Form ADV

SEC fines RIA for failure to disclosure conflicts of interest on Form ADV

July 14, 2014 | Bryan Gort

In a consented-to Administrative Order dated July 2, 2014, the Securities and Exchange Commission fined a Missouri-based Registered Investment Adviser, SignalPoint Asset Management (“SignalPoint” or “SAM”), $215,000 for breaching its’ fiduciary duty to clients.

Prior to the formation of SignalPoint, the Principals of SignalPoint were registered as registered representatives and investment adviser representatives for a dually-registered broker-dealer and investment adviser. In 2008, the principals asked the dually-registered broker-dealer and investment adviser to allow them to have ownership and control of SignalPoint but were told that they could not have an ownership in an outside RIA.
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Mid-Sized Advisers Should Have Already Commenced Transition

December 11, 2011 | Steve Parker

As we first reported on this blog site in September, the North American Securities Administrators Association (NASAA) held a forum, through its Investment Adviser subcommittee, to discuss transition issues for Mid-Sized Advisers under the Dodd-Frank Wall Street Reform Act. As we approach the annual December moratorium on new registrations and renewals, it seems appropriate to review and comment on some of NASAA’s suggestions.

The first step that any Mid-Sized Adviser should take should be to contact his or her state regulatory agency to determine whether it has adopted special rules, forms, or timetables for use. However, the NASAA committee generally provided the following procedure that its state members intended to follow:
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State Investment Adviser Regulators Hold Forums

September 13, 2011 | Steve Parker

Two Parker MacIntyre attorneys — Bob Terry and Steve Parker — attended forums held this week by the Investment Adviser Section of the North American Securities Administrators Association, and by the NASAA members of the Joint NASAA/FINRA CRD/IARD Steering Committee, at the NASAA Annual Conference in Wichita, Kansas. The forums’ panelists included Melanie Senter Lubin, Securities Administrator for the State of Maryland, NASAA General Counsel Joseph Brady, Michigan Securities Director Linda Cena, and other Section and Committee members. Bob Terry, Counsel to Parker MacIntyre, served as Vice Chair of the CRD/IARD Committee for over three years until he left the office of the Georgia Secretary of State in January of 2011.

The hottest topics of both forums were details relating to transitioning to state registration of mid-sized advisers, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank’) and implementing regulations.

At least 20 states to date have conducted training seminars to investment advisers seeking information about switching to state registration and what to expect from becoming state-registered. NASAA has provided training materials and logistical support to securities administrators in those states. The goal is to introduce the prospective registrants to state-specific issues that may affect their registration process or their ongoing operations, particularly in the areas of regulation that may differ slightly or even significantly from the SEC rule or practice that the adviser to which the adviser is accustomed.
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Advisers Act Rules Implementing Dodd-Frank Adopted by SEC

June 28, 2011 | Steve Parker

On June 22, 2011, the Securities and Exchange Commission (SEC) adopted new rules and rule amendments under the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among other things, the rules, as adopted, provided transitional provisions for investment advisers required to switch from SEC to state registration because they fail to meet the new requirement of $100 million in assets under management, require advisers to hedge funds and other private funds to register with the SEC, require reporting by certain exempt investment advisers, and make substantial changes to the Form ADV.

The final rule relating to transition differed somewhat from the rule originally proposed by the SEC. The final rule requires that any “mid-sized” registrant with the SEC (defined as any firm with between $25 million and $100 million under management) that is registered as of July 21, 2011 (Dodd-Frank’s effective date) must remain registered with the SEC through the transition. New applicants that meet the definition of mid-sized advisers and who seek to apply between January 1, 2011 and July 21, 2011 can apply either with the SEC or the state or states in which it must register.
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RIA Switch Deadline Still Not Formally Postponed

June 11, 2011 | Steve Parker

Although the US Securities and Exchanges Commission (SEC) has publicly stated that the July 21, 2011 deadline for “Mid-Sized Investment Advisers” to register with the States will likely be moved, as of yet there is no rule formally postponing the deadline. The same looming deadline applies to hedge funds required to register for the first time.

The switch delay is thought to have been driven primarily by Investment Advisor Registration Depository (IARD) programming delays and the logistical issue of collecting asset under management data from all firms in order to qualify them for the switch. Some advisers, out of caution, are registering dually with the SEC and the states so as to cover their bases; they plan on de-registering with the SEC at the appropriate time.

The deadline may be formally moved at the upcoming June 22 SEC meeting, whose agenda identifies consideration of adoptions of new rules and amendments to implement Dodd-Frank; considering Investment Adviser Act exemption rules for venture capital funds and advisers with assets under management of less than $150 million; and considering the proposed rule defining “family offices” that will be excluded from the definition of an investment adviser under the Investment Advisers Act.

Florida Urges Dual Registration for RIAs Required to Switch

April 8, 2011 | Steve Parker

The Florida Office of Financial Regulation (OFR) issued a press release this week encouraging all federal covered investment advisers with less than $100 million under management to consider dually registering with OFR and the SEC, and to initiate OFR registration as soon as possible. Dual registration would allow the investment adviser to continue as a federal covered adviser while Florida reviews the firm’s application. Upon being approved by OFR, the firm can then withdraw its SEC registration after July 21, 2011.

Florida’s recommendation was prompted by the time it takes to renew and approve applications. Early application increases a firm’s chance of being approved prior to July 21.
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