Adviser Custody Rule And Related Form Adv Changes Adopted For Sec Advisers
In December 2009 the SEC adopted amendments to rule 206-2, the custody rule under the Investment Advisers Act of 1940. The effective date of the amended rule is March 12, 2010. The adopting release for the amended rule can be found at . The adopting release contains the text of the rule, information about the rule and the compliance dates for various parts of the rule.
The SEC also adopted amendments to Items 7 and 9 of Form ADV, Sections 7 and 9 of Schedule D to Form ADV, and Instructions to Form ADV-E. SEC-registered investment advisers must provide responses to the revised Form ADV in their first annual amendment after January 1, 2011. The IARD system has been upgraded to accept Form ADV-E, accountants performing surprise examinations must file Form ADV-E electronically through the IARD system.
The staff of the Division of Investment Management has prepared responses to questions about the amended custody rule which are available on the SECs web site at in the section entitled Staff Guidance and Studies. Additional responses may be added from time to time. These responses are not a rule, regulation, or statement of the Securities and Exchange Commission, and the SEC has neither approved nor disapproved this information.
Investment Adviser Registration Depository
The IARD is a joint effort by the U.S. Securities and Exchange Commission and the North American Securities Administrators Association . The Financial Industry Regulatory Authority , acting as a vender only, operates the IARD.
The first step in applying for investment adviser registration is to apply for access to the IARD system by completing forms in the State Registration IARD Entitlement Packet. This information is available at www.iard.com. The IARD Entitlement Group will send you a Confirmation Packet containing a log-on name and initial password which you will use to sign onto the IARD.
Prior to signing on, you should access the IARD Users Manual on the IARD website. It provides detailed instructions on how to submit your electronic filings. The IARD Users Manual helps guide you through IARD filings. You might find it beneficial to print this manual for future reference. After you receive a log-on name and initial password, you can set up your on-line IARD account by following the steps in Chapter 2 of the IARD Users Manual.
The FINRA Investment Adviser Support line is available at 386-4848 to assist you with questions regarding IARD system navigation and use. FINRA does not have regulatory authority over investment advisers therefore, questions related to investment advisory policy, interpretation, or regulatory requirements should be directed to the State Securities Board at 305-8300.
Notice Filing For Sec Registered Investment Advisers
SEC registered investment advisers subject to notice filing in NC must file electronically through the IARD system operated by FINRA. For questions relating to FINRA or the Web CRD/IARD systems, please call the Gateway Call Center at 386-4848. The relevant statutes are: and .
Notice filing:
- File Form electronically through the IARD system.
- Pay filing fee of $300.00. Fees are paid through IARD system.
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Electronic Financial Information Filing System
The Securities Division is excited to announce the launch of our new electronic financial information filing system . eFin is a portal for registered investment advisers to file the financial reporting documents required by WAC 460-24A-060 including balance sheets, surety bonds, fund audits, subordination agreements, and other related documents. Going forward investment advisers will file these documents in eFin instead of emailing them to the Securities Division as was previously done. Additional information regarding this system will be sent in a separate communication via e-mail. Please watch your email for this message.
Adviser Filings Now Available To Public On
Since September 25, 2001, investors have had Internet access to information contained in Form ADV electronic filings made by investment advisers on www.adviserinfo.sec.gov. This new Investment Adviser Public Disclosure website was launched by the SEC and NASAA to provide clients and prospective clients of advisers with direct access to Form ADV filings made by the then approximately 7,800 SEC-registered advisers and 8,200 state-registered advisers who filed Form ADV through IARD. This electronic database will expand significantly because increasing numbers of state-registered advisers are switching to electronic filing each day.
All information filed by advisers on Form ADV is available on this new website except for social security numbers, certain home addresses, and contact employee information. The new website is available free of charge, 24 hours a day.
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Grant Of Certificate After Investment Advisor Registration
- SEBI shall consider all the requirements specified in the Regulations for the purpose of grant of registration.
- If SEBI is satisfied that the applicant fulfils all the requirements will approve the applicant and information regarding the same, on receipt of payment of registration fees, grant certificate of registration subject to the terms and conditions as the board may deem fit and appropriate.
- On receipt of approval from SEBI, the applicant, if it is a body corporate, must pay registration fee of Rs.1,00,000 and Rs. 10,000 in case of the individual.
