Investment Adviser

Question 1

To be an IA under both federal and state laws a person must…(3 things)

Answer 1

Provide advice about securities (not about jewelry, rare coins, or real estate)

Provide that advice as part of an ongoing basis (have an office) on a regular basis

Receive compensation

*IAs are usually legal persons, but they can be an individual

Question 2

Sec release IA-1092

Answer 2

Release IA-1092 identifies as an investment adviser anyone who

• provides investment advice, reports, or analyses with respect to securities
• is in the business of providing advice or analyses and
• receives compensation either directly or indirectly

Question 3

Exclusion from definition of IAs

Answer 3

IA representatives (the business entity is the investment adviser, not the representative)

Banks, savings institutions and trust companies

Lawyers, accountants, teachers, engineers (LATE) except if they have established an advisory practice or hold themselves out as offering investment advice

Any BD whose investment services are incidental to their brokerage business and who receive no special or separate compensation (wrap fees) for their advice. This extends to agents of these broker-dealers as well

A publisher, employee, or columnist of a newspaper