What Is a Notice Filing?

A notice filing refers to any informational documents that an investment advisor registered with the Securities Exchange Commission may be required to submit to state securities authorities. Notice filing requirements kick in when an SEC-registered investment advisor offers services to state-based clients, like state pension funds, or other entities.

Notice filings must always include copies of ADV forms, which are documents detailing an advisory firm's investment style, assets under management (AUM), and key officers. These filing measures protect consumers, by affording them accurate and transparent views of the advisors they may consider trusting to manage their investment assets.

Key Takeaways

  • A notice filing refers to a document that SEC-registered advisors must file with state securities authorities.
  • Notice filings always entail ADV forms, which outline an advisory firm's investment style, key personnel, and assets under management.
  • Notice filings aim to make state securities oversight resemble federal securities reporting activities.
  • The chief goal with filing notices is to create better-informed consumers and decrease securities fraud.

Understanding Notice Filing

Notice filings experienced an uptick in frequency, following Congress' passage of the National Securities Markets Improvements Act of 1996 (NSMIA). This legislation, which was created as part of an effort to amend the Investment Company Act of 1940 and the Investment Advisers Act of 1940, dramatically altered the relative roles of state and federal government in regulating investment advisors and broker-dealers.

In creating this new framework, Congress required states to conform their record-keeping and financial regulation requirements, so that they more closely resemble federal record-keeping requirements. Simply put: NSMIA aims to unify state and federal securities regulation functions.

Paradoxically, NSMIA simultaneously narrowed the scope of state securities regulation of certain securities knowns as "covered securities," which entail the following types of investments:

  • The underlying securities that mutual funds and other registered investment companies invest in.
  • Nationally traded securities, such as those listed on the New York Stock Exchange.
  • Securities that qualify to trade over Nasdaq.

By checking the state-based securities officials, consumers can determine whether or not the investment advisors that they are contemplating hiring, are required to issue a notice filing.

Components Included With a Notice Filing

An ADV form specifies the investment style, assets under management, and key officers of an advisory firm. The ADV form has two main parts. The first component provides details about an advisor's education, business, and any punitive actions brought against them during the past ten years. The second component comprises the advisor’s service fees and investment strategies.

When vetting potential advisors, it's essential for consumers to analyze an advisor's ADV form before committing his or her assets.

Electronic Filing Requirements

All SEC-registered investment advisors are required to submit an initial electronic filing with the Investment Adviser Registration Depository (IARD), where they must divulge information about their respective regulatory status with state authorities, including noticing filings or state registrations currently in effect.

The fees that advisors must pay to register with IARD depend on the volume of regulatory assets they have under management. Advisors can use the electronic filing of ADV forms to issue notice filings for additional states where they do business, and each state may charge its own set of fees for each individual notice filing.