37254 Federal Register / Vol. 87, No. 119 / Wednesday, June 22, 2022 / Proposed Rules 

1 15 U.S.C. 80b. Unless otherwise noted, all 

references to statutory sections are to 15 U.S.C. 80b 

of the United States Code, at which the Advisers 

Act is codified, and all references to rules under the 

Advisers Act are to title 17, part 275 of the Code 

of Federal Regulations [17 CFR 275]. 

2 15 U.S.C. 80a–2(20). 

3For example, at least one pricing service has 

registered as an investment adviser with the 

Commission because it has related person advisers; 

another has registered because of its ability to affect 

national markets (despite a lack of assets under 

management). See, e.g., infra note 42 (discussing 

IDC application and order). 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 270 and 275 

[Release Nos. IA–6050; IC–34618; File No. 

S7–18–22] 

RIN 3235–AM95 

Request for Comment on Certain 

Information Providers Acting as 

Investment Advisers 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Proposed rule; equest for 

comment. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’) 

is seeking public comment on certain 

information providers whose activities, 

in whole or in part, may cause them to 

meet the definition of ‘‘investment 

adviser’’ under the Investment Advisers 

Act of 1940 (‘‘Advisers Act’’ or ‘‘Act’’). 

DATES: Comments should be received on 

or before August 16, 2022. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/submitcomments.htm); or 

• Send an email to rule-comments@

sec.gov. Please include File No. S7–18– 

22 on the subject line. 

Paper Comments 

• Send paper comments to Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–18–22. This file number 

should be included on the subject line 

if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method of submission. The 

Commission will post all comments on 

the Commission’s website (http://

www.sec.gov). Comments are also 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Operating conditions 

may limit access to the Commission’s 

public reference room. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make publicly available. 

Studies, memoranda, or other 

substantive items may be added by the 

Commission or staff to the comment file 

during this request for comment. A 

notification of the inclusion in the 

comment file of any such materials will 

be made available on the Commission’s 

website. To ensure direct electronic 

receipt of such notifications, sign up 

through the ‘‘Stay Connected’’ option at 

www.sec.gov to receive notifications by 

email. 

FOR FURTHER INFORMATION CONTACT: 

Christopher Chase, Juliet Han, Senior 

Counsels, or Melissa Roverts Harke, 

Assistant Director, Investment Adviser 

Regulation Office, or Matthew Cook, 

Senior Counsel, Chief Counsel’s Office, 

Division of Investment Management, at 

(202) 551–6787 or IARules@sec.gov, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–8549. 

SUPPLEMENTARY INFORMATION: The 

Commission is seeking public comment 

on certain information providers whose 

activities, in whole or in part, may cause 

them to meet the definition of 

‘‘investment adviser’’ under the Act. 

Table of Contents 

I. Introduction 

A. Index Providers 

B. Model Portfolio Providers 

C. Pricing Services 

II. Investment Adviser Status Under the 

Advisers Act 

III. Implications of Investment Adviser Status 

A. Registration Under, and Applicability 

of, the Advisers Act 

1. Advisers Prohibited From Registering 

Under the Advisers Act 

2. Requirements for SEC-Registered 

Advisers 

B. Related Investment Company Act 

Matters 

I. Introduction 

The role of index providers, model 

portfolio providers, and pricing services 

(‘‘information providers’’ or 

‘‘providers’’) has grown in size and 

scope in recent years, significantly 

changing the face of the asset 

management industry. The development 

and nature of these services may raise 

investment adviser status issues under 

the Advisers Act.1 Investment adviser 

status, in turn, has regulatory 

implications, including questions 

relating to registration under the 

Advisers Act. In addition, the 

development and nature of these 

services may raise questions under the 

Investment Company Act of 1940 

(‘‘Investment Company Act’’), including 

whether an information provider is 

acting as an ‘‘investment adviser’’ of an 

investment company under the 

Investment Company Act.2 These 

providers’ operations also raise 

potential concerns about investor 

protection and market risk, including, 

for example, the potential for frontrunning of trades where the providers 

and their personnel have advance 

knowledge of changes to the 

information they generate and potential 

conflicts of interest where the providers 

or their personnel hold investments 

they value or that are constituents of 

their indexes or models. Some 

individual information providers of the 

types we describe below have registered 

with the Commission as investment 

advisers (sometimes because of other 

business in which they engage), and 

others have not.3 Some may be 

prohibited (absent exemptive relief) 

from Commission registration because, 

for example, they lack regulatory assets 

under management. Depending on the 

facts and circumstances, however, 

particular information providers may 

have an ability, perhaps through 

operations of sufficient size and scope, 

to affect national markets or otherwise 

have a ‘‘national presence.’’ 

Accordingly, we are seeking comment 

regarding information providers to 

facilitate consideration of whether 

regulatory action is necessary and 

appropriate to further the Commission’s 

mission. 

A. Index Providers 

Index providers compile, create the 

methodology for, sponsor, administer, 

and/or license market indexes. They 

typically determine the particular 

‘‘market’’ (which may be a sector or 

other group of securities) that the index 

measures, the index constituents that 

measure that market, and the weightings 

that each constituent receives. Once the 

index is designed and its methodology 

is created, index providers determine 

the index’s level (or measurement) 

pursuant to that methodology. These 

activities leave room for significant 

discretion—for example, an index 

provider typically has the ability to 

make changes to the index by adding or 

dropping particular constituents (i.e., 

index reconstitution) or modifying their 


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4See Paul G. Mahoney & Adriana Z. Robertson, 

Advisers by Another Name, University of Virginia 

School of Law (Jan. 2021), at 28, available at 

https://papers.ssrn.com/sol3/papers.cfm?abstract_

id=3767087 (‘‘[C]ompiling an index . . . is an 

inherently discretionary exercise.’’). 

5See, e.g., Index Industry Association, Fourth 

Annual IIA Benchmark Survey Reveals Significant 

Growth in ESG Amid Continued Multi-Asset 

Innovation & Heightened Competition (Oct. 28, 

2020), available at https://www.businesswire.com/ 

news/home/20201028005255/en/IndexIndustry%E2%80%99s-Fourth-Annual-BenchmarkSurvey-Reveals-Significant-Growth-in-ESG-AmidContinued-Multi-Asset-Innovation-HeightenedCompetition (noting that in 2020, the overall 

number of indexes climbed by approximately three 

percent to 3.05 million). 

6For purposes of this Request for Comment, 

‘‘specialized’’ indexes may be customized or 

bespoke indexes. ‘‘Customized’’ indexes are those 

where an existing index is modified to suit the 

needs of a particular user, e.g., removing from a 

securities index all securities issued by companies 

engaged in a particular trade or business, and 

‘‘bespoke’’ indexes are those where an index 

provider constructs an index at the request or 

direction of a particular user. 

7Customized Indexes for Specific Needs, MSCI, 

available at https://www.msci.com/custom-indexes. 

8FTSE Russell Product Guide Oct 2019, FTSE 

Russell (2019), at 15, available at https://content.

ftserussell.com/sites/default/files/support_

document/FTSE%20Russell%20Product%20

Guide%20Oct%202019%20Single.pdf. 

9Bespoke and Custom Index Service, Markit, 

available at https://products.markit.com/indices/ 

products/BespokeIndices.asp?showLevel=8. 

10Sonya Swink, Index Providers Take Record 

$5bn in Revenue in 2021, Financial Times (May 24, 

2022), available at https://www.ft.com/content/ 

595c3c18-7c13-4e33-9a68-f82f558b7ad6. 

