The Investor Protection Bureau of the State of New York’s Office of Attorney General recently issued new guidance clarifying the state’s new process for registering investment adviser representatives (“IARs”). This guidance will be of particular interest to new and existing investment adviser representatives seeking registration in New York. Existing investment adviser representatives have until December 2, 2021 to comply with the registration requirement but must submit a Form U4 requesting investment adviser representative registration in New York on or before August 31, 2021.
RIA Compliance Consultants, Inc. recommends that all investment adviser representatives seeking IAR registration in New York closely review this guidance to ensure timely processing of their application by the state.
Guidance on Examination Requirements and Waivers
This guidance clarifies when an investment adviser representative applicant may be eligible for an examination waiver and when an examination must be taken and passed. Key points include:
- A “valid” Series 7, or SIE and S7TO, as indicated in CRD will satisfy the Series 7 examination requirement, regardless of the date of the examination.
- In contrast, New York requires IARs to have passed the Series 65 or Series 66 within the two years preceding the IAR’s application for registration in New York, or while such application is pending.
- Note that a Series 65 or Series 66 score designated as “valid” on CRD alone does not necessarily indicate that the applicant has met examination requirements in New York, since CRD does not have the same two-year requirement.
- In evaluating disclosure history for examination waiver requests, the NY Attorney General will focus primarily on civil and regulatory actions, proceedings and arbitrations listed in the applicant’s CRD disclosures and requiring a “Yes” response to Disclosure Questions 14C-14I on Form U4.
- Applicants generally will not trigger this exclusion where (1) the civil or regulatory action, proceeding or arbitration was denied or dismissed entirely by an impartial tribunal without settlement of any kind, or (2) the date of the action, proceeding or arbitration on the IAR’s CRD record—as determined solely by the state—occurred before the applicant passed the Series 65 or Series 66 examination.
- Disclosures existing on the applicant’s CRD record at the time NY IAR registration is granted to such applicant generally will not trigger an exclusion for examination waiver purposes in subsequent applications.
- The phrase “continuously registered” under 11.7(a) allows for aggregation of consecutive time periods of RA registration with different firms regardless of the state where the IAR was registered.
- Until December 2, 2023, IARs who have obtained registration through an 11.7(b) special waiver and who subsequently request IAR registration with a new employer but who do not have two years of registration in any jurisdiction will be deemed to have been “continuously registered” under 11.7(a).
- An applicant’s CRD record must reflect compensated affiliation with either a state registered investment adviser, a federally covered investment adviser or a dual-registered firm for the duration of the time period required under the rule.
- Uncompensated affiliation or affiliation with an entity other than those listed above (e.g., a non-dually registered broker dealer) would not qualify for the waiver.
In addition, the guidance lists common deficiencies and the appropriate response an IAR should take in response to such deficiencies.
Guidance on 13 NYCRR 11.18
This guidance discusses the factors the NY Attorney General will consider when determining whether to deny suspend, condition, or revoke an application of an investment adviser representative, solicitor, or principal “in the public interest for good cause.” Generally, the NY Attorney General expects applicants to demonstrate honesty, integrity, good faith, fair dealing, and lawful behavior.
The NY Attorney General may consider:
- whether the applicant violated any provision of the Martin Act;
- whether the applicant has violated Executive Law section 63(12) by engaging in repeated fraudulent or illegal acts or demonstrating persistent fraud or illegality in the conducting of business;
- whether the applicant has complied with governing federal law and SEC or FINRA rules;
- whether the applicant would be subject to discipline under the Uniform Securities Act or the Blue Sky laws of any other state;
- whether the applicant has been subject to any criminal conviction, or court or administrative order related to securities or commodities;
- whether the applicant is associated with other concerning disclosure history on CRD; and
- whether the applicant has already been found to have violated any law, rule or order, is under investigation for such violation or has failed to cooperate with any investigation.
To read the New York Guidance on Examination Requirements and Waivers in its entirety, click here. To read the Guidance on 13 NYCRR 11.18, click here.
If your state registered or SEC registered investment adviser firm is an existing client of RIA Compliance Consultants and has questions about New York investment adviser representative registration, we encourage you to speak with your compliance consultant. Or, if you are not an existing client of RIA Compliance Consultants, click here to set up an introductory call with our Business Development Team.
Attorney General James Continues to Modernize and Streamline Investment Adviser and Securities Filings in New York State
New York IAR Licensing – Updated Investment Adviser Compliance Manual Section – February 22, 2021
New York IAR – Special CRD Exam Waiver Window Opens 02/27/2021 – February 16, 2021
New York Investment Adviser Representative Registration Requirement Now Effective – February 1, 2021
New York Adopts Investment Adviser Representative Registration Rule – December 7, 2020
Proposed Rule to License New York Investment Adviser Representatives – April 15, 2020
Mid-Sized Investment Advisers Required to Register with the SEC Rather than New York Investor Protection Bureau – August 31, 2012
New York Investment Advisor Firm & Investment Adviser Representative State Registration Requirements
Frequently Asked Questions – Series 65 Examination
The information contained in this blog post is general in nature intended for educational purposes only and is not intended to be a comprehensive analysis of this topic. It is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation. For more information, please see our Disclosures webpage.
Posted by RCC
Tagged: IAR Licensing, IARD, Investment Adviser Representative, New York Investment Advisor, Series 65