally, the SEC staff regularly receive calls and correspondence concerning the application of the federal securities laws, and directorate and other registrants are encouraged to communicate whatever questions or issues to SEC staff. To ensure that you reach the correct person at the SEC, the SEC'south website lists the names and contact information for SEC staff in the Division of Investment Management who are responsible for responding to communication from the public about specific topics (https://world wide web.sec.gov/investment/contact/divisions-investment-imcontacthtm.html). With respect to issues or questions that arise in the context of a compliance examination by the SEC, directorate are encouraged to raise any questions or issues directly with the SEC examination team, or with examination supervisors in their local SEC role (contact information for senior examination staff is available at http://www.sec.gov/about/offices/ocie/ocie_org.htm).

Additional Information: Reference Materials

The post-obit informational sources may exist helpful.

Investment Directorate Are Fiduciaries

Section 206 of the Advisers Act.
SEC 5. Capital Gains Research Agency, Inc., 375 U.Southward. 180 (1963), bachelor on the SEC's website at http://www.sec.gov/almost/offices/ocie/iainfo/capitalgains1963.pdf.
In re Arleen W. Hughes, Release No. 34-4048 (Feb eighteen, 1948), bachelor on the SEC'south website at http://world wide web.sec.gov/litigation/opinions/2007/ia-4048.pdf.

Investment Advisers Must Have Compliance Programs

Rule 206(iv)-7 under the Advisers Human activity.
Compliance Programs of Investment Companies and Investment Advisers, Advisers Act Release No. 2204 (December. 17, 2003), available on the SEC's website at http://www.sec.gov/rules/concluding/ia-2204.htm.

Investment Advisers Are Required to Set Sure Reports and to File Certain Reports with the SEC

Form ADV (Function 1A and Part 2), instructions to the Form, and filing requirements contained Dominion 204-1 under the Advisers Human activity.
A list of the amendments that advisers must make to their Course ADV is in the General Instructions to Form ADV (Particular 4) at http://www.sec.gov/pdf/fadvpo.pdf.
SEC staff's responses to frequently asked questions regarding completing and filing Form ADV are available on the SEC'southward website at http://www.sec.gov/divisions/investment/iard/iardfaq.shtml.
Boosted data regarding Form 13F and an official list of securities that autumn nether Section xiii(f) of the Securities Exchange Act are on the SEC'south website at https://www.sec.gov/pdf/form13f.pdf.

Investment Advisers Must Provide Clients and Prospective Clients with a Written Disclosure Statement

Dominion 204-three under the Advisers Act.
Utilize Of Electronic Media Past Banker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information; Additional Examples Under The Securities Act Of 1933, Securities Exchange Act Of 1934, And Investment Company Act, Advisers Deed Release No. 1562 (May ix, 1996), available on the SEC's website at http://www.sec.gov/rules/interp/33-7288.txt.

Investment Directorate Must Have a Code of Ethics Governing Their Employees and Enforce Certain Insider Trading Procedures

Section 204A and Dominion 204A-ane of the Advisers Act.
Investment Adviser Codes of Ethics, Advisers Human activity Release No. 2256 (July ii, 2004), available on the SEC's website at http://www.sec.gov/rules/final/ia-2256.htm.
SEC staff no-activity letter, Kleinwort Benson Investment Management Express (pub. avail. Dec. xv, 1993), bachelor on the SEC's website at http://www.sec.gov/divisions/investment/noaction/kleinwort121593.htm.
SEC staff no-action letter of the alphabet, Corinne E. Wood (Herbert-Simon Co.) (pub. avail. April 17, 1986), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/herbert-simon031886.htm.

Investment Advisers are Required to Maintain Certain Books and Records

Rule 204-2 under the Advisers Act and Regulation Due south-P, privacy rules promulgated nether Section 504 of the Gramm-Leach-Bliley Act.
Privacy of Consumer Financial Information (Regulation S-P), Advisers Human activity Release No. 1883 (June 22, 2000), which is available on the SEC'south website at http://www.sec.gov/rules/final/34-42974.htm.
Electronic Recordkeeping past Investment Companies and Investment Advisers, Advisers Act Release No. 1945 (May 24, 2001), which is available on the SEC�s website at http://world wide web.sec.gov/rules/final/ic-24991.htm.

Investment Advisers Must Seek to Obtain the All-time Price and Execution for Their Clients' Securities Transactions