11Some scholars have recently made this 

argument. See Adriana Z. Robertson, Passive in 

Name Only: Delegated Management and ‘‘Index’’ 

Investing, 36 Yale J. on Reg. 795, 798 (2019) 

(‘‘Rather than being passive in any meaningful 

sense, index investing simply represents a form of 

delegated management. . . . Not only are these 

indices managed portfolios in the strictly financial 

sense, by their construction they often also imply 

a substantial amount of delegated decisionmaking 

authority.’’); see also Jill Fisch, Assaf Hamdani & 

Steven Davidoff Solomon, The New Titans of Wall 

Street: A Theoretical Framework for Passive 

Investors, 18 U. Pa. L. Rev. 17, 21 (2019) (‘‘The 

construction and management of [an] index is not 

passive but entails a form of managed investing, if 

not by the passive funds themselves, then by the 

index providers.’’). Indexes may be actively 

rebalanced or reconstituted on a predetermined 

schedule (e.g., semiannually). Constitution also may 

change on an ad hoc basis as a result of mergers, 

acquisitions, or bankruptcies. 

12A model portfolio may be physically or 

synthetically rebalanced (e.g., to reduce costs 

during a volatile market, derivatives that have the 

effect of rebalancing may be used in lieu of trading 

in a defined benefit plan). Model portfolios are 

distinct from portfolio allocation models, which can 

be educational tools that investors use to obtain a 

sense of which asset classes (as opposed to which 

specific securities) are appropriate for the investor 

to allocate its assets to (e.g., 60% in equities, 40% 

in fixed income). 

13This discussion focuses on third-party model 

portfolio providers that sell models to wealth 

managers that apply them to client portfolios (or 

make available selected models to clients) versus 

internal firm models. This discussion includes as 

third-party model portfolio providers those persons 

who make available their own portfolios so that 

others can copy or license those portfolios in 

exchange for compensation. Portfolios may be made 

available through the provider’s online platform. 

14Model Portfolios See Greater Usage Among 

Advisory Firms, Ted Godbout, National Association 

of Plan Advisors (Feb. 23, 2021), available at 

https://www.napa-net.org/news-info/daily-news/ 

model-portfolios-see-greater-usage-among-advisoryfirms. 

15 Direct indexing is a personalized indexing 

strategy in which, rather than invest in one or more 

index ETFs, an investor buys some or all of an 

index’s constituent securities (i.e., a representative 

amount) to mirror its characteristics and then 

periodically adjusts these holdings to continue to 

closely replicate the index. With this investment 

strategy, an investor may achieve the diversification 

benefits of an ETF as well as the flexibilities that 

come from owning individual securities, such as tax 

benefits (e.g., harvesting individual security tax 

losses and capital gains) and customization (e.g., 

overweighting or underweighting a security or 

Continued 

weighting within the index (i.e., index 

rebalancing),4 in some cases without 

publicly disclosing their index 

methodologies or rules. 

The number and variety of indexes 

have grown over time, with millions of 

indexes in the global market.5 Some are 

broad-based and widely used, while 

others are more narrowly focused, 

including specialized indexes that are 

designed to be tracked by a particular 

user.6 Specialized indexes can be 

composed of constituents on the basis of 

a variety of considerations, including 

‘‘factors’’ that may be seen to cause 

certain types of securities to outperform 

or underperform the market as a whole. 

Index providers that offer specialized 

indexes might allow a user to ‘‘specify 

the customization criteria’’ on which a 

provider can create an index; 7 offer 

‘‘flexibility’’ with respect to the 

components of the index; 8 and can be 

‘‘built to the exact specifications of . . . 

clients, in any major asset class.’’ 9

Index providers are compensated by 

licensing indexes to users for the 

creation of investment products, 

reporting, and internal use. Generally, 

index providers license information 

related to their indexes to two main 

groups—those that seek to use the index 

as a benchmark, such as active 

managers, and those that seek to track 

the index, such as index funds. 

Although there are many indexes 

available and no formal barriers to 

becoming an index provider, three 

index providers account for over twothirds of the market for indexes, totaling 

approximately $5.0 billion in revenue in 

2021.10

While indexes have historically been 

associated with passive investing, index 

providers, particularly those that design 

specialized indexes, may be making 

active decisions in designing or 

administering the index.11 In some 

cases, these decisions may be 

personalized for a particular user, for 

example designing or modifying an 

index for the specific purpose of 

licensing its use by particular investors 

and/or their advisers to be employed as 

part of their investment strategy. 

Whether or not an index is specialized, 

the index provider’s inclusion or 

exclusion of a particular security in an 

index drives advisers with clients 

tracking that index to purchase or sell 

securities in response. 

B. Model Portfolio Providers 

A model portfolio generally consists 

of a diversified group of assets (often 

mutual funds or exchange-traded funds 

(‘‘ETFs’’)) designed to achieve a 

particular expected return with 

exposure to corresponding risks. As 

with indexes, a model portfolio may be 

rebalanced or have constituent changes 

over time.12 These models provide a 

convenient way to allocate and diversify 

investments through a single, 

professionally managed portfolio. For 

example, an investment adviser can 

outsource portfolio management to a 

model portfolio provider and select 

among several models offering the 

adviser’s clients different risk targets. A 

stable or more conservative portfolio 

generally would invest in mutual funds 

and ETFs that provide a client with low 

risk exposure and low return volatility, 

while an aggressive portfolio generally 

would invest in mutual funds and ETFs 

that provide the client with higher-risk 

exposure and higher return volatility. 

Model portfolio providers, sometimes 

referred to as ‘‘model originators,’’ 

include broker-dealers, asset managers, 

third-party strategists, asset allocators, 

and advisers.13 They design allocation 

models, may update or rebalance them 

over time, provide various degrees of 

customization, and may offer this 

information on a discretionary or nondiscretionary basis. While target 

allocation models that pursue defined 

outcomes or investment strategies (e.g., 

capital preservation, income) have been 

most common in the marketplace, there 

is a growing demand for specialized 

models that focus on a particular 

industry or strategy—for example, 

models that focus on sustainable or 

‘‘ESG’’ (environmental, social, and 

governance) investments.14

Model portfolio providers may 

consider the characteristics and 

investment goals of a general client 

type, such as whether the investor is 

focused on retirement or short-term 

financial management, or may engage in 

a more detailed, customized analysis 

when crafting a model portfolio 

through, for example, the use of direct 

indexing strategies.15


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37256 Federal Register / Vol. 87, No. 119 / Wednesday, June 22, 2022 / Proposed Rules 

sector allocation). The availability of fractional 

share investing and commission-free trading has 

made direct indexing an increasingly popular 

strategy for certain retail investors. See Rebecca 

Baldridge and Benjamin Curry, Beat Funds at Their 

Own Game with Direct Indexing, Forbes (Apr. 15, 

2021), available at https://www.forbes.com/advisor/ 

investing/direct-indexing/; Steve Johnson, Direct 

Indexing Looks Set to Disrupt the Retail ETF 

Market, Financial Times (Feb. 10, 2021), available 

at https://www.ft.com/content/3b35120a-dd92- 

48b0-8b6f-e26f116473e0; Rebecca Lake, What is 

Direct Indexing?, U.S. News & World Report (Sept. 

20, 2019), available at https://money.usnews.com/ 

investing/investing-101/articles/what-is-directindexing. 

16The additional fee compensates the model 

provider for its asset allocation advice. 2020 Model 

Portfolio Landscape, Morningstar Manager Research 

(Aug. 2020), at 3. Any person receiving transactionbased compensation (such as commissions) in 

exchange for providing a model portfolio or other 

information service must determine whether it is 

subject to statutory or regulatory requirements 

under Federal law, including the requirement to 

register as a broker-dealer pursuant to section 15(a) 

of the Securities Exchange Act of 1934. See 15 

U.S.C. 78o(a). 

17There may be a similar lack of understanding 

among investors in pooled investment vehicles, 

including registered investment companies, that 

rely on third-party models. 

18The Commission has stated that ‘‘an adviser’s 

federal fiduciary duty may not be waived, though 

it will apply in a manner that reflects the agreedupon scope of the relationship.’’ Commission 

Interpretation Regarding Standard of Conduct for 

Investment Advisers, Investment Advisers Act 

Release No. 5248 (June 5, 2019) [84 FR 33669, 

33672 (Jul. 12, 2019)]. 

19The names for these services may vary, such as 

pricing services, valuation agents, or providers of 

fairness opinions. 

