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8000 - Miscellaneous Statutes and Regulations


INVESTMENT ADVISERS ACT OF 1940

To provide for the registration and regulation of investment companies and investment advisers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE II—INVESTMENT ADVISERS

Findings

SEC. 201.  Upon the basis of facts disclosed by the record and report of the Securities and Exchange Commission made pursuant to section 30 of the Public Utility Holding Company Act of 1935, and facts otherwise disclosed and ascertained, it is hereby found that investment advisers are of national concern, in that, among other things--

(1)  their advice, counsel, publications, writings, analyses, and reports are furnished and distributed, and their contracts, subscription agreements, and other arrangements with clients are negotiated and performed, by the use of the mails and means and instrumentalities of interstate commerce;

(2)  their advice, counsel, publications, writings, analyses, and reports customarily relate to the purchase and sale of securities traded on national securities exchanges and in interstate over-the-counter markets, securities issued by companies engaged in business in interstate commerce, and securities issued by national banks and member banks of the Federal Reserve System; and

(3)  the foregoing transactions occur in such volume as substantially to affect interstate commerce, national securities exchanges, and other securities markets, the national banking system and the national economy.

[Codified to 15 U.S.C. 80b--1]

[Source: Section 201 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940]

SEC. 914.  STUDY ON ENHANCING INVESTMENT ADVISER EXAMINATIONS.

(a)  STUDY REQUIRED.--

(1)  IN GENERAL.--The Commission shall review and analyze the need for enhanced examination and enforcement resources for investment advisers.

(2)  AREAS OF CONSIDERATION.--The study required by this subsection shall examine--

(A)  the number and frequency of examinations of investment advisers by the Commission over the 5 years preceding the date of the enactment of this subtitle;

(B)  the extent to which having Congress authorize the Commission to designate one or more self-regulatory organizations to augment the Commission's efforts in overseeing investment advisers would improve the frequency of examinations of investment advisers; and

(C)  current and potential approaches to examining the investment advisory activities of dually registered broker dealers and investment advisers or affiliated broker-dealers and investment advisers.

(b)  REPORT REQUIRED.--The Commission shall report its findings to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, not later than 180 days after the date of enactment of this subtitle, and shall use such findings to revise its rules and regulations, as necessary. The report shall include a discussion of regulatory or legislative steps that are recommended or that may be necessary to address concerns identified in the study.

[Codified to 15 U.S.C. 80b--1 Note]

[Section 914 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1830), effective July 21, 2010]


Definitions

SEC. 202.  (a)  When used in this title, unless the context otherwise requires, the following definitions shall apply:

(1)  "Assignment" includes any direct or indirect transfer or hypothecation of an investment advisory contract by the assignor or of a controlling block of the assignor's outstanding voting securities by a security holder of the assignor; but if the investment adviser is a partnership, no assignment of an investment advisory contract shall be deemed to result from the death or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to the investment adviser of one or more members who, after such admission, shall be only a minority of the members and shall have only a minority interest in the business.

(2)  "Bank" means (A) a banking institution organized under the laws of the United States, or a Federal savings association, as defined in section 2(5) of the Home Owners' Loan Act (B) a member bank of the Federal Reserve System, (C) any other banking institution, savings association, as defined in section 2(4) of the Home Owners' Loan Act, or trust company, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency, and which is supervised and examined by State or Federal authority having supervision over banks or savings associations, and which is not operated for the purpose of evading the provisions of this title, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph.

(3)  The term "broker" has the same meaning as given in section 3 of the Securities Exchange Act of 1934.

(4)  "Commission" means the Securities and Exchange Commission.

(5)  "Company" means a corporation, a partnership, an association, a joint-stock company, a trust, or any organized group of persons, whether incorporated or not; or any receiver, trustee in a case under title 11, or similar official, or any liquidating agent for any of the foregoing, in his capacity as such.

(6)  "Convicted" includes a verdict, judgment, or plea of guilty, or a finding of guilt on a plea of nolo contendere, if such verdict, judgment, plea, or finding has not been reversed, set aside, or withdrawn, whether or not sentence has been imposed.

(7)  The term "dealer" has the same meaning as given in section 3 of the Securities Exchange Act of 1934, but does not include an insurance company or investment company.

(8)  "Director" means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated.

(9)  "Exchange" means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.

(10)  "Interstate commerce" means trade, commerce, transportation, or communication among the several States, or between any foreign country and any State, or between any State and any place or ship outside thereof.

(11)  "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; but does not include (A) a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956, which is not an investment company, except that the term "investment adviser" includes any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, such services or actions are performed through a separately identifiable department or division, the department or division, and not the bank itself, shall be deemed to be the investment adviser (B) any lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession; (C) any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor; (D) the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation; (E) any person whose advice, analyses, or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to section 3(a)(12) of the Securities Exchange Act of 1934, as exempted securities for the purposes of that Act; (F) any nationally recognized statistical rating organization, as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934, unless such organization engages in issuing recommendations as to purchasing, selling, or holding securities or in managing assets, consisting in whole or in part of securities, on behalf of others; (G) any family office, as defined by rule, regulation, or order of the Commission, in accordance with the purposes of this title; or (H) such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.

(12)  "Investment company," "affiliated person," and "insurance company" have the same meanings as in the Investment Company Act of 1940. "Control" means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.

(13)  "Investment supervisory services" means the giving of continuous advice as to the investment of funds on the basis of the individual needs of each client.

(14)  "Means or instrumentality of interstate commerce" includes any facility of a national securities exchange.

(15)  "National securities exchange" means an exchange registered under section 6 of the Securities Exchange Act of 1934.

(16)  "Person" means a natural person or a company.

(17)  The term "person associated with an investment adviser" means any partner, officer, or director of such investment adviser (or any person performing similar functions), or any person directly or indirectly controlling or controlled by such investment adviser, including any employee of such investment adviser, except that for the purposes of section 203 of this title (other than subsection (f) thereof), persons associated with an investment adviser whose functions are clerical or ministerial shall not be included in the meaning of such term. The Commission may by rules and regulations classify, for the purposes of any portion or portions of this title, persons, including employees controlled by an investment adviser.

(18)  "Security" means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security" or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing.

(19)  "State" means any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, or any other possession of the United States.

(20)  "Underwriter" means any person who has purchased from an issuer with a view to, or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission. As used in this paragraph the term "issuer" shall include in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.

(21)  "Securities Act of 1933", "Securities Exchange Act of 1934", and "Trust Indenture Act of 1939", mean those Acts, respectively, as heretofore or hereafter amended.

(22)  "Business development company" means any company which is a business development company as defined in section 2(a)(48) of this title and which complies with section 54 of this title, except that--

(A)  the 70 per centum of the value of the total assets condition referred to in sections 2(a)(48) and 54 of this title shall be 60 per centum for purposes of determining compliance therewith;

(B)  such company need not be a closed-end company and need not elect to be subject to the provisions of sections 54 through 64 of this title; and

(C)  the securities which may be purchased pursuant to section 54(a) of this title may be purchased from any person.

For purposes of this paragraph, all terms in sections 2(a)(48) and 54 of this title shall have the same meaning set forth in subchapter I of this chapter as if such company were a registered closed-end investment company, except that the value of the assets of a business development company which is not subject to the provisions of sections 54 through 64 of this title shall be determined as of the date of the most recent financial statements which it furnished to all holders of its securities, and shall be determined no less frequently than annually.

(23)  "Foreign securities authority" means any foreign government, or any governmental body or regulatory organization empowered by a foreign government to administer or enforce its laws as they relate to securities matters.

(24)  "Foreign financial regulatory authority" means any (A) foreign securities authority, (B) other governmental body or foreign equivalent of a self-regulatory organization empowered by a foreign government to administer or enforce its laws relating to the regulation of fiduciaries, trusts, commercial lending, insurance, trading in contracts of sale of a commodity for future delivery, or other instruments traded on or subject to the rules of a contract market, board of trade or foreign equivalent, or other financial activities, or (C) membership organization a function of which is to regulate the participation of its members in activities listed above.

(25)  "Supervised person" means any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.

(26)  The term "separately identifiable department or division" of a bank means a unit--

(A)  that is under the direct supervision of an officer or officers designated by the board of directors of the bank as responsible for the day-to-day conduct of the bank's investment adviser activities for one or more investment companies, including the supervision of all bank employees engaged in the performance of such activities; and

(B)  for which all of the records relating to its investment adviser activities are separately maintained in or extractable from such unit's own facilities or the facilities of the bank, and such records are so maintained or otherwise accessible as to permit independent examination and enforcement by the Commission of this Act or the Investment Company Act of 1940 and rules and regulations promulgated under this Act or the Investment Company Act of 1940.

(27)  The terms "security future" and "narrow-based security index" have the same meanings as provided in section 3(a)(55) of the Securities Exchange Act of 1934.

(28)  The term "credit rating agency" has the same meaning as in section 3 of the Securities Exchange Act of 1934.

