US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
The federal regime for investment advisers in the United States: who must register with the SEC or the States, the Form ADV, brochure and relationship summary disclosures, five-year books and records, insider trading procedures and the code of ethics for access persons, the limits on performance fees and assignment of advisory contracts, the antifraud provisions with their principal-trade consent requirement and the marketing, custody, pay-to-play, proxy voting, compliance programme and pooled vehicle rules, and the fiduciary duties of care (best-interest advice, best execution, monitoring) and loyalty (full and fair disclosure of conflicts and informed consent) as the Commission interprets them.
US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) is a compliance framework from United States (federal) with 5 domains and 23 controls. The largest domains are Sections 206 to 208 and the section 206(4) rules: antifraud, principal trades, marketing, custody, pay to play, proxy voting, compliance programmes, pooled vehicles – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (9 controls), Release IA-5248: the fiduciary duty of care and duty of loyalty as the SEC interprets section 206 – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (5 controls), Section 204 and rules 203-1, 204-1, 204-3, 204-4, 204-5 and 204(b)-1: Form ADV, brochures, Form CRS and private fund reporting – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (4 controls). Every control below carries what it requires and what an assessor expects to see.
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Framework Domains (5)
Release IA-5248: the fiduciary duty of care and duty of loyalty as the SEC interprets section 206 – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
| Code | Title |
|---|---|
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::ia5248-best-execution | Seek best execution where the adviser selects broker-dealers, periodically and systematically evaluating execution quality |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::ia5248-care-best-interest | Give advice that is in the client's best interest after reasonable inquiry into their objectives and reasonable investigation of the investment |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::ia5248-loyalty | Eliminate conflicts or make full and fair disclosure so the client can give informed consent; never favour the adviser's or another client's interest |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::ia5248-monitoring | Provide advice and monitoring over the course of the relationship at a frequency that fits the agreed scope |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::ia5248-scope | Apply the fiduciary duty across the whole relationship as the scope agreed with the client defines it, with disclosure of any limits |
Rules 204-2 and 204A-1 and section 204A: books and records, insider trading procedures and the code of ethics – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
| Code | Title |
|---|---|
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204-2-records | Make and keep the prescribed books and records for five years, the first two in an appropriate office |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204a-1-code-of-ethics | Adopt a code of ethics with reporting by access persons: initial and annual holdings, quarterly transactions, pre-clearance of IPOs and limited offerings |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204a-insider-trading | Establish, maintain and enforce written policies reasonably designed to prevent misuse of material non-public information |
Section 204 and rules 203-1, 204-1, 204-3, 204-4, 204-5 and 204(b)-1: Form ADV, brochures, Form CRS and private fund reporting – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
| Code | Title |
|---|---|
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204-1-adv-annual | Keep Form ADV current: amend within 90 days of fiscal year end and promptly when Part 1 or the brochure becomes materially inaccurate |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204-3-brochure | Deliver the Part 2A brochure and Part 2B supplements before or at contracting and offer the updated brochure every year |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204-4-era-pf | Exempt reporting advisers file the abbreviated Form ADV; private fund advisers report on Form PF |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::204-5-form-crs | Deliver the Form CRS relationship summary to retail investors at the start of the relationship and on later triggers |
Section 205 and rule 205-3: advisory contract terms, performance fees and assignment – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
| Code | Title |
|---|---|
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::205a-assignment-partnership | Contracts must bar assignment without client consent and, for partnerships, require notice of membership changes |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::205a-performance-fees | Charge performance-based compensation only to qualified clients and within the permitted fulcrum, fund and sophisticated-client exceptions |
Sections 206 to 208 and the section 206(4) rules: antifraud, principal trades, marketing, custody, pay to play, proxy voting, compliance programmes, pooled vehicles – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)
| Code | Title |
|---|---|
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-1-2-antifraud | Do not defraud, deceive or run a course of business that operates as a fraud on any client or prospective client |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-3-principal-cross | Before completing a principal trade or an agency cross with a client, disclose the capacity in writing and obtain the client's consent |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-1-marketing | Advertisements must meet the marketing rule's general prohibitions, testimonial and endorsement conditions, third-party rating rules and performance presentation standards |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-2-custody | Where the adviser has custody, use a qualified custodian, notify clients, ensure quarterly statements and obtain the annual surprise examination |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-5-pay-to-play | No compensation from a government client for two years after a contribution to a covered official, no soliciting contributions, no paid third-party solicitation except through regulated persons |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-6-proxy | Adopt proxy voting policies reasonably designed to vote in clients' best interest, disclose them and keep the voting records |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-7-compliance | Adopt written compliance policies, review their adequacy at least annually and designate a chief compliance officer |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::206-4-8-pooled | Do not make misleading statements or defraud investors or prospective investors in a pooled investment vehicle |
| us-investment-advisers-act-of-1940-and-sec-adviser-rules-17-cfr-part-275::207-208-misstatements-claims | No material misstatements in SEC filings, no claims of government approval, and no use of the term investment counsel without the business to match |
What is US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) and who does it apply to?
US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) is a compliance framework from United States (federal) with 5 domains and 23 controls. The federal regime for investment advisers in the United States: who must register with the SEC or the States, the Form ADV, brochure and relationship summary disclosures, five-year books and records, insider trading procedures and the code of ethics for access persons, the limits on performance fees and assignment of advisory contracts, the antifraud provisions with their principal-trade consent requirement and the marketing, custody, pay-to-play, proxy voting, compliance programme and pooled vehicle rules, and the fiduciary duties of care (best-interest advice, best execution, monitoring) and loyalty (full and fair disclosure of conflicts and informed consent) as the Commission interprets them. It is used by organisations to establish and maintain compliance with industry standards and regulatory requirements.
What does US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) actually require?
US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) has 23 controls organised across 5 domains. The largest domains are Sections 206 to 208 and the section 206(4) rules: antifraud, principal trades, marketing, custody, pay to play, proxy voting, compliance programmes, pooled vehicles – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (9 controls), Release IA-5248: the fiduciary duty of care and duty of loyalty as the SEC interprets section 206 – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (5 controls), Section 204 and rules 203-1, 204-1, 204-3, 204-4, 204-5 and 204(b)-1: Form ADV, brochures, Form CRS and private fund reporting – US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) (4 controls). Each control defines specific requirements that organisations must implement to achieve compliance.
If I already comply with another framework, how much of US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) do I already cover?
US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275) does not currently have cross-framework mappings in our system. Check back as we continuously expand our mapping database.
How do I implement US Investment Advisers Act of 1940 and SEC Adviser Rules (17 CFR Part 275)?
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