Investment Advisor Registration Requirements

Guest Contributor: Diana Kearns, Director of Marketing and Public Relations, Accounting & Compliance International (ACI)

An investment advisor is any entity that provides fee-based advice regarding the buying and selling of securities. Under the Investment Advisers Act of 1940, investment advisors are required to register with either the SEC or the state – which one would depend upon the firm’s assets under management (AUM). Investment advisor registration requirements have changed under the Dodd-Frank Wall Street Reform Act. The SEC is currently working to implement the provisions of Act so all details are not yet known and certain aspects remain unclear; however, it seems that in regards to investment advisor registration requirements there will be two major changes to prior regulations.

The first change is a shift in the assets under management thresholds that determine SEC vs. state registration. The new requirements will have Investment Advisors with under $100 million AUM register with the state and those above $100 million AUM register with the SEC.  There is an exception for private fund managers which will not have to register with the SEC until they reach the $150 million AUM threshold. The Private Fund Managers Exemption from registration for private funds with fewer than 15 clients has been removed completely, so unless the private fund manager is eligible for an alternative exemption, this asset threshold will determine registration.

Additional exemptions are outlined below, along with a summary of the investment advisor registration process. The deadline by which to adhere to these changes will be July 21, 2011 and advisors should be mindful to factor into their timeline at least 45 days for their application to be reviewed. For more information on new regulations or assistance with state or SEC registration contact Accounting & Compliance International (ACI) at info@acisecure.com or 212-668-8700. 

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