Requirements for State Registered Advisers

Requirements for State Registered Advisers

Also, State registered advisers should review and verify compliance with state regulatory requirements governing the business of investment advisers. The regulation of investment advisers can vary significantly from one state to the other. Attempts to unify the patchwork of state requirements have fallen short, and the only sure way to determine the specific requirements of a state is to refer directly to the state’s securities laws and regulations, which many states make available online. Due to the practical difficulty of identifying and keeping current on the requirements of each state in which an investment adviser conducts business, it is often advantageous for an investment adviser to adopt a policy that requires it to comply with all state requirements.

Provided below is a non-exhaustive list of common regulatory requirements that states impose on investment advisers. Any investment adviser that does not comply with a particular requirement should thoroughly document its basis for believing that the requirement does not apply in the states in which it conducts business.

For information on investment adviser registration in each state, check out NASAA’s State Investment Adviser Registration Information.

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Agent Registration Process

Agent Registration Process

The USA defines an agent as any individual who represents a broker-dealer or an issuer in effecting or attempting to effect transactions in securities for their clients. Agents are individuals in a sales capacity who represent broker-dealers or issuers of securities. Any person who meets the definition of an agent must register with the states they do business in. To register with the state securities Administrators, you must:

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Form ADV Part 2B: Disclosures for Supervised Persons

Form ADV Part 2B: Disclosures for Supervised Persons

Form ADV Part 2B is a brochure supplement that must contain certain information about specific individuals, acting on behalf of the investment adviser, who actually provide the investment advice and interact with the client. The brochure supplement is also a narrative format in plain English and includes six required disclosure categories, with a seventh for advisers registered or are registering with one or more state securities authorities:

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Registering as an Agent for a Broker-Dealer

Registering as an Agent for a Broker-Dealer

The USA defines an agent as any individual who represents a broker-dealer or an issuer in effecting or attempting to effect transactions in securities for their clients. Agents are individuals in a sales capacity who represent broker-dealers or issuers of securities. As agents, they act, usually on commission basis, on behalf of others. Agents are often referred to as registered representatives, whether sell registered securities or securities exempt from registration. The use of the term individual here is important. Only an individual, or a natural person, can be an agent. A corporation such as a brokerage firm is not a natural person, it is a legal entity. The brokerage firm is the legal person, or legal entity, the agent, a natural person, represents in securities transactions.

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Minimums for RIAs Policies and Procedures

Minimums for RIAs Policies and Procedures

All RIAs are required to register either with the SEC or a state securities regulator. In general, RIAs managing less than $100 million of assets register with their home state, while those managing more than $100 million register with the SEC. Both federal covered advisers and state registered advisers have requirements set for policies and procedures. While the requirements set are similar, some state regulations may be slightly different.

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