(29)  The term "private fund" means an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3), but for section 3(c)(1) or 3(c)(7) of that Act.

(30)  The term "foreign private adviser" means any investment adviser who--

(A)  has no place of business in the United States;

(B)  has, in total, fewer than 15 clients and investors in the United States in private funds advised by the investment adviser;

(C)  has aggregate assets under management attributable to clients in the United States and investors in the United States in private funds advised by the investment adviser of less than $25,000,000 or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purpose of this title; and

(D)  neither--

(i)  holds itself out generally to the public in the United States as an investment adviser; nor

(ii)  acts as--

(I)  an investment adviser to any investment company registered under the Investment Company Act of 1940; or

(II)  a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53), and has not withdrawn its election.

(b)  No provision in this title shall apply to, or be deemed to include, the United States, a State, or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned directly or indirectly by any one or more of the foregoing, or any officer, agent, or employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto.

(c)  CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION, AND CAPITAL FORMATION.--Whenever pursuant to this title the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.

[Codified to 15 U.S.C. 80b--2]

[Source: Section 202 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940, as amended by section 12(c) of the Act of June 25, 1959 (Pub. L. No. 86--70; 73 Stat. 143), effective June 25, 1959; section 7(d) of the Act of July 12, 1960 (Pub. L. No. 86--624; 74 Stat. 412), effective July 12, 1960; section 1 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 885), effective September 13, 1960; section 13(j) of the Act of July 1, 1966 (Pub. L. No. 89--485; 80 Stat. 243), effective July 1, 1966; section 23 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1430), effective December 14, 1970; section 311 of title III of the Act of November 6, 1978 (Pub. L. No. 95--598; 92 Stat. 2672), effective October 1, 1979; section 201 of title II of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2289), effective October 21, 1980; section 6 of the Act of October 13, 1982 (Pub. L. No. 97--303; 96 Stat. 1410), effective October 13, 1982; section 701 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1263), effective December 4, 1987; and section 206(b) of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2720), effective November 15, 1990; section 303(c) of title III of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3438), effective April 9, 1997; sections 217, 218, 219 and 224 of title II of the Act of November 12, 1999 (Pub. L. No. 106--102; 113 Stat. 1399, 1400 and 1402), effective May 12, 2001; sections 209(a)(2) and (4) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--435 and 436), effective December 21, 2000; section 4(b)(3)(A) and (B) of the Act of September 29, 2006 (Pub. L. No. 109--291; 120 Stat. 1337), effective September 29, 2006; section 401(b)(1) of title IV of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1973; sections 402(a) and 409(a) of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1570 and 1575), effective July 21, 2011]

Notes

(b)  OTHER DEFINITIONS.--As used in this title, the terms "investment adviser'' and "private fund'' have the same meanings as in section 202 of the Investment Advisers Act of 1940, as amended by this title.

[Codified to 15 U.S.C. 80b--2 Note]

[Section 402(b) of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203;124 Stat. 1571), effective July 21, 2011]

(b)  RULEMAKING.--The rules, regulations, or orders issued by the Commission pursuant to section 202(a)(11)(G) of the Investment Advisers Act of 1940, as added by this section, regarding the definition of the term "family office'' shall provide for an exemption that--

(1)  is consistent with the previous exemptive policy of the Commission, as reflected in exemptive orders for family offices in effect on the date of enactment of this Act, and the grandfathering provisions in paragraph (3);

(2)  recognizes the range of organizational, management, and employment structures and arrangements employed by family offices; and

(3)  does not exclude any person who was not registered or required to be registered under the Investment Advisers Act of 1940 on January 1, 2010 from the definition of the term "family office'', solely because such person provides investment advice to, and was engaged before January 1, 2010 in providing investment advice to--

(A)  natural persons who, at the time of their applicable investment, are officers, directors, or employees of the family office who--

(i)  have invested with the family office before January 1, 2010; and

(ii)  are accredited investors, as defined in Regulation D of the Commission (or any successor thereto) under the Securities Act of 1933, or, as the Commission may prescribe by rule, the successors-in-interest thereto;

(B)  any company owned exclusively and controlled by members of the family of the family office, or as the Commission may prescribe by rule;

(C)  any investment adviser registered under the Investment Adviser Act of 1940 that provides investment advice to the family office and who identifies investment opportunities to the family office, and invests in such transactions on substantially the same terms as the family office invests, but does not invest in other funds advised by the family office, and whose assets as to which the family office directly or indirectly provides investment advice represent, in the aggregate, not more than 5 percent of the value of the total assets as to which the family office provides investment advice.

(c)  ANTIFRAUD AUTHORITY.--A family office that would not be a family office, but for subsection (b)(3), shall be deemed to be an investment adviser for the purposes of paragraphs (1), (2) and (4) of section 206 of the Investment Advisers Act of 1940.

[Codified to 15 U.S.C. 80b--2 Note]

[Section 409 (b) and (c) of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203;124 Stat. 1575-1576), effective July 21, 2011]


SEC. 419.  TRANSITION PERIOD.

Except as otherwise provided in this title, this title and the amendments made by this title shall become effective 1 year after the date of enactment of this Act, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission.

[Codified to 15 U.S.C. 80b--2 Note]

[Section 419 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203;124 Stat. 1580), effective July 21, 2011]

Registration of Investment Advisers

SEC. 203.  (a)  Except as provided in subsection (b) and section 203A, it shall be unlawful for any investment adviser, unless registered under this section, to make use of the mails or any means or instrumentality of interstate commerce in connection with his or its business as an investment adviser.

(b)  The provisions of subsection (a) shall not apply to--

(1)  any investment adviser, other than an investment adviser who acts as an investment adviser to any private fund all of whose clients are residents of the State within which such investment adviser maintains his or its principal office and place of business, and who does not furnish advice or issue analyses or reports with respect to securities listed or admitted to unlisted trading privileges on any national securities exchange;

(2)  any investment adviser whose only clients are insurance companies;

(3)  any investment adviser that is a foreign private adviser;

(4)  any investment adviser that is a charitable organization, as defined in section 3(c)(10)(D) of the Investment Company Act of 1940, or is a trustee, director, officer, employee, or volunteer of such a charitable organization acting within the scope of such person's employment or duties with such organization, whose advice, analyses, or reports are provided only to one or more of the following:

(A)  any such charitable organization;

(B)  a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940; or

(C)  a trust or other donative instrument described in section 3(c)(10)(B) of the Investment Company Act of 1940, or the trustees, administrators, settlors (or potential settlors), or beneficiaries of any such trust or other instrument;

(5)  any plan described in section 414(e) of the Internal Revenue Code of 1986, any person or entity eligible to establish and maintain such a plan under the Internal Revenue Code of 1986, or any trustee, director, officer, or employee of or volunteer for any such plan or person, if such person or entity, acting in such capacity, provides investment advice exclusively to, or with respect to, any plan, person, or entity or any company, account, or fund that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940;

(6)(A)  any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading advisor whose business does not consist primarily of acting as an investment adviser, as defined in section 202(a)(11) of this title, and that does not act as an investment adviser to--

(i)  an investment company registered under title I of this Act; or

(ii)  a company which has elected to be a business development company pursuant to section 54 of title I of this Act and has not withdrawn its election; or

(B)  any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading advisor and advises a private fund, provided that, if after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, the business of the advisor should become predominately the provision of securities-related advice, then such adviser shall register with the Commission.

(7)  any investment adviser, other than any entity that has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a-54), who solely advises--

(A)  small business investment companies that are licensees under the Small Business Investment Act of 1958;

(B)  entities that have received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the Small Business Investment Act of 1958, which notice or license has not been revoked; or

(C)  applicants that are affiliated with 1 or more licensed small business investment companies described in subparagraph (A) and that have applied for another license under the Small Business Investment Act of 1958, which application remains pending.

(c)(1)  An investment adviser, or any person who presently contemplates becoming an investment adviser, may be registered by filing with the Commission an application for registration in such form and containing such of the following information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors:

(A)  the name and form of organization under which the investment adviser engages or intends to engage in business; the name of the State or other sovereign power under which such investment adviser is organized; the location of his or its principal office, principal place of business, and branch offices, if any; the names and addresses of his or its partners, officers, directors, and persons performing similar functions or, if such an investment adviser be an individual, of such individual; and the number of his or its employees;

(B)  the education, the business affiliations for the past ten years, and the present business affiliations of such investment adviser and of his or its partners, officers, directors, and persons performing similar functions and of any controlling person thereof;

(C)  the nature of the business of such investment adviser, including the manner of giving advice and rendering analyses or reports;

(D)  a balance sheet certified by an independent public accountant and other financial statements (which shall, as the Commission specifies, be certified);

(E)  the nature and scope of the authority of such investment adviser with respect to clients' funds and accounts;

(F)  the basis or bases upon which such investment adviser is compensated;

(G)  whether such investment adviser, or any person associated with such investment adviser, is subject to any disqualification which would be a basis for denial, suspension, or revocation or registration of such investment adviser under the provision of subsection (e) of this section; and

(H)  a statement as to whether the principal business of such investment adviser consists or is to consist of acting as investment adviser and a statement as to whether a substantial part of the business of such investment adviser, consists or is to consist of rendering investment supervisory services.