Department 206 of the Advisers Act.
Interpretive Release Concerning Scope of Section 28(eastward) of the Securities Exchange Act of 1934 and Related Matters, Exchange Act Release No. 23170 (Apr. 23, 1986), available on the SEC's website at http://world wide web.sec.gov/rules/interp/34-23170.pdf.
Estimation of Section 206(3) of the Investment Advisers Act of 1940, Advisers Deed Release No. 1732 (July 17, 1998), bachelor on the SEC's website at http://www.sec.gov/rules/interp/ia-1732.htm.
Committee Guidance Regarding Customer Commission Practices Under Department 28(e) of the Securities Substitution Act of 1934, Exchange Act Release No. 54165 (July 18, 2006), bachelor on the SEC's website at http://www.sec.gov/rules/interp/2006/34-54165.pdf.
In re Thompson and McKinnon, Exchange Human action Release No. 8310 (May 8, 1968), available on the SEC'due south website at http://www.sec.gov/litigation/opinions/34-8310.pdf.
In re Mark Bailey and Co., Directorate Act Release No. 1105 (Feb. 24, 1988), available on the SEC's website at http://world wide web.sec.gov/litigation/admin/ia-1105.pdf.
In re Kingsley, Jennison, McNulty & Morse, Inc., Directorate Human activity Release No. 1396 (Dec. 23, 1993), bachelor on the SEC's website at http://www.sec.gov/litigation/opinions/ia-1396.pdf.
In re Marvin & Palmer Associates, Inc., Directorate Human activity Release No. 1841 (Sept. 30, 1999), available on the SEC's website at http://www.sec.gov/litigation/admin/ia-1841.htm.
SEC staff no-action letter of the alphabet, United Missouri Banking company of Kansas City, N.A. (pub. avail. May 11, 1990), available on the SEC'south website at http://www.sec.gov/investment/noaction/unitedmissouribank012395.htm.
SEC staff no-action letter, SMC Uppercase, Inc. (pub. avail. Sept. 5, 1995), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/smccapital090595.htm.
SEC staff no-action letter, Pretzel & Stouffer (December. i, 1995), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/pretzelstouffer120195.htm.

Requirements for Investment Advisers' Contracts with Clients

Section 205 of the Advisers Act.
SEC staff no-action alphabetic character, Auchincloss & Lawrence, Inc. (pub. avail. Feb. 8, 1974) available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/auchincloss010874.htm.
SEC staff no-action letter, Heitman Capital letter Management LLC (pub. avail. Feb. 12, 2007), available on the SEC's website at http://world wide web.sec.gov/divisions/investment/noaction/2007/heitman021207.pdf.

Investment Directorate May be Examined past the SEC Staff

Section 204 of the Directorate Human activity.

Requirements for Investment Directorate that Vote Proxies of Clients' Securities

Rule 206(4)-vi and Rule 204-2(c)(2) under the Advisers Human activity.
Proxy Voting by Investment Advisers, Advisers Human activity Release No. 2106 (January. 31, 2003), available on the SEC's website at http://www.sec.gov/rules/concluding/ia-2106.htm.

Requirements for Investment Advisers that Advertise their Services

Section 206 and Rule 206(four)-1 under the Advisers Human activity.
SEC staff no-activity letter of the alphabet, Clover Capital Direction, Inc. (pub. avail. October. 28, 1986), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/clovercapital102886.htm.
SEC staff no-activity letter, Investment Company Institute, (pub. avail. Sept. 23, 1988), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/ici092388.htm.
SEC staff no-activity letter, Mandell Financial Grouping. (pub. avail. May 21, 1997), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/mandell052197.htm.

Requirements for Investment Advisers that Pay Others Cash to Solicit New Clients

Dominion 206(four)-3 of the Advisers Human activity.

Requirements for Investment Advisers that have Custody or Possession of Clients' Funds or Securities

Rule 206(4)-2 nether the Advisers Act.
Staff Responses to Questions about the Custody Rule at http://world wide web.sec.gov/divisions/investment/custody_faq_030510.htm
Custody of Funds or Securities of Clients by Investment Advisers, Advisers Act Release No. 2986 (December. xxx, 2009), available on the SEC's website at http://www.sec.gov/rules/final/2009/ia-2968.pdf.
SEC staff no-action letter, Investment Adviser Clan, (pub. avail. Sept. 20, 2007), bachelor on the SEC�due south website at http://www.sec.gov/divisions/investment/noaction/2007/iaa092007.pdf.

Requirements for Investment Advisers to Disclose Sure Financial and Disciplinary Data

Rule 206(4)-iv nether the Advisers Human action.

^one The Securities and Commutation Commission, as a affair of policy, disclaims responsibility for whatever publication or statement past whatsoever of its employees. The views expressed herein are those of the staff and do not necessarily reflect the views of the Commission or the other staff members of the SEC.

² This information canvass contains descriptions of the Advisers Act, rules, Commission releases, court decisions, Commission orders and opinions, which impose or explain legal obligations. It too contains staff interpretations and no-activeness letters that have been issued by the Division of Investment Direction. Staff interpretations and no-action letters provide informal interpretative and advisory assistance and correspond the views of persons who are continuously working with the provisions of the Advisers Human action. Opinions expressed past the staff, however, are not an official expression of the Commission's views and they practice non have the force of law. You may wish to speak with an attorney or a compliance professional about specific provisions and how they apply to your firm. This information is electric current as of June 2007.

³ A consummate study contains: the title and blazon of security; the exchange ticker symbol or CUSIP number; the number of shares, and principal corporeality of the security; the proper name of any broker, dealer or bank where the access person has an account that holds securities for the admission person's direct or indirect do good; and the date the admission person submits the study.

⁴ There are exceptions to this requirement. For instance, an adviser is not required to provide regular account statements with respect to a registered investment company or a limited partnership (or another blazon of pooled investment vehicle) that is bailiwick to an audit at least annually and that distributes its audited financial statements prepared in accord with by and large accepted bookkeeping principles (GAAP) to all investors, generally inside 120 days of the end of its fiscal yr (nether Rule 206(4)-ii).

http://www.sec.gov/divisions/investment/advoverview.htm