The SEC Limits The Internet Adviser Exemption

BRIEF OVERVIEW

On 27 March 2024, the US Securities and Exchange Commission (SEC) adopted amendments (the Amendments) to Rule 203A-2(e) under the Investment Advisers Act of 1940 (Advisers Act). Rule 203A-2(e) is commonly known as the "Internet Adviser Exemption." Originally adopted in 2002, advisers relying on the Internet Adviser Exemption are permitted to register with the SEC, even if they do not have enough assets under management or otherwise qualify for federal registration. The Amendments substantially narrow the Internet Adviser Exemption by:

• Eliminating the de minimis exception for non-internet clients;
• Mandating that advisers relying on the Internet Adviser Exemption maintain an "operational interactive website" at all times; and