Background: Cross-Border Oversight and Data Protection Laws
For many years, the U.S. Securities and Exchange Commission (SEC) has maintained that, in order to register a non-U.S. investment adviser firm under the Investment Advisers Act of 1940, it must be able to access the registrant’s books and records for examination purposes.
This requirement became more complex following the implementation of the European Union’s General Data Protection Regulation (GDPR) in 2018. The GDPR introduced stringent data privacy protections, including strict limitations on the cross-border transfer of personal data—particularly to non-EU regulatory authorities. In response, many countries outside the EU adopted similar laws, often referred to as GDPR-style privacy frameworks, to strengthen local data protection standards.
To ensure it could fulfill its oversight responsibilities, the SEC began pausing the processing of new registration applications from investment adviser firms with a principal place of business in foreign jurisdictions where it was uncertain whether it could lawfully obtain the information necessary to conduct examinations.
New Arrangement with Switzerland Allows SEC Registrations to Proceed
In June 2025, the SEC announced in Press Release No. 2025-83 that it had resumed processing new registration applications for investment advisers based in Switzerland. This decision followed the creation of a cooperative arrangement between the SEC and the Swiss Financial Market Supervisory Authority (FINMA).
This new framework allows the SEC to conduct oversight of Swiss-based registrants without violating Swiss privacy and data protection laws. Accordingly, Swiss investment advisers that had previously encountered registration delays or uncertainty may now resume the registration process with the SEC.
Why This Development Matters
Investment adviser firms located in foreign jurisdictions where cross-border privacy issues previously limited or prevented registration efforts can now reassess whether SEC registration is a viable strategic option.
In the absence of the SEC registration path, some investment adviser firms have relied on alternative structures to serve U.S. clients, including:
- Forming an affiliate with a principal place of business in the U.S. and registering at the state level;
- Advising a private fund as an Exempt Reporting Adviser (ERA); or
- Limiting advisory services to non-U.S. clients in order to avoid triggering SEC registration requirements.
Each of these alternatives carries its own regulatory, operational, and legal challenges. Depending on the specific circumstances, some of these alternatives may not be available or impose constraints that limit scalability or service flexibility. This blog post does not recommend or endorse any particular structure or strategy but instead encourages foreign adviser firms to carefully evaluate the current viability of SEC registration in light of recent developments.
While these structures may remain feasible depending on the firm’s business model, full SEC registration provides notable advantages, such as:
- The ability to serve U.S. clients across multiple states (through the highly efficient notice filing system and without the lengthy process of individual state registration);
- A uniform federal regulatory regime; and
- Increased credibility with certain institutional investors.
What to Consider Before Moving Forward
Foreign-based investment adviser firms contemplating SEC registration should take the following steps:
- Determine whether their jurisdiction now supports regulatory cooperation with the SEC that permits lawful access to books and records;
- Work with local and U.S. legal counsel to confirm that data disclosures to the SEC are permitted under domestic law and can be documented through legal opinions; and
- Understand the SEC compliance framework, including obligations under the Marketing Rule, the books and records rule, cybersecurity practices, and annual update requirements.
Progress for Switzerland with Continued Jurisdictional Review Elsewhere
This recent action by the SEC reflects a pragmatic approach that recognizes the importance of regulatory cooperation, while still honoring its statutory obligations. However, this is not a blanket opening to all jurisdictions with GDPR-style privacy and data protection laws, but rather a targeted outcome based on jurisdiction-specific legal accommodations permitting the sharing of U.S. client data with the SEC. For foreign investment adviser firms that previously deferred SEC registration due to privacy-based uncertainty, now may be the time to reassess.
Disclaimer and Disclosure
This regulatory alert is a summary which is general in nature and offered only for educational purposes. There is no warranty associated with this regulatory alert. It should not be considered as a comprehensive review or analysis of this development. There are certain requirements and exceptions outlined in the rule which are not covered in this regulatory alert. There may be additional obligations and nuances not covered here. Each investment adviser firm is unique, and specific guidance may be required to address your firm’s circumstances. This communication is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation without further analysis. This regulatory alert is not a safe harbor or a legal opinion. Merely reading this regulatory alert does not create an engagement with RIA Compliance Consultants, Inc. The reader should study the actual guidance, rule or enforcement action in detail and consult with his or her compliance professionals. This information in this regulatory alert may become out of date.
