A former investment banker starts a business helping technology founders find investors. She introduces companies to funds, helps prepare materials, sits in on negotiations, and takes a percentage of the money raised.

She is almost certainly acting as an unregistered broker, and the consequences are not theoretical: her contracts may be voidable, the issuers who paid her may have rescission exposure to their own investors, and she faces SEC enforcement and potential disgorgement.

A different founder starts a newsletter recommending specific stocks for a subscription fee.

He is very likely an investment adviser, notwithstanding that he never touches client money, because he provides advice about securities, for compensation, as a business — and the publisher's exclusion is narrower than he assumes.

Both people believed they were outside the securities laws because they are not stockbrokers and do not manage accounts. Neither belief survives contact with the statutory definitions, which is where any analysis in this area has to begin.

Who is an investment adviser

Section 202(a)(11) of the Investment Advisers Act 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.

Three elements, each read broadly:

  • Advice about securities. Includes advice about asset allocation among securities categories, about selecting other advisers or managers, and about whether to hold. Advice limited to non-securities — real estate, commodities, insurance products that are not securities — falls outside, though most such practices touch securities somewhere.
  • As a business. Need not be the sole or principal business. Holding oneself out as an adviser, or receiving special compensation for advice, satisfies it, and giving advice with any regularity generally does.
  • For compensation. Any economic benefit. It need not be paid by the person advised, need not be separately stated, and need not be a fee — commissions, a share of profits, and compensation from a third party all count. This is the element people misjudge most often.

Statutory exclusions in § 202(a)(11), each narrow:

  • Banks and bank holding companies, not including a bank's separately identifiable department acting as an adviser to a registered fund.
  • Lawyers, accountants, engineers, and teachers whose advice is solely incidental to the practice of their profession. An accountant who tells a client to fund a retirement account is excluded; one who runs an asset allocation practice for a fee is not.
  • Brokers and dealers whose advice is solely incidental to their brokerage business and who receive no special compensation for it. This is the historical basis for the adviser/broker line, and asset-based fee accounts fall outside it — which is why wirehouses register their advisory businesses separately.
  • Publishers of bona fide newspapers, news magazines, or business or financial publications of general and regular circulation. The Supreme Court read this in Lowe v. SEC to protect genuinely disinterested publications of general circulation, not personalized advice or publications timed to market events.
  • Certain government securities advisers, credit rating agencies, and family offices under a separate rule.

Registration: federal or state

Section 203A divides authority.

  • SEC registration is prohibited for most advisers with less than $100 million in regulatory assets under management, who must register with the states where they have a place of business and clients, subject to each state's own de minimis exemptions.
  • Mid-sized advisers ($100M–$110M) may register with the SEC; those at or above $110 million generally must, and once registered may remain until AUM falls below $90 million.
  • Exceptions requiring or permitting SEC registration regardless of size include advisers to registered investment companies, advisers required to register in fifteen or more states, pension consultants above a threshold, internet advisers meeting a rule's conditions, and advisers whose home state does not examine.

Form ADV is the registration and disclosure document:

  • Part 1 — structured data about the business, ownership, clients, AUM, affiliations, custody, and disciplinary history. Filed through the IARD system and public.
  • Part 2A — the narrative "brochure," in plain English, describing services, fees, methods of analysis, risks, conflicts, and disciplinary events. Delivered to clients at or before engagement and updated annually.
  • Part 2B — brochure supplements on the individuals who provide advice.
  • Part 3 (Form CRS) — a two-page relationship summary for retail investors, required of both advisers and broker-dealers, in prescribed format and order.

Annual updating amendments are due within 90 days of fiscal year end, and prompt amendments are required when specified information becomes inaccurate — disciplinary events, custody changes, and control changes among them.

Exempt reporting advisers. Two exemptions permit an adviser to avoid registration while still filing portions of Form ADV publicly:

  • Private fund adviser exemption, § 203(m): advisers solely to private funds with less than $150 million in U.S. assets under management.
  • Venture capital fund adviser exemption, § 203(l): advisers solely to venture capital funds as defined by rule — a definition with specific requirements on qualifying investments, leverage, redemption rights, and holding out.

Exempt reporting advisers remain subject to the Act's antifraud provisions, to the pay-to-play rule, and to examination authority, and they must still comply with state requirements.

