What Is The Deadline For Registering As An Investment Adviser Representative In New York
Newly registering investment adviser representatives must register via CRD beginning February 1, 2021.
Existing investment adviser representatives will have until December 2, 2021 to comply with the registration requirement and may seek a waiver of the examination requirement under certain circumstances. However, existing investment adviser representatives must submit a Form U4 requesting investment adviser representative registration in New York for that person on or before August 31, 2021. Upon submitting the Form U4, applicants will have a fourteen day window to correct any non-examination related deficiency identified by the state. Examination related deficiencies must be corrected by December 2, 2021.
The state considers an existing investment adviser representative to be any individual who, prior to February 1, 2021, was serving continuously and permissibly in any capacity that requires investment adviser representative registration, and who, through continued service, is subject to the registration requirements. The rule change does not provide any relief to individuals who were acting as investment adviser representatives in violation of New York law prior to February 1, 2021.
After initial registration, investment adviser representatives must renew their registration annually, and make timely updating amendments through the year whenever material changes occur.
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In December 2020, the New York Attorney Generals Investor Protection Bureau adopted proposed rule changes to 13 N.Y.C.R.R. Part 11. These rule changes require the registration of investment adviser representatives including principals, supervisors and solicitors for registered investment advisers through the WebCRD/IARD system beginning February 1, 2021. Prior to the rule change, New York was the only state that did not license investment adviser representatives via the WebCRD/IARD system. Click here to read the final adopted rule.
Ongoing Renewal And Update Requirements In New York
Investment Advisor Firm updates through the Investment Adviser Registration Depository:Annual updates to the ADV will always be required in order to reflect any changes to your firms fees, or employment status changes for advisers in your firms employ. License renewal actions must be completed by December 31st every year, and are processed through the Investment Advisor Registration Depository. Expect the following fees to apply
- IARD administrative fees of $100
- New Yorks renewal fees are $200 for the firm. There are no registration fees charged for IARs in the firms employ.
- Renewal fees are paid for all states where the firm is registered
Investment Adviser Representative updates through the Central Registration Depository: IARs are required to maintain their own Form U-4 by alerting the firms compliance department. As a firm principal, you will update your own Form U-4. The items listed below are considered amendments that will require Form U-4 updates:
- Additional business activities
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New Registration And Examination Requirements For New York Investment Adviser Representatives
What You Need To Know:
- Personnel for certain investment advisers and solicitors with natural person clients in New York will have to meet new registration and examination requirements.
- Affected persons must be approved before December 2, 2021, to continue conducting investment advisory business in New York state.
Effective February 1, 2021, amendments to the New York Investment Advisory Act require supervised persons representing certain New York-registered investment advisers, and, to a lesser degree, investment advisers registered with the Securities and Exchange Commission , to register with the New York Department of Laws Investor Protection Bureau and meet new examination requirements. These supervised persons, called investment adviser representatives, have until August 31, 2021 to meet the new requirements and must have their registration approved before December 2, 2021 to continue operating within New York. As discussed in more detail below, private fund managers who are federally registered investment advisers are not affected by the Amendments.
I. Who Must Register: Personnel of State-Registered Advisers
II. Who Must Register: Personnel of State-Registered Solicitors
III. Exemptions: Personnel of SEC-Registered Advisers and Exempt Reporting Advisers
IV. Registration Process for Affected Personnel
The Amendments waive the examination requirements in one of three scenarios:
Takeaways
Next Steps
New York Adopts New Rules Requiring Registration And Exams For Investment Adviser Representatives Principals And Solicitors
The New York State Department of Law recently adopted new regulations, effective February 1, 2021, imposing registration and exam requirements on investment adviser representatives, principals and supervisors of investment advisers, solicitors, and principals and representatives of solicitors. The regulations provide an implementation period to certain persons who are currently permissibly engaged in the investment advisory business, so long as such persons submit an application for registration by August 31, 2021. The newly adopted regulations also impose a new recordkeeping requirement for investment advisers and require state-registered investment advisers to verify the accredited investor and qualified client status of its clients, effective February 1, 2021. The new regulations do not impact the requirement to register as an investment adviser in New York.
This memorandum summarizes certain notable aspects of the new regulations. The new regulations:
S& K Observations
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New York Adopts New Regulations Requiring Registration And Examination For Certain Investment Adviser Personnel And Solicitors
The New York State Department of Law recently adopted new regulations, effective February 1, 2021, governing registration and examination requirements of natural persons representing New York registered investment advisers, including investment adviser representatives, principals, supervisors, solicitors, and certain investment adviser representatives of federally covered investment advisers .
