SEC Division of Investment Management staff letter: Alfred A. Zurl

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DIVISION OF

lISTMENT MANAGEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

August 7, 1995

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£/i--fJ -i¿ .~~~.;~ ;:~s-t ,~?1Á-) ¡;)cq) Mr. Alfred A. Zurl b~elion ¡ ~ 221-41 90 Avenue

Queens Village, NY 11428

Dear Mr. Zurl: ~:~~,. a ¡.~. .. c: ,.,~~~~~: :11t!.~,.... '7 t.~.,.,.._,~...""~,,iW d' This is in response to your letter to Jack W. .Murphy dated

July 8, 1995 asking whether you would need to register as an

investment adviser' if you give investment advice in a newsletter

or by telephone using a 900 number.

The Commission regulates investment advisers primarily under

the Investment Advisers Act of 1940 ("Advisers Act"). Section

(202) (a) (11) of the Advisers Act generally defines an investment adviser as any person who, for compensation, engages in the

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. Section 203 (a) of the Advisers Act generally business of

register with the Commission.

A person who provides advice about securities by telephone or by

newsletter may fall within this definition and may be required to

register under the Advisers Act.

requires an investment adviser to

Section 202 (a) (11) (D) of the Advisers Act, however, excepts
from the definition of investment adviser, and thus from

registration and regulation under the Act, the publisher of any

bona fide newspaper, news magazine, or business or financial

publication of general and regular circulation. The United

States Supreme Court has interpreted this "publisher's exclusion"

to include publications that offer impersonal investment advice

to the general public on a regular basis. ~/ To qualify for

the section 202 (a) (11) (D) exclusion, under Lowe, the publication must be:
i; of a general and impersonal nature, in that the advice

provided is not adapted to any specific portfolio or

any cl ient' s part icular needs; ~/ Lowe v. SEC, 472 U.S. 181 (1985).

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2) "bona fide" or genuine, in that it contains

disinterested commentary and analysis as opposed to

promotional material; and

3) of general and regular circulation, in that it is not

timed to specific market activity or to events

affecting, or having the ability to affect, the

securities industry.

A person who provides advice about securities using a 900

numer could similarly qualify for the Section 202 (a) (11) (D)

exclusion, provided the three criteria listed above are met. The

staff generally declines. to express an opinion whether a person

qualifies for the exclusion because this is a factual and not a

legal determination. If you are an If investment adviser" under

the Advisers Act and do not qualify for the publisher's

exclusion, or for any other exclusion from the definition of

investment adviser, or for an exemption from registration under

Section 203 (b), you must register with the Commission as an

investment adviser. ~/

I have enclosed a copy of the Commission's Investment

Adviser Registration Package, which contains a copy of the

Advisers Act and other explanatory materials. I have also

included a copy of the rules under the Advisers Act and a

memorandum that discusses the regulation of investment advisers.

I hope that this information is helpful. Please contact this

office at (202) 942 - 0660 if we can be of further assistance.

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Sincerely, j/e'¿At-4 ~ ;2'¿'7'L~
Veena K. Jain

At torney
Office of Chief Counsel

enclosures
~/ The exclusions from the definition of an investment adviser

are set forth in Section 202 (a) (11) of the Advisers Act.

221-~1 80 Avenue

Queens Village, N. Y. 11428

July 8, 1885

Mr. Jack W. Murphy

Secur i ties and Exchange Commissi on 450 Fifth Street N. W.

Washington, D. C. 20548
Dear Mr. Murphy,

I obtained your name and address from one of your New

York colleagues. who encouraged me to write to you about

an SEC-related question.
I am an experienced individual investor in the stock

market, with no affiliation to the SEC or NASD. I am

considering the possibility of a new project possibly

sometime in 1886. This would be providing some stock

market investment advice to the general public. either

via investment-newsletter, or 800-phone-line. etc.

This would not involve giving individual advice or

managing individual accounts. It \Jould consist of recommending

certain individual stocks, but to the public in general, not

specific individuals.

My understanding is that, in light of the above, it would not be necessary to register as an Investment Advisor with the SEC, and that legally, the SEC should have no objection ~ to this. If you agree with the above, there is no need to repl y. Otherwise, a brief letter would be welcome and desired.

Thank you very much for taking the time to read this,

and for your cooperation.

Si ncerel y,
á(;t-Lc(' Ó, 'ji i- ..(., 1./ J L.L-

Al f' roed A. Zurl