Investment advisers are generally prohibited from registering with the Commission unless
The U.S. SEC proposed amendments to modernize the internet adviser exemption by eliminating the de minimis exception for non-internet clients and requiring advisers to provide services exclusively through an operational interactive website, with no fraud, charges, or penalties involved—only regulatory clarification.
The U.S. Securities and Exchange Commission proposed rule amendments to update Rule 203A-2(e), the internet adviser exemption under the Investment Advisers Act of 1940, to reflect technological advancements since 2002. The changes would eliminate the allowance for up to 15 non-internet clients per year and require advisers relying on the exemption to provide investment advice exclusively through an operational interactive website to more than one client at all times. No fraud, enforcement action, or financial penalties are associated with this proposal—it is purely a regulatory modernization to align the exemption with Congress’s original intent and current industry practices.
The U.S. Securities and Exchange Commission proposed amendments to modernize Rule 203A-2(e), the internet adviser exemption, which allows certain small investment advisers to avoid SEC registration. The key changes include eliminating the de minimis exception that previously permitted up to 15 non-internet clients in a 12-month period and requiring advisers to provide investment advice exclusively through an operational, interactive website to more than one client at all times. These reforms aim to align the exemption with the evolution of technology and the marketplace since its adoption in 2002, ensuring that only truly internet-based advisers qualify for the exemption. The SEC emphasized that the changes reflect Congress’s original intent to narrowly define the exemption and clarify registration obligations. No individual or firm is accused of fraud, misconduct, or wrongdoing—this is a proactive regulatory update, not an enforcement action. The proposal also includes corresponding updates to Form ADV to reflect the new requirements. The rule change is open for public comment for 60 days following its publication in the Federal Register, allowing stakeholders to provide input before finalization.
Extracted insights
- person comment period
- person de minimis exception
- agency Securities and Exchange Commission
- Securities And Exchange Commission Proposed Rule Amendments To Modernize The Internet Adviser Exemption
- Proposal Would Require Investment Adviser To Have An Operational Interactive Website
- Proposal Would Eliminate De Minimis Exception
- Comment Period Will Be Open For 60 Days
Warning: TT: undefined function: 32 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 certain 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 if they meet certain conditions, including those relating to the adviser’s use of an interactive website to advise clients. The proposed 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 that was intended to reflect Congress’s allocation of responsibility. How This Rule Would Apply The proposed amendments would apply to investment advisers seeking to register with the Commission, but who would otherwise be prohibited from doing so pursuant to section 203A of the Advisers Act. What Would Be Required The proposal would amend the internet adviser exemption to require an investment adviser relying on the rule 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. It would also eliminate the de minimis exception in the current rule, which currently permits The Securities and Exchange Commission proposed rule amendments to modernize the internet adviser exemption from the prohibition on SEC registration for smaller investment advisers. The proposed amendments would: ● 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 that an internet investment adviser must provide advice to all of its clients exclusively through an operational interactive website. FACT SHEET | Internet Adviser Exemption Reforms U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 2 OF 2 investment advisers relying on the internet adviser exemption to have a limited number (i.e., fewer than 15) of non-internet clients in a 12-month period. An internet investment adviser would thus be required to provide advice to all of its clients exclusively through an operational interactive website. Finally, the proposal would make certain corresponding changes to Form ADV. Additional Information: Visit sec.gov to find more information about the proposal and the full text of the proposed rules. The comment period will be open for 60 days following publication of the proposing release in the Federal Register.
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 certain 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 if they meet certain conditions, including those relating to the adviser’s use of an interactive website to advise clients. The proposed 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 that was intended to reflect Congress’s allocation of responsibility. How This Rule Would Apply The proposed amendments would apply to investment advisers seeking to register with the Commission, but who would otherwise be prohibited from doing so pursuant to section 203A of the Advisers Act. What Would Be Required The proposal would amend the internet adviser exemption to require an investment adviser relying on the rule 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. It would also eliminate the de minimis exception in the current rule, which currently permits The Securities and Exchange Commission proposed rule amendments to modernize the internet adviser exemption from the prohibition on SEC registration for smaller investment advisers. The proposed amendments would: ● 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 that an internet investment adviser must provide advice to all of its clients exclusively through an operational interactive website. FACT SHEET | Internet Adviser Exemption Reforms U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 2 OF 2 investment advisers relying on the internet adviser exemption to have a limited number (i.e., fewer than 15) of non-internet clients in a 12-month period. An internet investment adviser would thus be required to provide advice to all of its clients exclusively through an operational interactive website. Finally, the proposal would make certain corresponding changes to Form ADV. Additional Information: Visit sec.gov to find more information about the proposal and the full text of the proposed rules. The comment period will be open for 60 days following publication of the proposing release in the Federal Register. Why This Matters How This Rule Would Apply What Would Be Required Additional Information: