The regs they are a-changin’ for mid-sized investment advisors.
Effective July 21, the Securities and Exchange Commission said that any new investment advisor who is managing more than $25 million and less than $100 million will have to join smaller investment advisors in registering with the state regulatory authority where she or he is based. The only exceptions are New York and Wyoming where, because those states don’t require any examination of investment advisors, all investment advisors would still have to register with and be regulated by the SEC.
Under this new amendment to the 1940 law regulating investment advisors -- a provision of the new Dodd-Frank Financial Reform Act -- current advisors who are managing more than $25 million in assets -- but less than $100 million -- and who are currently registered with and regulated by the SEC are to remain registered with the SEC until Jan. 1, 2012. These advisors will have until July 28, 2012 to switch registration over to their state regulatory authority which in many states is the Office of Secretary of State.
During that time, state regulators will have to gear up their registration operations and their regulatory offices to handle these larger advisors.
A. Thomas Cardwell, commissioner of the Florida Office of Financial Regulation, has advised investment advisors in his state who have to switch to “initiate registration in Florida as close to January 1, 2012 as possible.” He added that dual registration by both the state and the SEC is permissible while state authorities review the applications.
Just to make things a little more complicated, advisors who find themselves in the process of switching their registration from the SEC to their home state but manage to grow their assets under management to more $110 million will then have to switch back to registering with the SEC.
In determining what an advisor’s assets under management amount is, the SEC said that proprietary and family accounts are also included -- even if no investment advisory fees are being charged for those accounts.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access