Investment Adviser, Broker Dealer, and Fund Regulation Attorneys
Registration status, exemptions, and ongoing compliance for advisers, brokers, fund managers, and commodity firms anywhere in the United States.
A firm that advises on securities, effects transactions for others, pools investor capital, or trades commodity interests is regulated by definition, whether or not it thinks of itself as a financial institution. The Investment Advisers Act, the Securities Exchange Act, the Investment Company Act, and the Commodity Exchange Act each define who must register, each provides exemptions, and each carries a compliance regime once the definition is met.
Industria Business Lawyers advises advisers, broker dealers, fund managers, family offices, and commodity firms on which of these regimes reach their activity, whether an exemption is available, and what registration and compliance follow. The work usually begins with a written status analysis and continues into the registration filings, the compliance manual, and the ongoing obligations the analysis identifies.
Every firm is different, and the exemptions are narrow and fact dependent. Getting the status question right at the start is what keeps the business from having to unwind it later.
Get a Free Consultation
Find Out Whether Your Firm Must Register
Regulated Finance Questions We Handle
Four federal statutes draw the lines, and each has a state counterpart. These are the questions that decide a firm’s status.
Investment Adviser Registration
Section 202(a)(11) of the Advisers Act defines an investment adviser as any person who, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities, or who for compensation and as part of a regular business issues analyses or reports concerning securities. Section 203(a) makes it unlawful for an investment adviser to use interstate commerce in its business unless registered, subject to the exemptions in section 203(b) and the state allocation in section 203A. We determine whether the definition is met and whether an exemption applies.
Federal or State Adviser Registration
Section 203A of the Advisers Act provides that an adviser regulated in the state of its principal office shall not register with the Commission unless it has assets under management of not less than $25,000,000, or such higher amount as the Commission sets by rule, or advises a registered investment company, with separate treatment for mid sized advisers. Which regulator an adviser answers to is decided by that allocation. We work out where the firm registers and prepare the filing.
Broker Dealer Registration
Section 3(a)(4) of the Exchange Act defines a broker as any person engaged in the business of effecting transactions in securities for the account of others, and section 15(a)(1) makes it unlawful for a broker or dealer to use interstate commerce to effect transactions in, or to induce the purchase or sale of, any security unless registered. Finders, placement agents, platforms, and affiliates of issuers all raise the question. We analyse the activity against the definition.
Private Fund Exemptions
Section 3(c)(1) of the Investment Company Act excludes an issuer whose outstanding securities are beneficially owned by not more than one hundred persons, or 250 for a qualifying venture capital fund, and which is not making and does not propose to make a public offering. Section 3(c)(7) excludes an issuer whose securities are owned exclusively by qualified purchasers and which is not making a public offering. A fund that relies on either must be structured and operated to stay inside it. We advise on which exclusion fits and how to keep it.
Commodity Pool Operators and Trading Advisors
Section 4m of the Commodity Exchange Act makes it unlawful for a commodity trading advisor or commodity pool operator to use interstate commerce in that business unless registered, with an exception for an advisor that has not furnished advice to more than fifteen persons in the preceding twelve months and does not hold itself out to the public as a commodity trading advisor. Funds and managers that touch futures, swaps, or digital asset derivatives raise the question. We determine whether registration or an exemption applies.
Compliance Programs and Examinations
Once a firm is registered, it carries a compliance manual, a code of ethics, books and records requirements, and periodic examination. We draft the program, maintain it as rules change, and prepare the firm for regulator examination and counterparty due diligence.
Four Statutes, and How They Overlap
The same firm can be an investment adviser, a broker, a fund sponsor, and a commodity pool operator at once, and each status is decided separately.
Advising. The Advisers Act reaches a person who advises on securities for compensation as a business. Whether the firm registers with the Commission or with its home state is decided by section 203A and the assets under management threshold it sets.
Transacting. The Exchange Act reaches a person engaged in the business of effecting securities transactions for others. Receiving transaction based compensation for introducing investors is the most common way a firm that does not consider itself a broker meets the definition.
Pooling. The Investment Company Act reaches an issuer that pools investor capital in securities. Private funds stay outside it by fitting the section 3(c)(1) or 3(c)(7) exclusion, which limits who can invest and prohibits a public offering.
Commodities. The Commodity Exchange Act reaches an operator of a pool that trades commodity interests and an advisor on commodity interests. Digital asset derivatives and futures bring firms inside it that never expected to be there.
What that means in practice. A firm’s status has to be worked out under each statute separately, and the exemptions under one do not carry over to another. The written analysis we prepare answers each question and lists the registrations and programs the answers require. For digital asset businesses, our digital asset regulatory page covers the securities status question that comes first. Firms that hold or move customer funds should also review FinCEN MSB registration.