- The registration fee must be made in favour of The Securities and Exchange Board of India.
State Registered Advisers: Firm
An investment adviser is generally defined as any person who receives compensation in the business of advising others as to the value of securities or as to the advisability of investments in, purchasing of, or selling of securities. Investment advisers must obtain registration in the states where they conduct business.
No investment adviser shall engage in business from offices in this state, or render investment advice to persons of this state, unless the investment adviser is registered with the Office of Financial Regulation pursuant to Section 517.12, Florida Statutes .
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In Addition The Following Items Must Be Filed Directly With The Securities Commissioner At:
State Securities BoardP.O. Box 13167Austin, Texas 78711-3167
Costs To Register As A Registered Investment Advisor Firm
One of the first steps in registering as a registered investment advisor firm is to become properly registered as an RIA at either the SEC or state jurisdiction level. FINRA does not have any regulatory authority over RIAs, but it does administer the online application system for the registration of RIAs and their investment advisor representatives.
There are some slight differences in registration fees depending on whether the RIA will be registered with the SEC or state:
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What Is An Investment Advisor
The investment advisor is also known as financial advisor and alternatively can be spelt as investment adviser or financial adviser. The Investment advisor performs their duty as professionals within the financial industry by giving guidance to the clients in exchange for fees. The clients interests must be preferred by the investment advisors, as they owe a fiduciary duty towards them.
Investment Advisor And Representative Registration Instructions
Note: All investment advisor and representative registrations expire annually at midnight on the 31st day of December unless renewed.
Deminimus Exemption – 21 VAC 5-80-210 B allows any registered investment advisor or federally covered investment advisor who has no place of business in Virginia to have up to five clients in any prior twelve month period without the need of a Virginia registration or notice filing.
Investment Advisor Initial Registration
- State Covered Investment Advisor Initial Registration
- 21 VAC 5-80-10 A requires applicant as an investment advisor file in compliance with all requirements of the Investment Advisor Registration Depository system
- 21 VAC 5-80-10 B requires an applicant file directly with the IARD system:
- completed Form ADV Parts 1 and 2 designating Virginia as a jurisdiction
- the statutory fee of $200 paid from the applicants IARD Daily Account
- register each of its representatives providing advice to a Virginia resident as required by § 13.1.504
- any other information the Commission may require.
Investment Advisor Representative Initial Registration
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What Is An Investment Adviser
It is as simple as ABC. An investment adviser is defined in Corporations Code Section 25009 generally as any person who, for Compensation, engages in the Business of Advising others, either directly or indirectly through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, publishes analyses or reports concerning securities.
What Is An Investment Adviser Representative
An investment adviser representative , sometimes referred to as a registered adviser , or associated person is defined in Code Section 25009.5 as any partner, officer, director of or other individual, except clerical or ministerial personnel, who is employed by or associated with, or subject to the supervision and control of, an investment adviser that has obtained a certificate or that is required to obtain a certificate under this law, and who
makes any recommendations or otherwise renders advice regarding securities,
manages accounts or portfolios of clients,
determines which recommendations or advice regarding securities should be given,
solicits, offers, or negotiates for the sale or sells investment advisory services, or
supervises employees who perform any of the foregoing.
Important: Each officer, director or partner exercising executive responsibility or each person who owns 25% or more is presumed to be acting as an IAR or associated person.
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State Investment Adviser Registration Information
All states require that investment advisers and investment adviser representatives conducting business in the state register with the states securities regulatory authority . Approximately 17,500 investment advisers are so registered. Registration standards are complex and you should consult an attorney if you have questions about whether you or your firm must register.
Applicants for investment adviser registration must file Form ADV, Parts 1 & 2, through the Investment Adviser Registration Depository and may be required to submit additional materials . Applicants should heed the instructions for completing Form ADV and should update it over time per the forms instructions.
An applicant for registration as an investment adviser representative must file a Form U4, which also has its own completion instructions. The Form U4 must show that the applicant has passed the required competency exams or holds an active, acceptable professional designation.
Registration fees must be paid electronically through the IARD system.
For your convenience, general investment adviser registration information can be found for each state at the links below. NASAA makes no representation as to the accuracy of this information readers and their counsel should consult the laws and rules of each state to determine their registration requirements. Any questions about registration requirements may be directed to each states securities regulator.
