The following are frequently asked questions by investment adviser firms regarding the annual renewal of the registration and notice filings of investment adviser firms and investment adviser representatives via the IARD and CRD systems. The answers are general in nature and do not cover all aspects or scenarios related to IARD renewals. Please refer to the instructions by the IARD system and your state securities regulator for definitive guidance. An investment adviser firm should also understand that IARD renewal deadlines vary from year to year, and an investment adviser firm should refer to the IARD renewal calendar published by IARD.com for the deadline in a particular year.
Each year registrations/notice filings/licenses of an investment adviser firm and its investment adviser representatives expire at the end of the calendar year unless renewed, and the term “IARD renewals” refers to the process for an investment adviser firm to renew such registrations/notice filings/licenses and pay the applicable regulatory fees. An investment adviser firm’s renewal fees are renewed and collected in two phases: Preliminary Renewal Statement; and Final Renewal Statement.
The Preliminary Renewal Statement reflects all approved registrations/notice filings for which an investment adviser firm has not submitted Post-Dated Termination filings. The Preliminary Renewal Statement reflects the total amount of renewal fees due as of the issuance date (November 11, 2019 for calendar year 2020) and includes the following: system processing fees; firm state registration, exempt reporting status, or notice filing renewals with the applicable jurisdictions; branch registration filing renewals with the applicable jurisdictions; and investment adviser representative (IAR) registration renewals with applicable jurisdictions.
The Preliminary Renewal Statement is typically available in the IARD system during early November. An investment adviser firm should check IARD.com for each year’s renewal program calendar for the exact date when the Preliminary Renewal Statement will be available. For calendar year 2020, the Preliminary Renewal Statement is available November 11, 2019.
As you review your investment adviser firm’s Preliminary Renewal Statement, you should consider whether your investment adviser firm desires to terminate a firm-level investment adviser state registration or state notice filing so it can receive a regulatory fee refund.
In order to receive a refund on the Final Renewal Statement, your investment adviser firm must file the withdrawal request (Post-Dated Termination Notice) via the IARD system by no later than the last day in the calendar year for IARD filings (for example, you will need to file no later than Thursday, December 26, 2019 to receive a refund for calendar year 2020). Your investment adviser firm will not receive partial or pro-rata refunds for withdrawing state registrations and state notice filings on or after the first business day of the new calendar year (January 2, 2020 for calendar year 2020); no refunds will be issued by the state securities regulator if the Form ADV-W or Form ADV Amendment is filed after the last-day IARD filing date (December 26, 2019 for calendar year 2020).
Although your investment adviser firm may file such a Form ADV-W or Form ADV amendment removing the state registration or notice filing, your investment adviser firm still must pay the Preliminary Renewal Statement in full, by the due date for Preliminary Renewal Statements (Monday, December 16, 2019 for calendar year 2020). You will not receive credit for any refunds until the Final Renewal Statement.
Any changes to your investment adviser firm’s Representative Roster Report and/or list of approved states made between the date that the Preliminary Renewal Statement was issued (November 11, 2019) and the last day to submit form filings for the calendar year (December 26, 2019) will be reflected on your firm’s Final Renewal Statement available via the IARD system starting on the date that the Final Renewal Statement is issued (Thursday, January 2, 2020 for calendar year 2020). In order to receive a refund, all termination and withdrawal filings must be filed through the IARD/Web CRD system no later than the final day for IARD filings in the calendar year (Thursday, December 26, 2019). For example, if your investment adviser firm adds a state now, your investment adviser firm will be charged an initial fee now and will also be charged that state’s renewal fee on the Final Renewal Statement. If you want to remove a state and receive a regulatory fee refund, you must file to withdraw a state by no later than Thursday, December 26, 2019.
The Representative Roster Report lists the individual investment adviser representatives (individually “IAR” or collectively “IARs”) licensed under your investment adviser firm.
You should compare the Representative Roster Report with the renewal statement to ensure each IAR is correctly licensed under your investment adviser firm and in the state jurisdiction(s) where the IAR needs to be licensed. If an IAR needs to add or remove a registration in a state, an amendment to the Form U4 or Form U5 is required to be filed with the state securities regulator.
Your investment adviser firm should take prompt action if there is an individual listed as an investment adviser representative on the Representative Roster Report that is no longer affiliated with your investment adviser firm. A Form U5 must be submitted via the Web CRD system to terminate the individual’s registration and must be submitted no later than last filing date for the calendar year (Thursday, December 26, 2019) if your investment adviser firm desires a refund of the 2020 renewal fee from the state. (See our Representative Term Checklist which provides tasks to perform when an investment adviser representative’s affiliation is terminated with the investment adviser firm.)
Your investment adviser firm needs to act if there is an individual not listed on the Representative Roster Report that should be registered with a state regulator as an investment adviser representative under your investment adviser firm. A Form U4 must be submitted to register the individual under your investment adviser firm in the proper jurisdiction. An initial state-filing fee will be assessed upon submission of the Form U4 and a renewal fee will be assessed on the Final Renewal Statement if the investment adviser representative is approved by the state regulator before the end of the year. (See our Prospective Representative Checklist – Compliance Issues which includes various compliance issues which may be relevant in determining whether to affiliate with a prospective investment adviser representative.)