What Our Clients Say About Us
Read more...
I would recommend working with Aaron and team.”
Julien Genestoux from Unlock, Inc
Read more...
They consistently deliver thorough and timely work. For any small business looking for dependable and knowledgeable corporate counsel, we wholeheartedly recommend IBL.”
Felipe Pinto from Revolve Labs
Read more...
As a result, we’ve continued to rely on them as our go-to legal counsel for ongoing corporate matters.”
Zachary Panos from Fourcaster LLC
Read more...
The attorneys were incredibly responsive, guiding me through every step of the process with clarity and professionalism. They took the time to address all my questions and concerns, ensuring that I felt confident in each decision we made. Their attention to detail and thoroughness were evident in the documents they prepared, which gave me peace of mind knowing that everything was handled properly. What stood out most was their commitment to my vision. They not only provided legal advice but also offered valuable insights into the industry, helping me navigate potential challenges and seize opportunities. Their strategic approach was instrumental in setting up a robust fund structure that aligns with my goals. Overall, working with IBL was a fantastic experience. They made a complex process manageable and stress-free. Thank you for your outstanding support.””
Jeff from Solar Carbon Credit Fund
Tell Us About Your Matter
How We Work a Registration and Compliance Matter
Activity Review +
What the firm advises on, transacts in, pools, or trades; how it is compensated; who its clients and investors are; and where the firm and its clients are located.
Adviser Status +
The activity against the Advisers Act definition and exemptions, and the federal or state allocation under section 203A.
Broker Dealer Status +
Each role and compensation stream against the Exchange Act broker definition and the section 15(a) registration requirement.
Fund Structure +
Any pooled vehicle against the Investment Company Act exclusions, with the investor limits and offering restrictions each one imposes.
Commodity Status +
Any futures, swaps, or derivative activity against the Commodity Exchange Act registration requirements and exemptions.
Written Status Analysis +
The conclusions under each statute and the registrations, filings, and programs they require, written for the firm, its counterparties, and its auditors.
Registration and Compliance Build +
The filings the analysis calls for, the compliance manual and code of ethics, and the ongoing maintenance and examination preparation that follow.
FAQ
01 • Regulation When does a firm become an investment adviser?
Under section 202(a)(11) of the Advisers Act, when it engages in the business of advising others on securities for compensation, or issues reports or analyses on securities for compensation as part of a regular business. Whether a particular activity meets that description, and whether an exemption applies, depends on the facts.
02 • Regulation Does my adviser register with the SEC or my state?
Section 203A of the Advisers Act allocates advisers between the Commission and the states principally by assets under management, with a statutory floor of $25,000,000 for Commission registration that the Commission may raise by rule, and separate treatment for mid sized advisers and advisers to registered investment companies. The allocation has to be worked out for each firm.
03 • Regulation Can a private fund avoid registering as an investment company?
A fund can fall outside the Investment Company Act by fitting section 3(c)(1), which limits beneficial owners to one hundred persons or 250 for a qualifying venture capital fund and prohibits a public offering, or section 3(c)(7), which limits investors to qualified purchasers and prohibits a public offering. The fund must be structured and operated to stay inside the exclusion it relies on.
04 • Regulation Is a finder a broker?
Section 3(a)(4) of the Exchange Act defines a broker as any person engaged in the business of effecting transactions in securities for the account of others. Whether a finder’s activity and compensation meet that description depends on what the finder does and how it is paid. The question is decided on the facts, not on the title.
05 • Regulation When does a fund manager need to register with the CFTC?
Section 4m of the Commodity Exchange Act requires a commodity pool operator or commodity trading advisor to register unless an exemption applies, including the statutory exception for an advisor with fifteen or fewer advisees in the preceding twelve months who does not hold itself out to the public. A manager whose fund trades futures, swaps, or digital asset derivatives should have the question answered in writing.
Talk to a Regulated Finance Attorney
Advisers, broker dealers, fund managers, and commodity firms anywhere in the United States. Call (202) 860-1210 or describe your firm through the form. Every firm is different, and the exemptions are narrow. We will tell you which statutes reach your activity and what registering, or staying exempt, would involve.
This page provides general information about registration and compliance under the Investment Advisers Act, the Securities Exchange Act, the Investment Company Act, and the Commodity Exchange Act and does not constitute legal advice. Reading it does not create an attorney client relationship. Statutes cited were reviewed on the date this page was last updated and are subject to change. Whether a particular firm must register depends on its specific facts.