Title 15, Commerce and TradeRelease 119-110
§80b–11 Rules, Regulations, and Orders of Commission
Title 15 › CHAPTER 2D — INVESTMENT COMPANIES AND ADVISERS › SUBCHAPTER II — INVESTMENT ADVISERS › § 80b–11
Summary
The Commission may make, change, and cancel rules and orders it needs to do its job. It can set definitions, group people and matters, and make different rules for different groups. Its rules take effect when it says they do, subject to federal rules about paperwork and information collection. The Commission must give notice and a chance for a hearing before issuing orders. Parties get notice by personal delivery, registered or certified mail, or confirmed telegraph to their last business address. Other interested people can be told the same way or by publishing in the Federal Register. If someone acts in good faith and follows a Commission rule or order, they won’t be held liable even if that rule is later changed or found invalid. The Commission and the Commodity Futures Trading Commission must together create report forms for advisers registered with both agencies no later than 12 months after July 21, 2010. The Commission may also make rules saying brokers, dealers, and investment advisers who give personalized securities advice to retail customers must act in the customer’s best interest, disclose big conflicts, and may get the customer’s consent. A “retail customer” means a person (or their legal rep) who gets personalized advice used mainly for personal, family, or household purposes. The Commission must promote clear disclosures and can ban harmful sales practices or pay schemes. It has enforcement power to punish violators and to seek the same sanctions it uses for brokers who give personalized advice.
Full Legal Text
Title 15, §80b–11
Commerce and Trade, Source: USLM XML via OLRC
(a)Power of Commission
The Commission shall have authority from time to time to make, issue, amend, and rescind such rules and regulations and such orders as are necessary or appropriate to the exercise of the functions and powers conferred upon the Commission elsewhere in this subchapter, including rules and regulations defining technical, trade, and other terms used in this subchapter, except that the Commission may not define the term “client” for purposes of paragraphs (1) and (2) of section 80b–6 of this title to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser. For the purposes of its rules or regulations the Commission may classify persons and matters within its jurisdiction and prescribe different requirements for different classes of persons or matters.
(b)Effective date of regulations
Subject to the provisions of chapter 15 of title 44 and regulations prescribed under the authority thereof, the rules and regulations of the Commission under this subchapter, and amendments thereof, shall be effective upon publication in the manner which the Commission shall prescribe, or upon such later date as may be provided in such rules and regulations.
(c)Orders of Commission after notice and hearing; type of notice
Orders of the Commission under this subchapter shall be issued only after appropriate notice and opportunity for hearing. Notice to the parties to a proceeding before the Commission shall be given by personal service upon each party or by registered mail or certified mail or confirmed telegraphic notice to the party’s last known business address. Notice to interested persons, if any, other than parties may be given in the same manner or by publication in the Federal Register.
(d)Good faith compliance with rules and regulations
No provision of this subchapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or order of the Commission, notwithstanding that such rule, regulation, or order may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.
(e)Disclosure rules on private funds
The Commission and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after July 21, 2010, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under subsection 80b–4(b) of this title and with the Commodity Futures Trading Commission by investment advisers that are registered both under this subchapter and the Commodity Exchange Act [7 U.S.C. 1 et seq.].
(g)Standard of conduct
(1)In general
The Commission may promulgate rules to provide that the standard of conduct for all brokers, dealers, and investment advisers, when providing personalized investment advice about securities to retail customers (and such other customers as the Commission may by rule provide), shall be to act in the best interest of the customer without regard to the financial or other interest of the broker, dealer, or investment adviser providing the advice. In accordance with such rules, any material conflicts of interest shall be disclosed and may be consented to by the customer. Such rules shall provide that such standard of conduct shall be no less stringent than the standard applicable to investment advisers under section 80b–6(1) and (2) of this title when providing personalized investment advice about securities, except the Commission shall not ascribe a meaning to the term “customer” that would include an investor in a private fund managed by an investment adviser, where such private fund has entered into an advisory contract with such adviser. The receipt of compensation based on commission or fees shall not, in and of itself, be considered a violation of such standard applied to a broker, dealer, or investment adviser.
(2)Retail customer defined
For purposes of this subsection, the term “retail customer” means a natural person, or the legal representative of such natural person, who—
(A)receives personalized investment advice about securities from a broker, dealer, or investment adviser; and
(B)uses such advice primarily for personal, family, or household purposes.
