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The expiration of the SEC’s no-action letter has significant implications for European research firms operating in the US market. With the relief provided by the letter set to expire at the end of June this year, firms may be required to register as investment advisers.
In a significant development for European research firms conducting business with US clients, the SEC announced the expiration of a crucial no-action letter issued in 2017. This expiration directly impacts European firms seeking to provide research services to US clients while complying with regulatory requirements.
The SEC’s no-action letter provided relief to European research firms from having to register as investment advisers under the Investment Advisers Act of 1940. It allowed these research firms to provide research services to US institutional investors without triggering registration requirements. This no-action relief is set to expire at the end of June this year, creating uncertainty for European firms and necessitating a reassessment of their operations and compliance obligations.
Without the relief provided by the letter, these firms may be required to register as investment advisers, with the registration process requiring firms to fulfil certain regulatory obligations, including disclosure and reporting requirements, compliance programs, and potential ongoing regulatory oversight.
European research firms seeking to continue serving US clients must carefully evaluate their activities and assess whether registration as investment advisers is necessary. In this complex landscape, partnering with a consultancy firm experienced in regulatory compliance can be invaluable. Navigating potential registration implications under the Investment Advisers Act of 1940 requires a comprehensive understanding of US regulatory requirements.
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Our expert team actively support global businesses as they navigate the journey of US registration and manage their ongoing obligations as a regulated firm.