Brief Fact Summary. The Securities and Exchange Commission (SEC) (Plaintiff) wanted to stop Lowe (Defendant) and his company from printing general investment advice and commentary in a publication due to them not being registered investment advisers.
Synopsis of Rule of Law. An investment adviser cannot be prevented from publishing a nonpersonalized investment publication just because he is not registered.
From a profession charged with such responsibilities there must be exacted those qualities of truth-speaking, of a high sense of honor, of granite discretion, of the strictest observance of fiduciary responsibility, that have, throughout the centuries, been compendiously described as moral character.View Full Point of Law
Issue. Can investment adviser be prevented from publishing a nonpersonalized investment publication just because he is not registered?
Held. (Stevens, J.) No. An investment adviser cannot be prevented from publishing a nonpersonalized investment publication just because he is not registered. The SEC was given broad regulatory authority over those participating in the investment advice industry by the Investment Advisers Act of 1940. The Act’s creation was applicable only to those who offer personalized advice serving a certain client. So, the Act disregards a â€œpublisher of any bona fide newspaper, news magazine, or financial publication of regular general circulation.â€ The term â€œbona-fideâ€ was seemingly used to permit regulation of single issue â€œtoutsâ€ or â€œtipsâ€ in opposition to standard newsletters. In this case, Lowe Management’s publications, with their standard publication dates, seem authentic and so fall under the statutory exclusion. The SEC was not within their jurisdiction to regulate them. Reversed.
Discussion. The SEC is not completely lacking jurisdiction in this case. If the newsletters content had been misstated, inaccurate or in violation of securities laws in some other fashion, the SEC would have regained its authority to enforce sanctions but it did not, seeing as this case only dealt with powers of prior constraint.