Is It Time to Register with the SEC?
It's likely that your investment advisor firm is currently working on its Form ADV annual amendment since it must be filed within ninety (90) days after an advisor's fiscal year end. You should pay particular attention to updating the firm's assets under management since regulators have stated an advisor's assets under management must be current as of the firm's most recently completed fiscal year.
Once you've calculated your investment advisor's assets under management, you must determine whether your firm will need to change from a state to SEC registration or conversely from an SEC to state registration. When a firm's assets exceed $30 million, the firm must be registered directly with the SEC. A firm with assets under $25 million must register with the applicable individual states. If a firm's assets under management are between $25 million to $30 million, the firm can choose between SEC or state registration.
If your firm's assets under management now exceed $30 million (or are significantly above $25 million) for the first time, do you know the steps that must be taken to register with the SEC? Has your firm developed a code of ethics and set of written supervisory policies and procedures? Are you ready for an SEC examination? If you need help calculating assets under management, completing the Form ADV annual amendment or filing your registration with the SEC, please give us a call.
Once you've calculated your investment advisor's assets under management, you must determine whether your firm will need to change from a state to SEC registration or conversely from an SEC to state registration. When a firm's assets exceed $30 million, the firm must be registered directly with the SEC. A firm with assets under $25 million must register with the applicable individual states. If a firm's assets under management are between $25 million to $30 million, the firm can choose between SEC or state registration.
If your firm's assets under management now exceed $30 million (or are significantly above $25 million) for the first time, do you know the steps that must be taken to register with the SEC? Has your firm developed a code of ethics and set of written supervisory policies and procedures? Are you ready for an SEC examination? If you need help calculating assets under management, completing the Form ADV annual amendment or filing your registration with the SEC, please give us a call.
Labels: Registration
posted by bhill at 3:13 PM
Final Renewal Statements and Web CRD/IARD Functionality
Beginning Tuesday, January 3, 2006 advisor firms will be able to retrieve their Final Renewal Statements via the Web CRD/IARD system. It is important that all advisor firms review their Final Renewal Statement to ensure its accuracy. The Final Renewal Statement will indicate one of three things.
1. Paid in Full - If your firm's renewal statement has been paid in full, your renewal process is complete. You should print a copy of the Final Renewal Statement and file it with your firm's books and records.
2. Outstanding Balance Due or Refund - If you firm paid its Preliminary Renewal Statement in full, but added or removed a state registration or advisor representative during the time period from November 21 through December 21, then your firm will either have additional fees due or receive a credit. If additional fees are due, the fees must be submitted to your Renewal Account by February 1. If your firm received a refund, the credit will automatically be transferred to your firm's Daily Account.
3. Failed to Renew - If a firm's Final Renewal Statement indicates Failed to Renew, the NASD did not receive the total balance due on the Preliminary Renewal Statement prior to the December 14 deadline. In these cases, it is standard operating procedure for the NASD to automatically terminate all advisor representatives of the firm. In addition, over thirty states have given the NASD the authority to automatically terminate an advisor firm that does not pay its renewal fees in full. If your firm's statement indicates Failed to Renew, you will need to contact each state jurisdiction immediately to determine an appropriate course of action.
In addition to the Final Renewal Statements availability on January 3, the Web CRD/IARD form filing functionality will resume and advisor firms will be able to submit any pending Form U4 and Form ADV filings. Regulatory authorities will also be able to resume approving registrations of advisor firms and representatives.
Additional information about the 2006 Renewal Season can be attained at the IARD website.
1. Paid in Full - If your firm's renewal statement has been paid in full, your renewal process is complete. You should print a copy of the Final Renewal Statement and file it with your firm's books and records.
2. Outstanding Balance Due or Refund - If you firm paid its Preliminary Renewal Statement in full, but added or removed a state registration or advisor representative during the time period from November 21 through December 21, then your firm will either have additional fees due or receive a credit. If additional fees are due, the fees must be submitted to your Renewal Account by February 1. If your firm received a refund, the credit will automatically be transferred to your firm's Daily Account.
3. Failed to Renew - If a firm's Final Renewal Statement indicates Failed to Renew, the NASD did not receive the total balance due on the Preliminary Renewal Statement prior to the December 14 deadline. In these cases, it is standard operating procedure for the NASD to automatically terminate all advisor representatives of the firm. In addition, over thirty states have given the NASD the authority to automatically terminate an advisor firm that does not pay its renewal fees in full. If your firm's statement indicates Failed to Renew, you will need to contact each state jurisdiction immediately to determine an appropriate course of action.
