SEC Adopts Rule Allowing Federal Registration of Internet Investment Advisers
The SEC adopted new Rule 203A-2(f) (the "Rule") under the Investment Advisers Act of 1940 (the "Advisers Act"), which permits certain investment advisers that provide advisory services through the Internet to register with the SEC instead of with state securities authorities. (The SEC release proposing the Rule was discussed in the April 23, 2002 of the Alert). To be eligible for federal registration under the Rule, an investment adviser must provide investment advice to all of its clients exclusively through an interactive website, i.e., one in which software-based models or applications provide investment advice to a client based on information that the client provides through the website. The Rule includes a de minimis exception that would allow an investment adviser relying on the Rule to have non-Internet clients provided that there are no more than fifteen such clients during the preceding twelve