GENERAL PROVISIONS
Register Your Firm In New York
As a new advisor, you will be required to complete your registration process through the Financial Industry Regulatory Authority -administered Investment Adviser Registration Depository . Both state registration with the New York Investor Protection Bureau and federal registration with the Securities and Exchange Commission are processed through this system.
If you elect to manage more than $100 million client assets then your firm will be registered at the federal level with the SEC. If youll manage client assets that total less than $100 million, you will register your IA at the state level only. The following details the process for both state and federal registrants.
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Policies And Procedures Manual
The firms written Policies and Procedures manual is the guiding supervisory document that your firm will use to maintain and enforce your firms internal policies on all aspects of your business, from the handling of client complaints to the training of new IARs. It also houses your firms other policies, including but not limited to, Business Continuity Plan, Information Security Policy, Proxy Voting Policy, and Insider Trading Policy.
New York Investment Adviser Representatives Now Subject To Registration
On December 1, 2020, the New York Attorney General announced amendments to the New York Investment Advisory Act that will require investment adviser representatives to register with the state of New York. If you render investment advice from a place of business in New York, now is the time to begin reviewing the rule and your registration obligations. This new law applies even if you previously filed a NY-IAQ on behalf of a state-registered investment adviser.
Beginning on February 1, 2021, many IARs of state-registered and SEC-registered investment advisers will be required to meet examination and registration requirements with the state of New York. Under the Rules, an IAR of a state-registered firm is defined as a natural person representing an investment adviser or solicitor in doing any of the acts that define an investment adviser. Those acts generally include engaging in investment advisory business within or from the state of New York. For individuals acting on behalf of SEC-registered firms from a place of business in New York, the Rules defer to the federal definition of investment adviser representative. Affected IARs will be required to register through the Central Registration Depository/Investment Adviser Registration Depository. The licensing fee is $200 and will be the second most expensive in the country behind Georgia.
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The State of New Yorks new investment adviser representative registration requirements are now effective. Prior February 1, 2021, New York remained the final state that did not require investment adviser representatives to be licensed with the state securities regulator by filing the Form U4. Adopted in December 2020, the rule changes now require the registration of investment adviser representatives including principals, supervisors and solicitors for registered investment adviser firms by filing the Form U4 via the WebCRD/IARD system. Registration is required for investment adviser representatives of New York state registered investment adviser firms, as well as for investment adviser representatives of SEC-registered investment adviser firms, if the investment adviser representative conducts advisory activities from a place of business in New York.
For more information on the new investment adviser representative registration requirement in New York, including who must register, deadlines, examination requirements and waivers, and how to register, click here.
Additional Resources
To read New Yorks final adopted rule on investment adviser representative registration, click here.
To view New Yorks step-by-step guidance for registering new investment adviser representatives, existing investment adviser representatives, and solicitors, click here. If needed, the new Form NY-IASW is available here.
New York Investor Protection Bureau Investment Adviser FAQs
Summary Of Registration Process And Examination Requirements
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Individuals described above who must register with New York will apply for such registration through the online Investment Adviser Registration Depository system by submitting a Form U4 and paying the required $200 filing fee.
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For individuals who are engaged in investment advisory business and/or associated with an investment adviser prior to February 1, and who will become subject to the registration requirement as of February 1, the deadline for submitting their registration application is August 31.
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Applications will not be approved until compliance with the examination requirement, or a waiver therefrom, is confirmed by the New York Department of Law.
The general examination requirement is a passing grade on either: the Series 65 examination or all three of the Securities Industry Essentials Examination, the Series 7 examination, and the Series 66 examination.
There are waivers from the examination requirement that are available under the following circumstances:
Special Waiver. If an individual has, in the regular course of business, engaged in investment advisory activity from a place of business in New York continuously and permissibly for at least two years prior to February 1, upon an application to the state on Form NY-IASW. A special waiver will not be available if an individual:
submits his/her Form U4 application after August 31
in the two years prior to December 2, 2020 has only served as a solicitor
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Who Must Register As An Investment Adviser Representative In New York
All investment adviser representatives, including principals, supervisors and solicitors, must apply for registration in connection with their representation of a New York state registered investment adviser or solicitor. Additionally, an investment adviser representative for an SEC-registered investment adviser must apply for registration in connection with their representation if the investment adviser representative conducts advisory activities from a place of business in New York.