(2)  Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents) the Commission shall--

(A)  by order grant such registration; or

(B)  institute proceedings to determine whether registration should be denied. Such proceedings shall include notice of the grounds for denial under consideration and opportunity for hearing and shall be concluded within one hundred twenty days of the date of the filing of the application for registration. At the conclusion of such proceedings the Commission, by order, shall grant or deny such registration. The Commission may extend the time for conclusion of such proceedings for up to ninety days if it finds good cause for such extension and publishes its reasons for so finding or for such longer period as to which the applicant consents.

The Commission shall grant such registration if the Commission finds that the requirements of this section are satisfied and that the applicant is not prohibited from registering as an investment adviser under section 203A. The Commission shall deny such registration if it does not make such a finding or if it finds that if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (e) of this section.

(d)  Any provision of this title (other than subsection (a) of this section) which prohibits any act, practice, or course of business if the mails or any means or instrumentality of interstate commerce are used in connection therewith shall also prohibit any such act, practice, or course of business by any investment adviser registered pursuant to this section or any person acting on behalf of such an investment adviser, irrespective of any use of the mails or any means or instrumentality of interstate commerce in connection therewith.

(e)  The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, suspend for a period not exceeding twelve months, or revoke the registration of any investment adviser if it finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or revocation is in the public interest and that such investment adviser, or any person associated with such investment adviser, whether prior to or subsequent to becoming so associated--

(1)  has willfully made or caused to be made in any application for registration or report required to be filed with the Commission under this title, or in any proceeding before the Commission with respect to registration, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which is required to be stated therein.

(2)  has been convicted within ten years preceding the filing of any application for registration or at any time thereafter of any felony or misdemeanor or of a substantially equivalent crime by a foreign court of competent jurisdiction which the Commission finds--

(A)  involves the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, perjury, burglary, any substantially equivalent activity however denominated by the laws of the relevant foreign government, or conspiracy to commit any such offense;

(B)  arises out of the conduct of the business of a broker, dealer, municipal securities dealer, investment adviser, bank, insurance company, government securities broker, government securities dealer, fiduciary, transfer agent, credit rating agency, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent statute or regulation;

(C)  involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities or substantially equivalent activity however denominated by the laws of the relevant foreign government; or

(D)  involves the violation of section 152, 1341, 1342, or 1343 or chapter 25 or 47 of title 18, United States Code, or a violation of substantially equivalent foreign statute.

(3)  has been convicted during the 10-year period preceding the date of filing of any application for registration, or at any time thereafter, of--

(A)  any crime that is punishable by imprisonment for 1 or more years, and that is not described in paragraph (2); or

(B)  a substantially equivalent crime by a foreign court of competent jurisdiction.

(4)  is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction, including any foreign court of competent jurisdiction, from acting as an investment adviser, underwriter, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, transfer agent, credit rating agency, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent statute or regulation, or as an affiliated person or employee of any investment company, bank, insurance company, foreign entity substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent statute or regulation, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security.

(5)  has willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, this title, the Commodity Exchange Act, or the rules or regulations under any such statutes or any rule of the Municipal Securities Rulemaking Board, or is unable to comply with any such provision.

(6)  has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, this title, the Commodity Exchange Act, the rules or regulations under any of such statutes, or the rules of the Municipal Securities Rulemaking Board, or has failed reasonably to supervise, with a view to preventing violations of the provisions of such statutes, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision. For the purposes of this paragraph no person shall be deemed to have failed reasonably to supervise any person, if--

(A)  there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person, and

(B)  such person has reasonably discharged the duties and obligations incumbent upon him by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with.

(7)  is subject to any order of the Commission barring or suspending the right of the person to be associated with an investment adviser;

(8)  has been found by a foreign financial regulatory authority to have--

(A)  made or caused to be made in any application for registration or report required to be filed with a foreign securities authority, or in any proceeding before a foreign securities authority with respect to registration, any statement that was at the time and in light of the circumstances under which it was made false or misleading with respect to any material fact, or has omitted to state in any application or report to a foreign securities authority any material fact that is required to be stated therein;

(B)  violated any foreign statute or regulation regarding transactions in securities or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board or trade; or

(C)  aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any foreign statute or regulation regarding transactions in securities or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade, or has been found, by the foreign financial regulatory authority, to have failed reasonably to supervise, with a view to preventing violations of statutory provisions, and rules and regulations promulgated thereunder, another person who commits such a violation, if such other person is subject to his supervision; or

(9)  is subject to any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit Union Administration, that--

(A)  bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or

(B)  constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct.

(f)  The Commission, by order, shall censure or place limitations on the activities of any person seeking to become associated, or, at the time of the alleged misconduct, associated or seeking to become associated with an investment adviser, or suspend for a period not exceeding 12 months or bar any such person from being associated with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person has committed or omitted any act or omission enumerated in paragraph (1), (5), (6), (8) or 9 of subsection (e) of this section or has been convicted of any offense specified in paragraph (2) or 3 of subsection (e) within ten years of the commencement of the proceedings under this subsection, or is enjoined from any action, conduct, or practice specified in paragraph (4) of subsection (e). It shall be unlawful for any person as to whom such an order suspending or barring him from being associated with an investment adviser is in effect willfully to become, or to be, associated with an investment adviser without the consent of the Commission, and it shall be unlawful for any investment adviser to permit such a person to become, or remain, a person associated with him without the consent of the Commission, if such investment adviser knew, or in the exercise of reasonable care, should have known, of such order.

(g)  Any successor to the business of an investment adviser registered under this section shall be deemed likewise registered hereunder, if within thirty days from its succession to such business it shall file an application for registration under this section, unless and until the Commission, pursuant to subsection (c) or subsection (e) of this section, shall deny registration to or revoke or suspend the registration of such successor.

(h)  Any person registered under this section may, upon such terms and conditions as the Commission finds necessary in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission. If the Commission finds that any person registered under this section, or who has pending an application for registration filed under this section, is no longer in existence, is not engaged in business as an investment adviser, or is prohibited from registering as an investment adviser under section 203A, the Commission shall by order cancel the registration of such person.

(i)  MONEY PENALTIES IN ADMINISTRATIVE PROCEEDINGS.--

(1)  AUTHORITY OF COMMISSION.--(A) IN GENERAL.--In any proceeding instituted pur- suant to subsection (e) or (f) against any person, the Commission may impose a civil penalty if it finds, on the record after notice and opportunity for hearing, that such penalty is in the public interest and that such person--

(i)  has willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, or this title, or the rules or regulations thereunder;

(ii)  has willfully aided, abetted, counseled, commanded, induced, or procured such a violation by any other person;

(iii)  has willfully made or caused to be made in any application for registration or report required to be filed with the Commission under this title, or in any proceeding before the Commission with respect to registration, any statement which was, at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which was required to be stated therein; or

(iv)  has failed reasonably to supervise, within the meaning of subsection (e)(6), with a view to preventing violations of the provisions of this title and the rules and regulations thereunder, another person who commits such a violation, if such other person is subject to his supervision;

(B)  CEASE-AND-DESIST PROCEEDINGS.--In any proceeding instituted pursuant to subsection (k) against any person, the Commission may impose a civil penalty if the Commission finds, on the record, after notice and opportunity for hearing, that such person--

(i)  is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

(ii)  is or was a cause of the violation of any provision of this title, or any rule or regulation issued under this title.

(2)  MAXIMUM AMOUNT OF PENALTY.--

(A)  FIRST TIER.--The maximum amount of penalty for each act or omission described in paragraph (1) shall be $5,000 for a natural person or $50,000 for any other person.

(B)  SECOND TIER.--Notwithstanding subparagraph (A), the maximum amount of penalty for each such act or omission shall be $50,000 for a natural person or $250,000 for any other person if the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

(C)  THIRD TIER.--Notwithstanding subparagraphs (A) and (B), the maximum amount of penalty for each such act or omission shall be $100,000 for a natural person or $500,000 for any other person if--

(i)  the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

(ii)  such act or omission directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons or resulted in substantial pecuniary gain to the person who committed the act or omission.

(3)  DETERMINATION OF PUBLIC INTEREST.--In considering under this section whether a penalty is in the public interest, the Commission may consider--

(A)  whether the act or omission for which such penalty is assessed involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;

(B)  the harm to other persons resulting either directly or indirectly from such act or omission;

(C)  the extent to which any person was unjustly enriched, taking into account any restitution made to persons injured by such behavior;

(D)  whether such person previously has been found by the Commission, another appropriate regulatory agency, or a self-regulatory organization to have violated the Federal securities laws, State securities laws, or the rules of a self-regulatory organization, has been enjoined by a court of competent jurisdiction from violations of such laws or rules, or has been convicted by a court of competent jurisdiction of violations of such laws or of any felony or misdemeanor described in section 203(e)(2) of this title;

(E)  the need to deter such person and other persons from committing such acts or omissions; and

(F)  such other matters as justice may require.

