Which statement about exclusions from the Investment Advisers Act of 1940 is true for state law purposes?

• A. Any person excluded from the Investment Advisers Act of 1940 is excluded from the state law definition
• B. Only banks are excluded
• C. Only pension funds are excluded
• D. No one is excluded

Answer: (A)

Exclusions from the federal Investment Advisers Act are carried over for state law purposes. In practice, state securities laws follow the federal framework and treat anyone who is excluded from being an investment adviser under the Advisers Act as also excluded under state law. This helps keep registration and regulation consistent across jurisdictions and avoids duplicative oversight for entities or professionals that aren’t subject to adviser regulation.

Common examples include banks and bank-holding companies, as well as professionals like lawyers, accountants, or teachers whose investment advice is incidental to their professional practice rather than a separate business. It’s broader than just banks, and it’s not correct to say that only pension funds are excluded or that no one is excluded.