An Act to amend certain provisions of the Investment Advisers Act of 1940, as amended.
PL 86-750 (S.3773), enacted 09/13/1960

74 
S T A T . ] 
PUBLIC LAW 86-750-SEPT. 13, 1960 
885 
Public Law 86-750 
AN ACT 
September 13, 1960 
To amend certain provisions of the Investment Advisers Act of 1940, as amended. 
[s. 37733 
Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress assembled^ That (a) paragraph 
12 of subsection (a) of section 202 of the Investment Advisers Act 
of 1940, as amended, is amended to read as follows: 
"(12) 'Investment company', affiliated person, and 'insurance com-
pany' have the same meanings as in the Investment Company Act 
of 1940. 'Control' means the j)ower to exercise a controlling influence 
over the management or policies of a company, unless such power is 
solely the result of an official position with such company." 
(b) Paragraph (18) of section 202(a) of the Investment Advisers 
Act of 1940, as amended, is amended by striking out "the Philippine 
Islands,". 
SEC. 2. Clause (F) of paragraph (1) of section 203(c) of the In-
vestment Advisers Act of 1940, as amended, is amended to read as 
follows: 
"(F) whether such investment adviser, or any partner, officer, di-
rector thereof, or any person performing similar functions, or any 
person directly or indirectly controlling or controlled by such invest-
ment adviser, is subject to any disqualification which would be a basis 
for denial, suspension, or revocation of registration of such investment 
adviser under the provisions of subsection (d), and". 
SEC. 3. (a) Paragraph (2) of subsection (c) of section 203 of the 
Investment Advisers Act of 1940, as amended, is amended to read as 
follows: 
"(2) a statement as to whether the principal business of such 
investment adviser consists or is to consist of acting as investment 
adviser and a statement as to whether a substantial part of the 
business of such investment adviser consists or is to consist of 
rendering investment supervisory services." 
(b) Subsection (d) of section 203 of the Investment Advisers Act 
of 1940, as amended, is amended to read as follows: 
"(d) The Commission shall, after appropriate notice and op- ^__ 
portunity for hearing, by order deny registration to, or suspend for T
r
a
t
T
o
n 
a period not exceeding twelve months or revoke the registration of, 
an investment adviser, if it finds that such denial, suspension, or rev-
ocation is in the public interest and that (1) such investment adviser, 
whether prior or subsequent to becoming such, or (2) any partner, 
officer, or director thereof, or any person performing similar func-
tions, or (3) any person directly or indirectly controlling or controlled 
by such investment adviser, whether prior or subsequent to becoming 
such, (A) has willfully made or caused to be made in any application 
for registration or report filed with the Commission under this title, 
or in any proceeding oef 
ore the Commission with respect to registra-
tion, any statement which was at the time and in the light of the cir-
cumstances under which it was made false or misleading with respect 
to any material fact, or who has omitted to state in any such applica-
tion or report any material fact which is required to be stated therein; 
or (B) has been convicted within ten years preceding the filing of the 
application or at any time thereafter of any felony or misdemeanor 
which the Commission finds (i) involves the purchase or sale of any 
security, (ii) arises out of the conduct of the business of a broker, 
dealer, or investment adviser, (iii) involves embezzlement, fraudulent 
conversion, or misappropriation of funds or securities, or (iv) in-
volves the violation of section 1341, 1342, or 1343 of title 18, United 
States Code, as heretofore or hereafter amended; or (C) is perma-
Investment Ad-
visers Act of 1940, 
amendment. 
54 Stat. 847. 
15 u s e 80b-2. 
IS u s e 80b-3. 
Registration ap-
plication. 
Information 
r e -
quired. 
Denial or 
s u s -
pension of 
regis-
62 Stat. 643. 
886 
PUBLIC LAW 86-750-lSEPT. 13, 1960 
[74 S T A T 
48 Stat. 74, 881. 
15 use 77a, 78a. 
15 u s e 80b-3. 
e o m m encement 
of proceedings. 
Withdrawal 
regi stration. from 
15 use 80b-4. 
Records and re-
ports. 
15 use 80b-3. 
nently or temporarily enjoined by order, judgment, or decree of any 
court of competent jurisdiction from acting as an investment adviser, 
underwriter, broker, or dealer, or as an affiliated person or employee 
of any investment company, bank, or insurance company, or from 
engaging in or continuing any conduct or practice in connection with 
any such activity, or in connection with the purchase or sale of any 
security; or (D) has willfully violated any provision of the Securities 
Act of 1933, or of the Securities Exchange Act of 1934, or of this 
title, as any of such statutes heretofore have been or hereafter may be 
amended, or of any rule or regulation under any of such statutes; or 
(E) has aided, abetted, counseled, commanded, induced, or procured 
the violation by any other person of the Securities Act of 1933, or 
the Securities Exchange Act of 1934, or of this title, as any of such 
statutes heretofore have been or hereafter may be amended, or of any 
rule or regulation under any of such statutes." 
