Seite - 106 - in Austrian Law Journal, Band 1/2015

ALJ 1/2015 Brian Carroll 106 limited restitution and enjoin the further operation of the contract.47 Although there are other types of actions that may call into play investment adviser status,48 the vast majority of federal court actions interpreting § 202(a)(11) are initiated by one of these three parties. V. Observations on Judicial Approaches to Discerning Investment Adviser Status This article focuses on judicial approaches to interpreting investment adviser status. For pur- poses of this discussion, the elements of the definition of an investment adviser are that a person: 1) engages in the business of providing 2) investment advice 3) to others 4) concerning securities 5) for compensation. The discussion of each element varies according to the issues raised in relevant judicial decisions and the nature of the author’s observations offered along the way. Some elements provoke more commentary than others. Because this article focuses on judicial approaches, Commission or Commission staff guidance on investment adviser status is generally discussed to the extent that it is relied upon in a judi- cial opinion. Two key examples come to mind. In the Matter of Augustus P. Loring, Jr., (“In re Lor- ing”),49 a Commission order exempting a court-supervised trustee from the definition of in- vestment adviser pursuant to § 202(a)(11)(H), has played a recurrent role in determining whether certain trust services meet the definition of an investment adviser and the role of “solely incidental” advice. Also significant is a Commission staff interpretive guidance discuss- ing application of the definition of an investment adviser to certain financial services. In “Ap- plicability of the Investment Advisers Act to Financial Planners, Pension Consultants, and Other Persons Who Provide Investment Advisory Services as a Component of Other Financial Ser- vices”50 (“SEC Release 1092”) Commission staff, not the Commission, express views on how each element of the definition may be interpreted. 47 Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 19 (1979) (Section 215 “permitting federal suit for recission of a contract or injunction against continued operation of the contract, and for restitution”.); see also Douglass v. Beakley, 900 F. Supp. 2d 736, 746 (N.D. Tex. 2012) (“[…] the only apparent remedy available to an aggrieved investor under the IAA, aside from rescission, would be commissions, fees, or other compensation paid to the investment adviser pursuant to the investment contract.”); Filson v. Langman, 2002 WL 31528616 (D. Mass. 2002) (no claim for damages permitted under Section 215); Fraioli v. Lemcke, 328 F. Supp. 2d 250 (D.R.I. 2004) (dismissed action because lost investment not recoverable and no standing to sue adviser). 48 In addition to these types of cases, other potential parties may initiate civil or criminal actions implicating investment adviser status. See, e.g., Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1002(38)(B) (incorporating by reference definition of an investment adviser under Advisers Act); West’s Ann. Cal. Corp. Code § 25009 (defining an investment adviser under California law); McKinney’s General Business Law § 359- eee(a) (defining an investment adviser under New York law); see generally Uniform Securities Act of 1956 § 401(f) (defining an investment adviser). 49 Investment Advisers Act Release No. 33, 1942 WL 34539 (July 22, 1942); see also In the Matter of Augustus P. Loring, Jr., 11 S.E.C. 885, Investment Company Act Release No. 33, 1942 WL 34853 (July 20, 1942). 50 Investment Advisers Act Release No. 1092 (Oct. 8, 1987), 52 FR 38400 (Oct. 16, 1987) (interpretive release).