Misrepresenting Registration & 'Investment Counsel'
Registration is not approval; 'investment counsel' is a restricted title.
What is Misrepresenting Registration & 'Investment Counsel'?
No one may state or imply that the Administrator has approved, passed on, or recommended a person or security; saying accurately that one is registered is allowed. An adviser may not call itself 'investment counsel' unless its principal business is acting as an investment adviser and a substantial part of that business is providing continuous and regular investment supervisory services. Misstating qualifications or credentials is likewise prohibited.
Misrepresenting Registration & 'Investment Counsel': a worked example
An advertisement reading 'approved by the State Securities Division' is a violation.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.