More Screen Time: SEC Adopts Amendments to Internet-Only Investment Adviser Exemption
On March 27, 2024, the Securities and Exchange Commission (“SEC”) announced amendments to the rule that allows internet-only investment advisers to register with the SEC (the “Rule”).[1] The amended Rule eliminates the current Rule’s de minimis exception approach[2] and requires internet-based investment advisers relying on the Rule to:
- provide investment advisory services exclusively to internet-based clients (i.e., internet-based investment advisers relying on the amended Rule cannot have clients outside of its internet-based services);
- maintain – at all times – an operational interactive website through which the adviser provides its investment advisory services to clients; and
- make disclosures in its Form ADV that the internet-based investment adviser maintains an operational interactive website and is eligible to file under the Rule.[3]
Investment advisers relying on the Rule must comply with the amendments by March 31, 2025.
If you have any questions about the Rule or the regulation of investment advisers generally, please feel free to contact us.
By the Investment Management and Broker-Dealer Team at Kilpatrick Townsend & Stockton
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[1] 17 CFR 275.203A-2(e); SEC Press Release, SEC Adopts Reforms Relating to Investment Advisers Operating Exclusively Through the Internet, March 27, 2024, available at https://www.sec.gov/news/press-release/2024-42.
[2] The current Rule allows internet-only investment advisers to provide investment advice to fewer than 15 non-internet clients during the preceding twelve months.
[3] SEC Fact Sheet, Internet Adviser Registration Reforms, March 27, 2024, available at https://www.sec.gov/files/ia-6578-fact-sheet.pdf.
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