SEC. 4. Subsection (e) of section 203 of the Investment Advisers 
Act of 1940, as amended, is amended to read as follows: 
"(e) The commencement of a proceeding to deny registration 
under this section shall operate to postpone the effective date of 
registration for a period of ninety days, or until final determination 
whether such registration shall be denied if that determination is 
made within such ninety-day period; but if, after appropriate notice 
and opportunity for hearing, it shall appear to the Commission to be 
necessary or appropriate in the public interest or for the protection 
of investors to postpone the effective date of such registration beyond 
such ninety-day period and until final determination of whether such 
i-egistration shall be denied, the Commission shall so order. 
Upon 
request of any interested party, made more than ninety days after the 
effective date of such order, the Commission shall consider whether 
such postponement should continue, and shall take such action, if any, 
with respect thereto as in its discretion is necessary or appropriate 
in the public interest or for the protection of investors." 
SEC. 5. Subsection (g) of section 203 of the Investment Advisers 
Act of 1940, as amended, is amended to read as follows: 
"(g) Any person registered under this section may, upon such 
terms and conditions as the Commission finds necessary in the public 
interest or for the protection of investors, withdraw from registra-
tion by filing a written notice of withdrawal with the Commission. 
If the Commission finds that any person registered under this section, 
or who has pending an application for registration filed under this 
section, is no longer in existence or is not engaged in business as an 
investment adviser, the Commission shall by order cancel the regis-
tration of such person." 
SEC. 6. Section 204 of the Investment Advisers Act of 1940, as 
amended, is amended to read as follows: 
"SEC. 204. Every investment adviser who makes use of the mails or 
of any means or instrumentality of interstate commerce in connection 
with his or its business as an investment adviser (other than one 
specifically exempted from registration pursuant to section 203(b)), 
shall make, keep, and preserve for such periods, such accounts, corre-
spondence, memorandums, papers, books, and other records, and make 
such reports, as the Commission by its rules and regulations may pre-
scribe as necessary or appropriate in the public interest or for the pro-
tection of investors. Such accounts, correspondence, memorandums, 
papers, books, and other records shall be subject at any time or from 
time to time to such reasonable periodic, special, or other examinations 
by examiners or other representatives of the Commission as the Com-
mission may deem necessary or appropriate in the public interest or 
for the protection of investors." 
74 S T A T . ] 
PUBLIC LAW 86-750-SEPT. 13, 1960 
887 
SEC. 7. The introductory paragraph of section 205 of the Invest-
ment Advisers Act of 1940, as amended, is amended to read as fol-
lows : 
"SEC. 205. No investment adviser, unless exempt from registration 
pursuant to section 203(b), shall make use of the mails or any means 
or instrumentality of interstate commerce, directly or indirectly, to 
enter into, extend, or renew any investment advisory contract, or in 
any way to perform any investment advisory contract entered into, 
extended, or renewed on or after the effective date of this title, if such 
contract>—". 
SEC. 8. The introductory paragraph of section 206 of the Investment 
Advisers Act of 1940, as amended, is amended by striking out "reg-
istered under section 203". 
SEC. 9. Section 206 of the Investment Advisers Act of 1940, as 
amended, is amended by changing the period at the end thereof to a 
semicolon and by adding the following new paragraph: 
" (4) to engage in any act, practicej or course of business which 
is fraudulent, deceptive, or manipulative. 
The Commission shall, 
for the purposes of this paragraph (4) by rules and regulations 
define, and prescribe means reasonably designed to prevent, such 
acts, practices, and courses of business as are fraudulent, de-
ceptive, or manipulative." 
SEC. 10. The caption of section 208 of the Investment Advisers Act 
of 1940, as amended, is amended by striking out "UNLAWFUL 
REPRESENTATIONS" 
and inserting 
in 
lieu 
thereof 
"GENERAL 
PROHIBrnONS". 
SEC. 11. (a) Subsection (c) of section 208 of the Investment Ad-
visers Act of 1940, as amended, is amended to read as follows: 
"(c) It shall be unlawful for any person registered under section 
203 of this title to represent that he is an investment counsel or to use 
the name 'investment counsel' as descriptive of his business unless (1) 
his or its principal business consists of acting as investment adviser, 
and (2) a substantial part of his or its business consists of rendering 
investment supervisory services." 
