Investment Advisor Act of 1940 Law and Legal Definition

The Investment Advisor Act of 1940 is a federal law requiring investment advisors and firms providing investment advice to register with the SEC and comply with SEC regulations. With certain exceptions, this Act requires that firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors. Since the Act was amended in 1996, generally only advisers who have at least $25 million of assets under management or advise a registered investment company must register with the Commission.