The adviser's fiduciary duty

An adviser is a fiduciary, a proposition the Supreme Court established in SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963), reading § 206 as reflecting a congressional intent to eliminate conflicts of interest and to require full disclosure. The duty is not written in the statute; it is enforced through § 206's antifraud provisions.

Duty of care comprises:

  • A duty to provide advice in the client's best interest, based on a reasonable understanding of the client's objectives — which requires actually inquiring about them and updating the understanding over time.
  • A duty to seek best execution where the adviser has trading responsibility, evaluated on overall value including price, speed, and quality, not commission alone.
  • A duty to provide advice and monitoring over the course of the relationship, at a frequency consistent with the scope of the engagement.

Duty of loyalty requires that the adviser not subordinate the client's interests to its own, and that it either eliminate conflicts or make full and fair disclosure sufficient for informed consent. The SEC's interpretive guidance emphasizes that disclosure must be specific enough that a client can understand the conflict and its implications — "may have a conflict" is inadequate where a conflict exists.

Conflicts that recur, and how they are handled:

  • Proprietary and affiliated products, and revenue sharing.
  • Share class selection — recommending a mutual fund share class paying 12b-1 fees when a cheaper class was available. This produced a major SEC initiative and hundreds of settlements, and it remains a standard examination topic.
  • Cash sweep arrangements paying the adviser or an affiliate.
  • Principal trades and cross trades, which § 206(3) restricts and which require transaction-by-transaction disclosure and consent for principal trades.
  • Soft dollars, within the safe harbor of Exchange Act § 28(e) and disclosed.
  • Allocation of investment opportunities among clients and among funds.
  • Fee and expense allocation in private funds — the largest single source of private fund enforcement.
  • Outside business activities and personal trading by supervised persons.

The rules that generate examinations and enforcement

Compliance rule, Rule 206(4)-7-7). Every registered adviser must adopt and implement written policies and procedures reasonably designed to prevent violation of the Act, review them annually for adequacy and effectiveness, and designate a chief compliance officer who is competent, knowledgeable, and empowered. A compliance manual purchased from a vendor and never tailored is the classic finding; so is an annual review that exists as a one-page memo.

Code of ethics, Rule 204A-1. Standards of conduct, compliance with securities laws, personal securities reporting by access persons (initial and annual holdings, quarterly transactions), pre-clearance of IPOs and limited offerings, and reporting of violations.

Custody rule, Rule 206(4)-2. An adviser with custody — including through fee deduction authority, through a general power of attorney, or by serving as general partner of a fund — must maintain client assets with a qualified custodian, ensure account statements are sent to clients at least quarterly, and undergo an annual surprise examination by an independent public accountant, unless an exception applies. Pooled vehicles may satisfy the requirement through an annual audit by a PCAOB-registered firm distributed to investors within 120 days (180 for funds of funds). Inadvertent custody — a standing letter of authorization, a misplaced client check, access to a client's login credentials — is a routine deficiency.

Marketing rule, Rule 206(4)-1. The 2020 amendments consolidated the old advertising and cash solicitation rules and changed practice substantially:

  • Testimonials and endorsements are permitted, with disclosure of whether the person is a client, whether compensation was paid, and material conflicts — plus oversight and, for compensated promoters, a written agreement and disqualification screening.
  • Performance advertising is heavily conditioned: net performance must accompany gross performance with equal prominence; prescribed time periods (one, five, and ten years) are required for most presentations; related performance must include all similar portfolios unless exclusion does not raise or lower results; extracted performance requires the total portfolio's performance; and predecessor performance requires personnel and account continuity.
  • Hypothetical performance — including model, backtested, and targeted or projected returns — may be presented only where the adviser adopts policies reasonably designed to ensure it is relevant to the likely financial situation and objectives of the intended audience, and provides sufficient information for the audience to understand the criteria and assumptions. The SEC has taken the position that this generally makes hypothetical performance inappropriate in mass advertising, including on a public website.
  • General prohibitions on untrue statements, unsubstantiated claims, misleading omissions, unfair treatment of risks and benefits, and cherry-picked results.

The Commission's early enforcement under this rule focused on hypothetical performance on websites and on unsubstantiated claims such as "conflict-free," and the settlements were numerous and relatively small — a deliberate sweep pattern.