(4)  EVIDENCE CONCERNING ABILITY TO PAY.--In any proceeding in which the Commission may impose a penalty under this section, a respondent may present evidence of the respondent's ability to pay such penalty. The Commission may, in its discretion, consider such evidence in determining whether such penalty is in the public interest. Such evidence may relate to the extent of such person's ability to continue in business and the collectability of a penalty, taking into account any other claims of the United States or third parties upon such person's assets and the amount of such person's assets.

(j)  AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING AND DISGORGEMENT.--In any proceeding in which the Commission may impose a penalty under this section, the Commission may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.

(k)  CEASE-AND-DESIST PROCEEDINGS.--

(1)  AUTHORITY OF THE COMMISSION.--If the Commission finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this title, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any other person.

(2)  HEARING.--The notice instituting proceedings pursuant to paragraph (1) shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served.

(3)  TEMPORARY ORDER.--

(A)  IN GENERAL.--Whenever the Commission determines that the alleged violation or threatened violation specified in the notice instituting proceedings pursuant to paragraph (1), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest, including, but not limited to, losses to the Securities Investor Protection Corporation, prior to the completion of the proceedings, the Commission may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest as the Commission deems appropriate pending completion of such proceedings. Such an order shall be entered only after notice and opportunity for a hearing, unless the Commission, notwithstanding section 211(c) of this title, determines that notice and hearing prior to entry would be impracticable or contrary to the public interest. A temporary order shall become effective upon service upon the respondent and, unless set aside, limited, or suspended by the Commission or a court of competent jurisdiction, shall remain effective and enforceable pending the completion of the proceedings.

(B)  APPLICABILITY.--This paragraph shall apply only to a respondent that acts, or, at the time of the alleged misconduct acted, as a broker, dealer, investment adviser, investment company, municipal securities dealer, government securities broker, government securities dealer, or transfer agent, or is, or was at the time of the alleged misconduct, an associated person of, or a person seeking to become associated with, any of the foregoing.

(4)  REVIEW OF TEMPORARY ORDERS.--

(A)  COMMISSION REVIEW.--At any time after the respondent has been served with a temporary cease-and-desist order pursuant to paragraph (3), the respondent may apply to the Commission to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior Commission hearing, the respondent may, within 10 days after the date on which the order was served, request a hearing on such application and the Commission shall hold a hearing and render a decision on such application at the earliest possible time.

(B)  JUDICIAL REVIEW.--Within--

(i)  10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior Commission hearing, or

(ii)  10 days after the Commission renders a decision on an application and hearing under subparagraph (A), with respect to any temporary cease-and-desist order entered without a prior Commission hearing, the respondent may apply to the United States district court for the district in which the respondent resides or has its principal office or principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior Commission hearing may not apply to the court except after hearing and decision by the Commission on the respondent's application under subparagraph (A) of this paragraph.

(C)  NO AUTOMATIC STAY OF TEMPORARY ORDER.--The commencement of proceedings under subparagraph (B) of this paragraph shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.

(D)  EXCLUSIVE REVIEW.--Section 213 of this title shall not apply to a temporary order entered pursuant to this section.

(5)  AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING AND DISGORGEMENT.--In any cease-and-desist proceeding under paragraph (1), the Commission may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.

(l)  EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.--No investment adviser that acts as an investment adviser solely to 1 or more venture capital funds shall be subject to the registration requirements of this title with respect to the provision of investment advice relating to a venture capital fund. Not later than 1 year after the date of enactment of this subsection, the Commission shall issue final rules to define the term venture capital fund' for purposes of this subsection. The Commission shall require such advisers to maintain such records and provide to the Commission such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.

(m)  EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND ADVISERS.--

(1)  IN GENERAL.--The Commission shall provide an exemption from the registration requirements under this section to any investment adviser of private funds, if each of such investment adviser acts solely as an adviser to private funds and has assets under management in the United States of less than $150,000,000.

(2)  REPORTING.--The Commission shall require investment advisers exempted by reason of this subsection to maintain such records and provide to the Commission such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.

(n)  REGISTRATION AND EXAMINATION OF MID-SIZED PRIVATE FUND ADVISERS.--In prescribing regulations to carry out the requirements of this section with respect to investment advisers acting as investment advisers to mid-sized private funds, the Commission shall take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk, and shall provide for registration and examination procedures with respect to the investment advisers of such funds which reflect the level of systemic risk posed by such funds.

[Codified to 15 U.S.C. 80b--3]

[Source: Section 203 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 850), effective November 1, 1940, as amended by sections 2--5 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 885, 886), effective September 13, 1960; section 24 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1430), effective December 14, 1970, except section 203(b) which effective date is December 14, 1971; section 29(1)--(4) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 166--169), effective June 4, 1975; section 202 of title II of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2290), effective October 21, 1980; section 102(m) of title I of the Act of October 28, 1986 (Pub. L. No. 99--571; 100 Stat. 3220), effective July 25, 1987; section 702 of title VII of of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1263), effective December 4, 1987; and section 401 of title IV of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 946), effective October 15, 1990; sections 205(b) and (c) of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2719), effective November 15, 1990; section 5 of the Act of December 8, 1995 (Pub. L. No. 104--62; 109 Stat. 685), effective December 8, 1995; sections 303(b) and (d) and 305 of title III and section 508(d) of title V of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3438 and 3448, respectively), effective April 9, 1997, except that the amendments made to subsection (b)(3)--(5) by section 508(d) are effective October 11, 1996; section 301(d)(1) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3237), effective November 3, 1998; section 209(b) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--436), effective December 21, 2000; sections 604(b) and 604(c)(2) of title VI of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 796), effective July 30, 2002; section 4(b)(3)(C) of the Act of September 29, 2006 (Pub. L. No. 109--291; 120 Stat. 1337), September 29, 2006; sections 403, 407, and 408 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1571, 1574, and 1575), effective July 21, 2011; sections 925(b), 929(p)(A)(4), and 985(e)(1) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1851, 1864, and 1935), effective July 21, 2010]

SEC. 203A. STATE AND FEDERAL RESPONSIBILITIES.

(a)  ADVISERS SUBJECT TO STATE AUTHORITIES.--

(1)  IN GENERAL.--No investment adviser that is regulated or required to be regulated as an investment adviser in the State in which it maintains its principal office and place of business shall register under section 203, unless the investment adviser--

(A)  has assets under management of not less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this title; or

(B)  is an adviser to an investment company registered under title I of this Act.

(2)  TREATMENT OF MID-SIZED INVESTMENT ADVISERS.--

(A)  IN GENERAL.--No investment adviser described in subparagraph (B) shall register under section 203, unless the investment adviser is an adviser to an investment company registered under the Investment Company Act of 1940, or a company which has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn the election, except that, if by effect of this paragraph an investment adviser would be required to register with 15 of more States, then the adviser may register under section 203.

(B)  COVERED PERSONS.--An investment adviser described in this subparagraph is an investment adviser that--

(i)  is required to be registered as an investment adviser with the securities commissioner (or any agency or office performing like functions) of the State in which it maintains its principal office and place of business and, if registered, would be subject to examination as an investment adviser by any such commissioner, agency, or office; and

(ii)  has assets under management between--

(I)  the amount specified under subparagraph (A) of paragraph (1), as such amount may have been adjusted by the Commission pursuant to that subparagraph; and

(II)  $100,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this title.

(3)  DEFINITION.--For purposes of this subsection, the term "assets under management" means the securities portfolios with respect to which an investment adviser provides continuous and regular supervisory or management services.

(b)  ADVISERS SUBJECT TO COMMISSION AUTHORITY.--

(1)  IN GENERAL.--No law of any State or political subdivision thereof requiring the registration, licensing, or qualification as an investment adviser or supervised person of an investment adviser shall apply to any person--

(A)  that is registered under section 203 as an investment adviser, or that is a supervised person of such person, except that a State may license, register, or otherwise qualify any investment adviser representative who has a place of business located within that State; or

(B)  that is not registered under section 203 because that person is excepted from the definition of an investment adviser under section 202(a)(11).

(2)  LIMITATION.--Nothing in this subsection shall prohibit the securities commission (or any agency or office performing like functions) of any State from investigating and bringing enforcement actions with respect to fraud or deceit against an investment adviser or person associated with an investment adviser.

(c)  EXEMPTIONS.--Notwithstanding subsection (a), the Commission, by rule or regulation upon its own motion, or by order upon application, may permit the registration with the Commission of any person or class of persons to which the application of subsection (a) would be unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes of this section.

(d)  STATE ASSISTANCE.--Upon request of the securities commissioner (or any agency or officer performing like functions) of any State, the Commission may provide such training, technical assistance, or other reasonable assistance in connection with the regulation of investment advisers by the State.

