States announce reviews for midsize advisers

State regulators last week announced a coordinated review program for midsize investment advisers who will have to switch to state oversight.

The program is for investment advisers registered with the Securities and Exchange Commission who must register with anywhere from four to 14 states, according to the North American Securities Administrators Association Inc.

Under the Dodd-Frank Act, financial advisers with $25 million to $100 million in assets under management must switch from federal to state registration by June.

Advisers registered in 15 or more states can remain with the SEC.

“We're hoping this [program] will smooth the whole process,” said Melanie Lubin, Maryland's securities commissioner, who was involved in designing the program. “A lot of this is just reconciling comments [advisory] firms get from states.”

MARYLAND ADVISERS

For example, Maryland advisers typically register in the District of Columbia and Virginia, as well, Ms. Lubin said.

“They might a get comment from a Virginia examiner that may or may not line up with a comment from one of mine,” she said.

“This is just putting a [formal] process in place” to resolve deficiencies, Ms. Lubin said.

To participate in the program, advisers must submit a coordinated review form found on NASAA's Switch Resource Center website, as well as all required documents, such as ADV forms, client contracts and financial information. There is no cost for using the service.

A program manager will act as facilitator in coordinating state reviews, but final authority to approve applications remains with each state.

About 3,200 advisory firms are expected to move from federal to state registration.

Firms must notify the SEC by the end of March as to their eligibility to remain SEC-registered. That is also the deadline for enrolling in NASAA's coordinated-review program.

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Related Topics: North American Securities Administrators Association Inc (NASAA), Securities and Exchange Commission