Securities Regulation

SEC Proposes Amendments to Internet Investment Adviser Registration Rule


The Securities and Exchange Commission (SEC) has recently put forth a set of proposed amendments to the rule governing the registration of investment advisers who provide their services through the Internet. These amendments aim to modernize the existing Internet adviser registration rule and ensure that investment advisers can efficiently and effectively provide their services in the digital age. In this article, we will delve into the key aspects of these proposed amendments and their potential impact on the investment advisory landscape.

Operational Interactive Website Requirement

One of the central aspects of the proposed amendments is the introduction of an operational interactive website requirement for internet-based investment advisers. According to the proposed changes, any investment adviser relying on the Internet adviser registration rule must maintain an operational interactive website continuously. Through this website, the adviser is expected to offer digital investment advisory services to more than one client on an ongoing basis.

This requirement emphasizes the SEC’s commitment to ensuring that investment advisers embrace digital platforms to cater to their client’s needs effectively. By mandating the presence of an operational interactive website, the SEC aims to promote transparency, accessibility, and ease of communication between investment advisers and their clients.

Elimination of De Minimis Exception

The proposed amendments also seek to eliminate the de minimis exception currently present in the rule. The de minimis exception allowed certain internet-based advisers to provide advice without registering with the Commission if they operated on a limited scale. However, under the new proposal, internet investment advisers will no longer be able to rely on this exception.

The SEC justifies this move by stressing the need for uniformity and comprehensive oversight in the investment advisory industry. By requiring all internet-based advisers to register and provide advice exclusively through an operational interactive website, the SEC aims to enhance regulatory clarity and investor protection.

Form ADV Changes

In addition to the operational interactive website requirement and the elimination of the de minimis exception, the proposed amendments include certain corresponding changes to Form ADV. Form ADV is a disclosure document that registered investment advisers are required to submit to the SEC and their clients. The changes to Form ADV aim to align it with the modernized Internet advisers exemption and capture relevant information related to digital investment advisory services.

SEC Chair Gary Gensler’s Perspective

SEC Chair Gary Gensler provided insights into the rationale behind these proposed amendments. He acknowledged that the existing internet advisers exemption, granted in 2002, was intended to be a narrow exception allowing internet-based advisers to register with the SEC instead of individual states. However, he emphasized that significant changes have occurred in the past two decades, and the current exemption may not be sufficient to address emerging challenges.

Gensler highlighted the importance of keeping regulations up to date with rapidly advancing technology and market trends. He expressed his belief that the proposed amendments would close existing gaps and enable the SEC to oversee registered investment advisers more efficiently and effectively.

Public Comment Period

The proposed amendments, detailed in the proposing release, will soon be published in the Federal Register. Following this publication, there will be a public comment period lasting for 60 days. During this period, stakeholders, industry participants, and the general public can provide their feedback and opinions on the proposed changes. The SEC will carefully consider all comments before finalizing the amendments.


In conclusion, the Securities and Exchange Commission’s proposed amendments to the Internet investment adviser registration rule aim to modernize the regulatory framework for investment advisers operating in the digital space. By mandating an operational interactive website and eliminating the de minimis exception, the SEC seeks to enhance transparency, investor protection, and regulatory oversight. Investment advisers and stakeholders should actively participate in the public comment period to contribute their perspectives and insights.

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