[Codified to 15 U.S.C. 80b--3a]

[Source:  Section 203A of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 850), effective November 1, 1940, as added by section 303(a) of title III of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3437), effective April 9, 1997; section 7(b)(1) of the Act of September 29, 2006 (Pub. L. No. 109--290; 120 Stat. 1321), effective September 29, 2006; as amended by section 410 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1576), effective July 21, 2011]

Annual and Other Reports

SEC. 204.  (a)  IN GENERAL.--Every investment adviser who makes use of the mails or of any means or instrumentality of interstate commerce in connection with his or its business as an investment adviser (other than one specifically exempted from registration pursuant to section 203(b) of this title), shall make and keep for prescribed periods such records (as defined in section 3(a) (37) of the Securities Exchange Act of 1934), furnish such copies thereof, and make and disseminate such reports as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. All records (as so defined) of such investment advisers are subject at any time, or from time to time, to such reasonable periodic, special, or other examinations by representatives of the Commission as the Commission deems necessary or appropriate in the public interest or for the protection of investors.

(b)  RECORDS AND REPORTS OF PRIVATE FUNDS.--

(1)  IN GENERAL.--The Commission may require any investment adviser registered under this title--

(A)  to maintain such records of, and file with the Commission such reports regarding, private funds advised by the investment adviser, as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk by the Financial Stability Oversight Council (in this subsection referred to as the Council'); and

(B)  to provide or make available to the Council those reports or records or the information contained therein.

(2)  TREATMENT OF RECORDS.--The records and reports of any private fund to which an investment adviser registered under this title provides investment advice shall be deemed to be the records and reports of the investment adviser.

(3)  REQUIRED INFORMATION.--The records and reports required to be maintained by an investment adviser and subject to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser, a description of--

(A)  the amount of assets under management and use of leverage, including off-balance-sheet leverage;

(B)  counterparty credit risk exposure;

(C)  trading and investment positions;

(D)  valuation policies and practices of the fund;

(E)  types of assets held;

(F)  side arrangements or side letters, whereby certain investors in a fund obtain more favorable rights or entitlements than other investors;

(G)  trading practices; and

(H)  such other information as the Commission, in consultation with the Council, determines is necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk, which may include the establishment of different reporting requirements for different classes of fund advisers, based on the type or size of private fund being advised.

(4)  MAINTENANCE OF RECORDS.--An investment adviser registered under this title shall maintain such records of private funds advised by the investment adviser for such period or periods as the Commission, by rule, may prescribe as necessary and appropriate in the public interest and for protection of investors, or for the assessment of systemic risk.

(5)  FILING OF RECORDS.--The Commission shall issue rules requiring each investment adviser to a private fun to file reports containing such information as the Commission deems necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk.

(6)  EXAMINATION OF RECORDS.--

(A)  PERIODIC AND SPECIAL EXAMINATIONS.--The Commission--

(i)  shall conduct periodic inspections of the records of private funds maintained by an investment adviser registered under this title in accordance with a schedule established by the Commission; and

(ii)  may conduct at any time and from time to time such additional, special, and other examinations as the Commission may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.

(B)  AVAILABILITY OF RECORDS.--An investment adviser registered under this title shall make available to the Commission any copies or extracts from such records as may be prepared without undue effort, expense, or delay, as the Commission or its representatives may reasonably request.

(7)  INFORMATION SHARING.--

(A)  IN GENERAL.--The Commission shall make available to the Council copies of all reports, documents, records, and information filed with or provided to the Commission by an investment adviser under this subsection as the Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund.

(B)  CONFIDENTIALITY.--The Council shall maintain the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality established for the Commission pursuant to paragraph (8). The Council shall be exempt from section 552 of title 5, United States Code, with respect to any information in any report, document, record, or information made available, to the Council under this subsection.

(8)  COMMISSION CONFIDENTIALITY OF REPORTS.--Notwithstanding any other provision of law, the Commission may not be compelled to disclose any report or information contained therein required to be filed with the Commission under this subsection, except that nothing in this subsection authorizes the Commission--

(A)  to withhold information from Congress, upon an agreement of confidentiality; or

(B)  prevent the commission from complying with--

(i)  a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction; or

(ii)  an order of a court of the United States in an action brought by the United States or the Commission

(9)  OTHER RECIPIENTS CONFIDENTIALITY.--Any department, agency, or self-regulatory organization that receives reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with the level of confidentiality established for the Commission under paragraph (8).

(10)  PUBLIC INFORMATION EXCEPTION.--

(1)  IN GENERAL.--The Commission, the Council, and any other department, agency, or self-regulatory organization that receives information, reports, documents, records, or information from the Commission under this subsection, shall be exempt from the provisions of section 552 of title 5, United States Code, with respect to any such report, document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the same limitations on public disclosure as any facts ascertained during an examination, as provided by section 210(b) of this title.

(B)  PROPRIETARY INFORMATION.--For purposes of this paragraph, proprietary information includes sensitive, non-public information regarding--

(i)  the investment or trading strategies of the investment adviser;

(ii)  analytical or research methodologies;

(iii)  trading data;

(iv)  computer hardware or software containing intellectual property; and

(v)  any additional information that the Commission determines to be proprietary.

(11)  ANNUAL REPORT TO CONGRESS.--The Commission shall report annually to Congress on how the Commission has used the data collected pursuant to this subsection to monitor the markets for the protection of investors and the integrity of the markets..

(c)  FILING DEPOSITORIES.--The Commission may, by rule, require an investment adviser--

(1)  to file with the Commission any fee, application, report, or notice required to be filed by this title or the rules issued under this title through any entity designated by the Commission for that purpose; and

(2)  to pay the reasonable costs associated with such filing and the establishment and maintenance of the systems required by subsection (c).

(3)  LIMITATION ON LIABILITY.--An entity designated by the Commission under subsection (b)(1) shall not have any liability to any person for any actions taken or omitted in good faith under this subsection.

(d)  RECORDS OF PERSONS WITH CUSTODY OR USE.--

(1)  IN GENERAL.--Records of persons having custody or use of the securities, deposits, or credits of a client, that relate to such custody or use, are subject at any time, or from time to time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection of investors.

(2)  CERTAIN PERSONS SUBJECT TO OTHER REGULATION.--Any person that is subject to regulation and examination by a Federal financial institution regulatory agency (as such term is defined under section 212(c)(2) of title 18, United States Code) may satisfy any examination request, information request, or document request described under paragraph (1), by providing the Commission with a detailed listing, in writing, of the securities, deposits, or credits of the client within the custody or use of such person.

[Codified to 15 U.S.C. 80b--4]

[Source: Section 204 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as amended by section 6 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 886), effective September 13, 1960; and section 29(5) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 169), effective June 4, 1975; section 7 of the Act of September 29, 2006 (Pub. L. No. 109--290; 120 Stat. 1321), effective September 29, 2006; section 404 of title IV of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1571); section 929Q(b) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1866), effective July 21, 2010]


Prevention of Misuse of Nonpublic Information

SEC. 204A.  IN GENERAL.--Every investment adviser subject to section 204 of this title shall establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of such investment adviser's business, to prevent the misuse in violation of this Act or the Securities Exchange Act of 1934, or the rules or regulations thereunder, of material, nonpublic information by such investment adviser or any person associated with such investment adviser. The Commission, as it deems necessary or appropriate in the public interest or for the protection of investors, shall adopt rules or regulations to require specific policies or procedures reasonably designed to prevent misuse in violation of this Act or the Securities Exchange Act of 1934 (or the rules or regulations thereunder) of material, nonpublic information.

(b)  FILING DEPOSITORIES.--The Commission may, by rule, require an investment adviser--

(1)  to file with the Commission any fee, application, report, or notice required to be filed by this title or the rules issued under this title through any entity designated by the Commission for that purpose; and

(2)  to pay the reasonable costs associated with such filing and the establishment and maintenance of the systems required by subsection (c).

(c)  ACCESS TO DISCIPLINARY AND OTHER INFORMATION.--

(1)  MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES.--

(A)  IN GENERAL.--The Commission shall require the entity designated by the Commission under subsection (b)(1) to establish and maintain a toll-free telephone listing, or a readily accessible electronic or other process, to receive and promptly respond to inquiries regarding registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information required by law or rule to be reported) involving investment advisers and persons associated with investment advisers.

(B)  APPLICABILITY.--This subsection shall apply to any investment adviser (and the persons associated with that adviser), whether the investment adviser is registered with the Commission under section 203 or regulated solely by a State, as described in section 203A.

(2)  RECOVERY OF COSTS.--An entity designated by the Commission under subsection (b)(1) may charge persons making inquiries, other than individual investors, reasonable fees for responses to inquiries described in paragraph (1).

(3)  LIMITATION ON LIABILITY.--An entity designated by the Commission under subsection (b)(1) shall not have any liability to any person for any actions taken or omitted in good faith under this subsection.

