Do I need to register as an investment adviser with the SEC?
An investment adviser to a fund will generally be required to register with the SEC if:
- it advises a registered investment company;
- it has $150 million or more in assets under management;
- it advises separate accounts and funds and has $100 million or more in assets under management;
- it advises separate accounts and funds, has less than $100 million and more than $25 million in assets under management (mid-sized adviser) and is not required to register in the state where it maintains its principal office and place of business, or if registered would not be subject to examination by the state’s securities commissioner.
In June 2011, the SEC eliminated the private adviser exemption under the Advisers Act of 1940, as amended, and created three new exemptions: the private fund adviser exemption, the venture capital fund exemption and the foreign private adviser exemption. In addition, the SEC created “Exempt Reporting Advisers” who are advisers that rely on either the private fund or venture capital fund exemption and are only required to file an annual report by filing an abbreviated Form ADV, Part 1.
How do I register as an investment adviser with the SEC?
An investment adviser registers with the SEC by filing a Form ADV.
Form ADV consists of two parts (Part 1 and Part 2) and several schedules. Part 1 asks for information about the adviser and persons associated with the adviser. In addition to name, address and form of organization, Part 1 asks about the size and scope of the adviser’s activities, about criminal, civil and regulatory actions involving the adviser and persons associated with the adviser and about the private funds it manages. Part 2 focuses on the services and business practices of the adviser. In July 2010, the SEC adopted revisions to Part 2. The revisions require the use of a narrative brochure, accompanied by a brochure supplement for certain advisory personnel.
An adviser is required to amend its Form ADV promptly each year by filing an annual updating amendment within 90 days of the end of the adviser’s fiscal year, updating responses to all items. In addition, an adviser must amend its Form ADV by filing additional amendments (“other-than-annual amendments”) promptly if certain specified provisions become inaccurate.
Do I need to register with a state securities regulator?
If an investment adviser is not registered with the SEC, it will generally be required to register in the state where it maintains its principal office and potentially in other states where it conducts business. It is necessary to examine the law of each state where the adviser conducts business in order to determine if an exemption from registration is available.