In addition to the Final Renewal Statements availability on January 3, the Web CRD/IARD form filing functionality will resume and advisor firms will be able to submit any pending Form U4 and Form ADV filings. Regulatory authorities will also be able to resume approving registrations of advisor firms and representatives.
Additional information about the 2006 Renewal Season can be attained at the IARD website.
Labels: Renewals
posted by bhill at 2:22 PM
End of Year Compliance Items - Part 3
This is the third entry in a series of blogs RIA Compliance Consultants is posting concerning annual compliance requirements and end of year filings. While we are trying to touch upon the items that all advisor firms are required to complete, it is important that you refer to your regulatory authority to ensure you have an all inclusive list of the requirements your firm must meet. If your firm has questions or concerns about one of the items listed in this entry, please give us a call to discuss how we can help your firm meets its regulatory obligations.
Written Compliance Programs - The end of the year is a great time to complete a written review of your firm's compliance and procedures program. While we feel that a written compliance program should be reviewed continuously and updated whenever needed, regulators require advisor firms to review and update their compliance programs at least annually. Again, the key is to document those reviews. Once a review is completed, employees should be made aware of the changes and required to sign off on their understanding and acknowledgement of the policies. Even if no changes are made, we suggest that all employees agree to their understanding and acknowledgement of the firm's policies and procedures, in writing, each year.
Code of Ethics - The SEC and many states require advisor firms to have a Code of Ethics. Even if your firm does not require its employees to acknowledge their understanding of its compliance programs on an annual basis, all SEC firms must require all employees to read and agree to abide by the firm's Code of Ethics on an annual basis. The Code of Ethics must be reviewed by the firm on annual basis and if needed, updated. It is important to document any changes to the Code of Ethics and document each employee's agreement to abide by the code. Under the SEC's rule, a firm must include the review of employee's personal securities and its insider trading policy under the Code of Ethics.
Personal Securities Transactions - All SEC advisor firms must collect or prepare updated personal securities holdings reports from all access persons. The information on the report must be current as of a date no more than 45 days before the report is submitted. The annual report does not need to be done at the end of the calendar year; however, the timing of the report must be consistent from year to year. The holdings report is in addition to the review of fourth quarter transaction reports. As part of the Code of Ethics rule, all SEC advisor firms are required to review the activity of their access persons' securities holdings. Quarterly transaction reports must be submitted no later than 30 days after the end of each calendar quarter.
Compliance Training for Representatives and Employees - The end of the year is great time to hold compliance training for all employees and representatives. This is because many firms implement new policies or advisory programs set to take effect at the beginning of the year. Any time a new rule or program is implemented, it is imperative that proper training be provided so all employees are aware of the changes. While we recommend more frequent training sessions or meetings, an annual process is essential in today's regulatory landscape.
Written Compliance Programs - The end of the year is a great time to complete a written review of your firm's compliance and procedures program. While we feel that a written compliance program should be reviewed continuously and updated whenever needed, regulators require advisor firms to review and update their compliance programs at least annually. Again, the key is to document those reviews. Once a review is completed, employees should be made aware of the changes and required to sign off on their understanding and acknowledgement of the policies. Even if no changes are made, we suggest that all employees agree to their understanding and acknowledgement of the firm's policies and procedures, in writing, each year.
Code of Ethics - The SEC and many states require advisor firms to have a Code of Ethics. Even if your firm does not require its employees to acknowledge their understanding of its compliance programs on an annual basis, all SEC firms must require all employees to read and agree to abide by the firm's Code of Ethics on an annual basis. The Code of Ethics must be reviewed by the firm on annual basis and if needed, updated. It is important to document any changes to the Code of Ethics and document each employee's agreement to abide by the code. Under the SEC's rule, a firm must include the review of employee's personal securities and its insider trading policy under the Code of Ethics.
Personal Securities Transactions - All SEC advisor firms must collect or prepare updated personal securities holdings reports from all access persons. The information on the report must be current as of a date no more than 45 days before the report is submitted. The annual report does not need to be done at the end of the calendar year; however, the timing of the report must be consistent from year to year. The holdings report is in addition to the review of fourth quarter transaction reports. As part of the Code of Ethics rule, all SEC advisor firms are required to review the activity of their access persons' securities holdings. Quarterly transaction reports must be submitted no later than 30 days after the end of each calendar quarter.
Compliance Training for Representatives and Employees - The end of the year is great time to hold compliance training for all employees and representatives. This is because many firms implement new policies or advisory programs set to take effect at the beginning of the year. Any time a new rule or program is implemented, it is imperative that proper training be provided so all employees are aware of the changes. While we recommend more frequent training sessions or meetings, an annual process is essential in today's regulatory landscape.
