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SEC requests public comment on information providers acting as investment advisors

On Behalf of | Jun 24, 2022 | Financial News

The Securities and Exchange Commission is seeking public comment on whether “information providers”, including index providers, model portfolio providers, and pricing services, would fall under the definition of an investment advisor under the Investment Advisers Act of 1940.

The SEC announced that it will publish its request on and in the Federal Register, with comments due no later than August 16. The commission said it would use the comments and information it receives to guide its approach as it tries to determine whether regulatory action is necessary in this area.

“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.”

Gensler said the commission must now weigh whether the existing framework for regulating investment advisors should apply to information providers. If these providers are in fact acting as investment advisors, the SEC said it would raise questions related to registration under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.

The public comment period will remain open for 60 days following publication of the request on the SEC’s website or 30 days following publication of the request in the Federal Register, whichever period is longer.

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