Compliance Solutions for Investment Advisers

Category Archives: Registration & Licensing

Why is the IARD Closed on Weekends?

The entire world puts in some work time over the weekend. Why can’t the IARD system be up and running? For that matter, it should be accessible 24/7. After all, it is a computer system. My computer works round the clock. Anyway, it would be especially helpful during the registration renewal period.

2 Most Common Registration Deficiencies

The 2 most common registration deficiencies: Inconsistencies in responses to similar items found on Part 1 and Part 2 of Form ADV (e.g., Item 8C of Part 1A indicates that the adviser does not have investment discretion, but the adviser then discusses its discretionary authority in Item 16 of Part 2A). Inadequate or incomplete disclosures

Don’t Exaggerate AUM

Assets under management is a defined term on Form ADV. Don’t exaggerate to stay registered with the SEC. The SEC has enforcement actions underway against multiple SEC-registered advisory firms that puffed up their assets.

Common Registration Deficiencies

Applicants for investment adviser registration should not only be concerned about the accuracy of their firm’s primary registration documents (i.e., Form ADV Part 1 and Part 2A), but also that these documents, along with the firm’s advisory agreements, are consistent amongst each other. The most common areas of inconsistency are as follows: The types of

Check Those U-4s – They are Probably Outdated

Are you really at the same weight you were in 2003? You would be positively amazed at how quickly the information on the Form U-4 can become outdated. Why? Because unlike the ADV 1, you can renew an investment adviser representative’s Form U-4 by just paying your registration renewal fees. There is no system requirement

Massachusetts to Check Criminal Backgound

The Office of the Secretary of the Commonwealth, Securities Division is registered under the provisions of MASS. GEN. LAWS c. 6, § 172 to receive and review Criminal Offender Record Information (“CORI”) for the purpose of screening current registrants and otherwise qualified prospective registrants.   Subsequent to January 1, 2014 and pursuant to a change in

Venture Capital Guidance Update

On December 2, 2013, the SEC’s Division of Investment Management issued a new “Guidance Update” that provides some important interpretive guidance on the exemption from registration under the Investment Advisers act of 194 for certain venture capital fund advisers (the VC Exemption).  In particular, the Guidance Update clarifies that certain structures and practices common in

IARD User Fees

IARD user fees are always a source of confusion. That is because advisers swear up and down that they paid their renewal fees and this additional fee must be a mistake. But IARD user fees are separate and apart from your renewal fees. Renewal fees take care of your firm’s various registrations (e.g., state, notice

New Private Equity Registration Exemption??

The U.S. House of Representatives is expected to vote on legislation that would  exempt certain private equity fund advisers from U.S. Securities and Exchange Commission (“SEC”) registration and reporting rules. The Dodd-Frank Act significantly changed the adviser registration requirements. As a result, many advisers to private investment funds, including private equity funds, must register with

Annual Registration Renewal Starts Tomorrow

Tomorrow starts the registration renewal period. You need to log on to your IARD account and get a copy of your Preliminary Renewal Statement. Payment is due by December 13th, but we suggest paying well in advance. You have your choice of one of the 3 following payment methods: 1.  E-BILL E-Bill enables your firm

Don’t Confuse Titles With Licenses

The SEC and state securities regulators are warning investors to not rely solely on a financial professional’s title to determine whether the person has the expertise they need. In a joint Investor Bulletin, released Wednesday, the SEC and the North American Securities Administrators Association warn investors to ensure that they are working with a financial professional

Changes to Massachusetts IAR Registration?

On March 15, 2013, the Massachusetts Securities Division (the “Division”) filed regulations proposing amendments with respect to investment adviser representative (“IAR”) applications.  If made effective, the IAR application process would change and may affect your firm’s registration process for all future IAR applications filed with our office. Specifically, the proposal would require an applicant, as

Annual Renewal Deadline

. . . is April 1st this year because March 31st falls on a Sunday.

SAA Entitlement Certification

Even though you may get a message from FINRA to the contrary, investment advisory firms with only one registered investment adviser do not have to go through the annual SAA certification process. In fact, you can’t.

Annual Entitlement Certification

Just a reminder that the annual super account administrator certification begins this coming Monday (Jan. 14th).

Super Account Administrator

Important News from FINRA: As you may be aware, one of your responsibilities as your firm’s Super Account Administrator (SAA) is to complete the annual FINRA Entitlement User Accounts Certification Process. This certification process–which for 2013 begins Jan. 14 and ends Feb. 13–requires a review of your firm’s user accounts and appropriate action to ensure

Common Deficiencies

In order to provide state-registered investment advisers with a better understanding of what they need to do to “stay out of trouble” we analyzed all the state-level compliance material (e.g., examination request lists, deficiency letters, policy notices, speeches) we have assembled over the years to develop a list of compliance issues that are of greatest

SEC Versus State Registration

We have always contended that it is far easier to register as an investment adviser with the SEC than it is with most any state. Counterintuitive though it may be, registration with the SEC requires the filing of ONLY two documents (e.g., the ADV Part 1 and Part 2A). When registering as an investment adviser

California Requirements

For those SEC-registered advisers transitioning to registration in the State of California, you need to include the following two disclosures in your ADV Part 2A: “XYZ Advisors has disclosed all material conflicts of interest under section 260.238(k) of the California Code of Regulations regarding the firm, its representatives and its employees which could be reasonably

Choice of Law

California is requiring an adviser that is transitioning its SEC registration to state registration in multiple states to change the choice of law provision in its advisory agreement from its home state (not California) to California. Does anyone know of any requirement under either the investment adviser regulations or corporate regulations that require this? I