Kansas Securities Commissioner Issues Guidance Regarding SEC’s New Switch Rule for Mid-Size Investment Advisers

July 07, 2011

On July 5, 2011, the Kansas Securities Commissioner issued a letter to investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) that are also notice filed in Kansas regarding the SEC’s new rule switching mid-size investment advisers (with assets under management between $25 million to $100 million) from the jurisdiction of the SEC to state securities regulators.

The letter confirmed that the Office of the Kansas Securities Commissioner conducts investment adviser examinations, including a thorough review of investment adviser applications before becoming effective.  As a result, a mid-size investment adviser with a principal place of business in the State of Kansas will be required to register as a state investment adviser with the Kansas Securities Commissioner, unless it meets an exemption permitting SEC registration.

The Kansas Securities Commissioner is encouraging any mid-size investment adviser moving to state investment adviser registration under the SEC’s new “switch” rule to provide the required documents as early as possible so the Office of the Kansas Securities Commissioner can complete a review of these registration documents before the June 28, 2012 deadline to withdraw from SEC registration.

The Office of the Kansas Securities Commissioner will allow a mid-size investment adviser to request that its application to register as a state registered investment adviser be kept in a pending status until the mid-size investment adviser is ready to withdraw its investment adviser registration with the SEC.  This will avoid dual federal and state registration as an investment adviser.  However, an investment adviser will need to send a letter to the Office of the Kansas Securities Commissioner requesting the wavier of the Kansas statutory requirement that an investment adviser’s application to register to become effective on the 45th day after it is filed.  If the state investment adviser application is pending at the time that the mid-size investment adviser files the required SEC amendment (between January 1, 2012, and March 30, 2012), the mid-size investment adviser will need to notify the investment adviser/broker-dealer registration manager at the Office of the Kansas Securities Commissioner.

Posted by Bryan Hill
Labels: Form ADV, SEC, Switch from SEC to State