All investment advisors should retrieve their Final Renewal Statements to verify the accuracy of this final reconciled statement. Investment advisors who’s Final Renewal Statement reflects an amount due must ensure that FINRA is in receipt of the full payment amount by no later than February 3, 2012. If an investment advisor’s Final Renewal Statement reflects a “Failed to Renew” status, you are advised to immediately contact each jurisdiction where your firm is required to be registered and/or notice field to determine the appropriate reinstatement procedures you must take.

If after reviewing your firm’s Final Renewal Statement, your firm discovers any discrepancies on the final statement, you must report, in writing, any errors to FINRA by February 3, 2012. With your letter of discrepancy, include a copy of your firm’s Final Renewal Statement and any supplemental documentation that would support your claim. If your renewal account had a credit balance as of January 3, 2012, the credit balance was transferred to your Daily Account. Investment advisors can leave the balance in the Daily Account for future needs or can request a refund. Instructions for requesting a refund can be found on the IARD website. For more information on the IARD renewal program, click here.

If you would like more information on how RIA Compliance Consultants may assist you with renewals, please click here to schedule a time to speak to one of our Senior Compliance Consultants. If you are an existing client of RIA Compliance Consultants, please contact your Senior Compliance Consultant directly.

As the renewal process begins to wrap up, most investment advisers should also be preparing for filing the annual Form ADV updating amendment. Investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) and state registered advisers must file a Form ADV annual amendment within 90 days of the investment adviser’s fiscal year. Between January 1, 2012 and March 30, 2012 all SEC registered investment advisers must file a Form ADV Part 1 amendment (annual amendment or other than annual amendment, as applicable) to confirm the investment advisers qualification to remain SEC registered or to indicate that the investment adviser is no longer eligible for SEC registration.  Investment advisers that are no longer eligible for SEC registration must register with the appropriate state regulator(s) and must file a Form ADV-W to withdraw registration with the SEC by June 28, 2011. Please note, an investment adviser’s failure to update Form ADV is considered an SEC violation or similar state rules violation and may result in the investment advisers registration being revoked.

If your investment adviser firm would like additional information in regards to RIA Compliance Consultants renewal service, annual amendment services, or services to assist with switching from SEC to state registration, please click here to schedule a time to speak to one of our Senior Compliance Consultants regarding our services.  If you are an existing client of RIA Compliance Consultants, you should contact your consultant directly to discuss how your consultant can assist you.

Most jurisdictions participate in the IARD Automatic Failure to Renew Program.  If your investment adviser firm or representatives are registered or noticed filed in a jurisdiction that participates in the IARD Automatic Failure to Renew Program, your jurisdiction has authorized FINRA to automatically terminate your investment adviser firm and investment adviser representative registrations on December 31, 2011 if your IARD account was not funded in full by the Renewal Deadline.  As of September 1, 2011, 44 Jurisdictions are participating in the IARD Automatic Failure to Renew Program.

Beginning November 14, 2011, firms may retrieve their Preliminary Renewal Statements using the IARD/Web CRD system. Your investment adviser’s Preliminary Renewal Statement will reflect the full payment your investment adviser firm must provide to FINRA by Monday, December 12, 2011. Investment adviser firms and representatives with an active “Approve” registration status will have a Preliminary Renewal Statement available.

If you would like help filing any necessary forms to your firm’s IARD account or want to discuss how RIA Compliance Consultants can assist you with your IARD renewals, click here to schedule a time to speak to one of our consultants.

All post-dated forms must be dated 12/31/2011 and all forms must be submitted by 6:00 p.m. Eastern Time (ET), December 23, 2011, in order for the firm to avoid paying 2012 registration renewals fees in jurisdictions where the firm or its investment advisor representatives need not renew. By filing a post-dated Form U5, an investment advisor representative can maintain registration(s) through the end of the calendar year. By filing a post-dated Form ADV-W, an investment advisor firm can maintain registration through the end of the calendar year.

Filing post-dated forms by November 11, 2011, will ensure that your investment advisor firm is not charged renewal fees on your firm’s Preliminary Renewal Statement for registrations that will be terminated at year-end. Firms that submit post-dated forms from November 14, 2011, through December 23, 2011, must pay the entire portion due on the Preliminary Renewal Statement, as the Preliminary Renewal Statement is calculated based upon the firm’s information available via IAPD as of November 11, 2011. However, those firms that have made filings between November 14, 2011, and December 23, 2011 to indicate any withdrawals of registration for the firm or its investment advisor representatives will be eligible to receive a refund of the fees paid for registration in jurisdictions which do not need to be renewed. The reconciled amount of renewal fees due will be reflected on the Final Renewal Statement that is available the first week of January 2012.

Please note that Form U5s, Form BR amendments, or Form ADV-W filings are processed by the IARD/Web CRD system upon submission and cannot be withdrawn once submitted.

About Form ADV-W

The Full Withdrawal Form ADV-W is used when an investment advisor firm is withdrawing registration with all regulators and indicates that the investment advisor firm is no longer operating as an investment advisor. State registered firms that must withdraw registration in one or more states, but will continue to operate in at least the firm’s home state, must file a Partial Withdrawal Form ADV-W. When switching from SEC to state registration (or state registration to SEC registration), a Partial Withdrawal Form ADV-W should also be used. After the Form ADV-W is submitted to withdraw SEC registration (including for the purpose of switching to state registration), the investment advisor firm’s notice filing status in any jurisdiction is automatically terminated. The IARD/Web CRD system will notify all applicable states that the investment advisor firm will no longer be making notice filings.

If you would like help filing any necessary forms to your firm’s IARD account or want to discuss how RIA Compliance Consultants can assist you with your IARD renewals, click here to schedule a time to speak to one of our consultants.

Although proper registration, notice filing, and licensing should be reviewed and monitored on an ongoing basis, during the annual renewal process all investment advisors are highly encouraged to review their existing registration or notice filing status and each investment advisor representative’s licensing status to determine if the investment advisor and its investment advisor representatives are properly registered, notice filed, or licensed (as applicable).  All registered investment advisors should also review the state requirements to see if branch office registration is required and, if it is, investment advisors should confirm that all branch office locations have been properly registered.  As of October 24, 2011, investment advisors may begin to submit Form U5s and Form BR Closing/Withdrawals via the IARD and/or Web CRD.  All post-dated forms must be dated 12/31/2011.

Here is a brief summary of some of the upcoming dates that your investment advisor should be aware of as it begins to prepare for the annual renewal process for your investment advisor firm and your investment advisor representatives:

• 11/1/2011-Firms may begin to submit post-dated Forms ADV-W. All forms must be post-dated 12/31/2011.

• 11/4/2011-All Transition Filing functionality for investment advisors is unavailable from 8 p.m. Eastern Time until 01/03/2012.

• 11/12/2011-IARD and Web CRD are unavailable as Preliminary Renewals Statements are generating.

• 11/14/2011-Preliminary Renewal Statements and reports are available for viewing and printing.

Click here for the full 2012 IARD Renewal Program Calendar.

Making necessary and early preparations for the annual renewal process can help streamline the event. Preliminary Renewal Statements must be paid, in full, by Monday, December 12, 2011. Because it takes approximately two days for payment to post to the IARD account, the funds should arrive no later than Thursday, December 08, 2011, to ensure the money is posted to your IARD account by December 12. If your investment advisor firm fails to pay its renewal fees in full, your investment advisor firm’s registration or notice filing status and investment advisor representatives’ licenses may be terminated effective December 31, 2011. An investment advisor that fails to properly renew its registration may face fines or further disciplinary actions for not being properly registered.

If your investment advisor needs assistance with the renewal process or determining if it is properly registered, RIA Compliance Consultants can assist you. Depending on your needs, RIA Compliance Consultants offers a variety of services to assist with the annual renewal process, preparing and filing the Form ADV Part 1 annual amendment, and switching from SEC to state registration (if applicable).  If you are an existing client of RIA Compliance Consultants interested in engaging us for assistance with these services, please contact your consultant to discuss the package options available. If you are a new client interested in these services, please click here to schedule a time to speak with one of our consultants.

RIA Compliance Consultants also wants to remind registered investment advisor firms of their obligation to update Form ADV on at least an annual basis in the form of an Annual Amendment. This is required under U.S. Securities and Exchange Commission (“SEC”) Rule 204-1 of the Investment Advisers Act of 1940 and similar rules of state securities regulators. The Form ADV Annual Amendment must be completed within 90 days after a registered investment advisor firm’s fiscal year end. This year, all SEC registered investment advisors must file an amendment by March 30, 2012 to indicate whether they are eligible to remain SEC registered. Since the majority of investment advisor firms coordinate their fiscal year end with the end of the calendar year, the Form ADV Annual Amendment has become a requirement that must be completed at the beginning of each year for most advisor firms. This will mean that the eligibility filing will be done with the fiscal year end filing for many firms but not all.