20See Money Market Fund Reform, Amendments 

to Form PF, Investment Advisers Act Release No. 

3879 (July 23, 2014) [79 FR 47736 (Aug. 14, 2014)]. 

21 Good Faith Determinations of Fair Value, 

Investment Company Act Release No. 34128 (Dec. 

3, 2020) [86 FR 748, 756 (Jan. 6, 2021)] (‘‘Fair Value 

Release’’), available at https://www.sec.gov/rules/ 

final/2020/ic-34128.pdf. 

22See Fair Value Release, at text following n.98. 

23Compliance Alert, Division of Examinations 

(published as Office of Compliance Inspections and 

Examinations), Securities and Exchange 

Commission (July 2008), available at https://

www.sec.gov/about/offices/ocie/ 

complialert0708.htm. This compliance alert and 

other staff statements (including those cited herein) 

represent the views of Commission staff and are not 

a rule, regulation, or statement of the Commission. 

The Commission has neither approved nor 

disapproved the content of these documents and, 

like all staff statements, they have no legal force or 

effect, do not alter or amend applicable law, and 

create no new or additional obligations for any 

person. 

24 15 U.S.C. 80b–2(a)(11). 

25Statement of Staff Interpretive Position, 

Applicability of the Investment Advisers Act to 

Model portfolio providers generally 

are compensated by fees on securities 

bought, sold, and held in the model 

(e.g., an asset manager that builds a 

model using proprietary products), but 

some providers charge a fee for the use 

of the model portfolio separate from the 

underlying product fees or receive 

commissions or other transaction-based 

compensation.16

Investment advisers’ use of a third 

party’s model portfolios may raise 

concerns with respect to clients’ 

understanding of the fees they are 

paying, the services being performed by 

each party (i.e., the client-facing adviser 

and the model portfolio provider), and 

their respective conflicts (or potential 

conflicts) of interest.17 For example, 

clients may be unsure which services 

are being performed by a model 

portfolio provider and which are being 

performed by the adviser, as well as by 

whom they are owed a fiduciary duty. 

This uncertainty may be increased 

where, for example, the client-facing 

adviser seeks to disclaim or limit its 

fiduciary duty or any other duty when 

implementing a model provided by a 

third-party model portfolio provider.18

In addition, an adviser may invest 

according to a model customized by the 

provider for the adviser, including 

where (for example) the model portfolio 

provider may adjust the model based on 

input from the adviser. 

C. Pricing Services 

Pricing services provide prices, 

valuations, and additional data about a 

particular investment (e.g., a security, a 

derivative, or another investment), to 

assist users with determining an 

appropriate value of the investment.19

In addition, a pricing service may 

provide pricing information when 

market quotations are unavailable, such 

as when the primary market for a 

foreign security is closed, or when the 

relevant security is traded in over-thecounter markets that result in 

incomplete information on the 

security’s market price. 

In providing pricing information to 

users, pricing services may exercise 

significant discretion. They often 

determine a valuation methodology to 

use; develop valuation model templates; 

determine the sources or relevance of 

inputs; determine whether the 

valuations generated are appropriate or 

require further adjustment; and may 

need to address any pricing challenges 

raised by the user. Because pricing 

services rely on and prioritize 

differently a variety of inputs, methods, 

models, and assumptions in 

determining a pricing level, different 

pricing services may determine different 

pricing levels for the same security.20 A 

pricing service may offer different 

pricing levels for the same security as 

well, depending on the service’s type of 

analysis or evaluation and the user’s 

needs. Depending on the specific 

analysis, pricing services may be 

compensated through subscription fees, 

through other fixed fees, and as a 

percentage of assets. 

The Commission recently discussed 

pricing services in adopting rule 2a–5 

under the Investment Company Act, 

which addresses valuation practices and 

the role of the board of directors with 

respect to the fair value of the 

investments of a registered investment 

company or business development 

company.21 Under the rule, fair value as 

determined in good faith requires 

overseeing and evaluating any pricing 

services used. The Commission 

recognized that pricing services play an 

important role in the fair value process, 

while also noting the potential risks and 

conflicts of interest that pricing services 

can present in registrants’ valuing of 

securities.22 Staff have also observed 

compliance issues in connection with 

registrants’ interactions with third-party 

pricing services, including the risks of 

misleading disclosure regarding 

whether those services provide 

‘‘independent’’ values and the 

possibility of stale or otherwise 

inaccurate valuations.23

II. Investment Adviser Status Under the 

Advisers Act 

The Advisers Act generally defines an 

‘‘investment adviser’’ as any person 

who, for compensation, engages in the 

business of advising others, either 

directly or through publications or 

writings, as to the value of securities or 

as to the advisability of investing in, 

purchasing, or selling securities, or any 

person who, for compensation and as 

part of a regular business, issues or 

promulgates analyses or reports 

concerning securities.24 The definition 

generally includes three elements for 

determining whether a person is an 

investment adviser: (i) the person 

provides advice, or issues analyses or 

reports, concerning securities; (ii) the 

person is in the business of providing 

such services; and (iii) the person 

provides such services for 

compensation. Each element must be 

met in order for a person to be deemed 

an investment adviser. 

With respect to the first element, a 

person generally is an investment 

adviser even if its advice, reports, or 

analyses about securities do not relate to 

specific securities, provided the services 

are performed as part of a business and 

for compensation. For example, in the 

context of financial planning services, 

our staff has taken the position that a 

person may be ‘‘advising’’ another 

within the meaning of the Advisers Act 

if the advice addresses whether to invest 

in securities instead of a non-securities 

investment.25


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Federal Register / Vol. 87, No. 119 / Wednesday, June 22, 2022 / Proposed Rules 37257 

Financial Planners, Pension Consultants, and Other 

Persons Who Provide Investment Advisory Services 

as a Component of Other Financial Services, 

Investment Advisers Act Release No. 1092 (Oct. 8, 

1987) [52 FR 38400, 38402 (Oct. 16, 1987)] 

(‘‘Financial Planners Release’’) (‘‘A person who, in 

the course of developing a financial program for a 

client, advises a client as to the desirability of 

investing in, purchasing or selling securities, as 

opposed to, or in relation to, any non-securities 

investment or financial vehicle would also be 

‘‘advising’’ others within the meaning of Section 

202(a)(11).’’); see also U.S. v. Elliott, 62 F.3d 1304, 

1309–10 (11th Cir. 1996) (citing Financial Planners 

Release and stating ‘‘[W]e are persuaded that both 

Elliott and Melhorn are ‘in the business’ of advising 

others because they satisfy all three of the 

disjunctive factors’’ in the Financial Planners 

Release); Luzerne County Retirement Bd. v. 

Makowski, 627 F.Supp.2d 506, 572–74 (M.D. Penn. 

1995) (applying three-part test of Financial Planners 

Release and granting summary judgment in favor of 

defendants as to count alleging violations of the 

Advisers Act); infra note 31 (describing the Solely 

Incidental Release, as defined therein). 

26See, e.g., Elliott, 62 F.3d at 1310 (stating that 

defendants ‘‘provided investment advice on more 

than rare, isolated occasions’’ and ‘‘regularly gave 

advice regarding the safety and effectiveness’’ of 

specific investment vehicles ‘‘based upon the 

personal circumstances of individual investors’’); 

SEC v. Battoo, 158 F. Supp. 3d 676, 698 (N.D. Ill. 

2016). Our staff took a similar view. See Financial 

Planners Release, 52 FR at 38402 (‘‘The frequency 

of the activity is a factor, but not determinative.’’). 

27At least one court has found that an ‘‘economic 

benefit’’ could even include an adviser’s ill-gotten 

gains from investors’ misappropriated funds. See 

U.S. v. Ogale, 378 Fed. Appx. 959, 960–61 (11th Cir. 

