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Investments glossary

Investment Advisers Act of 1940


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I\'m in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal.

— Milton Friedman

The Investment Advisers Act of 1940 is a U.S. federal law that defines the role and responsibilities of an investment advisor/adviser. Prompted in part by a 1935 report to Congress on investment trusts and investment companies prepared by the Securities and Exchange Commission (SEC), the act provides the legal groundwork for monitoring those who advise pension funds, individuals and institutions on investing. It specifies what qualifies as investment advice and stipulates who must register with state and federal regulators in order to dispense it.


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