In recent decades, the use of information providers has grown, changing the asset management industry. For example, registered funds that track indexes have grown substantially to over $10 trillion of assets under management.[1] These indexes have grown not only in size but also in available types, ranging from broad-based indexes for general use to specialized, narrowly-focused ones designed for particular users. Having evolved in size and scope, these indexes are increasingly influential. Thus, an index provider’s decision to include a particular security in an index often influences users of the index to purchase or sell securities. This raises questions about whether the index provider is providing investment advice. Model portfolio providers and pricing services have similarly grown and evolved. Each of these providers’ activities raise questions regarding our oversight of investment advisers and how we best protect the public.

The request seeks comment about these and other questions on whether these information providers are providing investment advice under particular facts and circumstances, and thus acting as “investment advisers” under the securities laws.[2] In addition, as some information providers may not fit neatly into the Commission’s existing regulatory structure for investment advisers, the release seeks comment on how existing rules should apply to them.

The SEC staff has issued statements on certain aspects of the “investment adviser” definition, largely in the 1980s and 1990s.[3] Given the changes to the asset management field in the intervening decades, it is appropriate to seek comment on information providers to consider if regulatory action is appropriate. Some elements of the definition may not be interpreted consistently by market participants. Thus, I believe the market may benefit from further guidance with respect to their applicability to some information providers.

I look forward to feedback from the public.

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