Investment advisers are generally prohibited from registering with the Commission unless

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FACT SHEET
Internet Adviser
Registration
Reforms

U.S. SECURITIES AND EXCHANGE COMMISSION  PAGE 1 OF 2

Why This Matters
Investment advisers are generally prohibited from registering with the Commission unless
they  either  reach  a  assets  under  management  threshold,  advise  a  registered  investment
company, or qualify for an exemption under Commission rules or statute. Internet investment
advisers  are  exempt  from  this  prohibition  under  rule  203A-2(e)  under  the  Investment
Advisers  Act  of  1940  (the  “Advisers  Act”)  (the  “internet  adviser  exemption")  if  they  meet
certain conditions, including those relating to the adviser’s use of an interactive website to
advise clients.
The final amendments  are  designed  to  modernize rule 203A-2(e)  to  reflect  the  broader
evolution in technology and the marketplace since the rule’s adoption in 2002 and to better
align  current  practices  in  the investment  adviser  industry  with  the  narrow  exemption  for
certain  investment  advisers  that  did  not  fall  neatly  within  the  framework  established  by
Congress.

How This Rule Applies
The amendments will apply to investment advisers seeking to register with the Commission
who would otherwise be prohibited from doing so pursuant to section 203A of the Advisers
Act.

On  March  27,  2024,  the Securities  and  Exchange  Commission  adopted  amendments  to
modernize  the  rule that  exempts  internet investment advisers  from  the  prohibition  on  SEC
registration for smaller investment advisers. The amendments will, among other things:
●    Require an  investment  adviser  relying  on  the  exemption  to  at  all  times  have  an
operational interactive website through which the adviser provides investment advisory
services on an ongoing basis to more than one client; and
●    Eliminate the current rule’s de minimis exception for non-internet clients, thus requiring
an internet investment adviser to provide advice to all of its clients exclusively through
an operational interactive website.
The Commission proposed the rules on July 26, 2023. The public comment file is available
online.

FACT SHEET | Internet Adviser Registration Reforms
U.S. SECURITIES AND EXCHANGE COMMISSION  Page 2 of 2

What’s Required
The amendments will:
• Require an  adviser  that  relies  upon  the  internet  adviser  exemption  to  provide
investment advice to all of its clients exclusively through an “operational” interactive
website at all times during which it relies on the exemption;
• Eliminate the de  minimis  exception  in  the  current  rule,  which  permitted  advisers
relying on the internet adviser exemption to have a limited number (i.e., fewer than
15) of non-internet clients in the preceding 12-month period; and
• Amend Form ADV to require an adviser relying on the internet adviser exemption as
a basis for registration to represent on Schedule D of its Form ADV that, among other
things, it has an operational interactive website.

What’s Next
The amendments will become effective 90 days after publication in the Federal Register. An
adviser  relying  on  the  internet  adviser  exemption  must  comply  with  the  rule,  including  the
requirement to amend their Form ADV to include a representation that the adviser is eligible
to register with the Commission under the internet adviser exemption, by March 31, 2025.
Most investment advisers will have filed their annual updating amendments to Form ADV by
this date (i.e., 90 days after the December 31, 2024, fiscal year end). An adviser that is no
longer eligible to rely on the amended exemption and does not otherwise have a basis for
registration  with  the  Commission  must  register  in  one  or  more  states  and  withdraw  its
registration with the Commission by filing a Form ADV-W by June 29, 2025.

FACT SHEET
Internet Adviser
Registration Reforms

On March 27, 2024, the Securities and Exchange Commission adopted amendments to modernize the rule that exempts internet investment advisers from the prohibition on SEC registration for smaller investment advisers. The amendments will, among other things:
- Require an investment adviser relying on the exemption to at all times have an operational interactive website through which the adviser provides investment advisory services on an ongoing basis to more than one client; and
- Eliminate the current rule's de minimis exception for non-internet clients, thus requiring an internet investment adviser to provide advice to all of its clients exclusively through an operational interactive website.
The Commission proposed the rules on July 26, 2023. The public comment file is available online.

Why This Matters

Investment advisers are generally prohibited from registering with the Commission unless they either reach a assets under management threshold, advise a registered investment company, or qualify for an exemption under Commission rules or statute. Internet investment advisers are exempt from this prohibition under rule 203A-2(e) under the Investment Advisers Act of 1940 (the "Advisers Act") (the "internet adviser exemption") if they meet certain conditions, including those relating to the adviser's use of an interactive website to advise clients.
The final amendments are designed to modernize rule 203A-2(e) to reflect the broader evolution in technology and the marketplace since the rule's adoption in 2002 and to better align current practices in the investment adviser industry with the narrow exemption for certain investment advisers that did not fall neatly within the framework established by Congress.

How This Rule Applies

The amendments will apply to investment advisers seeking to register with the Commission who would otherwise be prohibited from doing so pursuant to section 203A of the Advisers Act.

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PAGE 1 OF 2

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FACT SHEET | Internet Adviser Registration Reforms

What’s Required
The amendments will:
- Require an adviser that relies upon the internet adviser exemption to provide investment advice to all of its clients exclusively through an “operational” interactive website at all times during which it relies on the exemption;
- Eliminate the de minimis exception in the current rule, which permitted advisers relying on the internet adviser exemption to have a limited number (i.e., fewer than 15) of non-internet clients in the preceding 12-month period; and
- Amend Form ADV to require an adviser relying on the internet adviser exemption as a basis for registration to represent on Schedule D of its Form ADV that, among other things, it has an operational interactive website.

What’s Next
The amendments will become effective 90 days after publication in the Federal Register. An adviser relying on the internet adviser exemption must comply with the rule, including the requirement to amend their Form ADV to include a representation that the adviser is eligible to register with the Commission under the internet adviser exemption, by March 31, 2025. Most investment advisers will have filed their annual updating amendments to Form ADV by this date (i.e., 90 days after the December 31, 2024, fiscal year end). An adviser that is no longer eligible to rely on the amended exemption and does not otherwise have a basis for registration with the Commission must register in one or more states and withdraw its registration with the Commission by filing a Form ADV-W by June 29, 2025.

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