Investment Advisers Act

# The Investment Advisers Act of 1940 The Investment Advisers Act of 1940 is the foundational federal law governing who must register as an investment adviser, how they register, and how they conduct business — and it generates a significant portion of the approximately 39 questions in Section IV (Laws, Regulations & Guidelines) of the Series 65 exam, which carries 30% of the scored exam weight. [Source: NASAA Series 65 Exam Content Outline, effective 2023-06-12; series65/topic_weights/laws_regulations] --- ## What Is an Investment Adviser? The Act defines an investment adviser (IA) as any person who, for compensation, engages in the business of advising others about securities. Regulators apply the ABC Test to determine whether someone meets this definition. All three prongs must be present: | Prong | Question | |-------|----------| | A — Advice | Does the person advise on securities (or issue reports/analyses)? | | B — Business | Is advising part of a regular business activity? | | C — Compensation | Is the person compensated in any form for that advice? | If all three apply, the person is an investment adviser — unless an exclusion or exemption removes them from the definition or the registration requirement. > Critical distinction: An exclusion means you are *not* an investment adviser by definition. An exemption means you *are* an investment adviser but do not have to register. This distinction matters because exempted advisers still have fiduciary duties and are still subject to antifraud rules. --- ## Key Exclusions from the IA Definition (LATE)…