How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask CA Lawyer Your Own Question

CA Lawyer
CA Lawyer, Attorney
Category: Business Law
Satisfied Customers: 258
Experience:  10 plus years as an attorney handling business, transactional, estate & trust, and tax law.
Type Your Business Law Question Here...
CA Lawyer is online now
A new question is answered every 9 seconds

Hello, I am in Reno Nevada. My firm is an RIA. I need some

Customer Question

Hello, I am in Reno Nevada. My firm is an RIA. I need some legal advice about the laws regarding advertising for RIAs as well as hedge funds. I would like to attain the actual law books as a reference as well if possible.
Submitted: 5 years ago.
Category: Business Law
Expert:  CA Lawyer replied 5 years ago.

Hi. Thank you for contacting Just Answer. I look forward to assisting you.

 

Generally-

Rule 206(4)-1 under the Advisers Act prohibits SEC-registered investment advisers from using any advertisement that contains any untrue statement of material fact or that is otherwise misleading. The rule broadly defines "advertisement" to include any notice, circular, letter, or other written communication addressed to more than one person, or any notice or other announcement in any publication or by radio or television, that offers any investment advisory service.

In addition, an advertisement may not:

    use or refer to testimonials (which include any statement of a client's experience or endorsement);

     

  • refer to past, specific recommendations made by the adviser that were profitable, unless the advertisement sets out a list of all recommendations made by the adviser within the preceding period of not less than one year, and complies with other, specified conditions;

     

  • represent that any graph, chart, formula, or other device can, in and of itself, be used to determine which securities to buy or sell, or when to buy or sell such securities, or can assist persons in making those decisions, unless the advertisement prominently discloses the limitations thereof and the difficulties regarding its use; and

     

  • represent that any report, analysis, or other service will be provided without charge unless the report, analysis, or other service will be provided without any obligation whatsoever.

An adviser may advertise its past performance (both actual performance and hypothetical or model results) only if the advertisement meets certain conditions and restrictions. An advertisement using performance data must disclose all material facts necessary to avoid any unwarranted inference. Among other things, an investment adviser may not advertise its performance data if the adviser: (1) fails to disclose the effect of material market or economic conditions on the results advertised; (2) fails to disclose whether and to what extent the advertised results reflect the reinvestment of dividends or other earnings; or (3) suggests or makes claims about the potential for profit without also disclosing the potential for loss.

 

In addition, generally an adviser may not advertise gross performance data (i.e., performance data that does not reflect the deduction of various fees, commissions, and expenses that a client would pay) unless the adviser also includes net performance information in an equally prominent manner. An adviser may provide gross performance information, accompanied by appropriate disclosure regarding the impact of fees and expenses, in certain limited circumstances that present minimal risk that the client will not understand the impact of fees and expenses, such as when the client is a sophisticated institution, and the adviser presents the information to the client "one-on-one."

 

There are some good resources throught the Practicing Law Institute (PLI) - see link below

http://www.pli.edu/product/books.asp

 

Please click ACCEPT so that I can get credit for my work. If you have follow-up questions, please do not hesitate to ask.

Helpful resources for finding local legal counsel and legal information are http://www.martindale.com/ and http://www.findlaw.com/

DISCLAIMER - This answer is not legal advice. No attorney-client relationship is formed. The information provided is for educational purposes only. For specific advice regarding your situation, please consult a qualified attorney in your area. Please remember that we can only answer your question based on the information you provide.

Customer: replied 5 years ago.

My firm is looking to advertise for some seminars. My firm is an RIA. Speaking at the seminar will be 3 managers of hedge funds. I am going to advertise as the RIA and invite accredited invstors only. I am trying to find the actual laws that speak to what is allowed to promote an event like this.

 

I look forward to your answer.

 

Keith

Expert:  CA Lawyer replied 5 years ago.

Section 201 of the Investment Advisers Act of 1940 (“Advisers Act”) sets forth the basis for the Advisers Act.

The main components of the Act are described below.

1. The Advisers Act defines “investment adviser”, provides exceptions to the definition and establishes the requirement for federal registration on Form ADV.

2. Recordkeeping and reporting requirements are set forth in the Act. Also included is the SEC's right to make reasonable and periodic or special examinations (Both components were added by amendments to the Advisers Act in 1960).

3. Each registered adviser is required to deliver ADV Part II or a written disclosure statement containing the information contained in Part II to clients.

4. Advisers are required to have written policies and procedures designed to prevent the use of material, nonpublic information by the investment adviser or any person associated with the adviser (Added by 1988 amendments).

5. Investment adviser contract standards contain restrictions on certain adviser performance fee compensation arrangements and prohibit the assignment of the advisory contract without client consent.

6. Prohibited transaction provisions address defrauding clients or engaging in conduct that operates as a fraud or deceit. Advisers are required to disclose to clients the capacity in which the adviser acts in a transaction and obtain client consent, for example, if the adviser is acting in a principal capacity for its own account and selling to or buying from a client.

7. Rules under the Advisers Act also cover: advertisements by investment advisers;

custody or possession of funds or securities of clients; payment of a cash fee to a solicitor for its solicitation activities; financial and disciplinary information disclosure to clients; requirement for written proxy voting policies; and requirement for written compliance policies and procedures, and annual review of their adequacy and designation of a chief compliance officer.


State securities laws are preempted by the Advisers Act in many respects. If an investment adviser manages at least $30 million in assets, or advises a mutual fund, it is required to register with the SEC. Advisers with at least $25 million but less than $30 million in assets may elect to register with the SEC. Other investment advisers register only with the state in which the adviser maintains its principal place of business. If a state does not require advisers to register, advisers located in the state are regulated by the SEC. (Currently, Wyoming is the only such state.) If an adviser representative for a SEC-registered adviser has a place of business in a state, that state may require licensing of the adviser representative. The states retain the authority to initiate action for fraud against advisers.

The National Securities Markets Improvement Act of 1996 (“NSMIA”), Title III, Investment Advisers Supervision Coordination Act, amended the Advisers Act to exempt from Advisers Act registration, and thereby subject certain advisers primarily to state regulation, any adviser regulated in the state in which it maintains its principal office and place of business and that has less than $25 million in assets under management and that does not advise a registered investment company. Subsequent SEC rules permit an adviser to defer registration with the SEC until its assets under management reach $30 million.

Here is a link to the Nevada Statutes-

http://www.leg.state.nv.us/NAC/NAC-090.html


Please click ACCEPT so that I can get credit for my work. If you have follow-up questions, please do not hesitate to ask.

Helpful resources for finding local legal counsel and legal information are www.martindale.com and www.findlaw.com

DISCLAIMER - This answer is not legal advice. No attorney-client relationship is formed. The information provided is for educational purposes only. For specific advice regarding your situation, please consult a qualified attorney in your area. Please remember that we can only answer your question based on the information you provide.

Customer: replied 5 years ago.

I still haven't found any guidlines that talk about what an RIA can advertise. My seminars will have some hedge fund managers presenting their strategies. I'm wondering what I am allowed to advertise for events like this.

 

 

Expert:  CA Lawyer replied 5 years ago.
I can't give you anything specific or more than I have given you. I am sorry I could not be of more help.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA