As you may remember from our earlier blogs on registered investment advisers (RIAs), whether a firm should be registered as an investment adviser with the U.S. Securities and Exchange Commission (SEC) or with a state is typically determined by the amount of regulatory assets the firm has that receive continuous and regular supervision or management (collectively known as a firm’s “regulatory assets under management” or “regulatory AUM”); with some exceptions, firms that have over $100 million of regulatory AUM must register with the SEC, while smaller advisers must register with state securities authorities instead. But, what if a new investment adviser doesn’t currently have over $100 million of regulatory AUM, but expects to soon? Is the firm required to wait until it has over $100 million of regulatory AUM to register with the SEC?
[Continued from ERA: Exempt Reporting Adviser Qualification – Part I]
SEC ERA Registration vs. State ERA Registration
Firms with more than $100 million in regulatory AUM (Large Advisers) must register with the SEC unless an exemption is available. Advisers with between $100 million and $150 million AUM solely attributable to private funds are exempt under the private fund adviser exemption, as described above. Advisers with over $150 million AUM must register with the SEC.
Per the Investment Advisers Act of 1940 (the “Advisers Act”), firms who meet the definition of providing investment advisory services generally must register either with the SEC or with state securities regulators. When the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) was signed into law, the Advisers Act was amended to implement a new category for a narrow class of advisory firms: the Exempt Reporting Adviser (ERA).
Securities and Exchange Commission (SEC) adopted amendments to Investment Advisers Act rules in August 2016 that will result in significant changes to Form ADV for advisory firms working with SMA’s (Separately Managed Accounts). The additional data will help the SEC focus on examining firms more often that present the greatest risks. Read More…
The Securities and Exchange Commission (SEC) recently announced revisions to the ADV Part 1. These changes will affect most Registered Investment Advisers (RIAs) when they complete their annual amendment; however, RIAs may be prompted to address additional questions if a firm submits an amendment on or after October 1st.