SEC Division of Investment Management staff letter: David Parkinson

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON. D.C. 20549 DIVISION OF

INVESTMENT MANAGEMENT

October 19, 1995

David Parkinson, Ph.D.

5424 - 176 Street

Edmonton, Alberta

T6M 1C6
Canada
Dear Dr. Parkinson:

Your letter of August 17, 1995, has been referred to the

Office of Chief Counsel for response. In your letter, you state

that you plan to offer bond market timing advice on a

subscription basis to .registered investment advisers in the

United States. You ask whether you must register as an

investment adviser if you limit the availability of the advice to

registered investment advisers, and do not distribute it to the general public.
Section 203 (a) of the Investmènt Advisers Act of 1940 (the
"Advisers Act") requires a person or entity that meets the

definition of II investment adviser, n and that makes use of the

U. S. mails or any means or instruentality of interstate commerce

in connection with its business as an investment adviser, to

register under the Advisers Act, unless an exemption from

registration is available. Section 202 (a) (11) defines

"investment adviser" to include, among others, any person who,

for compensation, engages in the business of advising others as

to the value of securities or as to the advisability of investing

in, purchasing, or selling securities, or who issues or

promulgates analyses or reports concerning securities.

We believe that one who offers market timing advice for compensation would fall within this definition.1 The fact that you propose to limit your advice to registered investment advisers does not change this analysis, because the definition of investment adviser is not limited to persons who offer advice to the general public. We note, however, that Section 202 (a) (11) (D) excludes from the definition of investment adviser 'any publisher of a bona fide

newspaper, news magazine, or business or financial publication of

1 See, ~, Donald F. Pooley (pub. avail. Feb. 6, 1985);

The Maratta Advisory Inc. (pub. avail. Jul. 16, 1981).

David Parkinson, Ph. D .
October 19, 1995

general and regular circulation. To qualify for this exclusion,

the publication must:

(1) offer only impersonalized advice, i.e., advice not

tailored to the individual needs of a specific client

or group of clients;

(2) be bona fide; and

(3) be of general and regular circulation, i. e., not timed

to specific market activity or to events affecting or

having the ability to affect the securities industry. 2

Because of the fact - specific nature of the analysis required to

determine the availability of the publisher's exclusion, we are

unable to determine whether the service you describe meets the

requirements of the exclusion. You may wish to consult counsel

familiar with the U. S. federal securities laws.

I have enclosed for your informtion an investment adviser

registration package, which contains informtion on the

regulation of registered investment advisers. 3 If we can be of

further assistance, do not hesitate to contact this office at

(202) 942 - 0659.

Sincerely,
J. Ruöenstein

Counsel enclosure
2 See SEC v. Lowe, 472 U.S. 181 (1985).
3 Many states impose their own requirements on investment

advisers that do business within the state, including

registration. You may obtain the names and addresses of state

regulators from the North American Securities Administrators

Association, Inc., One Massachusetts Ave., N. W., Washington, D. C.

20001, (202) 737- 0900 ._.....__~.._n

David Parkinson, Ph~D. ~ ~
5424 - 176 Street N1 - - i: ~Cl\' L.()~~1(3)

Edmonton, Alberta ØK0N _ -i 0 l: 0._ , T6M 1C6 ." . -~ Canada ~ ¡OC (0 ": .l ~ r 11:
AV 1J,&1tlU ~

August 17, 1995

Division of Investment Management Securities and Exchange Commission 500 North Capitol Street Washington, D.C.

20549
Dear Sirs,
'For several years I have been running on my own behalf a bond market timing system. I am now interested in offering my market timing advice to others. I plan to offer the advice on a subscription basis to Registered Investment Advisors in the United States. Is it necessary for me to register as an investment advisor in order to do this? Specifically, if I limit the availability of the advice to Registered Investment Advisors, and do not distribute it to the general public, is it possible that I don't need to register? I look forward to your early response.