Business Compliance Partners Provides Updated SEC to State Registration Transition Information

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Investment advisors with assets under management of between $25 million and $90 million that are currently registered with the Securities and Exchange Commission (“SEC”) will be required to switch to state registration if their principal office and place of business is in a state where investment advisors are required to be registered and are subject to examination by a state securities regulator.

Advisors registered with the SEC will have to show that they are permitted to remain registered by filing an amendment to their Form ADV Part 1 by March 30, 2012. Those no longer eligible for SEC registration will have until June 28, 2012 to complete the switch to state registration. Failure to meet this deadline may result in the advisor’s deregistration with the SEC. An estimated 3,200 investment advisors will be affected.

Advisors in the following circumstances will continue to be registered with the SEC:

  •     Investment advisors in New York (no state examination program) and Wyoming (does not

        require investment advisors to register)

  •     Investment advisors required to register in 15 or more states
  •     There are nine less common exceptions (Use the CIAR link below for more details)

Advisors that are required to re-register in four or more states may voluntarily participate in the Coordinated Investment Advisor Review program (“CIAR”) administered by the North American Securities Administrators Association (“NASAA”). CIAR is designed to coordinate and streamline simultaneous registration in several states.

Advisors can participate by first preparing and submitting an application form. Individual states will then be alerted to an advisor’s participation by a NASAA representative. The states will review registration materials and discuss internally any deficiencies with the documents. After completing their review, each state may elect to issue a deficiency/information request letter or collaborate on a joint request.

CIAR will be available until March 30, 2012. Further details and the application form may be found at http://www.nasaa.org/1719/ia-switch-resource-center/.

The SEC has imposed a “buffer” of between $90 million and $110 million so advisors don’t have to switch their registration back and forth. A state registered advisor may register with the SEC once assets under management reach $90 million but must do so when assets reach $110 million. To remain registered with the SEC an advisor must maintain at least $90 million in assets under management.

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Paul Cox

Chris Kosifas
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