Category Archives: Switch from SEC to State

Florida’s Office of Financial Regulation Securities Division Reports on Investment Adviser Registrations Due to Switch

October 25, 2012

In a recent article in the Florida Current, it was reported that 315 investment adviser firms have applied for state registration with Florida’s Office of Financial Regulation Division of Securities due to the new rule of the U.S. Securities and Exchange Commission (“SEC”) requiring mid-sized investment adviser firms to switch from SEC to state registration.  Despite  four administrative positions being cut in the Division of Securities and the resignation of the director of the Division of Securities, Florida’s Office of Financial Regultion reports that it has approved 149 of the 157 Florida based investment adviser firms that have applied for state investment adviser registration due to the switch; however, there was no reference in the article as to how many of the out-of-state investment adviser registration applications due to the switch that have been approved by the Florida Division of Securities.

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SEC Announced Plans to Cancel Registration for Approximately 300 Investment Advisers Due to Failure to File Form ADV Amendments Related to Switch

October 24, 2012

On October 19, 2012, the U.S. Securities and Exchange Commission (“SEC”) issued a release indicating that the SEC intended to cancel the registrations of approximately 300 investment advisers due to failure to file an amendment to their Form ADV in the first quarter of 2012 indicating whether the firm remained eligible for registration with the SEC or who submitted an amended Form ADV indicating that they are no longer eligible to remain registered with the SEC as an investment adviser but have not filed the Form ADV-W to withdraw their registration.

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De-registration Looms for Mid-Sized Financial Advisers that Have Not Filed

July 05, 2012

Mid-sized investment adviser firms that did not register with one or more state securities regulators by the June 28, 2012, deadline are in danger of being de-registered by the U.S.  Securities and Exchange Commission (SEC) as early as this week.  However, the first wave of terminations may not occur until September according to a staff member from the SEC who spoke with one of our Senior Compliance Consultants earlier this year.  Investment advisers that did not file an amendment to Form ADV Part 1 confirming their registration status by the March 31, 2012, deadline and/or have not filed a state registration application, if no longer SEC eligible; face the highest risk for untimely termination.

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State Registered Investment Advisers Should Expect Increase in Examinations After the Switch

June 21, 2012

As we have discussed in a previous newsletter article, investment advisers switching registration from the U.S. Securities and Exchange Commission (“SEC”) to state securities regulators are likely to see an increase in examinations. According to the North American Securities Administrators Association (“NASAA“), “firms switching to state regulation for the first time can expect thorough inspections generally on a more frequent basis than they may have experienced before.”

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Constitutionality of State Securities Regulators Reporting to Investment Adviser SRO

June 12, 2012

H.R. 4624, the Investment Adviser Oversight Act of 2012, (“Investment Adviser Oversight Act”) proposes creating a self-regulatory organization (“SRO”) for investment advisers. Currently, the U.S. Securities and Exchange Commission (“SEC”) has primary oversight of federally registered investment advisers and state securities regulators have primary oversight of state-registered investment advisers. As a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), state securities regulators have begun serving as the primary regulator for investment advisers with up to $100 million of assets under management. Those investment advisers with more than $100 million are regulated primarily by the SEC. The Investment Adviser Oversight Act, if passed, creates an SRO for all investment advisers to report to, including those at the state level. H.R. 4624 as it stands now would also require state securities regulators to report to an investment adviser SRO annually to make sure that the states are meeting standards.

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SEC Investment Advisors: Time for a Final AUM Calculation

June 01, 2012

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.

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Investment Advisors Should Prepare for Increased Regulatory Examinations

March 21, 2012

By now, registered investment advisors affected by the changes to Rule 203A-5 under the Investment Advisers Act of 1940 (“Rule 203A-5”), mid-sized investment advisor firms (firms with assets under management between $25 million and $100 million), should have begun the process of switching from registration with the U.S. Securities and Exchange Commission (“SEC”) to state registration.  Mid-sized advisor firms making the switch must keep in mind that filing the Form ADV Part 1 amendment and submitting an application for registration with the appropriate state regulatory agencies is just the first step in the process of making the switch from SEC to state registration.  A registered investment advisor must familiarize itself with the regulatory requirements of the SEC or state securities regulators, as applicable, and make sure that appropriate procedures are in place for complying with these requirements.  For a mid-sized advisor this will mean reviewing and making sure that it is complying with the appropriate state rules and regulations versus those of the SEC.

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Approaching Deadlines for Mid-Sized Investment Advisors

March 20, 2012

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act passed on July 21, 2010, the U.S. Securities and Exchange Commission (“SEC”) is required to issue rules generally requiring “mid-sized investment advisors”, which is an investment advisor with between $25 million and $100 million of regulatory assets under management, to switch from the SEC to state registration.   The intent of the new rule is to reallocate primary regulatory oversight of mid-sized investment advisors to the state securities regulators. The SEC’s new rule became effective July 21, 2011.

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Investment Advisor Firms Registered with the SEC Required to Confirm Eligibility with First Quarter ADV Amendment Filing

November 02, 2011

Earlier this year, the U.S. Securities and Exchange Commission (“SEC”) adopted Rule 203A-5 to implement changes to SEC registration criteria, including increasing the assets under management threshold for SEC registration from $25 million to $100 million. In order to convert to the new standards for SEC registration, the SEC is requiring all investment advisor firms registered with the SEC on January 1, 2012, to file a Form ADV Part 1A amendment by no later than March 30, 2012. Each investment advisor firm will be required to report the market value of its assets under management (determined within 90 days of the filing of the amendment) and to specify if the investment advisor firm remains eligible for SEC registration. If it is determined that the investment advisor firm is not eligible to remain registered with the SEC, the investment advisor must withdraw from SEC registration by submitting a Form ADV-W by no later than June 28, 2012.  If the investment advisor firm intends to continue operations, then the investment advisor firm’s registration must be approved by state regulators before the firm withdraws its SEC registration.

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2011 Review – Are You Aware of the Regulatory Changes Made in 2011?

October 27, 2011

For registered investment advisors, 2011 gave way to many changes as various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) became effective. Understanding the changes made over this past year may help to confirm that your investment advisor is in compliance with the recent regulatory changes. Below is a brief overview of some of the regulatory changes that occurred during this past year.

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