My previous post discussed the new range of choices in Item 2 for SEC registration. While most of the options were already familiar, the “large adviser” and “mid-sized” adviser options were new. This post discusses the attendant changes to the … Continued
Item 2 is the section of Form ADV Part 1 that determines whether an adviser is eligible to register (or remain registered) with the SEC. To implement the new prohibition on registration for mid-sized advisers (e.g., those advisers with between … Continued
Dear Compliance Professional, The adoption by the SEC of a series of rules intended to effectuate certain provisions of the Dodd-Frank Wall Street Reform Act has ushered in many significant changes for investment advisers. Some of those changes (e.g., the … Continued
Spoke at length with a state regulator the other day. His exact quote: “Registration transition is going to be complete chaos.”
GET STARTED EARLY The state process can be quite protracted under ordinary circumstances. There will be nothing ordinary when thousands of transitioning advisers begin to overwhelm limited state resources.
NET CAPITAL REQUIREMENTS Determine if any net capital or net worth requirements apply. Usually, advisers with custody (even if it is only custody as a result of direct fee deduction) have to meet certain net capital requirements. Some states will … Continued
DOCUMENTS Determine what documents must be filed as part of the state registration process, review and update those documents if you already have them and/or draft new documents if necessary. States have very specific rules about what should be in … Continued
DETERMINE STATES OF REGISTRATION One of things you can do now to help ease your transition from SEC registration to registration with one or more states is determine the state(s) in which you must register. Seems obvious, huh? Just wait. … Continued
REGISTER FIRST – WITHDRAW SECOND The most important thing to remember about transitioning from SEC to state registration (other than to actually do it if you have less than $90 million in AUM) is do not – repeat, do not … Continued
We now know that at the $90 million asset under management threshold, approximately 3,300 SEC-registered advisers will be required to transition to registration with one or more states. Quite a few of these transitioning SEC advisers are positively giddy with … Continued
Recently enacted SEC rules have clarified the assets under management requirement for SEC registration. While $100 million in AUM is the figure that has caught everybody’s attention, the actual workings of the new threshold are a bit more complicated. If … Continued
Dear Compliance Professional, I hope this finds all of you and your families up and down the East Coast safe and sound. Earthquakes and hurricanes – two phenomena not usually associated with this neck of the woods (or Colorado, for … Continued
From the Massachusetts Securities Division: The Massachusetts Securities Division (the “Division”) is adopting, as amended from the original proposals, regulations found at 950 CMR 12.200 et. seq. (the “Regulations”). With the exception of 950 CMR 12.205(9)(c)(16), the adopted regulations shall … Continued
Dear Compliance Professional, The Compliance Alert below was originally sent out in 2008. Unfortunately, recent market events make the subject matter relevant once again. We will also be sending out other pertinent Compliance Alerts from 2008-2009. Background The purpose of … Continued
Dear Compliance Professional, Dodd-Frank is certainly keeping us all busy. On July 12, 2011, the SEC issued an order adopting changes to the standard for charging clients a performance fee. Background The Advisers Act generally prohibits an investment adviser from … Continued
Dear Compliance Professional, The recently adopted SEC rules and rule amendments refer to an adviser’s “regulatory assets under management.” This new terminology distinguishes the assets reported in Form ADV Part 1 from the assets under management disclosure that advisory clients … Continued
Dear Compliance Professional, The rules adopted by the SEC last week provided much needed clarity to both the new assets under management (AUM) threshold for SEC registration and the required transition of certain “mid-sized” SEC-registered investment advisers to state registration. … Continued
The Massachusetts Securities Division is currently conducting a social media survey of state-registered investment advisers. The first section asks whether you utilize any of listed sites, how long you have used such site(s), how many times in the last 12 … Continued
Last week, the SEC proposed adjusting the financial thresholds used to define a “qualified client” for purposes of the performance compensation rules under the Advisers Act, generally raising the net worth test from $1.5 million to $2 million and the … Continued
On April 21, 2011, the Massachusetts Securities Division released for comment proposed regulations that would affect registered investment advisers operating in Massachusetts. Investment Adviser Discretion and Custody Requirements The Division proposes to modify the minimum financial requirements for investment advisers … Continued