SEC Division of Investment Management staff letter: Louis Russo

ACT , A-~ 9-0;) (CÄ)( u)(D) SECTION UNITED STATES RULE SECURITIES AND EXCHANGE COMMI~C (p/;v/9'( WASHINGTON. D.C. 20549 AVAILAIL

DIVISION OF

INVESTMENT MANAGEMENT June 16, 1994

Mr. Louis Russo

4 Myers Pl.
Middlesex, NJ 08846

Dear Mr. Russo:

Your letter dated April 15, 1994 has been forwarded to this

office for response. In your letter, you state that you intend

to publish a weekly or bi-monthly newsletter giving

recommendations regarding the buying and selling of stocks.

Subscribers will pay you a fee for this publication. In

addition, you are considering using a telephone line to provide

recorded stock recommendations. You ask whether any of these activities require you to register as an investment adviser with

the Commission.

Section 202 (a) (11) of the Investment Advisers Act of 1940
(the "Advisers Act") generally defines an investment adviser as

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.

If you publish and sell an investment newsletter or provide stock

recommendations by telephone, you may fall within this definition

and be subj ect to registration and regulation under the Advisers

Act. 1./
Section 202 (a) (11) (D), however, excludes from the definition
of investment adviser, and thus from registration and regulation

under the Advisers Act, the publishers 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. g/ To qualify for the

publisher's exclusion under Lowe, a newsletter must be:

(1) of a general and impersonal nature, in that the advice

provided is not attuned to any specific portfolio or

any client's particular needs;

( 2 ) "bona fide" or genuine; and 1./ In providing a telephone line, I assume you are referring to

a "900" telephone numer and will receive compensation from this

phone system.
~/ Lowe v. SEC, 472 U.S. 181 (1985).

Mr. Louis Russo

June 16, 1994

(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.

The proprietor of a telephone service that provides recorded

stock recommendations could similarly qualify for the publisher's

exclusion, provided the criteria set forth in Lowe are met. ~/

However, because of the fact- specific analysis required to make

this determination, the staff generally will not indicate whether

a particular newsletter or telephone advisory service qualifies

for the publisher's exclusion. ~/ If you do not qualify for the

publisher's exclusion, or any other exclusion set forth in

section 202 (a) (11) (A) - (E), you may be required to register under
the Advisers Act, unless you qualify for an exemption from

registration. 2/

You may wish to consult an attorney for additional guidance

on these matters. If you have additional questions regarding

requirements for investment advisers, you may contact this office

at (202) 942-0660.

Sincerely,
J~l-. ~tJ~
Felice R. Foundos

At torney
Office of Chief Counsel

~/ See Charles L. Simpson (pub. avail. July 7, 1992).

~/ See Charles L. Simpson; Independent Drug Wholesalers Group,

Inc. (pub. avail. Apr. 16, 1992); Eugene E. Castleberry (pub.

avail. June 17, 1991).

2/ See,~, Section 203 (b) (3) which exempts from registration an investment adviser that has fewer than fifteen clie.üts and does not hold itself out to the public generally as an investment

adviser or act as an investment adviser to a registered

investment company.

.'
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
HO 131196
OFFICE OF
CONSUMER AFFAIRS
May 20, 1994

Mr. Louis Russo

4 Myers Place

Middlesex, NJ 08846

Dear Mr. Russo:

Thank you for your letter of April 15, 1994, requesting

information on whether you would be required to register as an

Investment AdvisGr.

We note in your correspondence that you previously telephoned

the Commission's Office of Chief Counsel in the Division of Investment Management. Since you have any unlisted telephone number, we were unable to confirm whether you have already received

a reply to your question. However, in an effort to assist you, we

have forwarded a copy of your correspondence to the appropriate

office within the Commission for its consideration and response.

If we can be of assistance in other securities-related matters, please do not hesitate to contact our office.

Sincerely, t.O.i- e,i-~D . ~~~ 'R~ E.~~elson Consumer Affairs Specialist

cc: Off ice of Chief Counsel

Division of Investment Management

~ "'
/ -i..~.i..l,;...., .1., ..
ÀPR 2 1 1994 Louis Russo

SECUITES & EXCHGE COMMISSION 4 Myers PI.
Apri 15, 1994 CONSUMER AfFAIRS BRANCH Middlesex, NJ

08846 Offce of Filgs, Inormation and Consumer Servces

U.S. Secrities and Exchange Commssion 450 Fif Street, N.W.

Washigton, D.D. 20549

Dea Sir or Madam
I nee your assistace. I am stg a business in which I would publish a weekly or bi￾monthy newsletter givig recmmendations regarding the buyig and sellg of stocks. For ths publication, l would receive a fee from suscribers. I would make recmmendations based upon cha and techncal analysis. Also, I am considerig a telephone lie givig stock buy or sell recmmendations from a recrded messae. My question is: Do I have to register with the Secties Exchange Commssion as an Investent Advisor.

As I review the Investment Advisor Package, page #1, titled" Who is an Investment Advisor", it sttes "any person who for compenstion and as par of a business gives advice, makes recmmendations, issues report..... though publications. Certy by ths defition I woud nee to register. However, "Exclusions from the Defition" sttes

"publishers of bona fide newspapers......or fiancial publication of general cicuation II are exluded. I nee clarcation of the law so I may proce. Today I spoke with several people at the Exchage and I was unable to recive an aner by telephone. I was asked to ca The Offce of the Chief Council at 202-272-2030, which I did and left a recorded message. I would appreciate your timely response. Th you. Louis Rus