2010) (‘‘The receipt of any economic benefit 

qualifies as compensation under the Investment 

Adviser’s [sic] Act and thus the investment adviser 

enhancement.’’); see also U.S. v. Miller, 833 F.3d 

274, 282 (3rd Cir. 2016) (finding that adviser 

compensation includes ‘‘any economic benefit’’ and 

holding that defendant who sold his firm’s 

promissory notes to his clients met the 

compensation element of Section 202(a)(11)); U.S. 

v. Elliott, 62 F.3d at 1311 (finding that adviser 

compensation includes ‘‘any economic benefit’’ and 

holding that defendants were investment advisers 

even though they did not receive an investment 

adviser’s fee but did receive compensation from an 

economic relationship that included providing 

ongoing investment advice as a primary aspect of 

the relationship). 

28This staff analysis does not consider other 

aspects of the statutory definition—e.g., whether 

such information or data constitutes advice ‘‘as to 

the value of securities,’’ see section 202(a)(11). 

29See, e.g., Datastream International, Inc., SEC 

Staff No-Action Letter (Mar. 15, 1993), available at 

https://www.sec.gov/divisions/investment/ 

noaction/1993/datastream-international-031593- 

202a.pdf; RDM Infodustries, SEC Staff No-Action 

Letter (Mar. 25, 1996), available at https://

www.sec.gov/divisions/investment/noaction/1996/ 

rfminfodustries032596.pdf. 

30See 15 U.S.C. 80b–2(a)(11)(A) through (H). A 

person relying on any of the exclusions must meet 

all of its requirements. See, e.g., Solely Incidental 

Release, infra note 31. 

31 15 U.S.C. 80b–2(a)(11)(C) (‘‘broker-dealer 

exclusion’’). The Commission has adopted an 

interpretation of the ‘‘solely incidental prong’’ of 

the broker-dealer exclusion that states that ‘‘a 

broker-dealer’s provision of advice as to the value 

and characteristics of securities or as to the 

advisability of transacting in securities is consistent 

with the solely incidental prong if the advice is 

provided in connection with and is reasonably 

related to the broker-dealer’s primary business of 

effecting securities transactions.’’ Commission 

Interpretation Regarding the Solely Incidental Prong 

of the Broker-Dealer Exclusion from the Definition 

of Investment Adviser, Investment Advisers Act 

Release No. 5249 (June 5, 2019) [84 FR 33681 (July 

12, 2019)] (‘‘Solely Incidental Release’’). The Solely 

Incidental Release also states that ‘‘[w]hether 

advisory services provided by a broker-dealer 

satisfy the solely incidental prong is assessed based 

on the facts and circumstances surrounding the 

broker-dealer’s business, the specific services 

offered, and the relationship between the brokerdealer and the customer.’’ Id. In the Solely 

Incidental Release, the Commission stated that 

broker-dealers ‘‘receive special compensation where 

there is a clearly definable charge for investment 

advice.’’ Id. at n.68 (internal citations omitted). 

32 15 U.S.C. 80b–2(a)(11)(H). The Commission is 

authorized to exempt persons by rule, regulation, or 

order, see id., and has exercised that authority. See, 

e.g., In the Matter of 1112 Partners, LLC, Investment 

Advisers Act Release No. 4917 (May 29, 2018) 

(order). 

33 15 U.S.C. 80b–2(a)(11)(D). 

34 Lowe, 472 U.S. 181, 208–210 (1985); see also 

Alfred A. Zurl, SEC Staff No-Action Letter (Aug. 7, 

1995), available at https://www.sec.gov/divisions/ 

investment/noaction/1995/alfredzurl080795.pdf 

(applying Lowe). 

35SEC v. Park, 99 F. Supp.2d 889, 895 (N.D. Ill. 

2000). 

With respect to the second element, 

giving advice does not need to 

constitute the principal business 

activity or any particular portion of the 

business activities of a person in order 

for the person to be considered ‘‘in the 

business’’ of acting as an investment 

adviser under the Advisers Act. Rather, 

the giving of advice need only be done 

on a basis such that it constitutes a 

business activity occurring with some 

regularity.26 Finally, the receipt of any 

economic benefit, whether in the form 

of an advisory fee or some other fee 

relating to the total services rendered, 

commissions, or some combination of 

the two, would generally suffice with 

respect to compensation under the 

definition. The source of an ‘‘economic 

benefit’’ that would satisfy this element 

of the definition is not, however, limited 

to fees and commissions.27

As technology and advisory practices 

have evolved, one aspect of this 

statutory definition that market 

participants have questioned is whether 

certain types of information or data 

constitute ‘‘analyses or reports 

concerning securities.’’ For example, 

these questions have arisen in the 

context of databases and various 

computer software services offering 

calculations and pricing models. Our 

staff has considered these questions, in 

the context of one part of the statutory 

definition,28 and stated that, while this 

is a facts and circumstances analysis, 

relevant factors could include whether: 

(i) The information is not readily 

available to the public in its raw state, 

(ii) the categories of information are 

highly selective, and (iii) the 

information is organized or presented in 

a manner that suggests the purchase, 

holding, or sale of any security or 

securities.29

The Advisers Act expressly excludes 

from the definition of investment 

adviser certain types of persons or 

persons engaging in certain types of 

activities.30 The exclusions generally 

cover persons that are already subject to 

regulation, either by the Commission or 

another regulator, or persons that 

Congress did not intend to be covered 

by the Act. For example, the Advisers 

Act excludes from the definition ‘‘any 

broker or dealer whose performance of 

such services is solely incidental to the 

conduct of his business as a broker or 

dealer and who receives no special 

compensation therefor.’’ 31 The Advisers 

Act also authorizes the Commission to 

exempt from the definition of 

investment adviser any other person 

‘‘not within the intent’’ of the statutory 

definition.32

In addition, the Advisers Act excludes 

from the definition the ‘‘publisher of 

any bona fide newspaper, news 

magazine or business or financial 

publication of general and regular 

circulation’’ (‘‘publisher’s exclusion’’).33

In Lowe v. SEC, the Supreme Court 

construed the publisher’s exclusion and 

held that publishers are excluded from 

the definition under the Advisers Act as 

long as their publication: (i) Provides 

only impersonal advice; (ii) is ‘‘bona 

fide,’’ meaning that it provides genuine 

and disinterested commentary; and (iii) 

is of general and regular circulation 

rather than issued from time to time in 

response to episodic market activity.34

Building on Lowe, the court in SEC v. 

Park stated that the personalized or 

disinterested nature of a publication 

‘‘clearly’’ affects whether it is ‘‘bona 

fide.’’ 35

Certain providers have relied on the 

publisher’s exclusion. We believe that 

index providers have historically 

concluded, for example, that, even if 

they meet the definition of investment 

adviser, they may rely on the exclusion 

and thus need not register with the 

Commission or be subject to any section 

of the Advisers Act, including section 

206. Similarly, other providers, such as 

pricing services, may be relying on the 

publisher’s exclusion. 

Given the length of time since Lowe 

was decided, and understanding that 

new business models have developed in 

the interim, we are considering the 

extent to which providers’ activities, in 

whole or in part, may raise investment 

adviser status issues. We specifically 

request comment on the following: 


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36See supra text accompanying note 29. 37See supra note 32. 

General 

1. Are our descriptions of each 

information provider accurate and 

comprehensive? What types of potential 

risks and conflicts of interest does each 

type of provider present? How many 

providers of each type do commenters 

estimate currently offer their services in 

the United States? 

2. Are there any other types of 

information providers whose activities, 

in whole or in part, may raise 

investment adviser status issues? If so, 

which providers, and why? 

General Questions Related to 

Information Providers’ Status 

3. How do providers analyze whether 

they meet the Advisers Act’s definition 

of ‘‘investment adviser’’ under each 

element of the definition? For those 

providers that have determined that 

they meet the definition, what were the 

determining factors? 

