1) June 22 -- Request for Comment on Certain Information Providers Acting as Investment Advisers: A Proposed Rule by the Securities and Exchange Commission
The Securities and Exchange Commission (“Commission” or “SEC”) is seeking public comment on certain information providers whose activities, in whole or in part, may cause them to meet the definition of “investment adviser” under the Investment Advisers Act of 1940 (“Advisers Act” or “Act”). Comments should be received on or before August 16, 2022.
The role of index providers, model portfolio providers, and pricing services (“information providers” or “providers”) has grown in size and scope in recent years, significantly changing the face of the asset management industry. The development and nature of these services may raise investment adviser status issues under the Advisers Act. Investment adviser status, in turn, has regulatory implications, including questions relating to registration under the Advisers Act. In addition, the development and nature of these services may raise questions under the Investment Company Act of 1940 (“Investment Company Act”), including whether an information provider is acting as an “investment adviser” of an investment company under the Investment Company Act.
These providers' operations also raise potential concerns about investor protection and market risk, including, for example, the potential for front-running of trades where the providers and their personnel have advance knowledge of changes to the information they generate and potential conflicts of interest where the providers or their personnel hold investments they value or that are constituents of their indexes or models. Some individual information providers of the types we describe below have registered with the Commission as investment advisers (sometimes because of other business in which they engage), and others have not. Some may be prohibited (absent exemptive relief) from Commission registration because, for example, they lack regulatory assets under management. Depending on the facts and circumstances, however, particular information providers may have an ability, perhaps through operations of sufficient size and scope, to affect national markets or otherwise have a “national presence.” Accordingly, we are seeking comment regarding information providers to facilitate consideration of whether regulatory action is necessary and appropriate to further the Commission's mission.
2) June 15 -- SEC Requests Information and Comment on Advisers Act Regulatory Status of Index Providers, Model Portfolio Providers, and Pricing Services: Commission Seeking Public Comments Regarding “Information Providers” Acting as “Investment Advisers” (Release 2022-109)
The Securities and Exchange Commission today announced that it is requesting information and public comment on matters related to the activities of certain “information providers,” including whether, under particular facts and circumstances, information providers are acting as “investment advisers” under the Investment Advisers Act of 1940 (“Advisers Act”). The Request specifically focuses on index providers, model portfolio providers, and pricing services.
“In recent decades, the use of information providers has grown, changing the asset management industry,” said SEC Chair Gary Gensler. “The role of these information providers today raises important questions under the securities laws as to when they are providing investment advice rather than merely information. In order to help the Commission determine when—and under what facts and circumstances—these providers are giving investment advice, the Commission seeks information and public comment to help guide our approach.”
Investment adviser status has regulatory implications, including questions related to registration under the Advisers Act and questions under the Investment Company Act of 1940. The Request will facilitate consideration of whether regulatory action is necessary and appropriate to further the Commission’s mission.
News release: https://www.sec.gov/news/press-release/2022-109
Chair Gensler statement: https://www.sec.gov/news/statement/gensler-statement-comment-certain-information-providers