Which description best defines an investment adviser under federal law?

• A. Provides investment advice, reports, or analysis with respect to securities; is in the business of providing advice or analyses; receives compensation for these services
• B. Only executes trades for clients
• C. Publishes general market newsletters with no compensation
• D. Provides legal advice only

Answer: (A)

Under federal law, an investment adviser is someone who, for compensation, provides advice, reports, or analyses about securities and is in the business of providing such advice. This means the person is offering tailored investment guidance related to securities as a regular part of their work and receives payment for those services. The description that fits best includes all three elements: giving investment advice or analysis about securities, doing so as a business, and being compensated for it. The other scenarios don’t fit because they involve activities outside the adviser role: simply executing trades is the broker-dealer function, not advising; publishing a general market newsletter with no compensation isn’t tailored advice in the business of advising; and giving legal advice falls under the practice of law, not investment advising.