RIA Compliance Consultants can assist you with renewals and Form ADV amendment needs, which for many firms may include the switch from SEC to state registration this year. RIA Compliance Consultants will help your firm confirm its registration status in all necessary jurisdictions and confirm the registration status of all investment advisor representatives for 2012. We can also help you with any Form ADV amendment filings once we determine which type of filing is appropriate for your firm. If you are an existing client of RIA Compliance Consultants interested in engaging us for assistance with your renewals and Form ADV amendment filing, please contact your consultant to discuss the package options available. If you are a new client interested in these services, please click here to schedule a time to speak with one of our consultants.

Engagements for annual renewal services received by RIA Compliance Consultants after November 30 are subject to availability so contact us soon to discuss the available options!

*If you are an annual retainer client of RIA Compliance Consultants, renewal and Form ADV Annual Amendment Services are included in your retainer agreement. If you are required to switch from SEC to state registration you will need to contact your consultant to discuss service options. To learn more about our retainer services and fees, please contact your consultant or schedule a time to speak with one of our consultants via the link provided above.

• SEC registered advisers must continue to indicate if the firm has custody at Items 9.A.(1) and (b), but may now mark “No” if “a related person maintains client funds or securities as a qualified custodian but [the adviser has] overcome the presumption that [it is] not operationally independent (pursuant to Advisers Act rule 206(4)(2)-(d)(5)) from the related person.”
• Addition of Item 9.A.(2) to report the total dollar amount of client funds and securities as well as the total number of clients for which the adviser has custody.
• Addition of Item 9.B.(2) to report the total dollar amount of client funds and securities as well as the total number of clients for which the adviser’s related persons have custody.
• Addition of Item 9.C. for advisers to indicate whether a qualified custodian sends quarterly account statements and whether an independent public accountant conducts an annual audit, an annual surprise examination, or prepares an internal control report.  If the answer is in the affirmative with respect to any of the independent public accountant questions, the adviser is required to complete Section 9.C of Schedule D for each independent public accountant that fulfills those functions.
• Addition of Item 9.D. to report whether the adviser or related persons of the adviser act as a qualified custodian for adviser’s clients.  If the adviser has a related person that acts as a qualified custodian, the adviser must fill out Section 9.D of Schedule D for each related person that acts as a qualified custodian for the adviser’s clients.
• Addition of Item 9.E. to list the date of any surprise examinations conducted by an independent public accountant during the adviser’s previous fiscal year.

The SEC has modified Item 7.A.(1) so that now all related persons that are investment advisers, broker dealers, municipal securities dealers, or government securities broker or dealers mustbe listed on Section 7.A. of Schedule D.  The SEC commented that these changes will provide investors with additional safeguards and will provide “better information about the custodial practices of investment advisors.” 

Also, the CRD/IARD Software Release 2010.4 included an announcement that the increased disclosure period from two to ten years on FINRA BrokerCheck and on IAPD (Investment Adviser Public Disclosure) became effective November 6.  This means the general public will be able to view information for 10 years following the individual or firm’s departure from the industry.

Finally, accounting firms hired by investment advisers to conduct surprise verification examinations, in accordance with the custody rule, must now submit Form ADV-E and the accompanying accountant’s examination certificate online through IARD.  A Form ADV-E must also be submitted by the accounting firm within four days of its resignation or dismissal from, or other termination of, the engagement with the investment adviser, or removing itself or being removed from consideration from reappointment, Investment adviser firms will receive notification via email when an accountant submits a surprise examination report via Form ADV-E.

As you may know, the Financial Industry Regulatory Authority (“FINRA”) administers the IARD and CRD systems for investment adviser firms on behalf of the U.S. Securities and Exchange Commission and state securities regulators, and the Entitlement Program allows an investment adviser firm to access to the IARD and CRD systems for purposes such as filing the Form ADV and Form U4.  

In the past, FINRA required an investment adviser firm to designate a primary and secondary contact for the investment adviser firm’s Entitlement Program.  Now, an investment adviser firm must designate a single individual as the firm’s Super Account Administrator (“SAA”).  FINRA should have sent reminders regarding this requirement directly to the existing Account Administrator of your investment adviser firm.  The deadline for an investment adviser firm to submit the SAA form to FINRA is November 30, 2010.  If your investment adviser firm has not already established entitlements for an individual Super Account Administrator, you should complete and submit the SAA Form by no later than November 30, 2010. The SAA Form can be accessed by clicking here.

