SEC Requests Comments on Whether Certain Information Providers Function as Investment Advisers

The SEC recently issued a “Request for Comment on Certain Information Providers Acting as Investment Advisers” which addresses three categories of what the SEC refers to as “information providers” to funds, including: index providers; model portfolio providers; and pricing services. The SEC states that the role of such firms “has grown in size and scope in recent years, significantly changing the face of the asset management industry,” and that “the development and nature of these services may raise investment adviser status issues” under the Advisers Act. The Request for Comment includes detailed and pointed questions such as (1) how providers analyze whether they meet the Advisers Act’s definition of “investment adviser,” (2) whether they rely on the “publisher’s exclusion,” (3) whether the regulatory status of providers developing broad-based indexes should differ from those developing customized or bespoke indexes, (4) to what extent providers view themselves as having fiduciary obligations to any investors that rely on the information they provide, (5) how potential conflicts of interest are addressed, and, (6) the extent of existing disclosure regarding information provider relationships provided to investors and the SEC, among other questions. Comments are due on August 16 or 30 days after the Request for Comment is published in the Federal Register, whichever date is later.

Click here to read a client alert from K&L Gates on the SEC’s Request for Comment.