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Comments on Wyoming’s Proposed Regulation of ESG Investing

September 18, 2023

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Joe Rubino
Chief Policy Officer and General Counsel
Wyoming Secretary of State’s Office
22 W. 25th St., Herschler Building East, Suites 100 and 101
Cheyenne, WY 82002


Re:      Proposed Amendments to Investment Adviser Rules in Chapter 10 Wyoming Code of Regulations – Required Disclosures for Investments that Incorporate a Social Objective

Dear Mr. Rubino:

The Investment Adviser Association (IAA)[1] appreciates the opportunity to comment on the Wyoming Secretary of State’s (Secretary’s) Notice of Intent to Adopt Rules.[2] The IAA represents the interests of fiduciary investment adviser firms, including investment advisers registered with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940[3] (Federal Covered Advisers).

The Secretary has proposed amendments to the investment adviser rules in Chapter 10 of the Wyoming Code of Regulations (WCR). The proposed amendments would add Rule Section 10-15 (Proposed Rule) to require investment advisers to disclose to clients when advice and/or recommendations incorporate a “social objective or other nonfinancial objective,” as defined in the Proposed Rule.[4]

As is clearly reflected in the Wyoming Statutes (WS), the Secretary may not extend any substantive regulation to Federal Covered Advisers or investment adviser representatives (IARs) of Federal Covered Advisers, in accordance with the National Securities Markets Improvement Act of 1996 (NSMIA), and we do not read the Proposed Rule as intending to do so. We are concerned that the Proposed Rule could be read as purporting to apply substantive requirements to IARs of Federal Covered Advisers.[5] We assume that this was not the Secretary’s intent as such a reading would be inconsistent with both NSMIA and the WS. In the interest of clarity, we ask that the Secretary explicitly confirm that it does not intend that the Proposed Rule be extended to Federal Covered Advisers or IARs of Federal Covered Advisers.

NSMIA Prohibits States from Directly or Indirectly Imposing Substantive Regulation on SEC-Registered Advisers

Congress enacted NSMIA to address its concerns about the overlap in regulation and duplication of regulatory resources. NSMIA sought to “moderniz[e] and rationaliz[e] aspects of the regulatory scheme, including the respective responsibilities of Federal and State governmental authorities over the securities markets,” and to “eliminat[e] the costs and burdens of duplicative and unnecessary regulation.”[6] Title III of NSMIA, the Investment Advisers Supervision Coordination Act (Coordination Act), broadly preempts state regulation of Federal Covered Advisers,[7] which the Proposed Rule appropriately recognizes by incorporating the statutory definition of “investment adviser” that explicitly excludes Federal Covered Advisers.[8]

States retain some limited authority over Federal Covered Advisers, but only in that they may: (i) require the registration, licensing, or qualification – and related payment of state filing fees – of any individual IAR with a place of business in the state; (ii) require the filing of documents filed with the SEC, but only for notice purposes; and (iii) investigate and bring enforcement actions against SEC-registered advisers for fraud.[9] States may not adopt any regulations, interpretations, or guidance, such as the Proposed Rule, that would directly or have the effect of substantively regulating Federal Covered Advisers.

Nor may states indirectly regulate activities of Federal Covered Advisers by deeming violations of state requirements related to business conduct to be fraudulent unless the conduct involved would be fraudulent even if the state requirements did not exist.[10] The SEC has explicitly asserted that states are precluded from “indirectly regulating the activities of [SEC]-registered advisers by applying state requirements that define ‘dishonest’ or ‘unethical’ business practices unless the prohibited practices would be fraudulent or deceptive absent the requirements.”[11]

The WS appropriately recognizes the limitations on state regulation imposed by NSMIA by excluding Federal Covered Advisers from the definition of “investment adviser” altogether,[12] and prohibits the Secretary from adopting rules governing the business conduct of IARs of Federal Covered Advisers.[13] Additionally, Section 17-4-406 of the WS explicitly captures any constraints on state regulation potentially not covered by these other provisions by stating that a “rule adopted or order issued under this act may impose such other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996” (emphasis added). We believe that the statutory language governs the potential reach of the Proposed Rule, even where the rule itself may not contain express limitations.