Books and records, Rule 204-2. Extensive and specific: financial records, order memoranda, communications relating to recommendations and advice, advertisements and their substantiation, performance calculation support, client agreements, and compliance records. Retention is generally five years, the first two in an easily accessible place.

Off-channel communications. The single largest enforcement theme of recent years across both regimes. The SEC and CFTC brought scores of actions against broker-dealers, advisers, and rating agencies for pervasive use of personal messaging applications for business communications that were never preserved, with aggregate penalties exceeding two billion dollars, admissions of violations, and mandated compliance consultants. The lesson is not "ban texting." It is that a policy nobody enforces, in an organization where senior personnel are the worst offenders, is an aggravating fact rather than a mitigating one. Effective programs provide an approved, captured channel that people actually want to use, monitor for leakage, and discipline consistently at every level.

Private fund rules. The SEC adopted rules in 2023 requiring quarterly statements, annual audits, adviser-led secondary fairness opinions, and restrictions on preferential treatment and certain activities. The Fifth Circuit vacated them in National Association of Private Fund Managers v. SEC, 103 F.4th 1097 (5th Cir. 2024), holding the Commission exceeded its statutory authority. The underlying fiduciary and antifraud obligations are unaffected, and fee and expense allocation, preferential liquidity in side letters, and disclosure of conflicts remain active enforcement areas under § 206.

Anti-money laundering. FinCEN issued a rule extending AML/CFT program requirements to SEC-registered investment advisers and exempt reporting advisers, with obligations including a risk-based program, suspicious activity reporting, recordkeeping, and information sharing. Advisers that previously relied on their custodians' programs must build their own.

Broker-dealers

Registration. Exchange Act § 15(a) makes it unlawful for a broker or dealer to effect securities transactions using interstate commerce unless registered. A broker is "any person engaged in the business of effecting transactions in securities for the account of others"; a dealer buys and sells for its own account as part of a regular business, excluding traders.

The factors courts and the SEC use to find broker activity:

  • Transaction-based compensation — a commission or a percentage of the raise. This is the single most important factor and it is close to dispositive.
  • Soliciting investors or actively finding them.
  • Participating in negotiations or advising on the merits.
  • Handling investor funds or securities.
  • Regularity of participation in securities transactions.
  • Prior involvement in the sale of securities.

The "finder" question. There is no general federal finder exemption. Rule 3a4-1 provides a safe harbor for associated persons of an issuer who receive no transaction-based compensation and meet other conditions. A proposed federal finder exemption was never adopted. Several states have adopted limited finder exemptions with registration and disclosure conditions, and a small number of no-action positions exist on narrow facts. The practical advice is unwelcome and correct: paying a percentage of a raise to an unregistered person is unlawful in most configurations, and the exposure runs to the issuer as well.

Consequences of unregistered activity: SEC injunctive relief, disgorgement, and penalties; a rescission right for purchasers under Exchange Act § 29(b) as to contracts made in violation; unenforceability of the finder's fee agreement; and a disclosure item that complicates every subsequent financing.

FINRA. A registered broker-dealer must become a member of a self-regulatory organization, which for nearly all firms means FINRA. Membership involves a New Member Application taking six months to a year, approval of a business plan and supervisory system, principals passing qualification examinations, and ongoing obligations: supervision under Rule 3110, annual compliance meetings, continuing education, advertising review under Rule 2210, arbitration of customer disputes, and examinations.

Financial responsibility. The net capital rule, Rule 15c3-1, requires minimum net capital scaled to the business, computed under specific haircuts. The customer protection rule, Rule 15c3-3, requires segregation of customer securities and maintenance of a special reserve account. Firms that do not hold customer funds or securities operate under lower requirements, and many introduce on a fully disclosed basis to a clearing firm precisely to avoid the operational burden.

Regulation Best Interest. Rule 15l-1 requires a broker-dealer making a recommendation of a securities transaction or investment strategy to a retail customer to act in the customer's best interest without placing its own interests ahead. Four component obligations:

  • Disclosure — full and fair written disclosure of the capacity in which the firm acts, fees and costs, the type and scope of services, material limitations, and conflicts.
  • Care — reasonable diligence, care, and skill to understand the recommendation, to have a reasonable basis to believe it is in the customer's best interest given their investment profile, and to consider reasonably available alternatives and cost. Series of recommendations must not be excessive.
  • Conflict of interest — policies to identify and at a minimum disclose or eliminate conflicts; mitigate conflicts creating incentives for associated persons; eliminate sales contests, quotas, bonuses, and non-cash compensation based on sales of specific securities within a limited period.
  • Compliance — written policies reasonably designed to achieve compliance with the rule as a whole.