Disbursement Of Public Monies Reporting
The Lobbying Act states a NYS Lobbyist Disbursement of Public Monies Report must be completed by a Lobbyist when:
- the Lobbyist is otherwise already required to file a Statement of Registration with the Commission and
- reasonably anticipates that during the calendar year they will expend, incur, or receive combined Reportable Compensation and Expenses in an amount in excess of $5,000 in connection with:
- any attempts to influence a determination by a Public Official, or by a person or entity working in cooperation with a Public Official with respect to the solicitation, award or administration of a grant, loan, or agreement involving the Disbursement of Public Monies in excess of $15,000, other than a governmental procurement as defined in Section 1-c.
The $5,000 threshold relates only to Compensation and Expenses attributable to the activities described above, and is in addition to and separate from the similar threshold for Lobbyist Registration set forth in Section 1-e of the Lobbying Act.
Is a DPM Report still required to be filed if a registered Lobbyist does not have any DPM reportable Compensation or Expenses for the reporting period?
What are the DPM reporting periods and when are they due?
These separate reports are required to be filed in accordance with the same schedule applicable to the filing of Bi-monthly Reports. The first DPM Bi-monthly is due by the 15th day of the month following the end of the relevant reporting period.
DPM due dates:
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What Are The Examination Requirements
Every principal, solicitor, and investment adviser representative of an investment adviser must pass the Series 65, or both the Series 7 and Series 66, within two years of making the application for investment adviser representatives registration in New York, unless such individual qualifies for a waiver. An individual who is currently serving as investment adviser representative in New York and does not qualify for a waiver must take and receive a passing grade on the required examination by December 2, 2021.
Take The Required Exam
The state of New York and the SEC have the ability to waive exam requirements for firm principals and representatives that have completed one of the five professional designation programs listed here:
- Chartered Financial Consultant
- The Series 66, Uniform Combined State Law Examination and the Series 7, General Securities Representative Examination.
Individual registration and exam applications are submitted through the Central Registration Depository:
- Form U-4 Uniform Application for Securities Industry Registration or Transfer is used to register individuals with the New York Securities Bureau, and the SEC, as applicable, as well as serving as an application for the required exams.
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New York Adopts Investment Adviser Representative Registration And Examination Requirements
On February 1, 2021, new regulations issued by the New York State Department of Law took effect, requiring certain investment adviser representatives, principals and supervisors of investment advisers to register with New York, and satisfy certain examination requirements . Registration is required by August 31, 2021, although IARs who permissibly operated under the prior rules and submit the requisite materials by August 31, 2021 can continue to operate under such prior rules until December 2, 2021. Note that prior to the new regulations taking effect, New York had not historically required the registration of IARs.
Under the new regulations, IARs representing an SEC-registered investment adviser from a New York place of business and meeting the definition of IAR under the Investment Advisers Act of 1940, as amended , are required to register in New York. As relevant, the Advisers Act defines an IAR as a supervised person of an investment adviser that has more than five clients who are natural persons and more than 10 percent of its clients who are natural persons. For purposes of counting natural person clients, qualified clients are excluded.
In general, IARs must be in compliance with the new regulations by December 2, 2021. IARs who permissibly operated under the prior rules can continue to operate under such prior rules so long as a Form U4 is submitted by August 31, 2021.
Applicability To Ny State Registered Advisers
The Revised Rules with respect to NY State Registered Advisers apply to a broader range of individuals than they do with respect to SEC Registered Advisers. First, the registration and examination requirements apply to any individual that represents a NY State Registered Adviser in performing any activities that would deem the individual to be an investment adviser under New York law . Based on the state’s definition of investment adviser, an individual who performs any of below acts would be deemed a NY IAR:
engages in the business of advising members of the public, either directly or through publications or writings within or from the State of New York as to the value of securities or as to the advisability of investing in, purchasing, or selling or holding securities, or who, for compensation and as a part of a regular business issues or promulgates analyses or reports concerning securities to members of the public within or from the State of New York.
Second, the registration and examination requirements apply to any “principal” or “supervisor” of a NY State Registered Adviser. Pursuant to the Revised Rules, a “principal” is any person that directly or indirectly controls a NY State Registered Adviser, and a “supervisor” is an individual who directly supervises one or more individuals associated with a NY State Registered Adviser in their capacity as NY IARs.
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