SEC Investment Advisors: Time for a Final AUM Calculation

June 01, 2012

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With the deadline for “the Switch” approaching, investment advisors that are currently registered with the U.S. Securities and Exchange Commission (“SEC”) should conduct one final calculation of their assets under management (“AUM”) to ensure that their investment advisor remains eligible for SEC registration.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act investment advisors with between $25 million and $100 million of regulatory assets under management are required to switch from the SEC to state registration.   Specifically, if an investment advisor that is currently SEC registered does not have $90 million in AUM then they are required to become registered with the appropriate state(s) and withdraw their SEC registration by filing a Form ADV-W by no later than June 28, 2012.  After June 28, the SEC will cancel the registration of investment advisors that are no longer eligible to remain registered with the SEC.  After this June 28th deadline, if an investment advisor that is no longer eligible for SEC registration has not registered with the appropriate states, the investment advisor will not be able to conduct business until its registration is approved.

If you have questions about how to calculate your assets under management, the SEC has provided detailed guidance in their instructions for Form ADV Part 1A, Item 5.F. The SEC uses a multi-level test to determine what investment advisory client assets should be reported as assets under management.  For a detailed discussion about this multi-level test, click here.

RIA Compliance Consultants can assist you with switching from SEC to state registration.  If you are an existing client of RIA Compliance Consultants interested in discussing how we can assist your investment advisor, please contact your consultant. If you are a new client that would like to speak with us regarding the services we can provide, please click here to schedule a time to speak with one of our consultants.

Posted by Bryan Hill
Labels: Assets Under Management, SEC, Switch from SEC to State