[Codified to 15 U.S.C. 80b--4a]

[Source:  Section 204A of title II of the Act of August 22, 1940 (Pub. L. No. 768), as added by section 3(b)(2) of the Act of November 19, 1988 (Pub. L. No. 100--704; 102 Stat. 4680), effective November 19, 1988; section 7(a) of the Act of September 29, 2006 (Pub. L. No. 109--290; 120 Stat. 1321), effective September 29, 2006]

Investment Advisory Contracts

SEC. 205. (a)  No investment adviser registered or required to be registered with the Commission shall enter into, extend, or renew any investment advisory contract, or in any way perform any investment advisory contract entered into, extended, or renewed on or after the effective date of this title, if such contract--

(1)  provides for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client;

(2)  fails to provide, in substance, that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract; or

(3)  fails to provide, in substance, that the investment adviser, if a partnership, will notify the other party to the contract of any change in the membership of such partnership within a reasonable time after such change.

(b)  Paragraph (1) of subsection (a) shall not--

(1)  be construed to prohibit an investment advisory contract which provides for compensation based upon the total value of a fund averaged over a definite period, or as of definite dates, or taken as of a definite date;

(2)  apply to an investment advisory contract with--

(A)  an investment company registered under title I of this Act, or

(B)  any other person (except a trust, governmental plan, collective trust fund, or separate account referred to in section 3(c)(11) of title I of this Act), provided that the contract relates to the investment of assets in excess of $1 million,

if the contract provides for compensation based on the asset value of the company or fund under management averaged over a specified period and increasing and decreasing proportionately with the investment performance of the company or fund over a specified period in relation to the investment record of an appropriate index of securities prices or such other measure of investment performance as the Commission by rule, regulation, or order may specify;

(3)  apply with respect to any investment advisory contract between an investment adviser and a business development company, as defined in this title, if (A) the compensation provided for in such contract does not exceed 20 per centum of the realized capital gains upon the funds of the business development company over a specified period or as of definite dates, computed net of all realized capital losses and unrealized capital depreciation, and the condition of section 61(a)(3)(B)(iii) of title I of this Act is satisfied, and (B) the business development company does not have outstanding any option, warrant, or right issued pursuant to section 61(a)(3)(B) of title I of this Act and does not have a profit-sharing plan described in section 57(n) of title I of this Act; and

(4)  apply to an investment advisory contract with a company excepted from the definition of an investment company under section 3(c)(7) of title I of this Act; or

(5)  apply to an investment advisory contract with a person who is not a resident of the United States.

(c)  For purposes of paragraph (2) of subsection (b), the point from which increases and decreases in compensation are measured shall be the fee which is paid or earned when the investment performance of such company or fund is equivalent to that of the index or other measure of performance, and an index of securities prices shall be deemed appropriate unless the Commission by order shall determine otherwise.

(d)  As used in paragraphs (2) and (3) of subsection (a), "investment advisory contract" means any contract or agreement whereby a person agrees to act as investment adviser to or to manage any investment or trading account of another person other than an investment company registered under title I of this Act.

(e)  The Commission, by rule or regulation, upon its own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or any class or classes of person or transactions, from subsection (a)(1), if and to the extent that the exemption relates to an investment advisory contract with any person that the Commission determines does not need the protections of subsection (a)(1), on the basis of such factors as financial sophistication, net worth, knowledge of and experience in financial matters, amount of assets under management, relationship with a registered investment adviser, and such other factors as the Commission determines as consistent with this section. With respect to any factor used in any rule or regulation by the Commission in making a determination under this subsection, if the Commission uses a dollar amount test in connection with such factor, such as a net asset threshold, the Commission shall, by order, not later than 1 year after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, and every 5 years thereafter, adjust for the effects of inflation on such test. Any such adjustment that is not a multiple of $100,000 shall be rounded to the nearest multiple of $100,000

(f)  AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.--

The Commission, by rule, may prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any investment adviser to arbitrate any future dispute between them arising under the Federal securities laws, the rules and regulations thereunder, or the rules of a self-regulatory organization if it finds that such prohibition, imposition of conditions, or limitations are in the public interest and for the protection of investors.

[Codified to 15 U.S.C. 80b--5]

[Source: Section 205 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as amended by section 7 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 887), effective September 13, 1960; section 25 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1432), effective December 14, 1971; section 203 of title II of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2290), effective October 21, 1980; and section 703 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1263), effective December 4, 1987; section 210 of title II of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3436), effective October 11, 1996; section 418 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1579), effective July 21, 2011; section 921(b) and 928 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1841 and 1852), effective July 21, 2010]

Prohibited Transactions by Investment Advisers

SEC. 206.  It shall be unlawful for any investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly--

(1)  to employ any device, scheme, or artifice to defraud any client or prospective client;

(2)  to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;

(3)  acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph (3) shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an invesment adviser in relation to such transaction; or

(4)  to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules and regulations define, and prescribe means reasonably designed to prevent, such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.

[Codified to 15 U.S.C. 80b--6]

[Source: Section 206 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 852), effective November 1, 1940, as amended by sections 8 and 9 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 887), effective September 13, 1960; section 985(e)(2) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1935), effective July 21, 2010]

Exemptions

SEC. 206A.  The Commission, by rules and regulations, upon its own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or any class or classes of persons, or transactions, from any provision or provisions of this title or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title.

[Codified to 15 U.S.C. 80b--6a]

[Source: Section 206A of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as added by section 26 of the Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1433), effective December 14, 1970]

Material Misstatements

SEC. 207.  It shall be unlawful for any person willfully to make any untrue statement of a material fact in any registration application or report filed with the Commission under section 203 or 204, or willfully to omit to state in any such application or report any material fact which is required to be stated therein.

[Codified to 15 U.S.C. 80b--7]

[Source: Section 207 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940]


General Prohibitions

SEC. 208.  (a)  It shall be unlawful for any person registered under section 203 of this title to represent or imply in any manner whatsoever that such person has been sponsored, recommended, or approved, or that his abilities or qualifications have in any respect been passed upon by the United States or any agency or any officer thereof.

(b)  No provision of subsection (a) shall be construed to prohibit a statement that a person is registered under this title or under the Securities Exchange Act of 1934, if such statement is true in fact and if the effect of such registration is not misrepresented.

(c)  It shall be unlawful for any person registered under section 203 of this title to represent that he is an investment counsel or to use the name "investment counsel" as descriptive of his business unless

(1)  his or its principal business consists of acting as investment advisor, and

(2)  a substantial part of his or its business consists of rendering investment supervisory services.

(d)  It shall be unlawful for any person indirectly, or through or by any other person, to do any act or thing which it would be unlawful for such person to do directly under the provisions of this title or any rule or regulation thereunder.

[Codified to 15 U.S.C. 80b--8]

[Source: Section 208 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as amended by sections 10 and 11 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 887), effective September 13, 1960]

Enforcement of Title

SEC. 209.  (a)  Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this title or of any rule or regulation prescribed under the authority thereof, have been or are about to be violated by any person, it may in its discretion require, and in any event shall permit, such person to file with it a statement in writing, under oath or otherwise, as to all the facts and circumstances relevant to such violation, and may otherwise investigate all such facts and circumstances.

(b)  For the purposes of any investigation or any proceeding under this title, any member of the Commission or any officer thereof designated by it is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records which are relevant or material to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in any State or in any Territory or other place subject to the jurisdiction of the United States at any designated place of hearing.

(c)  In case of contumacy by, or refusal to obey a subpena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoranda, contracts, agreements, and other records. And such court may issue an order requiring such person to appear before the Commission or member or officer designated by the Commission, there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found. Any person who without just cause shall fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in his or its power so to do, in obedience to the subpena of the Commission, shall be guilty of a misdemeanor, and upon conviction shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year, or both.

(d)  Whenever it shall appear to the Commission that any person has engaged, is engaged, or is about to engage in any act or practice constituting a violation of any provision of this title, or of any rule, regulation, or order hereunder, or that any person has aided, abetted, counseled, commanded, induced, or procured, is aiding, abetting, counseling, commanding, inducing, or procuring, or is about to aid, abet, counsel, command, induce, or procure such a violation, it may in its discretion bring an action in the proper district court of the United States, or the proper United States court of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this title or any rule, regulation, or order hereunder. Upon a showing that such person has engaged, is engaged, or is about to engage in any such act or practice, or, in aiding, abetting, counseling, commanding, inducing, or procuring any such act or practice, a permanent or temporary injunction or decree or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning any violation of the provisions of this title, or of any rule, regulation, or orderthereunder, to the Attorney General, who in his discretion, may institute the appropriate criminal proceedings under this title.

(e)  MONEY PENALTIES IN CIVIL ACTIONS.--

(1)  AUTHORITY OF COMMISSION.--Whenever it shall appear to the Commission that any person has violated any provision of this title, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 203(k) of this title, the Commission may bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.

