RIA Compliance Blog
The State of Wyoming recently enacted a statute that requires most investment advisers doing business in the state, and investment adviser representatives of those advisers, to register. The law subjects the state law registrants to examination in Wyoming by the Secretary of State. Investment advisers who do not have a place of business in Wyoming but have had more than five Wyoming clients during the preceding twelve months are also required to register. Solicitors for state-registered advisers will be required to register but are exempt from the examination requirements.
As a result of this new statute, investment advisers who are eligible for registration with the Securities and Exchange Commission (“SEC”) because they manage more than $25 million in assets are now prohibited from registering with the SEC unless they also manage in excess of $100 million. The result is that “mid-sized advisers,” or advisers that register between $25 million and $100 million, are no longer required to register with the SEC.
In response to Wyoming’s enactment, the SEC Division of Investment Management has updated its “Frequently Asked Questions Regarding Mid-Sized Advisers” (“FAQs”). As of July 21, 2011, a mid-sized adviser has been obligated to register with the SEC if it is not obligated to register as an investment adviser with the state securities division in the state where it has its principal office or place of business. A mid-sized adviser is also obligated to register with the SEC if it is not required to be examined as an adviser by the state where its principal office and place of business is.
The Division of Investment Management has amended the FAQs so that the State of Wyoming is no longer identified as a state in which a mid-sized adviser would not be “subject to examination” by a state securities division. According to the FAQs, as of now, the State of New York is the only state in which a mid-sized would not be subject to examination by a state securities division. Therefore, only mid-sized advisers with a principal office and place of business in New York are required to register with the SEC. The Division of Investment Management also edited out some outdated references in the FAQs.
Parker MacIntyre provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds, and issuers of securities, among others. Our regulatory practice group assists financial service providers with complex issues that arise in the course of their business, including compliance with federal and state laws and rules. Please visit our website for more information.