15 U.S.C. § 80b–11 — Rules, regulations, and orders of Commission

(a) Power of Commission. The Commission can make, issue, change, or cancel rules, regulations, and orders needed to carry out the powers this subchapter gives it, including rules defining technical or trade terms. One limit: the Commission cannot define "client" — for purposes of section 80b-6(1) and (2) — to include an investor in a private fund, if that fund itself has an advisory contract with the investment adviser. The Commission can also sort people and situations into classes and set different rules for different classes. (b) Effective date of regulations. Subject to chapter 15 of title 44 and its regulations, the Commission's rules, regulations, and any amendments take effect once published the way the Commission decides — or on a later date the rule itself sets. (c) Orders of Commission after notice and hearing; type of notice. The Commission can only issue orders after giving notice and a chance for a hearing. It notifies parties by personal service, registered mail, certified mail, or confirmed telegram to their last known business address. It can notify other interested people the same way, or by publishing in the Federal Register. (d) Good faith compliance with rules and regulations. If someone does something — or skips doing something — in good-faith reliance on a Commission rule, regulation, or order, this subchapter's liability provisions don't apply to them. That's true even if the rule, regulation, or order later gets amended, canceled, or ruled invalid. (e) Disclosure rules on private funds. The Commission and the Commodity Futures Trading Commission, after consulting the Financial Stability Oversight Council, had to jointly write rules — within 12 months of July 21, 2010 — setting the form and content of reports required under section 80b-4(b), for advisers registered under both this subchapter and the Commodity Exchange Act. (g) Standard of conduct. (1) The Commission can write rules requiring brokers, dealers, and investment advisers to act in a retail customer's best interest — without regard to their own financial interest — whenever they give that customer personalized investment advice about securities. Under such rules, material conflicts of interest must be disclosed, and the customer can consent to them. This standard can't be weaker than the standard advisers already follow under section 80b-6(1) and (2). The Commission still can't count a private fund's own investors as "customers" if that fund has an advisory contract with the adviser. Simply earning commissions or fees isn't, by itself, a violation. (2) A "retail customer" is a person (or their legal representative) who gets personalized securities advice from a broker, dealer, or adviser and uses it mainly for personal, family, or household reasons. (h) Other matters. The Commission must (1) help make sure investors get simple, clear disclosures about their relationships with brokers, dealers, and advisers, including any material conflicts of interest; and (2) study, and where appropriate write rules restricting or banning, sales practices, conflicts of interest, and pay arrangements it considers against the public interest or bad for investors. (i) Harmonization of enforcement. The Commission's power to enforce the investment-adviser standard of conduct includes both its usual enforcement power under this subchapter, and the enforcement power — including the power to impose sanctions — it has over broker-dealer standard-of-conduct violations under the Securities Exchange Act of 1934. The Commission must pursue and sanction violations of the adviser standard just as vigorously as it pursues and sanctions violations of the broker-dealer standard. Note: the source text for this section jumps from subsection (e) to subsection (g); no subsection (f) appears in the supplied text.