4. In light of new technologies and 

current market practices, when 

determining what constitutes ‘‘analyses 

or reports concerning securities,’’ what 

factors may raise investment adviser 

status issues? For example, are the 

factors described above appropriate? 36

Should they be modified? If so, what 

modifications and why? What economic 

benefits and costs would result if 

advisers were required to consider the 

factors described above or with 

modifications? Alternatively, are there 

other factors that advisers should be 

required to consider regarding what 

constitutes ‘‘analyses or reports 

concerning securities’’? Should the 

Commission provide additional 

guidance? What benefits and costs 

would result from requiring other 

factors or providing additional 

guidance? 

5. We understand that some 

information providers may determine 

that providing data or other information 

is not providing ‘‘analyses or reports 

concerning securities’’ and therefore the 

provider is not an investment adviser 

under the Advisers Act based on the 

factors above. Which types of 

information providers take this position, 

and on what basis do they consider such 

data and information not to be analyses 

or reports concerning securities? 

6. Which providers rely on the 

publisher’s exclusion? On what basis? 

To what extent do they rely on Lowe to 

inform the determination? How do they 

determine whether their publications 

are ‘‘impersonal,’’ ‘‘bona fide,’’ or of 

‘‘general and regular circulation’’? 

7. Which providers rely on another 

exclusion from the definition of 

‘‘investment adviser’’? Which exclusion 

and on what basis? For example, do 

some broker-dealers that provide model 

portfolios to their customers rely on the 

broker-dealer exclusion from the 

definition of investment adviser? To 

what extent do broker-dealer model 

portfolio providers provide their 

portfolios to investors or to other 

financial professionals, such as 

investment advisers or other managers 

(e.g., banks, trust companies), which 

may then use the model portfolios with 

their own customers or clients? Does 

this have an impact on the brokerdealer’s reliance on the exclusion? How 

are broker-dealers typically 

compensated for providing these model 

portfolios? Under what circumstances 

does a broker-dealer provide a model 

portfolio in exchange for a commission 

or other transaction-based 

compensation? On what basis is such 

commission or other transaction-based 

compensation charged? Do these brokerdealers receive different forms of 

compensation? 

8. To what extent do information 

providers view themselves as having 

fiduciary obligations to any investors 

that rely on the information they 

provide (for example, when investors 

receive such information through 

another financial professional)? How do 

providers view the scope of such 

obligations? Do they view their 

obligations more narrowly than those of 

a traditional client-facing adviser, and if 

so, how? How do these providers 

address potential conflicts of interest 

that may arise during their relationships 

with clients or users of their services? 

9. How do information providers 

exercise discretion in providing 

information? For example, do index 

providers or model portfolio providers 

create indexes or portfolios at the 

request of their licensees or users based 

on more customized investment 

objectives and goals? In these 

circumstances, does the provider 

include or exclude certain companies, 

funds, or countries from an index or 

portfolio based on the input of its 

licensee or user? As another example, in 

determining which inputs or factors to 

prioritize in assessing a security’s price, 

does a pricing service prioritize certain 

factors over others based on the input of 

its licensee or user? 

10. In what ways do information 

providers exercise discretion in 

establishing and updating their services 

or the information they provide? Is such 

discretion limited by a service’s users? 

For example, with respect to pricing 

services, do users limit providers’ 

discretion by contract, either by 

reference to standard pricing guides or 

principles or otherwise? If so, do users 

treat pricing services differently from 

other providers in how discretion is 

limited? If so, how and on what basis? 

Do the responses change when 

considering other types of information 

providers? 

11. To what extent, and under what 

circumstances, does each type of 

information provider personalize the 

services it offers? For example, what are 

industry practices around direct 

indexing and specialized indexes, and 

how prevalent are they? 

12. Do information providers adjust 

the services offered based on input from 

the users of their services? Do providers 

disclose such adjustments to users, 

including when such adjustments are 

made to address previous errors of the 

provider? 

13. Under what circumstances do 

information providers disclose changes 

or updates to the services provided, and 

to whom? For example, describe index 

providers’ disclosures about the changes 

in the index strategy or related aspects 

(e.g., tracking methodology, portfolio 

structure, portfolio limitations, index 

data distribution channels) and the level 

of discretion that the index provider 

may exercise. How do information 

providers communicate these changes 

or updates? 

14. How, and in what form, are 

information providers compensated? Do 

information providers charge license, 

subscription, or other types of fees? Are 

there tiers of fees? For example, do 

pricing services’ users pay multiple 

times for use of the same price? Are 

subscription fees different from 

engagement fees? If so, how? When an 

investment adviser or an investment 

company compensates information 

providers, is that compensation borne 

by advisory clients or fund investors? 

15. Should the Commission use its 

authority to exempt any of the 

information providers from the 

definition of ‘‘investment adviser’’? 37 If 

so, what facts and circumstances should 

factor in to an exemption? Please 

explain your answer. 

16. What are the economic benefits 

and costs associated with investment 

adviser status for each type of 

information provider identified above? 

Are there provisions of the Advisers Act 

that providers are unable to comply 

with or that would be operationally 

complex and burdensome? 

Questions Related to Index Providers 

17. To what extent are users of index 

providers’ services registered 

investment companies or other pooled 


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38See section 206 of the Act, rules 206(4)–5 and 

206(4)-8 under the Act;ssee also, e.g., S. Rep. No. 

1760, 86th Cong., 2d Sess. 7 (1960), which specifies 

that the antifraud provisions in section 206 of the 

Act apply to both registered and unregistered 

advisers. 39The Act also provides several voluntary 

exemptions from registration. See, e.g., 15 U.S.C. 

80b–3(b), (l), and (m). In addition, venture capital 

fund advisers and private fund advisers with less 

than $150 million in AUM in the United States 

(referred to as ‘‘exempt reporting advisers’’) are 

exempt from registration, but are required to file 

reports on Form ADV with the Commission and are 

subject to certain rules under the Act. See 15 U.S.C. 

80b–3(l) and (m); 15 U.S.C. 80b–4(a); 17 CFR 

275.204–4. 

40Exemption for Certain Investment Advisers 

Operating Through the Internet, Investment 

Advisers Act Release No. 2091 (Dec. 12, 2002) [67 

FR 77620, 77621 (Dec. 18, 2002)], at nn.4–5 and 

accompanying text (citing S. Rep. No. 293, 104th 

Cong., 2d Sess. 3–5 (1996) (‘‘Senate Report’’)); see 

also Senate Report at 3–4 (‘‘The states should play 

an important and logical role in regulating small 

investment advisers whose activities are likely to be 

concentrated in their home state. Larger advisers, 

with national businesses, should be registered with 

the Commission and be subject to national rules.’’). 

41 15 U.S.C. 80b–3a(c). 

42See rule 203A–2(a) and (e); Rules Implementing 

Amendments to the Advisers Act of 1940, 

Investment Advisers Act Release No. 1633 (May 15, 

1997) [62 FR 28112 (May 22, 1997)], at n.60 and 

accompanying text (noting the Commission’s 

adoption of a higher assets-under-management 

threshold for registration by pension consultants as 

‘‘necessary to demonstrate that a pension 

consultant’s activities have an effect on national 

markets’’). See Interactive Data Corporation, 

Investment Advisers Act Release No. 1685 (Dec. 9, 

1997) (notice) and In the Matter of Interactive Data 

Corporation, Investment Advisers Act Release No. 

1692 (Jan. 6, 1998) (order) (Interactive Data 

Corporation (‘‘IDC’’) argued that it should be 

permitted to register despite the fact that it did not 

qualify for an exemption from the prohibition on 

registration. Specifically, IDC argued that it is the 

type of large, national investment adviser that 

Congress intended to be registered with the SEC, 

that prohibiting its registration would unfairly 

burden interstate commerce, and that its services 

have a significant national impact). 

43See infra text accompanying note 47. 

44See, e.g., Jim Hawley and Jon Lukomnik, The 

Long and Short of It: Are We Asking the Right 

Questions? Modern Portfolio Theory and Time 

Horizons, 41 Seattle U. L. Rev. 449, 453–456 (2018) 

(summarizing studies describing market effects of 

Continued 

investment vehicles? What other types 

of users license indexes? Is there a 

difference in this respect between users 

of broad-based indexes and specialized 

indexes? 

