Tardy RIA state filers subject to 'deregistration' by SEC

It looks as though a substantial number of "midsize" advisers will miss the June 28 due date for switching their registrations from the Securities and Exchange Commission to state regulators. The SEC expects a total of 2,400 advisory firms will be making the switch. Those who miss the deadline "would be subject to deregistration proceedings" by the SEC, agency spokesman John Nester wrote in an e-mail. Over the past two months, the commission has sent alerts to about 1,500 midsize advisers who have not filed for registration in their home states, Mr. Nester noted. Compliance experts says midsize firms — firms with between $25 million and $100 million in assets — should at the very least get their state applications in the hopper and hope for the best. But observers also say some states are bogged down with reviews of registration applications. "My guess is [midsize advisers are] just going to sit there as SEC-registered advisers" until states approve them, said Daniel Bernstein, director of research and development at MarketCounsel LLC, a compliance consultant. "We're going to have some wiggle room, especially if you can show you've made the [state] filing," he said.