Two states have created a time-table to help mid-sized firms make the switch from Securities and Exchange Commission (SEC) supervision to state regulated supervision. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection (Dodd-Frank) Act, those investment advisers with $100 million or less but more than $25 million in assets under management will be required to register with the state or states in which they do business instead of the SEC. We have already discussed the switch in Mid-Sized Advisers Should Have Already Commenced Transition. Both Iowa and Missouri are helping mid-sized firms in their state by creating time-tables and providing guidance for the transition.
Recently, Iowa sent out a notice about the transition from SEC to state registration. The notice included a time-table which showed that investment advisers must file an amendment with the SEC updating the amount of assets under firm management by March 30, 2012. Next, advisers must apply for registration with each state jurisdiction in which they are required to register as soon as possible. Finally, they have to file a partial ADV-W to withdraw from SEC registration by June 28, 2012. The notice then continues to explain that if investment advisers are required to register in more than three but fewer than 15 states then they are eligible to participate in a Coordinated Review Program that is sponsored by the North American Securities Administrators Association (NASAA), Inc. The Coordinated Review Form can be found at http://www.nasaa.org/industry-resources/investment-advisers/coordinated-review/.
The Missouri Secretary of State, Robin Carnahan, also issued an advisory release intended to provide guidance to investment advisers that have to make the switch to state registration. The Missouri Securities Division conducts a Pre-Registration Examination of each applicant to analyze the application materials of investment advisers and evaluate the applicant’s advisory business. The Missouri Securities Division expects to receive 120 applications between March 30 and June 28. Those investment advisers who send in their application toward the end of the period risk having to withdraw from SEC registration before being approved for registration in Missouri. The advisory release recommends that investment advisers should apply for registration with the SEC soon after filing their assets under management amendment, which should have been completed by March 30, so that the Securities Division will have enough time to evaluate their application. Finally, the release also discusses the NASAA’s Coordinated Review Program.
Parker MacIntyre, LLC provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds and issuers of securities, among others. Our regulatory practice group assists financial service providers with the complex issues that arise in the course of their businesses, including compliance with federal and state laws and rules.