On November 4, 2019, the SEC Staff extended its prior no-action relief from investment adviser registration for broker-dealers that receive cash payments for their research. The prior (and now extended) relief permits a broker-dealer to receive cash payments from certain types of investment managers without the broker-dealer having to register as an investment adviser. Without the no-action relief, a broker-dealer’s mere receipt of cash for its research would be deemed “special compensation”, as contemplated by Section 202(a)(11)(C) under the Investment Advisers Act of 1940, as amended (the “Adviser’s Act”).
