FERC Clarifies Requirement for Advance Approval of Public Utility Company Stock Acquisition by Investment Advisers


In a late November meeting, in response to a request for a disclaimer of jurisdiction by a registered investment adviser, the Federal Energy Regulatory Commission (“FERC”) clarified and confirmed its jurisdiction under the Federal Power Act over the purchase, acquisition or holding of more than $10 million of stock in any public utility or public utility holding company by certain financial investment advisory companies. It ruled that any investment adviser that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the voting securities of any public utility company or holding company of a public utility company is itself a holding company that must then obtain Commission authorization prior to acquiring additional securities of the same or any other utility company valued at more than $10 million. Further, according to the statement of FERC Chairman Kelliher released along with the decision, this jurisdiction specifically includes “the circumstance in which a financial investment advisor itself is not a security account holder, the security account holders have delegated the power to vote securities to the investment advisor, and the investment advisor defers to another entity to actually vote the securities but reserves the right to override the recommendations of that entity.” Horizon Asset Management, Inc. 125 FERC ¶ 61,209 (2008).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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