Investment Advisers Act of 1940

Definition - What does Investment Advisers Act of 1940 mean?

Investment Advisers Act of 1940 is the federal legislation that sets forth guidelines for business requirements and activities of investment advisers.

Testopedia explains Investment Advisers Act of 1940

The Investment Advisers Act of 1940 defines an investment adviser as anyone who gives Advice regarding securities or anyone in the Business of advising on securities and receives Compensation for that advice. (Tip: use the ABC test to determine if someone is an investment advisory.)
The Act of 1940 not only defines who an investment adviser is, but it also sets the rules regarding the activities of the advisers. As per the Act, investment advisers must be registered in order to conduct business.

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