Previously we covered Investment Advisor Registration in our blog When Do You Have to Register as an Investment Adviser?, discussing what the Investment Advisors Act of 1940 defines as an investment advisor and what triggers the registration requirements. In this blog, we will focus on the exclusions from the definition of investment advisor at the federal and state level.

Federal Exclusions from the Definition of Investment Advisor

For federal registration, there are six primary exclusions:

  1. Banks as defined in the Bank Holding Company Act of 1956.
  2. Lawyers, accountants, teachers, or engineers whose advice is solely incidental to the practice of their profession, unless they have established a separate advisory business or holds themselves out as offering investment advice.
  3. Broker-dealers whose performance of such services is solely incidental to the conduct of his business as a broker-dealer and who receives no special compensation.
  4. Publishers of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation.
  5. Any Person whose advice, analyses, or reports are related only to securities that are direct obligations of, or obligations guaranteed by, the United States, or by certain U.S. government-sponsored corporations designated by the Secretary of the Treasury.
  6. Any nationally recognized statistical rating organization, unless they engage in issuing recommendations a to purchasing, selling, or holding securities or in managing assets, consisting in whole or in part of securities, on behalf of others.

State Exclusions from the Definition of Investment Advisor

Under state law, the following are excluded from the definition of Investment Advisor:

  • Banks, saving institutions, and trust companies.
  • Any Lawyer, accountant, teacher, or engineer whose advice is solely incidental to the practice of their profession, unless they have established a separate advisory business or holds themselves out as offering investment advice.
  • Any broker-dealer whose performance of such services is solely incidental to the conduct of his business as a broker-dealer and who receives no special compensation.
  • A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service that does not consist of the rendering of advice on the basis of the specific investment situation of each client.
  • Federally covered Advisors.
  • Investment advisor representatives (“RIAs”). A person can act as an IA and an Investment advisor representative, however, if they act solely as an IAR hen they are excluded from the definition of investment advisor.
  • Any person excluded by the Investment Advisors Act of 1940.
  • Any person the state Administrator specifies is excluded.

For information on persons who do meet the definition of investment advisor, but do not have to register, check out our  Federal Exemptions from Investment Advisor Registration blog and State Exemptions from Investment Advisor Registration blog.

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