(2)  AMOUNT OF PENALTY.--

(A)  FIRST TIER.--The amount of the penalty shall be determined by the court in light of the facts and circumstances. For each violation, the amount of the penalty shall not exceed the greater of (i) $5,000 for a natural person or $50,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation.

(B)  SECOND TIER.--Notwithstanding subparagraph (A), the amount of penalty for each such violation shall not exceed the greater of (i) $50,000 for a natural person or $250,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

(C)  THIRD TIER.--Notwithstanding subparagraphs (A) and (B), the amount of penalty for each such violation shall not exceed the greater of (i) $100,000 for a natural person or $500,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if--

(I)  the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

(II)  such violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.

(3)  PROCEDURES FOR COLLECTION.--

(A)  PAYMENT OF PENALTY TO TREASURY.--A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in section 308 of the Sarbanes-Oxley Act of 2002 and section 21F of the Securities Exchange Act of 1934.

(B)  COLLECTION OF PENALTIES.--If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court's order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.

(C)  REMEDY NOT EXCLUSIVE.--The actions authorized by this subsection may be brought in addition to any other action that the Commission or the Attorney General is entitled to bring.

(D)  JURISDICTION AND VENUE.--For purposes of section 214 of this title, actions under this paragraph shall be actions to enforce a liability or a duty created by this title.

(4)  SPECIAL PROVISIONS RELATING TO A VIOLATION OF A CEASE-AND-DESIST ORDER.--In an action to enforce a cease-and-desist order entered by the Commission pursuant to section 203(k), each separate violation of such order shall be a separate offense, except that in the case of a violation through a continuing failure to comply with the order, each day of the failure to comply shall be deemed a separate offense.

(f)  AIDING AND ABETTING.--For purposes of any action brought by the Commission under subsection (e), any person that knowingly or recklessly has aided, abetted, counseled, commanded, induced, or procured a violation of any provision of this Act, or of any rule, regulation, or order hereunder, shall be deemed to be in violation of such provision, rule, regulation, or order to the same extent as the person that committed such violation.

[Codified to 15 U.S.C. 80b--9]

[Source: Section 209 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 853), effective November 1, 1940, as amended by section 12 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 887), effective September 13, 1960, section 216 of title II of the Act of October 15, 1970 (Pub. L. No. 91--452; 84 Stat. 929), effective October 15, 1970; and section 704 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264), effective December 4, 1987; and section 402 of title IV of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 949), effective October 15, 1990; section 308(d)(5) of title III of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 785), effective July 30, 2002; sections 923(a)(3) and 929N of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1849 and 1862), effective July 21, 2010]

Publicity

SEC. 210.  (a)  The information contained in any registration application or report or amendment thereto filed with the Commission pursuant to any provision of this title shall be made available to the public, unless and except insofar as the Commission, by rules and regulations upon its own motion, or by order upon application, finds that public disclosure is neither necessary nor appropriate in the public interest or for the protection of investors. Photostatic or other copies of information contained in documents filed with the Commission under this title and made available to the public shall be furnished to any person at such reasonable charge and under such reasonable limitations as the Commission shall prescribe.

(b)  Subject to the provisions of subsections (c) and (d) of section 209 of this title and section 24(c) of the Securities Exchange Act of 1934, the Commission, or any member, officer, or employee thereof, shall not make public the fact that any examination or investigation under this title is being conducted, or the results of or any facts ascertained during any such examination or investigation; and no member, officer, or employee of the Commission shall disclose to any person other than a member, officer, or employee of the Commission any information obtained as a result of any such examination or investigation except with the approval of the Commission. The provisions of this subsection shall not apply--

(1)  in the case of any hearing which is public under the provisions of section 212; or

(2)  In the case of a resolution or request from either House of Congress.

(c)  No provision of this title shall be construed to require, or to authorize the Commission to require any investment adviser engaged in rendering investment supervisory services to disclose the identity, investments, or affairs of any client of such investment adviser, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its object the enforcement of a provision or provisions of this title; or for purposes of assessment of potential systemic risk.

[Codified to 15 U.S.C. 80b--10]

[Source: Section 210 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 854), effective November 1, 1940, as amended by section 13 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 887), effective September 13, 1960; section 202(b)(2) of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2715), effective November 15, 1990; section 405 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1574); sections 919B and 929I(c) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1838 and 1858), effective July 21, 2010; section 1(c) of the Act of October 5, 2010 (Pub. L. No. 111--257; 124 Stat. 2646), effective October 5, 2010]

SEC. 210A. CONSULTATION

(a)  EXAMINATION RESULTS AND OTHER INFORMATION.--

(1)  The appropriate Federal banking agency shall provide the Commission upon request the results of any examination, reports, records, or other information to which such agency may have access--

(A)  with respect to the investment advisory activities of any--

(i)  bank holding company or savings and loans holding company;

(ii)  bank; or

(iii)  separately identifiable department or division of a bank,

that is registered under section 203 of this title; and

(B)  in the case of a bank holding company or savings and loans holding company or bank that has a subsidiary or a separately identifiable department or division registered under that section, with respect to the investment advisory activities of such bank or bank holding company or savings and loans holding company.

(2)  The Commission shall provide to the appropriate Federal banking agency upon request the results of any examination, reports, records, or other information with respect to the investment advisory activities of any bank holding company or savings and loans holding company, bank, or separately identifiable department or division of a bank, which is registered under section 203 of this title.

(3)  Notwithstanding any other provision of law, the Commission and the appropriate Federal banking agencies shall not be compelled to disclose any information provided under paragraph (1) or (2). Nothing in this paragraph shall authorize the Commission or such agencies to withhold information from Congress, or prevent the Commission or such agencies from complying with a request for information from any other Federal department or agency or any self-regulatory organization requesting the information for purposes within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States, the Commission, or such agencies. For purposes of section 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section 552.

(b)  EFFECT ON OTHER AUTHORITY.--Nothing in this section shall limit in any respect the authority of the appropriate Federal banking agency with respect to such bank holding company or savings and loans holding company (or affiliates or subsidiaries thereof), bank, or subsidiary, department, or division or a bank under any other provision of law.

(c)  DEFINITION.--For purposes of this section, the term "appropriate Federal banking agency" shall have the same meaning as given in section 3 of the Federal Deposit Insurance Act.

[Codified to 15 U.S.C. 80b--10a]

[Source: Section 210A of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 854), effective November 1, 1940, as added by section 220 of the Act of November 12, 1999 (Pub. L. No. 106--102; 113 Stat. 1400), effective May 12, 2001; section 401(b) of title IV of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1973), effective October 13, 2006]

Rules, Regulations, and Orders

SEC. 211.  (a)  The Commission shall have authority from time to time to make, issue, amend, and rescind such rules and regulations and such orders as are necessary or appropriate to the exercise of the functions and powers conferred upon the Commission elsewhere in this title, including rules and regulations defining technical, trade, and other terms used in this title, except that the Commission may not define the term "client" for purposes of paragraphs (1) and (2) of section 206 to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser. For the purposes of its rules or regulations the Commission may classify persons and matters within its jurisdiction and prescribe different requirements for different classes of persons or matters, including rules and regulations defining technical, trade, and other terms used in this title,, except that the Commission may not define the term client' for purposes of paragraphs (1) and (2) of section 206 to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser.

(b)  Subject to the provisions of chapter 15 of title 44, United States Code, and regulations prescribed under the authority thereof, the rules and regulations of the Commission under this title, and amendments thereof, shall be effective upon publication in the manner which the Commission shall prescribe, or upon such later date as may be provided in such rules and regulations.

(c)  Orders of the Commission under this title shall be issued only after appropriate notice and opportunity for hearing. Notice to the parties to a proceeding before the Commission shall be given by personal service upon each party or by registered mail or certified mail or confirmed telegraphic notice to the party's last known business address. Notice to interested persons, if any, other than parties may be given in the same manner or by publication in the Federal Register.

(d)  No provision of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or order of the Commission, notwithstanding that such rule, regulation, or order may, after such act or ommission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

(e)  DISCLOSURE RULES ON PRIVATE FUNDS.--The Commission and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under subsection 204(b) and with the Commodity Futures Trading Commission by investment advisers that are registered both under this title and the Commodity Exchange Act (7 U.S.C. 1a et seq.).

