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ALJ 1/2015 Observations on Judicial Approaches to Discerning Investment Adviser Status 125
Letters183 for determining whether one âholds himself outâ184 to the public as an investment ad-
viser. More fundamentally, Zinnâs characterization of In re Loring fails to recognize that the vast ma-
jority of services provided by Loring were under court supervision, subject to a bonding require-
ment. This fact would support the Commission granting the exemptive request in In re Loring.
Similarly, Zinn appears not to appreciate that the standard applied by the Commission in the In Re
Loring exemptive application under § 202(a)(11)(H) is whether the applicant is a person ânot with-
in the intentâ of § 202(a)(11). This is a far more general and inclusive standard than determining
the reach of the engage in the business language of § 202(a)(11).
Finally, the Zinn decision does not acknowledge that Congress in enacting the Advisers Act choose
to include âsolely incidentalâ and âholding outâ language in other provisions of the Adviser Act but
not § 202(a)(11). Indeed, Zinnâs imposition of the âholding outâ to the public test and âsolely inci-
dentalâ limitation is not supported by the language of § 202(a)(11) and is undercut by the struc-
ture of the Advisers Act. Under § 202(a)(11), the definition of an investment adviser does not
include âsolely incidentalâ language. In contrast, the professionals exception under § 202(a)(11)(B)
and broker-dealer exception under § 202(a)(11)(C) both limit offering investment adviser that is
âsolely incidental to the conductâ of the practice of a profession and business as a broker or deal-
er, respectively. Under § 202(a)(11) the definition of an investment adviser does not include any
reference to âholding outâ to the public. Under former § 203(b)(3) an investment adviser is not
required to register with the Commission if certain requirements are met, such as that it does not
âhold[s] itself out to generally to the public as an investment adviser.â Zinnâs approach is difficult
to accept in light of the Supreme Courtâs holding in Barnhart v. Sigmon Coal Company, Inc.,185
where the court held that âwhen âCongress includes particular language in one section of a stat-
ute but omits it in another section of the same Act, it is generally presumed that Congress acts
intentionally and purposely in the disparate inclusion or exclusion.ââ
2. Alternative Approaches to Engage in the Business
Courts may benefit from taking a fresh approach to the engage in the business element. Although
neither the word âengageâ nor âbusinessâ is defined by the Advisers Act, these words appear in
other federal statutes and courts have routinely looked to their âordinary and naturalâ186 mean-
ings in interpreting the words âengageâ187 and âbusinessâ188 Some courts have been called upon
183 See supra footnote 165 above; see also Wilson v. Merrill Lynch & Co., 671 F.3d 120, 137 n.11 (2d Cir. 2011) (dis-
cussing degree of judicial deference due Commission staff No-Action Letters); Gryl ex rel. Shire Pharm. Grp. PLC. v.
Shire Pharm. Grp. PLC, 298 F.3d 136, 145 n.8 (2d Cir. 2002) (citations omitted) (âIt must be remembered, howev-
er, that SEC no action letter responses are staff interpretations rather than formal Commission action and thus
are of more limited utility than formal rulemaking or policies announced in SEC releases.â).
184 Zinn, 644 F.2d at 363 (citations omitted) (âAmong the factors the SEC looks to in determining whether someone
âholds himself outâ as an investment adviser are: â(t)he maintenance of a listing as an investment adviser in a tele-
phone or business directoryâ; âthe expression of willingness to existing clients or others to accept new clientsâ; or
âthe use of a letterhead indicating any activity as an investment adviser.ââ).
185 534 U.S. 438, 453, (2002) (citations omitted).
186 Scherr v. Marriott Intâl, Inc., 703 F.3d 1069, 1077 (7th Cir. 2013) (âWhen we do not have statutory definitions
available, we accord words and phrases their ordinary and natural meaning and avoid rendering them mean-
ingless, redundant, or superfluous; we view words not in isolation but in the context of the terms that sur-
round them; we likewise construe statutes in the context of the entire statutory scheme and avoid rendering
statutory provisions ambiguous, extraneous, or redundant; we favor the more reasonable result; and we
avoid construing statutes contrary to the clear intent of the statutory scheme.â).
187 See, e.g., U.S. v. Graham, 305 F.3d 1094, 1102 (10th Cir. 2002) (âThe term âengageâ is commonly defined as âto
occupy or involve oneself; take part; be active.â Websterâs New World College Dictionary at 450 (3rd ed.
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book Austrian Law Journal, Volume 1/2015"
Austrian Law Journal
Volume 1/2015
- Title
- Austrian Law Journal
- Volume
- 1/2015
- Author
- Karl-Franzens-Universität Graz
- Editor
- Brigitta Lurger
- Elisabeth Staudegger
- Stefan Storr
- Location
- Graz
- Date
- 2015
- Language
- German
- License
- CC BY 4.0
- Size
- 19.1 x 27.5 cm
- Pages
- 188
- Keywords
- Recht, Gesetz, Rechtswissenschaft, Jurisprudenz
- Categories
- Zeitschriften Austrian Law Journal