Division of Investment Management:
Frequently Asked Questions
Regarding Mid-Sized Advisers
Oct. 12, 2017
The staff of the Division of Investment Management has prepared the following responses to questions related to mid-sized advisers and expects to update this document from time to time. These responses represent the views of the staff of the Division of Investment Management. They are not a rule, regulation, or statement of the Commission, and the Commission has neither approved nor disapproved this information. Paper versions of current Form ADV Part 1A, Part 1B, and Part 2, General Instructions to Form ADV, Glossary, Instructions for Part 1A of Form ADV, and General Instructions for Part 2A of Form ADV can be found here: https://www.sec.gov/about/forms/formadv.pdf.
Additional frequently asked questions about Form ADV and IARD can be found here: https://www.sec.gov/divisions/investment/iard/iardfaq.shtml.
What is a “mid-sized adviser”?
A “mid-sized adviser” is an investment adviser that has between $25 million and $100 million of assets under management.
Are mid-sized advisers required to register with the Securities and Exchange Commission?
After July 21, 2011, a mid-sized adviser must register with the Securities and Exchange Commission if it:
- is not required to be registered as an adviser with the state securities authority in the state where it maintains its principal office and place of business; or
- is not subject to examination as an adviser by the state where it maintains its principal office and place of business.
A mid-sized adviser that does not meet either one of these two requirements is prohibited from registering as an adviser with the Commission after July 21, 2011, but will have to register with the state securities authorities. There are a few exceptions to the general prohibition from SEC registration in rule 203A-2, such as for certain multi-state investment advisers and pension consultants. In addition, a mid-sized adviser that is required to register with the SEC, may elect to not register if it can rely on an exemption from registration, such as those for certain advisers to private funds.
In which states would a mid-sized adviser not be “subject to examination” by the state securities authority?
Only New York.
A mid-sized adviser with its principal office and place of business in New York is not “subject to examination” by the New York state securities authority and would have to register with the SEC. A mid-sized adviser with its principal office and place of business in any other state is “subject to examination.” This information will be updated promptly upon notification by a state securities authority of any change to examination status.
How does a mid-sized adviser determine if it is “required to be registered” in the state where it maintains its principal office and place of business?
A mid-sized adviser should consult the investment adviser laws or the state securities authority for that state to determine if it is required to register as an investment adviser in that state.