(h)Other matters
The Commission shall—
(1)facilitate the provision of simple and clear disclosures to investors regarding the terms of their relationships with brokers, dealers, and investment advisers, including any material conflicts of interest; and
(2)examine and, where appropriate, promulgate rules prohibiting or restricting certain sales practices, conflicts of interest, and compensation schemes for brokers, dealers, and investment advisers that the Commission deems contrary to the public interest and the protection of investors.
(i)Harmonization of enforcement
The enforcement authority of the Commission with respect to violations of the standard of conduct applicable to an investment adviser shall include—
(1)the enforcement authority of the Commission with respect to such violations provided under this subchapter; and
(2)the enforcement authority of the Commission with respect to violations of the standard of conduct applicable to a broker or dealer providing personalized investment advice about securities to a retail customer under the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], including the authority to impose sanctions for such violations, and
the Commission shall seek to prosecute and sanction violators of the standard of conduct applicable to an investment adviser under this subchapter to same extent as the Commission prosecutes and sanctions violators of the standard of conduct applicable to a broker or dealer providing personalized investment advice about securities to a retail customer under the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.].
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Commodity Exchange Act, referred to in subsec. (e), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. The Securities Exchange Act of 1934, referred to in subsec. (i), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see section 78a of this title and Tables.
Amendments
2010—Subsec. (a). Pub. L. 111–203, § 406(1), inserted “, including
Rules and Regulations
defining technical, trade, and other terms used in this subchapter, except that the Commission may not define the term ‘client’ for purposes of paragraphs (1) and (2) of section 80b–6 of this title to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser” after “elsewhere in this subchapter”. Subsec. (e). Pub. L. 111–203, § 406(2), which directed addition of subsec. (e) at end of section, was executed by adding subsec. (e) after subsec. (d) to reflect the probable intent of Congress. See
Effective Date
of 2010 Amendment notes below. Subsecs. (g), (h). Pub. L. 111–203, § 913(g)(2), added subsecs. (g) and (h). Subsec. (i). Pub. L. 111–203, § 913(h)(2), added subsec. (i). 1987—Subsec. (b). Pub. L. 100–181 substituted “chapter 15 of title 44” for “the Federal Register Act”. 1960—Subsec. (a). Pub. L. 86–750 inserted “functions and”. Subsec. (c). Pub. L. 86–507 inserted “or certified mail” after “registered mail”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 AmendmentAmendment by section 913(g)(2), (h)(2) of Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an
Effective Date
note under section 5301 of Title 12, Banks and Banking. Amendment by section 406 of Pub. L. 111–203 effective 1 year after
July 21, 2010, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission, and except as otherwise provided, see section 419 of Pub. L. 111–203, set out as a note under section 80b–2 of this title. Study on Enhancing Investment Adviser Examinations Pub. L. 111–203, title IX, § 914,
July 21, 2010, 124 Stat. 1830, provided that: “(a) Study Required.—“(1) In general.—The Commission shall review and analyze the need for enhanced examination and
Enforcement
resources for investment advisers. “(2) Areas of consideration.—The study required by this subsection shall examine—“(A) the number and frequency of examinations of investment advisers by the Commission over the 5 years preceding the date of the enactment of this subtitle [
July 21, 2010]; “(B) the extent to which having Congress authorize the Commission to designate one or more self-regulatory organizations to augment the Commission’s efforts in overseeing investment advisers would improve the frequency of examinations of investment advisers; and “(C) current and potential approaches to examining the investment advisory activities of dually registered broker-dealers and investment advisers or affiliated broker-dealers and investment advisers. “(b) Report Required.—The Commission shall report its findings to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, not later than 180 days after the date of enactment of this subtitle [
July 21, 2010], and shall use such findings to revise its
Rules and Regulations
, as necessary. The report shall include a discussion of regulatory or legislative steps that are recommended or that may be necessary to address concerns identified in the study.” [For definitions of terms used in section 914 of Pub. L. 111–203, set out above, see section 5301 of Title 12, Banks and Banking.]
Executive Documents
Transfer of Functions
For
Transfer of Functions
of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.
Reference
Citations & Metadata
Citation
15 U.S.C. § 80b–11
Title 15, Commerce and Trade
Last Updated
Sep 23, 2026
Release point: 119-110