Reg BI is not a fiduciary standard, and the SEC said so; it is a standard applied at the time of a recommendation rather than an ongoing relationship duty. In practice the gap has narrowed, particularly on cost and alternatives analysis, and the documentation expectations are substantial. Note also that state law may impose more — several states have adopted their own fiduciary or best-interest standards for broker-dealers and for annuity recommendations.

The examination

Registered advisers and broker-dealers are examined by the SEC's examination staff, and advisers by state regulators where state-registered. Broker-dealers are examined by FINRA as well.

How it begins. A document request letter, typically covering one to three years, requesting the compliance manual and annual reviews, the code of ethics and personal trading records, client lists and account information, advisory agreements, fee calculations, trade blotters, allocation records, marketing materials, the custody arrangement, business continuity plans, cybersecurity policies, and email. Response windows are short — often two weeks — and the volume is large.

On-site or remote fieldwork. Interviews with the CCO, principals, portfolio managers, operations, and often junior personnel. Staff test specific transactions and trace them through the records.

Recurring examination priorities, which the Division publishes annually and which reliably include: fiduciary duty and conflicts; fee and expense calculation and billing accuracy; the marketing rule; custody; complex or illiquid products sold to retail investors; cybersecurity and operational resiliency; anti-money laundering; use of artificial intelligence in advice and in operations; branch office supervision; and off-channel communications.

The exit. A closing conference, then a deficiency letter identifying findings and requiring a written response describing corrective action. Most examinations end here. Serious findings are referred to the Division of Enforcement.

Enforcement. A formal order of investigation, subpoenas, testimony, then — if the staff proposes to recommend charges — a Wells notice and an opportunity to submit a Wells response arguing why charges should not be brought. Settlement is the norm, typically involving censure, cease-and-desist, disgorgement with prejudgment interest, civil penalties, undertakings, and sometimes a compliance consultant, industry bars, or supervisory suspensions.

A significant constitutional development. SEC v. Jarkesy, 603 U.S. 109 (2024), held that when the SEC seeks civil penalties for securities fraud, the Seventh Amendment entitles the defendant to a jury trial in federal court, so those claims cannot be adjudicated in the Commission's in-house administrative forum. The practical effect has been to push contested fraud actions into district court, with the litigation cost, discovery, and timeline that follow — a meaningful shift in settlement dynamics for respondents willing to fight.

Practical guidance for handling an examination:

  • Involve counsel at the document request stage, not after the deficiency letter.
  • Designate a single point of contact and route everything through them.
  • Produce completely and on time, and if you cannot, say so with a proposed schedule rather than producing partially and silently.
  • Prepare witnesses, including on what they do not know. Speculation in an interview creates findings.
  • Do not remediate silently. Fixing a problem discovered during an exam is right; the staff should learn about it from you, with documentation, rather than discovering the change themselves.
  • Take the annual compliance review seriously in advance. A firm that has documented its own findings and corrections presents an entirely different picture from one that has not looked.

Where advisers and brokers overlap

Many firms are dually registered, and many individuals are dually licensed. This creates specific obligations:

  • Capacity disclosure. The client must understand, at the time of each recommendation, whether the person is acting as an adviser or as a broker. The obligations differ, the compensation differs, and Form CRS requires an explanation of both.
  • Rollover recommendations are the highest-risk transaction in retail financial services. A recommendation to roll a retirement plan account into an IRA managed for a fee is a recommendation to move assets from a low-cost plan to a compensated relationship, and it is examined under Reg BI, the Advisers Act fiduciary duty, and the Department of Labor's fiduciary framework simultaneously. Document the comparison of costs, services, and alternatives — including leaving the assets in the plan.
  • Wrap fee programs, where advisory fees bundle transaction costs, require disclosure of the circumstances under which the program costs more than paying separately, and analysis of trading away.
  • Supervision of dual-hatted personnel must cover both sets of obligations, and a supervisory system built for one will have gaps.

