Due to the Dodd-Frank legislation, as of mid-2012, there are rules for registration eligibility that are primarily determined by a firm’s assets under management (“AUM”). For all firms below $100 million AUM, registration is required with the appropriate state jurisdictions. For all firms above $100 million AUM, registration will be at the SEC level. In order to account for fluctuations in AUM, the SEC has imposed, by rule, a buffer for Investment Advisers with AUM between $90 million and $110 million. An adviser may register with the SEC once it reaches AUM of $100 million. An adviser much register with the SEC if it’s AUM is $110 million or more. Once registered with the SEC, a mid-size adviser can remain registered with the SEC as long as its AUM is at least $90 million.
There are other factors to consider, to determine whether a firm should be registered with the state or the SEC. Investment advisers will remain under SEC oversight, regardless of AUM, if the firm is exempt from reporting. Examples include: Foreign Private Advisers, Exempt Reporting Advisers, Venture Capital Funds, Qualifying Private Funds.
Investment advisers in New York must register with the SEC if their AUM numbers exceed $25M and all Wyoming firms are required to register with the SEC. Investment advisers required to register in 15 or more states can register with the SEC.
|Less than $25M||State Registration|
|Between $25M and $100M||SEC or State registration|
|Between $90M and $110M||May register once $100M acquired; must register at $110M.|
|More than $110M||SEC registration|
The SEC has taken enforcement actions against firms that miss-reported their numbers, and therefore were registered with the SEC when they should have been registered with the state. Making sure your firm is registered at the proper jurisdiction is a crucial regulatory requirement for all RIA firms.