SEC issues temporary rule and re-proposes rule addressing the scope of the broker-dealer exception from the definition of investment adviser under the Investment Advisers Act of 1940

Section 202(a)(11)(C) of the Investment Advisers Act of 1940 excepts from the definition of investment adviser any broker-dealer whose performance of investment advisory services is solely incidental to the conduct of its broker-dealer business and who receives no special compensation in connection with its investment advisory services. This broker-dealer exception is a congressional recognition that broker-dealers generally provide some degree of investment advice to their brokerage customers, and that given the regulatory regime already applicable to broker-dealers - such as self-regulatory organization rules, Securities and Exchange Commission regulation under the Securities Exchange Act of 1934, and applicable state regulation - it might be regulatory overkill to bring broker-dealers within the scope of the Advisers Act merely because they provide some degree of incidental investment advise to their brokerage clients.