Additional Information Requested Pursuant To Minnesota Statute 80a61
Once the above forms and fee are filed on the IARD, the State of Minnesota reviews the information on file and may contact the applicant to request additional information. Applicants for registration should be prepared to provide:
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Rules Adopted To Implement Dodd
The Commission has adopted new rules and rule amendments under the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This release ) is available at . These rules and rule amendments:
Specific information about these changes, including effective and compliance dates of these and other various requirements, may be found in the IA-3221 adopting rule release.
Proxy Voting Disclosure Adopted For Sec Advisers
The Commission adopted a rule 206-6 requiring SEC-registered investment advisers that exercise voting authority over client securities to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of clients. These advisers are required to inform clients about their policies and procedures, give clients a copy upon request, and disclose to clients how they can obtain information from the adviser about proxy votes cast. Rule 204-2, the books and records rule, also was amended to require that these advisers maintain certain records of their proxy voting activities.
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Applicability To Personnel Of Sec Registered Advisers
A supervised person of an SEC Registered Adviser who represents that adviser from a place of business in New York and meets the federal definition of investment adviser representative , will be subject to the new registration and examination requirements described below.2 In general, a Federal IAR is defined under the Investment Advisers Act of 1940 as a supervised person of an SEC Registered Adviser that:
has more than five clients that are natural persons and
has a client base more than 10 percent of which is comprised of natural persons.
In counting clients for the Federal IAR definition, “qualified clients” as defined by the Advisers Act are excluded.3 Furthermore, any supervised person who does not regularly solicit, meet with or otherwise communicate with the adviser’s clients, or who only provides impersonal investment advice, is excluded from the Federal IAR definition and, therefore, will not be subject to these New York requirements.
Since advisory personnel must have natural person clients to meet the Federal IAR definition, the new registration and examination requirements will not apply to personnel of SEC Registered Advisers that only manage private funds and/or managed accounts of institutional clients.
Balance Sheet With Written Attestation
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Investment advisers are required annually to submit to the Securities Division a balance sheet dated as of the last day of your most recent fiscal year end. The balance sheet must be prepared in accordance with Generally Accepted Accounting Principles , with a written attestation that your balance sheet is true and complete to the best of your knowledge upon submission. This written attestation can be attached to your balance sheet or in the body of your email submission to the Division at .
Please see WAC 460-24A-060 for more information.
If you have custody, absent an exemption, your investment advisers balance sheet will need to be audited by an independent certified public accountant and must include the accountants audit opinion. See WAC 460-24A-060 for additional information.
If your principal place of business is located in the State of Washington, your minimum financial requirements are as follows:
- If you have custody of client funds or securities, you must maintain at all times a net worth of at least $35,000
- If you have discretion, you must maintain at all times a net worth of at least $10,000 or
- If you have neither discretion nor custody, you must be able to maintain a positive net worth.
See WAC 460-24A-170 for additional information.
Please note that you may be requested to provide your income statement, statement of cash flows, statement of owners equity, and trial balances to support and/or verify the information on your balance sheet.
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Maintaining Or Renewing Notice
Amendments to the Form ADV
If the information contained on the Form ADV, Uniform Application for Investment Adviser Registration, becomes inaccurate for any reason, the registrant shall file an amendment on the Form ADV correcting the information within 30 days.
Amendment filings shall be made through the IARD system.
Terminations
Notices of termination shall be filed on the Form ADV-W, Notice of Withdrawal from Registration as Investment Adviser.
Termination filings shall be made through the IARD system.
Annual Financial Statements
State registered advisers are required to file annual financial statements with the OFR within ninety days after the registrant’s fiscal year end pursuant to Rules 69W-600.0161, F.A.C. Such financial statements shall be mailed to the OFR at the address identified in the contact information section. Registration may be denied, revoked or suspended if financial statements reflect net capital less than required under Rule 69W-600.0161, F.A.C.
Renewal Fees
Renewal fees for all state registered advisers shall be paid through the IARD system in accordance with FINRA guidelines. It is incumbent upon the registrant, not the OFR, to ensure that the renewal payment is submitted timely. The renewal fee is $200 for each firm.
Registrants should refer to Sections 517.12, F.S., and Rule 69W-600.0016, F.A.C., for additional guidance. Renewal payments for all branch office locations and associated persons shall also be made through the CRD.
