Colorado Investment Advisor Firm & Investment Adviser Representative State Registration Requirements

Similar to other states, a firm seeking to register as a state registered investment advisor in Colorado is required to file the Form ADV Part 1 and Part 2 along with any applicable schedule or appendix through the Investment Adviser Registration Depository (“IARD”) system and correspondingly pay in advance the registration fees via the IARD system. Additionally, a firm applying for state registration as an investment advisor in Colorado is required to send the miscellaneous documents identified below directly to the Colorado Division of Securities. Here is a brief summary of certain requirements of an investment advisor firm registering in Colorado.

Registration Fees:

• Initial State Registration of Investment Advisor Firm: $80
• Renewal State Registration of Investment Advisor Firm: $80
• Investment Adviser Representative Registration: $16

Initial Forms and Information Required to Register:

• Investment Advisor Firm
  • Form ADV; and
  • Investment advisory client agreement(s).
• Investment Adviser Representative
  • Form U4

Compliance Supervisor

Colorado requires investment advisor firms to designate one individual as having supervisory responsibilities over the investment adviser representatives of such investment advisor firm.

Net Capital or Bonding Requirements

There is currently no net capital or bonding requirement of an investment advisor firm registered with the Colorado Securities Division.

Custody Requirements

The only investment advisor firms required to file financial statements with the Colorado Securities Division are those firms that have custody of client funds and/or securities or those firms that have been specifically requested to submit financial statements by the Colorado Securities Division.

Colorado also follows the U.S. Securities and Exchange Commission’s custody requirements for an investment advisor:

No investment advisor with its principal office and place of business in this state or investment adviser representative of a licensed investment adviser with a place of business in this state shall take or maintain custody or possession of any funds or securities in which any client of such person has any beneficial interest unless:

(a) All of the securities of each client are segregated, marked to identify the particular client with any beneficial interest therein, and held in safekeeping in some place reasonably free from risk of loss, damage, or destruction; and

(b) (I) All of the funds of each client are deposited in one or more accounts, containing only clients’ funds, at a depository institution; and

(II) Each account is maintained in the name of the investment adviser or a federal covered adviser as agent or trustee for such clients; and

(III) A separate record is maintained for each such account that shows the name and address of the depository institution where the account is maintained, the dates and amounts of deposits to and withdrawals from the account, and the exact amount of each client’s beneficial interest in the account; and

(c) Written notification is sent to the client giving the place and manner in which the client’s funds or securities will be maintained immediately after the investment adviser or investment adviser representative accepts custody or possession of such funds or securities from the client and thereafter, if and when there is any change in the place or manner, written notification is sent to the client explaining the change; and

(d) An itemized statement is sent to each client, at least once every three months, that shows the client’s funds and securities in the custody or possession of the investment adviser or investment adviser representative at the end of the period and all debits, credits, and transactions affecting the funds and securities during the period; and

(e) A certified public accountant or, with the prior written consent of the client, a public accountant verifies all funds and securities of clients at least once during each calendar year through an actual examination. Such examination shall be at a time chosen by the accountant without prior notice to the investment adviser or investment adviser representative. The investment adviser shall file with the securities commissioner promptly after each such examination a certificate from the accountant in which such accountant avers to the commissioner that the accountant has performed an examination of the funds and securities accounts, and in which the accountant describes the nature and extent of the examination, and the results and conclusions reached.

(f) The investment adviser or investment adviser representative who has custody of client funds or securities posts bonds in amounts and with conditions the securities commissioner may by rule prescribe, subject to the limitations of section 222 (c) of the federal “Investment Advisers Act of 1940”. Any equivalent deposit of cash or securities shall be accepted in lieu of any bonds so required. Every bond shall provide for suit thereon by any person who has a cause of action under section 11-51-604 (3) and (5).

Additional Information

Colorado Department of Regulatory Agencies Division of Securities