[Codified to 15 U.S.C. 80b--11]

[Source: Section 211 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat 855), effective November 1, 1940, as amended by section 1(16) of the Act of June 11, 1960 (Pub. L. No. 86--507; 74 Stat. 201), effective June 11, 1960; section 14 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 888), effective September 13, 1960; and section 705 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264), effective December 4, 1987; section 406 of title IV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1574); sections 913(g)(2) and 913(h)(2) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1829--1830), effective July 21, 2010]

Hearings

SEC. 212.  Hearings may be public and may be held before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

[Codified to 15 U.S.C. 80b-12]

[Source: Section 212 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 855), effective November 1, 1940]

Court Review of Orders

SEC. 213.  (a)  Any person or party aggrieved by an order issued by the Commission under this title may obtain a review of such order in the United States Court of Appeals within any circuit wherein such person resides or has his principal office or place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or set aside in whole or in part. A copy of such petition shall be forthwith transmitted by the clerk of the court to any member of the Commission, or any officer thereof designated by the Commission for that purpose, and thereupon the Commission shall file in the court the record upon which the order complained of was entered, as provided in section 2112 of title 28, United States Code. Upon the filing of such petition such court shall have jurisdiction, which upon the filing of the record shall be exclusive, to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission or unless there were reasonable grounds for failure so to do. The findings of the Commission as to the facts, if supported by substantial evidence, shall be conclusive. If application is made to the court for leave to adduce additional evidence, and it is shown to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the proceeding before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts by reason of the additional evidence so taken, and it shall file with the court such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and its recommendation, if any, for the modification or setting aside of the original order. The judgement and decree of the court affirming, modifying, or setting aside, in whole or in part, any such order of the Commission shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

(b)  The commencement of proceedings under subsection (a) shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.

[Codified to 15 U.S.C. 80b--13]

[Source: Section 213 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 855), effective November 1, 1940, as amended by section 32(a) of the Act of June 25, 1948; (Pub. L. No. 773; 62 Stat. 991), effective June 25, 1948; section 127 of the Act of May 24, 1949 (Pub. L. No. 72; 63 Stat. 107), effective May 24, 1949; section 26 of the Act of August 28, 1958 (Pub. L. No. 85--791; 72 Stat. 949), effective August 28, 1958; and section 706 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264), effective December 4, 1987; section 985(e)(3) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1935), effective July 21, 2010]

Jurisdiction of Offenses and Suits

SEC. 214.  (a)  IN GENERAL.--The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have jurisdiction of violations of this title or the rules, regulations, or orders thereunder, and, concurrently with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by, or to enjoin any violation of this title or the rules, regulations, or orders thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by, or to enjoin any violation of this title or rules, regulations, or orders thereunder, may be brought in any such district or in the district wherein the defendant is an inhabitant or transacts business, and process in such cases may be served in any district of which the defendant is an inhabitant or transacts business or wherever the defendant may be found. In any action or proceeding instituted by the Commission under this title in a United States district court for any judicial district, a subpoena issued to compel the attendance of a witness or the production of documents or tangible things (or both) at a hearing or trial may be served at any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued under the preceding sentence. Judgments and decrees so rendered shall be subject to review as provided in sections 1254, 1291, 1292, and 1294 of title 28, United States Code. No costs shall be assessed for or against the Commission in any proceeding under this title brought by or against the Commission in any court.

(b)  EXTRATERRITORIAL JURISDICTION.--The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of the antifraud provisions of this title involving--

(1)  conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or

(2)  conduct occurring outside the United States that has a foreseeable substantial effect within the United States.

[Codified to 15 U.S.C. 80b--14]

[Source: Section 214 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 856), effective November 1, 1940, as amended by section 707 of title VII of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1264), effective December 4, 1987; and section 403 of title IV of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 951), effective October 15, 1990; sections 929E(d) and 929P(b)(3) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1865), effective July 21, 2010]

Validity of Contracts

SEC. 215.  (a)  Any condition, stipulation, or provision binding any person to waive compliance with any provision of this title or with any rule, regulation, or order thereunder shall be void.

(b)  Every contract made in violation of any provision of this title and every contract heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of any provision of this title, or any rule, regulation, or order thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, regulation, or order, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision.

[Codified to 15 U.S.C. 80b--15]

[Source: Section 215 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 856), effective November 1, 1940]

Annual Reports of Commission

SEC. 216.  The Commission shall submit annually a report to the Congress covering the work of the Commission for the preceding year and including such information, data, and recommendations for further legislation in connection with the matters covered by this title as it may find advisable.

[Codified to 15 U.S.C. 80b--16]

[Source: Section 216 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]

Penalties

SEC. 217.  Any person who willfully violates any provision of this title, or any rule, regulation, or order promulgated by the Commission under authority thereof, shall, upon conviction, be fined not more than $10,000, imprisoned for not more than five years, or both.

[Codified to 15 U.S.C. 80b--17]

[Source: Section 217 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940, as amended by section 15 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 888), effective September 13, 1960; and section 27(f) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 163), effective June 4, 1975]


Hiring and Leasing Authority of the Commission

SEC. 218.  The provisions of section 4(b) of the Securities Exchange Act of 1934 shall be applicable with respect to the power of the Commission--

(1)  to appoint and fix the compensation of such other employees as may be necessary for carrying out its functions under this title, and

(2)  to lease and allocate such real property as may be necessary for carrying out its functions under this title.

[Codified to 15 U.S.C. 80b--18]

[Source: Section 218 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940, as amended by section 1106(a) of title XI of the Act of October 28, 1949 (Pub. L. No. 429; 63 Stat. 972), effective October 28, 1949; section 104(d) of title I of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2714), effective November 15, 1990]

STATE REGULATION OF INVESTMENT ADVISERS

SEC. 222.  (a)  JURISDICTION OF STATE REGULATORS.--Nothing in this title shall affect the jurisdiction of the securities commissioner (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations thereunder.

(b)  DUAL COMPLIANCE PURPOSES.--No State may enforce any law or regulation that would require an investment adviser to maintain any books or records in addition to those required under the laws of the State in which it maintains its principal office and place of business, if the investment adviser--

(1)  is registered or licensed as such in the State in which it maintains its principal office and place of business; and

(2)  is in compliance with the applicable books and records requirements of the State in which it maintains its principal place of business.

(c)  LIMITATION ON CAPITAL AND BOND REQUIREMENTS.--No State may enforce any law or regulation that would require an investment adviser to maintain a higher minimum net capital or to post any bond in addition to any that is required under the laws of the State in which it maintains its principal office and place of business, if the investment adviser--

(1)  is registered or licensed as such in the State in which it maintains its principal office and place of business; and

(2)  is in compliance with the applicable net capital or bonding requirements of the State in which it maintains its principal office and place of business.

(d)  NATIONAL DE MINIMIS STANDARD.--No law of any State or political subdivision thereof requiring the registration, licensing, or qualification as an investment adviser shall require an investment adviser to register with the securities commissioner of the State (or any agency or officer performing like functions) or to comply with such law (other than any provision thereof prohibiting fraudulent conduct) if the investment adviser--

(1)  does not have a place of business located within the State; and

(2)  during the preceding 12-month period, has had fewer than 6 clients who are residents of that State.

[Codified to 15 U.S.C. 80b--18a]

[Source: Section 222 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 847), effective November 1, 1940, as added by section 16 of the Act of September 13, 1960 (Pub. L. No. 86--750; 74 Stat. 888), effective September 13, 1960; as amended by section 304 of title III of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3438), effective April 9, 1997; section 301(d)(2) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3237), effective November 3, 1998; section 985(e)(4) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1935), effective July 21, 2010]


CUSTODY OF CLIENT ACCOUNTS.

SEC. 223.  An investment adviser registered under this title shall take such steps to safeguard client assets over which such adviser has custody, including, without limitation, verification of such assets by an independent public accountant, as the Commission may, by rule, prescribe.

[Codified to 15 U.S.C. 80b--18b]

[Section 223 added by section 411 of title IV of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1577), effective July 21, 2011]

224.  RULE OF CONSTRUCTION RELATING TO THE COMMODITIES EXCHANGE ACT

SEC. 224.  Nothing in this title shall relieve any person of any obligation or duty, or affect the availability of any right or remedy available to the Commodity Futures Trading Commission or any private party, arising under the Commodity Exchange Act (7 U.S.C. 1 et seq.) governing commodity pools, commodity pool operators, or commodity trading advisors.

[Codified to 15 U.S.C. 80b--18c]

[Section 224 added by section 414 of title IV of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1578), effective July 21, 2011]

Separability of Provisions

SEC. 219.  If any provision of this title or the application of such provision to any person or circumstances shall be held invalid, the remainder of the title and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby.

[Codified to 15 U.S.C. 80b--19]

[Source: Section 219 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]

Short Title

SEC. 220.  This title may be cited as the "Investment Advisers Act of 1940."

[Codified to 15 U.S.C. 80b--20]

[Source: Section 220 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]

SHORT TITLE OF 2010 AMENDMENT

SEC. 401.  This title enacting sections 80b--18b and 80b--18c of this title, amending sections 80b--2, 80b--3, 80b--3a, 80b--4, 80b--5, 80b--10, 80b--11 of this title, enacting provisions set out as notes under sections 77b and 80b--2 of this title maybe be cited as the "Private Fund investment Advisers Registration Act of 2010".

[Codified to 15 U.S.C. 80b--20 Note]

[Section 401 of title IV of the Act of July 21, 2010 (Pub L. No. 111--203; 124 Stat. 1570), effective July 21, 2011]

Effective Date

SEC. 221.  This title shall become effective on November 1, 1940.

[Codified to 15 U.S.C. 80b--21]

[Source: Section 221 of title II of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective November 1, 1940]  


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