As the approaching deadline nears for mid-size investment advisers (those with assets under management between $25 and $99 million) to switch from U.S. Securities and Exchange Commission (“SEC”) registration to state registration, many state securities regulators are making preparations for increased regulatory oversight. As these efforts are taking place, the North American Securities Administrators Associations (“NASAA”) recently released “an updated series of recommended best practices that investment advisers should consider to minimize the risk of regulatory violations.” These best practices were developed after a series of coordinated examinations were conducted between January 1, 2011 and June 30, 2011. Examinations were conducted by 45 state and provincial securities examiners of 825 investment advisers. According to Jack Herstein, NASAA President and Assistant Director of the Nebraska Banking and Finance Department, Bureau of Securities, “Our goal in identifying deficiencies and recommending best practices is to help investment advisers strengthen their internal compliance programs and improve the services they provide to clients.”
Category Archives: Switch from SEC to State
Notice for Mid-Sized Investment Adviser Firms Transitioning to California State Registration
October 17, 2011
On October 7, 2011 the California Department of Corporations issued a notice to mid-sized investment adviser firms transitioning to California state registration. According the release, current investment adviser firms that are regulated under the U.S. Securities and Exchange Commission (“SEC”) that are considered mid-sized investment adviser firms (with assets under management between $25 and $100 million), are highly encouraged to file as soon as possible the appropriate state application and paperwork to transition to regulation under the State of California. The California Department of Corporations is anticipating a “high volume of transition applications, which will be reviewed in the order received.” The release also advised investment adviser firms to respond promptly to any requests for additional information and/or application revisions. The release highlighted some important dates for investment advisers to note:
With the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), mid-sized investment adviser firms (firms with assets under management between $25 million and $100 million in assets under management) will now be required to switch from federal to state regulation. One of the anticipated outcomes resulting from this change that should be notice by all registered investment advisers is more frequent regulatory examinations. As stated by the North American Securities Administration 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 had experienced before. Most advisers should find that thorough inspections and strong internal compliance benefit customer and firm alike.” Additionally, in a study conducted by the staff of the U.S. Securities and Exchange Commission (“SEC”) under the requirements of Section 914 of the Dodd-Frank Act, released January, 2011, it was indicated that, “The Staff expects that the frequency of examinations of registered investment advisers could increase following the effective date of Title IV as a result of a substantial decrease in the number of registered investment advisers, many of whom will transition from federal to state registration.”
A lot of important information regarding the upcoming requirement for mid-sized advisors to switch from SEC to state registration was provided during the recent webinar, “The Switch is On Again for RIAs,” hosted by Advisor4Advisor and presented by Tammy Emsick of RIA Compliance Consultants. Therefore, we would like reiterate a few of the main points presented during this webinar.
The “Switch” Webinar Hosted by advisors4advisors.com
August 12, 2011
Join our senior compliance consultant, Tammy Emsick, as she discusses the upcoming regulatory switch for mid-sized investment advisors in today’s advisors4advisors.com webinar. To join click here. Note: advisors4advisors.com does require users to register as a member; however, members of advisors4advisors.com can replay any webinar 24/7.
Frequently Asked Questions About the Switch of Mid-Sized Investment Advisors from the SEC to State Securities Regulators
August 02, 2011
Click here to view our answers to frequently asked questions about the switch of mid-sized investment advisors from the SEC to state securities regulators.
SEC Publishes Frequently Asked Questions Regarding Switch of “Mid-Size” Investment Advisers
July 21, 2011
The U.S. Securities and Exchange Commission (“SEC”) posted a webpage with frequently asked questions regarding the switch of “mid-size” investment adviser ($25 million to $100 million of assets under management) from the SEC to state securities regulator(s).
Maintaining Investment Advisor Books and Records
July 12, 2011
A registered investment advisor is required to make and keep true, accurate, and current certain books and records relating to its investment advisory business. For investment advisors registered with the U.S. Securities and Exchange Commission (“SEC”), these required books and records are outlined in Rule 204-2 of the Investment Advisers Act of 1940 (“Advisers Act”). Each investment advisor registered with the SEC should familiarize itself with the requirements of Rule 204-2 in relation to the documents and reports that need to be maintained, where and for how long the documents must be maintained, and how the documents may be maintained. Most books and records requirements for state registered investment advisors are the same as or similar to the SEC requirements, but you need to make sure that you familiarize yourself with the requirements of the appropriate regulatory authority for your investment advisor.
Kansas Securities Commissioner Issues Guidance Regarding SEC’s New Switch Rule for Mid-Size Investment Advisers
July 07, 2011
On July 5, 2011, the Kansas Securities Commissioner issued a letter to investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) that are also notice filed in Kansas regarding the SEC’s new rule switching mid-size investment advisers (with assets under management between $25 million to $100 million) from the jurisdiction of the SEC to state securities regulators.
