Investment Advisers are Not Broker-Dealers
Investment Advisers are Not Broker-Dealers:
The AIC urges the SEC to confirm that broker-dealer regulations do not apply to private equity investment advisers merely because they may receive fees in connection with the acquisition, financing and sale of the portfolio companies they control.
Private equity investment advisers are not broker-dealers. They provide investment expertise and advice to their affiliated funds and portfolio companies, are subject to fiduciary duties, and do not engage in traditional brokerage activities. Receipt of fees in connection with the purchase or sale of portfolio companies alone does not transform a private equity sponsor into a broker. The AIC believes that this confusion can best be resolved through a no-action letter that will confirm, subject to certain conditions that have largely been addressed in precedent, that private equity sponsors are not required to register as broker-dealers merely because they receive such fees.
