New developments for non‐US investment advisers doing business in the USA
| Date | 01 March 1997 |
| Pages | 222-235 |
| Published date | 01 March 1997 |
| DOI | https://doi.org/10.1108/eb024930 |
| Author | Marybeth Sorady |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 5 Number 3
New developments
for
non-US investment
advisers doing business
in
the USA
Marybeth Sorady
Received: 18th March, 1997
Price Waterhouse LLP, 1301
K
Steet, NW 800W, Washington DC 20005-3333; tel: 202 414 4352;
fax: 202 414 4313.
Marybeth Sorady
is a
Managing Director
in
the
Regulatory Compliance Consulting
Group
at
Price Waterhouse LLP. She pro-
vides consulting services with emphasis
on investment advisers, broker-dealers,
registered investment companies
and
unregistered pooled investment funds.
Such services include advice and analysis
concerning,
and
preparation
of
policies
and procedures
for
such financial services
entities.
Ms
Sorady
was
engaged
in the
practice
of
law
for
15 years prior to joining
Price Waterhouse LLP, specialising
in
cor-
porate and financial services matters.
ABSTRACT
For the foreign investment adviser wishing
to
do business
in the USA, the
regulatory climate
has never been more propitious. This paper
describes
the
recently
restructured
framework
of
federal and state
law and
regulation applicable
to non-US advisers that provide investment
advisory services
to US
clients, whether from
abroad
or
through
a US
subsidiary
or
affiliate.
For those advisers that will
register
either them-
selves
or
subsidiaries
or
affiliates
as
investment
advisers
in the US,
the paper first
describes
the
requirements
of
the Investment Advisers
Act of
1940 (Advisers
Act),1
rules thereunder and sig-
nificant interpretations and
discusses
the
SEC's
recent enforcement priorities.
It
then discusses
the scope
of and
limitations imposed under
recent interpretations permitting non-US advi-
sers that register
in the USA to
comply with
US restrictions only
in
connection with their
US clients. Finally,
the
paper discusses other
legal and regulatory provisions that apply
if
the
adviser offers interests
in a
pooled investment
vehicle
(ie an
investment company)
in the
USA.
INTRODUCTION
In recent years,
the
Securities and Exchange
Commission (SEC),
the US
federal regula-
tory authority that regulates investment
advisers,
has
loosened
its
previous restric-
tions
on
foreign advisers with
US
clients.
Until recent years,
a
non-US investment
adviser could
not
provide services
to US
clients without itself becoming subject
to
the panoply
of
requirements under
the
Advisers
Act,
including,
for
example,
restrictions
on
placing clients' securities
trades
for
execution with
or
through affili-
ates,
restrictions
on
performance-based
compensation
and
limitations
on the
manner
in
which
the
adviser's performance
information could
be
presented.
The
requirement
of the
Advisers
Act are
dis-
cussed below.
Until
the
last
few
years,
it has
been
the
SEC's position that
the
requirements
of
US
law applied
to all of
the adviser's activities
with all clients. Thus, even
if
only
a
limited
percentage
of an
adviser's clients were
US
clients,
if
the adviser were registered
in the
Journal
of
Financial Regulation
and Compliance. Vol.
5,
No.
3,
1997, pp. 222-235
© Henry Stewart Publications,
1358-1988
Page 222
To continue reading
Request your trial