April 1, 2024
What happened?
On March 27, 2024, the Securities and Exchange Commission (SEC) adopted amendments to the rule that allows certain internet investment advisers to register with the SEC (the “internet adviser exemption”). According to the SEC’s press release, advisers relying on this exemption will be required “to have at all times an operational interactive website through which the adviser provides digital investment advisory services on an ongoing basis to more than one client.” These advisers will also be required to provide advice through an operational interactive website to all clients, eliminating the current de minimis exception. Finally, the amendments will also update Form ADV’s Schedule D for advisers relying on the internet adviser exemption.
“These amendments modernize a 22-year-old rule to better protect investors in a digital age,” said SEC chair Gary Gensler. “These changes better reflect what it means in 2024 truly to provide an exclusively internet-based service. This will better align registration requirements with modern technology and help the Commission in the efficient and effective oversight of registered investment advisers.”
The amendments will become effective 90 days after publication in the Federal Register and have a compliance date of March 31, 2025. While many investment advisers will have already filed their annual Form ADV by the compliance date, advisers affected by the amendments will need to comply with the new requirements on Form ADV by the compliance date. Advisers that are no longer eligible for the amended exemption and otherwise have no other basis for being registered with the Commission must register in one or more states and withdraw their registration by filing a Form ADV-W to the Commission by June 29, 2025.
What does this mean for me?
If you are currently relying on the internet adviser exemption for your registration, mark your calendar for next year’s annual ADV amendment. If you are unable to provide investment advice to all of your clients exclusively through an operational interactive website, consider taking the necessary steps to either a) create such a website, b) register as an investment adviser under another provision that does not rely on the internet adviser exemption, or c) withdraw from SEC registration.
Fairview provides comprehensive and ongoing compliance services including complete examination support. If you have any questions on the amendments to the rule relating to internet investment advisers, please contact us and one of our regulatory experts will be in touch soon.