18. Do index providers that develop 

broad-based indexes raise different 

investment adviser status issues as 

compared to those that develop 

customized or bespoke indexes? If so, 

what factors categorize or distinguish 

different types of indexes? Does an 

index that is specialized raise 

investment adviser status issues? Are 

there other parameters that we should 

utilize? 

19. How, if at all, do index providers 

limit the dissemination of their 

methodologies or indexes to only those 

who license such information? Should 

the limitations placed on dissemination 

affect the analysis of their status as an 

investment adviser? 

20. Under what circumstances, if any, 

is an index provider compensated based 

on the amount of assets that are 

managed according to its index? Do 

compensation methods for index 

providers differ based on whether they 

provide broad-based indexes or 

specialized indexes? If so, how or on 

what basis do such compensation 

methods differ? 

21. What are the economic benefits 

and costs associated with investment 

adviser status for index providers that 

develop broad-based indexes versus 

specialized indexes? 

Questions Related to Model Portfolio 

Providers 

22. Do model portfolio providers raise 

different investment adviser status 

issues than those raised by index 

providers that provide specialized 

indexes? In what ways are they 

distinguishable? 

Questions Related to Pricing Services 

23. Is there a distinction between 

typical pricing services in the market 

and a ‘‘valuation specialist’’ that 

exercises informed judgment in 

determining valuation inputs, 

methodologies, and the legitimacy of a 

valuation conclusion? How should any 

regulation reflect these distinctions, or 

any other distinction between types of 

pricing services? 

24. To what extent do the results of 

price challenges to a pricing service’s 

values affect the prices provided to 

other users of pricing services? Are 

there times when a pricing service 

aggregates or delivers information from 

another pricing service? 

III. Implications of Investment Adviser 

Status 

A. Registration Under, and Applicability 

of, the Advisers Act 

Generally, a person that meets the 

definition of ‘‘investment adviser’’ (and 

cannot rely on an exclusion) must 

register under the Advisers Act, unless 

it: (i) Is prohibited from registering 

under section 203A of the Act, or (ii) 

qualifies for an exemption from the 

Act’s registration requirement, each as 

discussed below. All advisers, including 

an unregistered adviser, are subject to 

the Advisers Act’s antifraud 

provisions.38

1. Advisers Prohibited From Registering 

Under the Advisers Act 

Section 203A of the Advisers Act 

prohibits certain advisers from 

registering under the Act, unless they 

meet an assets-under-management 

(‘‘AUM’’) threshold. In general, a small 

adviser with less than $25 million in 

AUM that is regulated or required to be 

regulated as an adviser in the state 

where it maintains its principal office 

and place of business, and a mid-sized 

adviser with between $25 million and 

$100 million in AUM that is required to 

be registered as an adviser in the state 

where it maintains its principal office 

and place of business and that is subject 

to examination by its state securities 

commissioner, are ineligible to register 

with the Commission. These smaller 

and mid-sized advisers are regulated at 

the state level.39

The relevant thresholds reflect an 

amount ‘‘designed to distinguish 

investment advisers with a national 

presence from those that are essentially 

local businesses.’’ 40 Even when 

advisers lack such a ‘‘national 

presence,’’ we are authorized to exempt 

from the prohibition on Commission 

registration those investment advisers 

for which the prohibition ‘‘would be 

unfair, a burden on interstate commerce, 

or otherwise inconsistent’’ with the 

purposes of the Act’s provisions 

allocating authority between the 

Commission and state securities 

authorities.41 On this basis, we have 

exempted certain types of advisers from 

the prohibition against registration with 

the Commission, including pension 

consultants, internet investment 

advisers, and some pricing services.42

Certain providers, if they are 

investment advisers, may not have 

significant AUM, or regulatory assets 

under management (‘‘RAUM’’), 

depending on how those terms are 

used,43 but could service a significant 

portion of the financial intermediaries 

and other players in the national 

financial markets with broad market 

effects. For example, to the extent that 

many advisers rely on a single pricing 

service, and all use that service’s 

evaluated price for a particular security, 

that pricing service may affect the 

national market in that security in a way 

that would not happen if the same 

advisers each reached independent 

determinations of, or relied on separate 

pricing services to determine, the 

security’s price. Similarly, the decisions 

of index providers can affect domestic 

and global financial markets in some 

circumstances. Some analysis has 

shown an increase in stock price, among 

other effects, associated with inclusion 

in the S&P 500 Index.44 As an example, 


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index inclusion) (internal citations omitted). But 

see Maria Kasch and Asani Sarkar, Is There an S&P 

500 Index Effect?, FIRS 2013 (Mar. 2014), available 

at https://ssrn.com/abstract=2171235. 

45As another example, when major equity index 

providers included in their emerging market 

indexes the ‘‘A shares’’ of certain Chinese 

companies listed in China, the weight of Chinese 

markets in those indexes increased and investors 

tracking those indexes invested in those companies. 

See, e.g., Division of Economic and Risk Analysis, 

U.S. Securities and Exchange Commission, Risk 

Spotlight: U.S. Investors’ Exposure to Domestic 

Chinese Issuers (July 6, 2020), available at https:// 

www.sec.gov/files/US-Investors-Exposure-toDomestic-Chinese-Issuers_2020.07.06.pdf (noting 

that the weight of Chinese A shares in the three 

emerging market indexes ranged between 4% and 

5.5% after completion of each index’s inclusion 

process); see also Xie Yu, China’s Bonds Win Third 

Key Index Inclusion, Wall Street Journal (Sept. 24, 

2020) (reporting that FTSE Russell would add 

Chinese government debt to certain indices and 

estimating the inclusion ‘‘could attract more than 

$100 billion of foreign capital’’), available at 

https://www.wsj.com/articles/chinas-bonds-winthird-key-index-inclusion-11600994714; Robin 

Wigglesworth, Trillions 258–59 (Portfolio 2021) 

(describing efforts by the Chinese government to 

affect decisions of index providers). 

46The Commission has tailored the adviser 

regulatory regime to recognize advisers in different 

situations. See Exemptions for Advisers to Venture 

Capital Funds, Private Fund Advisers with Less 

Than $150 Million in Assets Under Management, 

and Foreign Private Advisers, Advisers Act Release 

No. 3222 (June 22, 2011) [76 FR 39645 (July 6, 

2011)] (adopting rules to implement exemptions 

from the registration requirements of the Advisers 

Act for advisers to certain privately offered 

investment funds and stating that the Commission 

does not apply most of the substantive provisions 

of the Advisers Act to the non-U.S. clients of a nonU.S. adviser registered with the Commission). 

47Form ADV uses the term ‘‘regulatory assets 

under management’’ instead of ‘‘assets under 

management.’’ Form ADV describes how advisers 

must calculate RAUM and states that in 

determining the amount of RAUM, an adviser 

should ‘‘include the securities portfolios for which 

[it] provide[s] continuous and regular supervisory 

or management services as of the date of filing’’ the 

form. See Form ADV, Instructions for Part 1A, 

Instruction 5.b. 

model portfolios may be used to manage 

large amounts of assets (serving, in some 

cases, as the basis for their providers’ 

compensation), even though model 

portfolio providers do not have 

discretionary authority over those assets 

and, accordingly, may not have 

RAUM.45

2. Requirements for SEC-Registered 

Advisers 

Advisers registered (or required to be 

registered) with the Commission are 

subject to substantive prohibitions and 

requirements; contractual requirements; 

recordkeeping obligations; and oversight 

by the Commission, including periodic 

filings and inspection. Many of the rules 

under the Act are generally designed to 

apply to the variety of advisers’ business 

models. Form ADV similarly is designed 

to facilitate reporting by advisers with 

disparate business models and client 

types. However, it is possible to 

differentiate application of the adviser 

regulatory regime (including reporting 

requirements) to a type of investment 

adviser.46

To the extent that providers’ activities 

may constitute investment advice, and 

have the potential to affect broadly the 

national securities markets, we request 

comment on all aspects of the 

investment adviser regulatory regime 

with respect to these providers. Such 

comments would be particularly useful 

given that many of the provisions of the 

Act, the rules thereunder, and Form 

ADV are designed primarily for 

investment advisers that provide 

investment advice designed for the 

objectives and needs of specific clients, 

which may not be the case with all of 

these information providers. We 

specifically request comment on the 

following: 

Registration Under the Advisers Act 

25. To the extent that a provider 

meets the Act’s definition of 

‘‘investment adviser,’’ should it register 

with the SEC or the states in which it 

maintains its principal office or places 

of business? As a policy matter, should 

Commission registration be permitted or 

required? What economic benefits and 

costs would result? What would be the 

effect of registration on the ability of 

new competitors to come into the 

marketplace? What would be the effect 

of registration on providers’ ability to 

speak or communicate? If any type of 

information provider were required to 

register, what process might we provide 

to ensure an orderly transition of 

registration status? 

