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Legal Update

US Securities and Exchange Commission's Division of Investment Management Issues Guidance Regarding Robo-Advisers

5 April 2017
Mayer Brown Legal Update
On February 23, 2017, the staff of the Division of Investment Management (“Staff”) at the US Securities and Exchange Commission (“SEC”) issued a guidance update (IM Guidance Update No. 2017-02 or the “Update”) on how robo-advisers may meet their disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940 (the “Advisers Act”). Robo-advisers—investment advisers that use algorithmic and other technology-based programs to provide clients with discretionary asset management services—face unique challenges in complying with their fiduciary requirements under the Advisers Act given their limited human and typically online delivery of investment advice, and the SEC is showing increasing concern regarding the potential risks of this alternative advisory business model. Our legal update examines the SEC Update’s guidance and practical considerations for robo-advisers.

Authors

  • Stephanie M. Monaco
    T +1 202 263 3379
  • Amy Ward Pershkow
    T +1 202 263 3336
  • Leslie S. Cruz
    T +1 202 263 3337
  • Peter M. McCamman
    T +1 202 263 3299
  • Andrew D. Getsinger
    T +1 202 263 3325
  • Adam D. Kanter
    T +1 202 263 3164
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