UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

i am writing in response to your letter dated June 5, 1995,
 

WASHINGTON. D.C. 20549 

.(SION OF 

.~VESTMENT MANAGEMENT 

-. '--'---'---'--gus 1; 8-T.".l9-%._..... 

. ...~~_...__1_Æf - '-0 

Mark A. Bush 

5443 Redwood Road rr;()!!,_ ;ló3, Ch)(3)____..~() ~Cdì--.---.... 

Columbus, OH 43229 

Dear Mr. Bush: :. . 1 ~. 

. c',:'.n.~.1.y 

.... .~!_~L ?~._.. .

in which you reql1~Rt a no-action position concerning your plan to 

set up three affiliated entities to engage in investment related businesses. One of these entities would register as an 

investment adviser under the Investment Advisers Act of 1940
 

("Advisers Act"). The other two entities would remain
 unregistered. 

Your letter does not contain sufficient information or legal
 

analysis for us to determine whether no-action relief under the
 

federal securities laws is appropriate. Moreover, because the
 

Commission administers the federal securities laws, we cannot
 

address issues under laws governing commodity advisers, commodity
 

pools, or commodity futures trading.
 

We note that, although the structure you describe may appear
 

to comply with Section 203 (b) (3) of the Advisers Act, the facts
 

outlined in your letter raise an issue under Section 208 (d) of
 

the Advisers Act. Section 208 (d) makes it unlawful for any
 

person to do indirectly any act that would be unlawful for such
 

person to do directly under the Advisers Act. When an
 

unregistered adviser is affiliated with a registered adviser, and
 

the two entities are not operated separately, the unregistered
 

adviser potentially could engage in conduct outside the
 

Commission i s jurisdiction that is detrimental to the clients of
 

the registered adviser. In light of this concern, in applying
 

Section 208 (d) and the registration requirements of the Advisers
 

Act, the staff has taken the position that, under some
 

circumstances, an unregistered adviser that is affiliated with a
 

registered adviser may be integrated with the registered adviser
 

for purposes of determining the availability of any exemption
 

from registration. The application of the law to a specific set
 

of facts, however, requires an analysis of all the surrounding
 

circumstances to determine whether the businesses of the two
 

entities are conducted in a manner that justifies separate
 

treatment of the entities under the Act.
 
We are enclosing no-action responses of the staff which
 

apply this concept to different facts and circumstances. We are
 

also enclosing releases on the general procedures for requesting
 

a no-action letter from the staff. Given the complexity of these
 

matters, you may wish to obtain the advice of legal counsel
 

familiar with the federal securities laws before proceeding.
 

Sincerely, 

1 ~
 

Linda A. Schneider
 

Attorney 

Office of Chief Counsel
 

Enclosures 
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