Specifically, the Proposed Rule looks to the statutory definition of “investment adviser representative,”[14] which excludes an individual who “[i]s employed by or associated with a federal covered investment adviser, unless the individual has a ‘place of business’ in this state as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940 and is [] [a]n ‘investment adviser representative’ as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940.”[15] This definition also excludes “investment adviser representatives” that are excluded by rule adopted or order issued under Chapter 10 of the WS.

As noted above, WS Section 17-4-502 reflects the understanding that attempting to regulate the conduct of Federal Covered Advisers and their IARs would be attempting to impose substantive regulation on them and makes clear that the advisers and IARs are out of scope. It states that “[a] rule adopted under this act may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative.” (Emphasis added)

The Proposed Rule is a similarly substantive rule, aimed at the conduct of advisers and IARs (rather than their licensing and qualifications), and its application must thus be limited to non-Federal Covered Advisers and non-Federal Covered IARs. Any other reading would be inconsistent with NSMIA and the WS. We ask that the Secretary explicitly confirm that it does not intend for the Proposed Rule to try to reach Federal Covered Advisers or their IARs.

* * *

We appreciate your consideration of our comments on this important issue. Please do not hesitate to contact the undersigned at (202) 293-4222 if we can be of further assistance.

Respectfully Submitted,

Gail C. Bernstein
General Counsel

William A. Nelson
Associate General Counsel


The Honorable Gary Gensler, Chair
The Honorable Hester M. Peirce, Commissioner
The Honorable Caroline A. Crenshaw, Commissioner
The Honorable Mark T. Uyeda, Commissioner
The Honorable Jaime Lizárraga, Commissioner
William A. Birdthistle, Director, Division of Investment Management


[1] The IAA is the leading organization dedicated to advancing the interests of fiduciary investment advisers. For more than 85 years, the IAA has been advocating for advisers before Congress and U.S. and global regulators, promoting best practices and providing education and resources to empower advisers to effectively serve their clients, the capital markets, and the U.S. economy. The IAA’s member firms manage more than $35 trillion in assets for a wide variety of individual and institutional clients, including pension plans, trusts, mutual funds, private funds, endowments, foundations, and corporations. For more information, please visit

[2] See Notice of Intent to Adopt Rules, Chapter 10, Wyoming Code of Regulations (Aug. 2, 2023), available at Our comments apply to proposed amendments to Chapter 10, which applies to investment advisers and investment adviser representatives.

[3] 15 U.S.C. §§ 80b-1-80b-21 (Advisers Act).

[4] 002-10 Wyo. Code R. § 10-15.

[5] The IAA notes that there is currently a lawsuit challenging two new Missouri Securities Division rules that are substantially similar to the Proposed Rule.

[6] H.R. Rep. No. 104-622 at 16 (1996), available at

[7] See Rules Implementing Amendments to the Investment Advisers Act of 1940, SEC Rel. No. IA-1633 (May 15, 1997) (1997 SEC Release), at text accompanying n. 146, available at

[8] Under the Proposed Rule, “investment adviser” has the same meaning as under WY Stat. § 17-4-102(a)(xv).

[9] Advisers Act Section 203A(b). Indeed, when President Bill Clinton signed NSMIA into law, he stated that:

This legislation will more efficiently divide responsibility for regulation between the Federal and State governments. The SEC will be charged with responsibility for … large investment advisors. States will have responsibility for … investment advisors with smaller portfolios, while retaining their authority to take enforcement actions against fraudulent conduct in all situations.

Statement by President Clinton on signing H.R. 3005 at 1 (Oct. 11, 1996).

[10] The very fact of the savings clause in the Coordination Act that preserves antifraud investigation and enforcement authority for states manifests Congress’s intent that other authorities, including the authority to adopt any conduct regulations, are preempted. See 1997 SEC Release.

[11] 1997 SEC Release at text accompanying n. 152.

[12] See WY Stat. § 17-4-102. This would not prohibit the Secretary from investigating and bringing enforcement actions with respect to fraud or deceit, for example, acting under the general fraud authority in WY Stat. § 17-4-501.

[13] See WY Stat. § 17-4-502(b).

[14] Under the Proposed Rule, “investment adviser representative” has the same meaning as under WY Stat. § 17-4-102(a)(xvi).

[15] Under Advisers Act Rule 203A-1, an “investment adviser representative” is a “supervised person” (defined in Section 202(a)(25) of the Advisers Act) who has more than 5 clients who are natural persons and more than 10% of those clients are natural persons. Under Advisers Act Section 202(a)(25), a “supervised person” means any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.

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