Regulation of Investment Advisors - State Registration Process

While the Investment Advisers Act of 1940 governs federal registration of IAs, state registration of IAs is regulated under the Uniform Securities Act (Weblink 1.3).
Registration of investment advisers and investment adviser representatives is now available using the Investment Adviser Registration Depository (IARD) system referenced below. Under the Uniform Securities Act, state-registered IAs must also file what's known as a "consent to service of process," which appoints the state administrator as your agent to receive and process any legal complaints.

Finally, while a state may not require IAs to file if they are registered with the SEC, they may require IAs to file with the state any documents filed with the SEC, to file a consent to service of process, and/or to pay state fees.

States may also require any or all of the following:

  • A passing score on a competency exam for each person acting as an investment adviser or investment adviser representative
  • Payment of a fee for processing investment adviser application
  • Certain disclosures to the securities agency and/or the public
  • Registration of branch offices of the adviser
  • A bond or minimum net capital


Exam Tips and Tricks
The Series 65 exam is likely to have a number of questions on the state registration process, but most are pretty straightforward. Here is a typical example:

A state administrator can require all of the following of an investment adviser applicant EXCEPT:

  1. Minimum surety bond coverage
  2. Minimum competency evidenced by passing an examination
  3. Minimum net capital
  4. Minimum number of years of investment advisory experience


Answer
In this question the correct answer is "d", since the Uniform Securities Act does not require a specific number of years of experience.


Federally Registered Investment Advisers


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