Investment Adviser Registration
Who regulates investment advisers?
Investment advisers may be primarily regulated by the U.S. Securities and Exchange Commission (SEC) or by one or more state securities regulators. The regulator with which an adviser is registered serves as its primary regulator.
Sometimes it is helpful to know which regulatory authority is the primary regulator of an investment adviser. That could happen, for example, if you have a question about which rules and regulations apply to that adviser or if you want to know which regulator you can submit a complaint to.
What is the general rule for state regulation versus regulation by the SEC?
In general, it depends on the size of the investment adviser.
Investment advisers can be divided into three size categories based on their regulatory assets under management (RAUM). RAUM is a specialized calculation of the assets over which they provide investment advice.
- A small adviser has less than $25 million of RAUM.
- A mid-sized adviser has between $25 million and $100 million of RAUM.
- A large adviser has greater than $100 million of RAUM.
Small and mid-sized advisers are generally registered with, and primarily regulated by, one or more state securities authorities. Even so, certain federal securities provisions still apply to state-registered advisers (such as those prohibiting fraud).
Large advisers are registered with the SEC and are primarily subject to federal regulation instead of state regulation. However, SEC-registered investment advisers must comply with state anti-fraud prohibitions.
Also, individual representatives of SEC-registered investment advisers are licensed by and registered with state securities authorities.
Are there exceptions to the general rule based on RAUM noted above?
Yes. In some cases, a small or mid-sized adviser may be permitted or required to register with the SEC.
Here are some examples:
- Mid-sized advisers that are either not required to be registered as an adviser with, or not subject to examination by, the state securities authority where they maintain their principal office and place of business must register with the SEC.
- Advisers to investment companies registered under the Investment Company Act of 1940 must register with the SEC.
- Advisers to business development companies, when the adviser has at least $25 million of RAUM, must register with the SEC.
- Certain internet advisers who provide advice exclusively through an operational interactive website may register with the SEC.
- Multi-state advisers that would otherwise be obligated to register with 15 or more states may register with the SEC.
- Pension consultants providing advisory services to employee benefit plans having at least $200 million of assets may register with the SEC (even though the consultant does not itself have those assets under management).
- Related advisers that control, are controlled by, or are under common control of an SEC-registered adviser may register with the SEC, but only if they have the same principal office and place of business.
- Newly formed advisers that expect to be eligible for SEC registration within 120 days may register with the SEC.
- Non-U.S. advisers giving advice to U.S. persons must register with the SEC, unless an exemption from SEC registration is available (in which case it may be subject to state registration requirements).
Some advisers (like “multi-state advisers”) may have the option of choosing between SEC and state registration.
How do I find out who regulates my investment adviser?
To find out who has primary responsibility for regulating an investment adviser, you can contact it.
You can also use the free Check Out Your Investment Professional search tool on Investor.gov. In addition to checking registration status with the search tool, you can also find information that SEC- and state-registered investment advisers are required to provide about their businesses and investment advisory representatives. The search tool also provides access to registration status and information about brokers and their registered representatives.
ADDITIONAL RESOURCES
How to Use the Investment Professional Search Tool on Investor.gov
Contact Your State Securities Regulator - Contact information for state securities regulators can be found on the North American Securities Administrators Association website.