Labels: Code of Ethics, Compliance Program, Compliance Training, PST
posted by bhill at 2:17 PM
End of Year Compliance Items - Part 2
This is the second entry in a series of blogs RIA Compliance Consultants is posting concerning annual compliance requirements and end of year filings. While we are trying to touch upon the items that all advisor firms are required to complete, it is important that you refer to your regulatory authority to ensure you have an all inclusive list of the requirements your firm must meet. If your firm has questions or concerns about one of the items listed in this entry, please give us a call to discuss how we can help your firm meet its regulatory obligations.
Financial Statements - If your advisor firm is registered with one or more states, you may be required to submit certain financial statements to the state regulators on an annual basis. Many states have certain net worth or net capital requirements. Some states also have surety bond requirements. Most states that have these provisions require advisor firms to substantiate they are in compliance with the rules by submitting financial statements. In some cases the financial statements must be submitted at the end of the firm's fiscal year and in some states the financial records must be submitted at the end of the calendar year. In addition to any forms the firm may have to submit directly to regulators, it is essential the firm has updated all of its financial records under the regulatory books and records requirements. This is true for state and SEC registered advisor firms.
Form ADV Annual Amendment - The SEC and almost all states require advisor firms to amend their Form ADV on at least an annual basis in the form of an Annual Amendment. The Annual Amendment must be completed within 90 days after an advisor firm's fiscal year end. Since the majority of advisor firms coordinate their fiscal year end with the end of the calendar year, the Annual Amendment has become a requirement that must be completed at the beginning of each year for most firms. The main item that must be updated on the Annual Amendment is the firm's assets under management. Other items such as, but not limited to, the number of accounts, clients, employees, and advisor representatives should also be updated. The Annual Amendment can also be used to disclose any material changes. Keep in mind, however, that material changes need to be disclosed within 30 days no matter when they take place. Material changes include items such as, but are not limited to, reportable disciplinary and financial disclosures, changes in advisory programs, changes in fee arrangements and changes in billing practices.
Outside Business Activities and other Form U4 Amendments - The end of the year is a great time to remind all employees and advisor representatives to officially disclose their outside business activities to the firm. The disclosure of outside business activities must be done for three important reasons. Those reasons are to ensure the individual's Form U4 is current and up to date, ensure the firm's Form ADV does not need to be amended due to an individual's business activities, and finally, so the firm can determine if an individual's outside activities are in conflict with the firm's policies and in conflict with a client's best interests. In addition to disclosing outside business activities, updating other items on the Form U4 must also be completed when those items are materially inaccurate.
Financial Statements - If your advisor firm is registered with one or more states, you may be required to submit certain financial statements to the state regulators on an annual basis. Many states have certain net worth or net capital requirements. Some states also have surety bond requirements. Most states that have these provisions require advisor firms to substantiate they are in compliance with the rules by submitting financial statements. In some cases the financial statements must be submitted at the end of the firm's fiscal year and in some states the financial records must be submitted at the end of the calendar year. In addition to any forms the firm may have to submit directly to regulators, it is essential the firm has updated all of its financial records under the regulatory books and records requirements. This is true for state and SEC registered advisor firms.
Form ADV Annual Amendment - The SEC and almost all states require advisor firms to amend their Form ADV on at least an annual basis in the form of an Annual Amendment. The Annual Amendment must be completed within 90 days after an advisor firm's fiscal year end. Since the majority of advisor firms coordinate their fiscal year end with the end of the calendar year, the Annual Amendment has become a requirement that must be completed at the beginning of each year for most firms. The main item that must be updated on the Annual Amendment is the firm's assets under management. Other items such as, but not limited to, the number of accounts, clients, employees, and advisor representatives should also be updated. The Annual Amendment can also be used to disclose any material changes. Keep in mind, however, that material changes need to be disclosed within 30 days no matter when they take place. Material changes include items such as, but are not limited to, reportable disciplinary and financial disclosures, changes in advisory programs, changes in fee arrangements and changes in billing practices.
Outside Business Activities and other Form U4 Amendments - The end of the year is a great time to remind all employees and advisor representatives to officially disclose their outside business activities to the firm. The disclosure of outside business activities must be done for three important reasons. Those reasons are to ensure the individual's Form U4 is current and up to date, ensure the firm's Form ADV does not need to be amended due to an individual's business activities, and finally, so the firm can determine if an individual's outside activities are in conflict with the firm's policies and in conflict with a client's best interests. In addition to disclosing outside business activities, updating other items on the Form U4 must also be completed when those items are materially inaccurate.
Labels: Compliance Program, Financial Statements, Form ADV, Outside Business Activities
posted by bhill at 2:08 PM
