The purpose of this exemption is to provide regulatory relief to investment advisers operating exclusively through the internet and catering to a specific category of clients. This exemption aims to promote innovation and competition while ensuring investor protection. The exemption shall apply to qualifying investment advisers meeting the specified criteria as outlined in this document.
Section 2: Definitions (a) “Investment Adviser” refers to any individual or entity engaged in the business of providing investment advice or managing investment portfolios for compensation. (b) “Internet-Only Investment Adviser” refers to an investment adviser that exclusively offers its services through an online platform and does not maintain any physical presence or brick-and-mortar office. (c) “Qualified Clients” are those individuals or entities meeting the minimum net worth and/or investment asset thresholds as defined by relevant regulatory authorities.
Section 3: Eligibility Criteria To qualify for the exemption, the internet-only investment adviser must meet the following conditions: (a) Operate solely through an online platform without physical office locations or in-person client interactions. (b) Restrict services to Qualified Clients as defined by the relevant regulatory bodies. (c) Comply with all anti-money laundering (AML) and know-your-customer (KYC) requirements applicable to traditional investment advisers. (d) Implement robust data security and privacy measures to safeguard client information and transactions conducted online. (e) Provide clear and transparent disclosures on the risks and limitations associated with online investment advisory services. (f) Register with the appropriate regulatory authority and comply with reporting obligations as mandated by the applicable laws and regulations.
Section 4: Disclosure Requirements The internet-only investment adviser shall provide the following disclosures to potential and existing clients: (a) A detailed explanation of the firm’s online-only business model and limitations of providing advice solely through digital means. (b) Information on the qualifications and credentials of the advisers responsible for providing investment advice. (c) Clear fee structures and any potential conflicts of interest that may arise from the investment adviser’s business model. (d) Disclosures on the specific types of investments recommended and the associated risks. (e) A reminder that clients should regularly review their investment strategies and adjust as needed.