Publisher Exclusion

A weekly newsletter recommends specific securities to paying subscribers. Which change would most likely cause its publisher to LOSE the exclusion from the definition of investment adviser?

1. A.The newsletter is sold by paid subscription rather than given away freeBeing paid for a publication does not end the exclusion. Bona fide publications are ordinarily sold, and compensation alone does not make the publisher an adviser.
2. B.The newsletter is published on a website instead of on paperThe medium does not matter. An electronic publication is evaluated under the same three conditions as a printed one.
3. C.The publisher begins tailoring recommendations to the individual circumstances of paying subscribersCorrect. Once the advice is personalized, it is no longer impersonal general commentary, and the publisher is acting as an investment adviser.
4. D.The newsletter recommends specific securities by nameGeneral, impersonal recommendations of named securities are exactly what a market newsletter does. The exclusion still applies as long as the advice is not individualized.

Why: The publisher exclusion protects bona fide publications of general and impersonal advice that circulate regularly and are not tailored to individual subscribers or timed to specific market events. Charging for the newsletter, naming securities, and publishing online all leave the exclusion intact. Personalizing the advice to a subscriber's own situation destroys it, because the publication is then giving individualized investment advice.

Four persons distribute investment material in State P: (1) Bellamy Market Weekly, a paid-subscription newsletter of general and regular circulation containing only impersonal market commentary; (2) a newsletter mailed only when its author believes the market has reached a turning point, with contents timed to those calls; (3) a commercial bank that advises trust customers; and (4) an accountant who charges a separate, distinct fee for asset allocation advice. Which is excluded from the definition of INVESTMENT ADVISER by the PUBLISHER exclusion?

1. A.(1) and (3)The bank is excluded from the definition, but under the bank exclusion, not the publisher exclusion.
2. B.(1) and (2)A newsletter timed to market events is not of regular circulation and falls outside the exclusion.
3. C.(1) onlyCorrect. Only the regularly circulated, impersonal publication satisfies the publisher exclusion.
4. D.(1), (3) and (4)The accountant charging a separate fee for advice loses the professional exclusion, and the bank relies on a different provision.

Why: The publisher exclusion covers a bona fide newspaper, news magazine or business or financial publication of general and REGULAR circulation. Bellamy Market Weekly qualifies: it is genuinely a publication, its advice is impersonal, and it goes out on a regular schedule rather than in response to market events. Item (2) fails because circulation timed to market conditions is not regular and looks like tailored advice. The bank in (3) is excluded, but by the separate BANK exclusion. The accountant in (4) has charged a special fee for advice, which defeats the professional exclusion.