Building a program

For a new adviser, in sequence:

  1. Determine the registration jurisdiction and whether an exemption applies. Do this before accepting a client.
  2. Choose the entity and ownership structure, and screen every proposed owner and supervised person for statutory disqualification — a disciplinary event in a principal's background changes the entire application.
  3. File Form ADV — Parts 1, 2A, 2B, and CRS — with narrative disclosure that actually describes the business rather than boilerplate.
  4. Adopt the compliance program: manual tailored to the actual business, code of ethics, business continuity plan, cybersecurity and identity theft prevention program, privacy notice under Regulation S-P, proxy voting policy, valuation policy, and AML program.
  5. Appoint a CCO with authority and time. A junior person with a full production role is a finding waiting to happen.
  6. Establish the custody arrangement and confirm it does not create inadvertent custody.
  7. Build the books and records system on day one, including a compliant archiving solution for electronic communications across every channel the firm permits.
  8. Set up performance calculation and marketing review before any material goes out.
  9. Enter written agreements with clients addressing services, fees, termination, assignment consent, and, where applicable, arbitration.
  10. Calendar the annual obligations: updating amendment, brochure delivery or offer, annual compliance review, code of ethics certifications, surprise exam or fund audit.

For a firm that already exists, the highest-yield diagnostic questions are: Can you produce a fee calculation for any client account in ten minutes and prove it matches the agreement? Are all business communications captured, including on personal devices? Does anything on the website constitute hypothetical performance? Has anyone read the compliance manual in the last year? Is there any arrangement under which the firm has custody that it has not identified as custody?

Each of those has been the opening question of a bad examination.

A closing observation

The regulatory architecture here reflects an old and unresolved question: should the person selling you an investment owe you a duty, or merely tell you the truth? The Advisers Act answered one way for advisers and the Exchange Act another for brokers, and for eighty years the two lived side by side while the distinction between selling and advising eroded in practice. Regulation Best Interest narrowed the gap without closing it, and state fiduciary rules, Department of Labor initiatives, and periodic legislative proposals continue to press on it.

For practitioners, the practical consequence is that the safest position is to behave as a fiduciary regardless of the category. Disclose the conflict specifically. Compare the alternatives and write down the comparison. Charge a fee the client understands. Preserve the communications. None of that depends on which statute applies, and a firm operating that way rarely has an examination it dreads.

Private funds: the practice within the practice

A large share of registered advisers manage private funds, and the obligations there have a distinct shape.

Fund formation and the offering. The fund itself relies on an exclusion from the Investment Company Act — § 3(c)(1) for funds with no more than 100 beneficial owners (or 250 for a qualifying venture capital fund), or § 3(c)(7) for funds owned exclusively by qualified purchasers. Interests are offered under Regulation D, which means accredited investor verification for Rule 506(c) offerings and no general solicitation for 506(b). Blue sky notice filings are required where investors reside.

Performance fees. Rule 205-3 permits performance-based compensation only from qualified clients — those meeting an assets-under-management or net worth threshold that the SEC adjusts for inflation every five years. For a fund, the test is generally applied by looking through to the investors. Charging carried interest to a non-qualified client is a straightforward violation and a common finding at smaller advisers.

Fees and expenses. The single largest enforcement category. Recurring problems: expenses charged to the fund that the limited partnership agreement did not authorize; broken-deal expenses allocated entirely to the fund rather than shared with co-investors; accelerated monitoring fees taken on portfolio company exits without disclosure; management fee offsets calculated incorrectly; operating partners presented as adviser personnel but paid by portfolio companies; and allocation of shared expenses among funds without a documented methodology.

Valuation. Illiquid holdings are valued by the adviser, which is a structural conflict because valuation drives fees and reported performance. A defensible process has a written policy, consistent methodology, an independent input where practical, documented committee review, and back-testing against realizations.

Side letters and preferential terms. Preferential liquidity and preferential information rights are the two categories that raise the most serious concerns, because they can operate to the detriment of other investors who do not know about them. The vacated private fund rules would have restricted them; the fiduciary duty and antifraud provisions still reach them where they are undisclosed.

