Mid-Sized Investment Advisers Required to Register with the SEC Rather than New York Investor Protection Bureau

August 31, 2012

New York City houses one of the financial epicenters of the world so many may find it surprising that investment advisers with their principal office and place of business in New York are not subject to an examination by the New York Investor Protection Bureau.  The New York Investor Protection Bureau is charged with enforcing the New York State securities laws and requires investment advisers to register with the New York Attorney General’s Office.  Because the New York Investor Protection Bureau does not conduct examinations of investment advisers with a principal office and place of business who are registered with the New York Attorney General’s Office, the U.S. Securities and Exchange Commission (“SEC”) will handle the registration and examination of mid-sized investment advisers (investment advisers with between $25 million and $100 million of assets under management) with a principal office or place of business in New York.

Pursuant to new regulations under the Investment Advisers Act of 1940 (“Advisers Act”) that became effective in July of 2011 as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), mid-sized investment advisers are prohibited from registering with the SEC as an investment adviser if they are required to be registered as an investment adviser in the state in which the investment adviser maintains its principal office and place of business.  A mid-sized investment adviser was defined under the Dodd-Frank Act as an investment adviser that has assets under management between $25 million and $100.  However, a mid-sized investment adviser must register with the SEC: (i) if the investment adviser is not required to be registered as an investment adviser with the securities commissioner (or any agency or office performing like functions) of the state in which it maintains its principal office and place of business; or (ii) if registered with that state, the investment adviser would not be subject to examination as an investment adviser by that securities commissioner.  SEC staff contacted the state securities regulators for each state and based upon information provided by the state securities regulators New York was identified as a state that does not subject investment advisers registered with the New York Attorney General’s Office to examination.

While many mid-sized investment advisers were faced with switching from SEC to state registration earlier this year due to the new registration requirements under the Advisers Act resulting from the Dodd-Frank Act, the opposite may have been true for mid-sized investment advisers with a principal office and place of business in New York.  If an investment adviser with a principal office and place of business in New York was registered with the New York Attorney General’s Office at the time the investment adviser filed its Form ADV annual updating amendment and the investment adviser reported regulatory assets under management greater than $25 million, the investment adviser was required to register with the SEC.

If your investment adviser has questions about registration requirements or needs assistance with registration, RIA Compliance Consultants can help. If you already have a relationship with us, contact your compliance consultant to discuss your registration questions. If you need registration help and have not worked with RIA Compliance Consultants before please contact us to set up an appointment with one of our consultants.

Posted by Bryan Hill
Labels: How to Become RIA, Investment Advisor Registration, New York investment Advisor, Registration, SEC