To amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes.
What changed between versions
Removed the permanent statutory amendment to Section 202(a)(11) of the Investment Advisers Act that would have excluded research service compensation from the 'special compensation' definition, effectively keeping brokers and dealers compensated for research out of the investment adviser category.
Added detailed study contents including impacts on research for smaller issuers, unique challenges faced by minority-owned, women-owned, and veteran-owned small issuers, cost-benefit analysis of regulatory options, and impacts on a wide range of market participants including pension funds, endowments, investment advisers, and broker-dealers.
Added a 6-month extension of the October 26, 2017 SEC Staff No-Action Letter (SIFMA letter), which was set to expire on July 3, 2023. This letter provided relief related to European MiFID II rules on research costs and conflicts of interest.
Added a requirement that the SEC conduct a notice-and-comment study on the impact of expiring versus maintaining the no-action letter, with findings reported to the House Financial Services Committee and Senate Banking Committee.
Added congressional findings noting that the SEC granted no-action relief in 2017 without meaningful cost-benefit analysis, that approximately 15,300 registered investment advisers provide most investment research, and that both investors and broker-dealers have expressed concerns about the relief.
