On July 26, 2023, the Securities and Exchange Commission (SEC) proposed amendments to the rule which allows specific investment advisers providing services through the internet to register with the Commission. “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.”
The new reforms 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.
“In 2002, the SEC granted what was intended to be a narrow exception allowing internet-based advisers to register with the Commission instead of with the states,” said SEC Chair Gary Gensler. “A lot has changed in the 21 years since, and I believe an exemption written in 2002 allows gaps in 2023. Thus, today’s proposal would modernize the internet advisers exemption to better align registration requirements with modern technology and help the Commission in the efficient and effective oversight of registered investment advisers.”
The comment period for this proposal will remain open for 60 days after publication within the Federal Register.
Have questions? Contact a compliance expert to learn more about the impact of proposed and adopted regulations.