(b) Section 208 of the Investment Advisers Act of 1940, as 
amended, is amended by adding the following new subsection: 
"(d) It shall be unlawful for any person indirectly, or through or 
by any other person, to do any act or thing which it would be unlaw-
ful for such person to do directly under the provisions of this title or 
any rule or regulation thereunder." 
SEC. 12. Subsection (e) of section 209 of the Investment Advisers 
Act of 1940, as amended, is amended bj^ striking out "has engaged 
or is about to engage" in the first and in the second sentences and 
inserting in lieu thereof "has engaged, is engaged, or is about to 
engage"; by inserting in the first sentence after "any rule, regulation, 
or order hereunder," the first time that phrase appears, the follow-
ing: "or that any person has aided, abetted, counseled, commanded, 
induced, or procured, is aiding, abetting, counseling, commanding, 
inducing, or procuring, or is about to aid, abet, counsel, command, 
induce, or procure such a violation,"; and by inserting in the second 
sentence, after "such act or practice,", the following: "or in aiding, 
abetting, counseling, commanding, inducing, or procuring any such 
act or practice,". 
SEC. 13. Subsection (b) of section 210 of the Investment Advisers 
Act of 1940, as amended, is amended to read as follows: 
"(b) Subject to the provisions of subsections (c) and (e) of sec-
tion 209, the Commission, or any member, officer, or employee thereof, 
shall not make public the fact that any examination or investigation 
under this title is being conducted, or the results of or any facts 
15 u s e 80b-5. 
Invesirment a d -
visory contracts. 
15 u s e 80b-6. 
Prohibitions. 
15 u s e 80b-8. 
15 u s e 80b-9. 
15 u s e 80b-10. 
Disclostire of in-
formation. 
Restriction. 
888 
PUBLIC LAW 86-751-SEPT. 13, 1960 
[74 STAT. 
ascertained during any such examination or investigation; and no 
member, officer, or employee of the Commission shall disclose to any 
person other than a member, officer, or employee of the Commission 
any information obtained as a result of any such examination or 
investigation except with the approval of the Commission. 
The 
provisions of this subsection shall not apply— 
"(1) in the case of any hearing which is public under the 
1
5 use 80b-12. 
provisions of section 212; or 
"(2) in the case of a resolution or request from either House 
of Congress." 
SEC. 14. Subsection (a) of section 211 of the Investment Advisers 
1
5 use 80b. 11. 
^(,^ Q
j
f 1940^ as amended, is amended to read as follows: 
ua^s! ^^ '*^"" 
"(^) '^^^ Commission shall have authority from time to time to 
make, issue, amend, and rescind such rules and regulations and such 
orders as are necessary or appropriate to the exercise of the functions 
and powers conferred upon the Commission elsewhere in this title. 
For the purposes of its rules or regulations the Commission may 
classify persons and matters within its jurisdiction and prescribe dif-
ferent requirements for different classes of persons or matters." 
1
5 use 80b. 17. 
SEC. 15. Section 217 of the Investment Advisers Act of 1940, as 
amended, is amended to read as follows: 
Penalty. 
"SEC. 217. Any person who willfully violates any provision of this 
title, or any rule, regulation, or order promulgated by the Commis-
sion under authority thereof, shall, upon conviction, be fined not more 
than $10,000, imprisoned for not more than two years, or both." 
SEC. 16. The Investment Advisers Act of 1940, as amended, is 
amended by adding the following new section: 
a STATE CONTROL OF INVESTMENT ADVISERS 
"SEC. 222. Nothing in this title shall affect the jurisdiction of the 
securities commissioner (or any agency or officer performing like 
functions) of any State over an}^ security or any person insofar as it 
does not conflict with the provisions of this title or the rules and 
regulations thereunder." 
Approved September 13, 1960. 
Public Law 86-751 
AN ACT 
September 13. 1960 
[s. 1740] 
rj.,^ amend section 202(b) of the Communications Act of 1934 in order to expand 
tlie Federal (Communications Commission's regulatory authority under such 
section. 
Be it enacted hy the Senate and House of Representatives 
of the 
eommunicationa United States of America in Congress assemhled, That subsection 
meidt^ent!^^^' ^' (b) of sectiou 202 of the Communications Act of 1934 (47 U.S.C. 
48 Stat. 1070. 
202 (b)) is amended to read as follows: 
"(b) Charges or services, whenever referred to in this Act, include 
charges for, or services in connection with, the use of common carrier 
lines of communication, whether derived from wire or radio facilities, 
in chain broadcasting or incidental to radio communication of any 
kind." 
Approved September 13, 1960.