Investment Advisers Act, Wealth Management, Investing, Institutional Asset Managers
The Investment Advisers Act of 1940 (“IAA”) and its regulatory purview have changed dramatically over the life of the statute. The statute began as a simple registration scheme with barebones conduct integrity prohibitions for wealth managers and purveyors of investment newsletters. Although the statute’s original minimalist cast was deficient, the IAA’s regulatory scope has undergone a fundamental transformation, both in terms of the expanding class of advisers covered by the statute’s substantive provisions and the statute’s expansive structural integrity requirements. Over a span of decades, the IAA’s focus has been reoriented so that it is directed at least as much, if not more, at institutional asset managers rather than wealth managers who advise retail investors. As matters now stand, the IAA is the primary mechanism for regulating institutional asset managers that manage trillions of dollars in assets while retaining its legacy purpose of enforcing conduct integrity norms in delivering investment advice. This transformation is a product of the regulatory scheme’s enhanced reliance on structural integrity safeguards attained through rulemaking.
Joseph A. Franco, Bending the Investor Advisers Act's Regulatory Arc, 26 Fordham J. Corp. & Fin. L. 1 (2021).