Custody and audit. The audit exception is the standard path: a PCAOB-registered auditor, financial statements prepared under GAAP, distributed within 120 days of fiscal year end. Missing the deadline is a violation of the custody rule, and it happens most often at first-time funds whose auditor was engaged late.

Form PF. Larger private fund advisers file confidential systemic risk reporting, with current-event reporting requirements added for certain triggering events at private equity and hedge fund advisers. The filing calendar is unforgiving and the thresholds are easy to cross without noticing.

State-registered advisers

Roughly two-thirds of registered advisers are registered with states rather than the SEC, and their obligations are similar in outline and different in detail.

  • Registration through the same IARD system, but with each state's own application, fees, and review — which can involve substantive comment on the brochure, on the advisory agreement, and on fee levels. Some states will object to fees they consider excessive; the SEC generally will not.
  • Examination and qualification requirements for investment adviser representatives, typically the Series 65, or the Series 7 plus 66, or a professional designation accepted in lieu.
  • Net worth or bonding requirements, which vary and which can be triggered by discretionary authority or custody.
  • Custody rules that in several states are stricter than the federal rule, including outright prohibitions on custody by small advisers.
  • Advertising and performance rules that in some states have not been conformed to the federal marketing rule, so a state-registered adviser may face the older, stricter regime including prohibitions on testimonials.
  • The de minimis exemption. Most states exempt an adviser with no place of business in the state and fewer than six clients there in a twelve-month period — but the count and the exceptions differ, and an adviser adding clients across state lines needs to track it.

NASAA model rules supply much of the substance, and the association's uniform forms and model rules on unethical business practices, custody, and cybersecurity have been widely adopted. An adviser operating in several states should build to the strictest applicable requirement rather than maintaining state-by-state variations it cannot supervise.

A note on artificial intelligence in advice. Advisers increasingly use models to generate recommendations, to draft client communications, and to screen securities. Three obligations attach without any new rule. Care: an adviser relying on a model must understand what it does well enough to form a reasonable belief that the advice is in the client's interest, which means testing rather than trusting. Loyalty: a model that steers clients toward products the adviser profits from is a conflict whether the steering was designed or emergent. Disclosure: describing capabilities the firm does not have — "AI-driven," "proprietary algorithm" — is a misrepresentation, and the Commission has brought exactly that case under the label "AI washing." Document the model's role, its testing, its human review, and its limitations, and say the same thing in the brochure that you say in the pitch deck.

Primary authority

Adviser and broker-dealer regulation is statute, rule, and interpretive release in roughly equal measure.

  • 15 U.S.C. §§ 80b-1 to 80b-21 (Advisers Act) — in particular § 80b-2(a)(11) (definition of investment adviser), § 80b-3 (registration), § 80b-3(b)(3) (the private adviser exemption as narrowed by Dodd-Frank), and § 80b-6 (the antifraud provision from which the fiduciary duty is drawn).
  • SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963) — the origin of the adviser's federal fiduciary duty.
  • Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Release No. IA-5248 (June 5, 2019) — the Commission's consolidated statement of the duties of care and loyalty.
  • 17 C.F.R. § 275.206(4)-7 (compliance rule), § 275.204-2 (books and records), § 275.206(4)-1 (the modernized marketing rule), and § 275.206(4)-2 (custody), with the 2023 safeguarding proposal still pending.
  • 15 U.S.C. § 78o and § 78o(l) — broker-dealer registration, and 17 C.F.R. § 240.15l-1 (Regulation Best Interest), with its disclosure, care, conflict, and compliance obligations.
  • 17 C.F.R. § 240.17a-3 and § 240.17a-4 — the broker-dealer books and records rules behind the off-channel communications enforcement sweep.
  • 15 U.S.C. § 80b-3a — state versus federal registration, and the $100 million regulatory assets under management dividing line, with Form ADV as the operative disclosure document.
  • FINRA Rules 2111 (suitability), 3110 (supervision), and 4511 (records) — the self-regulatory layer that examinations actually test.
  • 15 U.S.C. § 80a-3(c)(1) and § 80a-3(c)(7) — the Investment Company Act exclusions private funds are structured around.

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This article is provided for general informational purposes and does not constitute legal advice. SEC and FINRA rules change frequently, several rules discussed here have been the subject of litigation, and state registration and conduct requirements differ. Consult qualified securities counsel before registering, relying on an exemption, or responding to an examination.