A U.S. federal law that establishes the duties and responsibilities of investment advisers. The Act defines the criteria for eligibility to register with the Securities and Exchange Commission (SEC) and outlines the requirements for advisers to operate under SEC oversight, ensuring the protection of investors. The Act mandates that individuals or firms providing investment advisory services must register with the SEC to act in the best interests of clients with honesty and integrity.
Exemptions to the Act include:
- Advisers of Private Funds: Advisers who manage private funds with assets under $150 million are not required to register with the SEC. These funds must meet the criteria of Section 3(c)(1) or Section 3(c)(7), involving fewer than 100 investors and no public offerings.
- Advisers of Venture Capital Funds: Advisers who manage venture capital funds are exempt from SEC registration, provided the fund meets Section 3(c)(1) or Section 3(c)(7) requirements and primarily invests in the equity of private companies, with specific limitations on borrowing and investor redemption rights.
- Advisers with Small Assets Under Management: Advisers managing less than $25 million in assets are required to register with the state securities regulator but are exempt from SEC registration.
Advisers qualifying for an exemption may still be required to file as an Exempt Reporting Adviser. SPV organizers typically qualify for this exemption but should consult legal counsel to determine the need for such filings.