If you’re a midsize firm and you have yet to switch your registration from the SEC to state regulators, your firm could be deregistered by the end of the year. Yes. Deregistered. And without warning.
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The deadline for switching registrations was June 30. There are approximately 250 firms who missed that deadline and are now subject to deregistration, although that number is dwindling as firms begin to comply.
The Dodd-Frank Act mandates that firms with between $25 million and $90 million in assets under management switch to state oversight. By the time the process is completed, there will be between 2500 and 2700 firms who have moved out from under the SEC.
State regulators have been trying to contact those who are late. Deregistration may not sound like anything to worry about but it is something that will go on your firm’s regulatory disclosures.
Deregistration, whether willfully neglectful or as the result of unwitting oversight,
can have unanticipated consequences. A recent case certainly gives some weight to that point.
So if you are subject to state regulation and still have not made the switch, now would be a good time to take action. Being proactive before becoming deregulated, even if you are past the deadline, is the smart thing to do. Stop whatever else you're doing and take care of this now.