As we first reported on this blog site in September, the North American Securities Administrators Association (NASAA) held a forum, through its Investment Adviser subcommittee, to discuss transition issues for Mid-Sized Advisers under the Dodd-Frank Wall Street Reform Act. As we approach the annual December moratorium on new registrations and renewals, it seems appropriate to review and comment on some of NASAA’s suggestions.
The first step that any Mid-Sized Adviser should take should be to contact his or her state regulatory agency to determine whether it has adopted special rules, forms, or timetables for use. However, the NASAA committee generally provided the following procedure that its state members intended to follow:
Step One: Commence state registration through filing an other than annual updating amendment during December 2011, but remain pending until after the beginning of 2012. (This will require coordination with state examiners to insure that the switch does not become effective prematurely, but was the committee’s stated preference.)
Step Two: As early as possible in the first quarter of 2012, complete the state registration process and become effective in the state or states in which the adviser is registering.
Step Three: Before June 28, 2012, file a PARTIAL Form ADV-W withdrawing SEC registration only. It is important to remember to file the annual updating amendment within 90 days of the end of the fiscal year (for most firms, by March 31, 2012).
NASAA is conducting coordinated reviews for new applicants applying in four or more states. The NASAA panelists urged Mid-Sized firms to remember that, since this is a new registration, some issues with the applicant may need to be worked through before approval can be given. This is the reason why NASAA ultimately recommended commencing the process in December 2011. Any firm that waits until 2012 to apply risks having the approval delayed by having to correct deficiencies, or just through backlogs.
In addition to providing hands-on training in certain states, NASAA also doled out “tool kits” to each member. These kits contain basic information, deadlines, recommendations, and similar information to help firms with the transition.
Parker MacIntyre 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.