The Super Account Administrator will be FINRA’s sole contact for the investment adviser firm and will be responsible for ensuring that all FINRA Entitlement procedures and policies are followed.  The SAA will also be able to manage users’ accounts on behalf of the investment adviser firm.  Only one SAA is permitted per ID/CRD number. An investment adviser firm with multiple affiliates may designate the same SAA for each affiliate, but a separate SAA Entitlement Form is required for each affiliate.

The information published by the IAPD includes qualifications, such as licenses, professional designations, and any exams passed; previous employment, including a list of firms where the investment adviser representative was previously registered, as well as any employment within the last ten years both inside and outside the securities industry; and a disclosure section which details any customer disputes or disciplinary events on the investment adviser representative’s record.  The published information is obtained through Form U4, which is a registration and licensing form used by securities regulators to collect information about investment adviser firms and investment adviser representatives.  Both investment adviser firms and investment adviser representatives are required to ensure this information is accurate and up-to-date.

The Final Renewal Statement will indicate one of the following.

Paid in Full - If your firm’s renewal statement has been paid in full, the renewal process is complete. You should print a copy of the Final Renewal Statement and file it with your firm’s books and records.

Outstanding Balance Due or Refund - If your firm paid its Preliminary Renewal Statement in full, but added or removed a state registration or advisor representative during the time period between the posting of Preliminary Renewal Statements and the 2009 shut down period, then your firm will either have additional fees due or receive a credit. If additional fees are due, the fees should be submitted as soon as possible, but must be posted by February 5, 2010. If your firm received a refund, the credit will automatically be transferred to your firm’s Daily Account.

Failed to Renew - If a firm’s Final Renewal Statement indicates Failed to Renew, FINRA did not receive the total balance due on the Preliminary Renewal Statement prior to the December deadline. In these cases, it is standard operating procedure for FINRA to automatically terminate all advisor representatives of the firm. In addition, over thirty states have given FINRA the authority to automatically terminate a registered investment advisor 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.

It is important to make sure your registered investment advisor submits all required documentation directly to the states where the firm is registered. If your firm failed to renew through IARD, it is important to take immediate action to rectify the situation. Give us a call to find out more about our re- registration services and pricing.

In addition to confirming your firm’s registration renewal for 2010, we would like to remind registered investment advisors of their responsibility to prepare and file their Form ADV Part 1 Annual Amendment. The Annual Amendment must be filed no later than 90 days after a registered investment advisor firm’s fiscal year ends. Many registered investment advisors use December 31 as their fiscal year end which results in a March 30, 2010 deadline to submit the Annual Amendment through the IARD system. The Annual Amendment is used to update information such as number of clients, number of accounts, and assets under management. We recommend registered investment advisors closely review the entire Form ADV to confirm all information is correct.

SEC registered firms should be aware that the SEC and FINRA have reinstated the annual IARD Firm System Processing Fee. The fee is assessed for the electronic filing of forms on the IARD system. The IARD Firm System Processing Fee is separate from applicable state Notice Filing fees. It must be paid by SEC registered firm when filing the Annual Amendment. Firms can begin working on the Annual Amendment, but will need to fund their IARD Daily Account before they can submit the Annual Amendment.

Please refer to the following schedule to determine your firm’s annual fee and submit payment to your firm’s IARD Daily Account. Be sure to fund the Daily Account; do not fund the Renewal Account: (a) for assets under management of less than $25 million, there’s a fee of $40; (b) for assets under management between $25 million and $100 million, there’s a fee of $150; and (c) for assets under management over $100 million, there’s a fee of $200.

Please contact RIA Compliance Consultants, Inc. if you are interested in our Form ADV Annual Amendment services. We would also like to invite you to attend our upcoming webinar on January 14, “Preparing the Form ADV Part 1 Annual Amendment”. The registration fee for our webinar is $59.95. During this webinar, RIA Compliance Consultants will discuss the items that must be updated as part of the Form ADV Part 1 Annual Amendment including how securities regulators expect a registered investment advisor to calculate assets under management. In addition, we will review common mistakes when preparing the Form ADV Part 1 Annual Amendment. Finally, we will cover some common examples of material changes that should have been updated to your Form ADV during the past year.