Bryan Hill is President and founder of RIA Compliance Consultants, Inc., which consists of a team of compliance consultants that assist registered investment advisors with meeting their regulatory obligations. | Follow-up Information for the Webinar, “The Switch Is On Again For RIAs” |
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| Friday, August 26, 2011 19:58 | ||
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A lot of important information regarding the upcoming requirement for mid-sized advisors to switch from SEC to state registration was provided during the recent webinar, “The Switch is On Again for RIAs”, hosted by Advisor4Advisor and presented by Tammy Emsick of RIA Compliance Consultants. Therefore, we would like reiterate a few of the main points presented during this webinar.
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Investment advisors with less than $25 million in assets under management will continue to be state registered and advisors that qualify for SEC registration will continue to notice file with the appropriate state regulatory authorities. Investment advisors with assets under management between $25 million and $100 million (“mid-sized advisors”) will need to switch from SEC to state registration unless the advisor is not required to be registered as an investment advisor with the state securities authority in the state where it maintains its principal office and place of business; the advisor is not subject to examination as an advisor in the state where it maintains its principal office and place of business; or the advisor qualifies for an exemption under Rule 203A-2 of the Investment Advisers Act of 1940.
The following are the key dates that all investment advisors currently registered with the SEC will need to be aware of:
Mid-sized advisors may be able to start applying for registration with state securities regulators at this time, but the investment advisor should first check with the appropriate state securities regulator(s) to make sure the state will not object to the investment advisor´s dual registration as an investment advisor with the state securities regulator and the SEC until the firm is able to withdraw from SEC registration after January 1, 2012. Every state securities regulator has its own investment advisor registration requirements and additional documentation may be required to be submitted along with the Form ADV. In the SEC final rule release regarding the switch, the SEC indicated that they estimate approximately 3,200 SEC registered investment advisors will be required to withdraw their registrations and register with one or more state securities authorities. This will likely mean that state regulators are going to be extremely busy reviewing registration applications during the first six-months of 2012. Investment advisors that need to switch to SEC registration should plan accordingly so that they will meet all of the required deadlines.
Finally, investment advisors that switch to state registration must keep in mind that along with making changes to the Form ADV, advisors’ client agreements and written supervisory procedures will probably need to be updated.
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