26. Some providers are currently SECregistered while others are not. For each 

type, on what basis? For those providers 

that have registered with the 

Commission as investment advisers, 

what were the determining factors? How 

would the economic benefits and costs 

differ between providers that are 

currently SEC-registered and others that 

are not? 

27. Do providers have RAUM with 

respect to their information services? 47

For example, do providers ‘‘provide 

continuous and regular supervisory or 

management services’’ to securities 

portfolios as required by the 

instructions on Form ADV for purposes 

of calculating RAUM? What range of 

RAUM is common? Should the 

Commission amend the Instructions to 

Form ADV to provide a calculation of 

RAUM that encompasses any or all 

providers? In particular, should the 

Commission define RAUM in a manner 

that explicitly applies to model portfolio 

providers? 

28. Should there be exemptions from 

the prohibition against registration for 

providers that have a ‘‘national 

presence’’ or can have a significant 

effect on the national markets regardless 

of RAUM? Are there factors that we 

should take into account in identifying 

those providers? For example, what 

characteristics would distinguish 

providers that have a national presence 

from ones that do not? Should 

registration be mandatory or optional? 

What would be the economic benefits 

and costs of mandatory or optional 

registration? 

29. Under what circumstances should 

a provider that acts as an investment 

adviser be required to treat as its 

advisory client another investment 

adviser that uses its services (the 

‘‘serviced adviser’’)? Under what 

circumstances, if any, should such a 

provider’s advisory client be the client, 

or end-user, of the serviced adviser? If 

a provider’s advisory client is the enduser of the serviced adviser, to what 

extent and under what circumstances 

should such end-user have the right to 

approve the assignment of the advisory 

agreement between the serviced adviser 

and the provider? To what extent and 

under what circumstances should such 

end-user receive the disclosure 

documents of the provider? 

Applicability of the Advisers Act 

30. Should we exempt providers that 

meet the definition of investment 

adviser, and are required to register with 

the SEC under the Advisers Act, from 

any of the provisions of the Act and 

rules that apply to SEC-registered 

advisers and, if so, which provisions 

and why? Would any such provisions 

raise operational or compliance 

challenges such that an exemption is 

necessary? What would be the economic 

benefits and costs of exempting 

providers that meet the definition of 

investment adviser, and are required to 

register with the SEC under the Act? 

How would such an exemption affect 

investors? What would be the effects on 

competition in the market for 

information providers if we were to 

exempt providers from some or all 

requirements of the Act? Alternatively, 

should any provisions of the Act or 

rules apply differently to providers? 

Which ones, why, and how should they 

apply? For example, should disclosure 

obligations differ to the extent the 

providers do not have a client-facing 

role? 

31. Would requiring providers to 

register with the SEC and become 

subject to the regulatory regime under 


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48See, e.g., Kathleen H. Moriarty, Should Index 

Providers Be Regulated as Investment Advisers 

Under the U.S. Investment Advisers Act of 1940, 

Journal of Index Investing (2021), at 67–68, 

available at https://jii.pm-research.com/content/ 

iijindinv/11-12/4-1/54.full.pdf. 

49Regulation (EU) 2016/1011. 

50See 15 U.S.C. 80a–2(a)(20)(A). 

51See 15 U.S.C. 80a–2(a)(20)(B). 

52 In addition, among other provisions related to 

its relationship with a fund, an adviser under the 

Investment Company Act is subject to regulations 

related to loans, purchases or sales of assets, or the 

receipt of commissions or similar compensation in 

connection with such purchases and sales. See 15 

U.S.C. 80a–17. 

53 15 U.S.C. 80a–15(a); 15 U.S.C. 80a–15(c). 

54See 15 U.S.C. 80a–2(a)(20). 

the Act in its current form cause them 

to alter their business models, 

consolidate, or exit the market? 48 How 

would this affect investors? 

32. At least one regulatory framework 

for index providers exists outside of the 

United States, under the European 

Securities and Market Authority 

(‘‘ESMA’’) and its EU Benchmarks 

Regulation (‘‘BMR’’).49 Some of the 

BMR’s key provisions include requiring 

EU administrators of a broad class of 

benchmarks to be authorized or 

registered by a national regulator, and 

for these administrators to implement 

various governance systems and other 

controls to ensure the integrity and 

reliability of their benchmarks. 

Administrators are also required to 

provide a code of conduct specifying 

requirements and responsibilities 

regarding input data. Although the BMR 

affects U.S.-based index providers that 

wish to have market access in the EU, 

it does not directly affect their business 

in the United States. Should any U.S. 

regulatory action, if adopted and 

implemented, be aligned with the 

framework placed by the BMR in the 

EU? Are there particular components of 

the BMR that should or should not be 

applied to index providers in the United 

States, and why? What has been the 

effect of the BMR on the provision of 

benchmarks and indexes in the EU? Has 

the BMR served as a barrier to entry for 

new benchmark and index providers? 

Reporting Obligations and Public 

Disclosure 

33. What information do registered 

advisers and investment companies 

currently submit to the Commission 

with respect to their information 

providers? What information, if any, 

should registrants be required to 

submit? What information currently 

required should be modified and why? 

Should some of the information be 

provided confidentially to the 

Commission? If so, which types of 

information and why? 

34. Should Form ADV require specific 

information about advisers’ use of 

information providers? Should we 

require additional or different 

information on Form ADV for providers 

that meet the definition of investment 

adviser and are required to register with 

the SEC under the Advisers Act? If so, 

what information? What would be the 

economic benefit and cost of requiring 

additional or different information on 

Form ADV? 

B. Related Investment Company Act 

Matters 

Analysis under the Investment 

Company Act of whether a person is an 

investment adviser of a fund generally 

relies on two main elements: 

(i) The person regularly furnishes 

advice to the fund with respect to the 

desirability of investing in, purchasing 

or selling securities or other property, or 

is empowered to determine what 

securities or property should be 

purchased or sold by the fund; and 

(ii) The person acts pursuant to a 

contract with the fund.50

In addition, the Investment Company 

Act includes in the definition of an 

investment adviser to a fund a person 

who, pursuant to a contract with an 

investment adviser of an investment 

company, ‘‘regularly performs 

substantially all the duties’’ undertaken 

by such investment adviser.51

An investment adviser of a fund 

under the Investment Company Act is 

subject to certain requirements and 

limitations. Among other things, this 

status may trigger prohibitions related to 

self-dealing and other types of 

overreaching of a fund by its affiliates 

(including its investment adviser), 

ineligibility criteria for certain affiliated 

persons (including investment advisers), 

and requirements related to the 

approval of compliance procedures and 

practices by the fund’s board of 

directors.52 In addition, the Investment 

Company Act contains specific 

requirements related to shareholder and 

board approval of the fund’s advisory 

contract (including of any assignment of 

the contract).53

The Investment Company Act sets out 

certain exceptions to its definition of 

investment adviser of a fund, including 

for persons distributing their 

publications to subscribers, providing 

statistical information without regularly 

furnishing advice or making 

recommendations concerning specific 

securities, compensated under the 

supervision of a court, or persons 

excluded by rule or regulation.54

Certain providers may implicate the 

Investment Company Act’s provisions 

relating to an investment adviser of an 

investment company. For example, 

index providers, particularly to the 

extent the index provider maintains a 

bespoke index created for a single fund, 

could meet the definition of an 

investment adviser to a fund under the 

Investment Company Act. This may be 

the case if the index is maintained with 

an eye to the specific needs of a fund. 

