Midsize advisers who don't switch could have their registrations withdrawn

Midsize advisers who haven't completed their switch to state registration from the SEC could have their registrations withdrawn — possibly by the end of the year. The Securities and Exchange Commission will have to put out a public notice that lists midsize advisers who haven't completed their state registrations and withdrawn from the SEC, and give those advisers a chance to argue why they shouldn't be terminated, said Maryland Securities Commissioner Melanie Lubin. “Everyone is talking about a notice going out this fall” from the SEC, she said last Monday at the annual meeting of the North American Securities Administrators Association Inc. in San Diego. About 250 advisory firms are subject to SEC deregistration, “although that number is dropping every day,” Ms. Lubin said in an interview.

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Although the SEC hasn't indicated when it might yank the registrations of tardy firms, she predicted that it could happen before year-end. Under the Dodd-Frank reform law, midsize advisers — those with $25 million to $90 million in assets under management — were supposed to move to state oversight by the end of June. SEC spokesman John Nester declined to comment. Once the process is completed, between 2,500 and 2,700 advisers will have moved to state jurisdiction. NASAA members have been active in reaching out to tardy advisers in their states, Ms. Lubin said. Advisers have an added incentive to finalize the switch. If their firms' names are published as part of the deregistration process, they will have to report the listing on their regulatory disclosures, Ms. Lubin said. [email protected] Twitter: @dvjamieson