A Post-Dated Termination Notice is a filing requesting termination (for a registration or notice filing) effective last day of the year (December 31, 2019) for an investment adviser firm which does not intend to renew the registration or notice filing for the subsequent calendar year. By filing a Post-Dated Termination Notice, an investment adviser firm is able to avoid paying the regulatory fee on the Final Renewal Statement. Post-dated filings are only permitted during certain periods of the year. See the applicable renewal calendar (2020 Renewal Program Calendar) for current dates. Once submitted, a Post-Dated Termination Notice cannot be “reversed.” If an investment adviser firm would like to re-request a jurisdiction, the investment adviser firm must submit the appropriate filing on or the first business day of the subsequent calendar year (January 2, 2020).
For calendar year 2020, full payment of the Preliminary Statement must post to your investment adviser firm’s Renewal Account by Dec. 16, 2019, even if your investment adviser firm intends to terminate additional investment adviser representatives before the end of the year. All payment methods may take up to two business days to process. Therefore, an investment adviser firm should make sure all payments are received at least two business days before the deadline. For calendar year 2020, an investment adviser firm should make sure payments are received by FINRA by no later than December 12, 2019.
There are four (4) options for an investment adviser firm to pay renewal fees under the Preliminary Renewal Statement and Final Renewal Statement: (1) automatic Flex-Funding -Account transfer; (2) payment by check; (3) payment through Ebill; or (4) payment by wire transfer. There are nuances and special requirements associated with each method of payment. You should review IARD.com for additional details.
Failure to remit full payment of an investment adviser firm’s Preliminary Statements by the due dates will cause the investment adviser firm and it is investment adviser representatives to become ineligible to do business in the jurisdictions where it is registered effective the start of the new calendar year and/or required to re-apply for registration as an investment adviser with the applicable securities regulator.
An investment adviser firm’s Final Renewal Statement reconciles what was charged on the Preliminary Renewal Statement with what is actually owed as the start of the new calendar year (January 1, 2020). The Final Renewal Statement confirms whether an investment adviser firm must pay an additional amount, received a refund (i.e. credit) to its Flex-Funding Account or is Paid-inFull.
The Final Renewal Statement is typically available for an investment adviser firm on the first business day of the new calendar year. An investment adviser firm should check IARD.com for each year’s renewal program calendar for the exact date when the Final Renewal Statement will be available. For 2020 renewals, the Final Renewal Statement will be available to an investment adviser firm on January 2, 2020.
When reviewing the Final Renewal Statement, an investment adviser firm should confirm whether the renewal fees have been paid in full or whether additional funds are required to be paid. The investment adviser firm should also confirm that the investment adviser firm and its investment adviser representatives are properly registered or noticed filed in the applicable jurisdictions.
If the Final Renewal Statement indicates “Failed to Renew”, an investment adviser firm will need to contact immediately each applicable state securities regulator to determine what will be required by the state securities regulator.
If an investment adviser firm owes additional fees on the Final Renewal Statement, the investment adviser firm must pay by the Final Renewal Statement’s due date (for 2020 renewals, the due date is January 17, 2020). An investment adviser firm should check IARD.com for each year’s renewal program calendar for the exact date when payments are due for the Final Renewal Statement.
The Super Account Administrator (“SAA”), Chief Compliance Officer (“CCO”) (as listed at Item 1.J. of Form ADV Part 1A, and Additional Regulatory Contact (“ARC”) (as listed at Item 1.K. of Form ADV Part 1A) will receive automated annual renewal notices from FINRA. However, any “Account-User” of your investment adviser firm’s IARD/Web CRD account can create IARD renewal email alerts in E-Bill section of the IARD account to receive additional, more specific notices and alerts. The email alerts sent to your investment adviser firm’s account-users can include notifications about renewal statements, deadlines, or confirmation that your investment adviser firm has paid its renewals in full. Account-Users, including the SAA, CCO, and ARC do not automatically receive all the available alerts; an Account-User must subscribe for the various email alerts. For more details about the features of the E-Bill section of your investment adviser firm’s IARD account, visit E-Bill Frequently Asked Questions (FAQ) at https://www.finra.org/filing-reporting/e-bill/faq#alerts
Yes, certain state securities regulators require its state-registered investment adviser firms to submit annual financial statements and/or other documents directly to the state securities regulator (outside of the IARD/CRD system).
Requirements vary significantly among states – some state securities regulators require all state registered investment adviser firms filed in the state to submit an annual financial statement while other state securities regulators may only require the submission of an annual financial statement if the investment adviser firm has a principal place of business in the state, maintains investment discretion or is deemed to have custody of client assets.
These annual submissions (outside of the IARD/CRD system) of the financial statement and/or other documents to a home state securities regulator are most commonly due at the end of the calendar year (December 31) or within 90 days of the end of an investment adviser’s fiscal year. However, each state has its own deadline, so it is important to check directly with the states where your investment adviser firm is registered.