To the extent that no exception from the 

definition applies, the index provider 

could implicate the Investment 

Company Act’s definition of investment 

adviser of an investment company, 

including when the index provider does 

not contract directly with a fund, but 

instead indirectly with the fund’s 

investment adviser. A similar analysis 

may apply to other providers, as well. 

We request comment on certain 

aspects of the Investment Company Act 

regime with respect to providers. We 

specifically request comment on the 

following: 

35. How do providers analyze 

whether they meet the Investment 

Company Act’s definition of 

‘‘investment adviser’’ of a fund under 

each element of the definition? What are 

the economic benefits and costs 

associated with whether a provider 

meets the Investment Company Act’s 

definition of ‘‘investment adviser’’ of a 

fund? Would the application of the 

definition to providers serve as a 

material barrier to entry for new 

entrants? 

36. To what extent do providers 

contract directly with funds? For 

example, do providers typically enter 

into contracts with the fund’s adviser, or 

an affiliate of the adviser? If a fund’s 

adviser delegates services to a provider, 

what duties does the adviser retain and 

what duties does the adviser delegate? 

Does the fund or its adviser make an 

affirmative determination made whether 

the provider is acting as an investment 

adviser under the Investment Company 

Act? 

37. The Investment Company Act 

excludes from the definition of 

investment adviser of a fund ‘‘a person 

whose advice is furnished solely 

through uniform publications 

distributed to subscribers thereto.’’ To 

what extent do providers distribute 

uniform publications? If so, how do 

these providers interpret ‘‘uniform’’? Do 

providers that rely on the Advisers Act 

publisher’s exclusion also rely on this 

exception and, if so, on what basis? 

38. To the extent a provider to a fund 

is an investment adviser of the fund, the 

fund and its provider would need to 

comply with various provisions of the 

Investment Company Act. What would 

be a reasonable amount of time for a 


khammond on DSKJM1Z7X2PROD with PROPOSALS
37262 Federal Register / Vol. 87, No. 119 / Wednesday, June 22, 2022 / Proposed Rules 

55See rule 38a–1 under the Investment Company 

Act. 

1Refer to ‘‘DOT Funding and Financing Programs 

with EV Eligibilities’’ chart on pages 10–11 in the 

NEVI Formula Program Guidance, found at: https:// 

www.fhwa.dot.gov/environment/alternative_fuel_

corridors/nominations/90d_nevi_formula_program_

guidance.pdf. 

registered investment company to come 

into compliance with these provisions? 

Are there measures we can take to assist 

with the transition? Are there provisions 

of the Investment Company Act that 

present unique challenges for providers? 

39. Rule 38a–1 under the Investment 

Company Act requires a fund’s board, 

including a majority of its independent 

directors, to approve policies and 

procedures reasonably designed to 

prevent violation of the Federal 

securities laws by the fund and certain 

service providers.55 To what extent do 

funds currently extend their compliance 

program to information providers, 

where such entity is not considered an 

investment adviser or one of the rule’s 

other named service providers 

(principal underwriters, administrators 

and transfer agents)? Does this analysis 

differ depending on the provider? 

Should we amend Rule 38a–1 to 

incorporate information providers 

within a fund’s compliance program, 

rather than requiring registration of 

information providers as investment 

advisers? What would be the costs and 

benefits of such an approach? 

40. In circumstances where a fund’s 

adviser contracts with an information 

provider, how much information is 

provided to the fund’s board regarding 

the providers on an ongoing basis? Do 

fund boards approve the engagement of 

providers in these circumstances? Does 

this differ depending on the provider? 

General Request for Comment 

This request for comment is not 

intended to limit the scope of 

comments, views, issues, or approaches 

to be considered. In addition to 

information providers, investment 

advisers and investment companies, 

advisory clients and other investors, we 

welcome comment from other market 

participants and particularly welcome 

statistical, empirical, and other data 

from commenters that may support their 

views or support or refute the views or 

issues raised by other commenters. 

By the Commission. 

Dated: June 15, 2022. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2022–13307 Filed 6–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Highway Administration 

23 CFR Part 680 

[Docket No. FHWA–2022–0008] 

RIN 2125–AG10 

National Electric Vehicle Infrastructure 

Formula Program 

AGENCY: Federal Highway 

Administration (FHWA), U.S. 

Department of Transportation (DOT). 

ACTION: Notice of proposed rulemaking 

(NPRM); request for comments. 

SUMMARY: The FHWA proposes to 

establish regulations setting minimum 

standards and requirements for projects 

funded under the National Electric 

Vehicle Infrastructure (NEVI) Formula 

Program and projects for the 

construction of publicly accessible 

electric vehicle (EV) chargers under 

certain statutory authorities. The 

standards and requirements proposed 

would apply to the installation, 

operation, or maintenance of EV 

charging infrastructure; the 

interoperability of EV charging 

infrastructure; traffic control device or 

on-premises signage acquired, installed, 

or operated in concert with EV charging 

infrastructure; data, including the 

format and schedule for the submission 

of such data; network connectivity of EV 

charging infrastructure; and information 

on publicly available EV charging 

infrastructure locations, pricing, realtime availability, and accessibility 

through mapping applications. 

DATES: Comments must be received on 

or before August 22, 2022. 

ADDRESSES: To ensure that you do not 

duplicate your docket submissions, 

please submit comments by only one of 

the following means: 

• Federal eRulemaking Portal: Go to 

https://www.regulations.gov and follow 

the online instructions for submitting 

comments. 

• Mail: Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Avenue SE, Washington, DC 

20590. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, 

West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The telephone 

number is (202) 366–9329. 

All submissions should include the 

agency name and the docket number 

that appears in the heading of this 

document or the Regulation Identifier 

Number (RIN) for the rulemaking. All 

comments received will be posted 

without change to https://

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Gary Jensen, Office of Natural 

Environment, (202) 366–2048, or via 

email at Gary.Jensen@dot.gov, or Ms. 

Dawn Horan, Office of the Chief 

Counsel (HCC–30), (202) 366–9615, or 

via email at Dawn.M.Horan@dot.gov. 

Office hours are from 8 a.m. to 4:30 

p.m., E.T., Monday through Friday, 

except Federal holidays. 

SUPPLEMENTARY INFORMATION: 

Electronic Access and Filing 

This document and all comments 

received may be viewed online through 

the Federal eRulemaking portal at 

www.regulations.gov using the docket 

number listed above. Electronic retrieval 

help and guidelines are also available at 

www.regulations.gov. An electronic 

copy of this document may also be 

downloaded from the Office of the 

Federal Register’s website at 

www.FederalRegister.gov and the 

Government Publishing Office’s website 

at www.GovInfo.gov. 

All comments received before the 

close of business on the comment 

closing date indicated above will be 

considered and will be available for 

examination in the docket at the above 

address. Comments received after the 

comment closing date will be filed in 

the docket and will be considered to the 

extent practicable. In addition to late 

comments, FHWA will also continue to 

file relevant information in the docket 

as it becomes available after the 

comment period closing date and 

interested persons should continue to 

examine the docket for new material. A 

final rule may be published at any time 

after close of the comment period and 

after FHWA has had the opportunity to 

review the comments submitted. 

Executive Summary 

The FHWA proposes to establish 

regulations that would set minimum 

standards and requirements for projects 

funded under the NEVI Formula 

Program and projects for the 

construction of publicly accessible EV 

chargers funded under title 23, United 

States Code.1 The FHWA is directed by 

Paragraph (2) under the Highway 

Infrastructure Program heading in title 

VIII of division J of the Bipartisan 


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