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Article Explores SEC Staff Guidance on Robo-Advisers

A recent article in the Investment Lawyer by Sullivan & Worcester lawyer Thomas M. Ahmadifar explores SEC Staff guidance issued earlier this year in response to the emergence of automated investment advisers in the fund industry. The article reviews the staff’s guidance and the regulatory structure that currently exempts robo-advisers from 1940 Act registration requirements. The article also discusses: requirements for robo-advisers under the Investment Advisers Act; considerations around developing an effective compliance program; the ways in which a robo-adviser may design its advising methods to avoid running afoul of the 1940 Act; and considerations in the provision of suitable advice and “full and fair” disclosures to clients.