The primary statutory requirements for the registration of dealers and investment advisers and their agents or representatives are found in Sections 12, , 13, 14, 18, 19, and 35 of the Texas Securities Act. Once registered, each registrant is required to timely, within 30 days, amend its information when an event occurs that causes an answer to a question on its application to become incorrect. All registrations for dealers, investment advisers, and their agents or representatives expire at the end of each calendar year and must be renewed timely for the registrant to remain registered to do business in Texas.
The registration of investment adviser representatives are processed through the CRD system. These online systems enable dealers and investment advisers to register themselves and their agents and representatives in all desired states via a single electronic platform. Skip to main content. Share This. A 1 and 2 of the Act allow the Securities Commissioner to deny registration to a person: convicted of any felony, or convicted of any misdemeanor which directly relates to the person's securities-realted duties and responsibilities.
The states of Texas and Louisiana do not offer a client de minimis exemption from registrations or notice filings for firms and individuals regardless of whether the firm or individuals maintain a place of business in those states. However, before a firm with a restricted limited registration can have a sixth client, it must transition to a full registration in Texas. If you are notified that a client is relocating to Texas or Louisiana, please make sure the appropriate filings are made immediately.
If you currently have a restricted limited registration in Texas, please be sure you transition to full registration prior to the sixth client or prospect. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms.
RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese.
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While states may defer to the SEC with respect to certain rules and regulations like custody, e. From this point forward in the article, the added complexities of state regulation will be brought into the fold.
Everything discussed in this article so far has addressed the federal cash solicitation rule as it applies to investment advisers registered with the SEC. But what about the solicitors themselves? This is where it gets messy. As a fundamental matter, it is important to highlight the fact that the SEC does not register or license natural persons including solicitors associated with SEC- or state-registered investment advisers, or require their qualification by examination e.
Thus, in practice, whether a solicitor must become registered as an investment adviser representative with a particular state depends on both the activity of the solicitor, his or her relationship to the RIA, and the particular state s involved and their view on the registration of solicitors operating in their state. Because Federalism, each state has adopted its own rules and regulations that govern the licensing, registration, and qualification of investment adviser representatives as such term is defined by a particular state.
Most states specifically include solicitation activity as an activity that requires some combination of licensing, registration, and qualification as an investment adviser representative. This could entail, for example, passing the Series 65 exam or qualifying with a professional exemption like the CFP marks or CFA designation , registering as an IAR of an existing RIA and filing a U4, or registering a new RIA through which to engage in solicitation and referral activity for compensation.
Missouri, for example, very explicitly does not require solicitors to register as investment adviser representatives. A: NO. Investment advisers may pay cash fees to a solicitor who refers business as long as the solicitor does not offer investment advice and is not subject to disqualification. The fee must be paid pursuant to a written agreement between the adviser and the solicitor and a copy of this agreement must be given to the client prior to any advisory contact. California, on the other hand, requires solicitor registration as an investment adviser representative but does not necessarily require that the solicitor qualifies as such by taking the series North Carolina effectively eliminates the entire concept of third-party solicitors and requires solicitors to register as investment adviser representatives with the RIA for which they are soliciting.
New Mexico exempts solicitors from registering as investment advisers or investment adviser representatives so long as such solicitors only receive a one-time payment in consideration for the solicitation activity see FAQ 2. Texas is an example of a state that clearly distinguishes between solicitors to state-registered advisers, and solicitors to SEC-registered advisers, as well as in-house and third-party solicitors.
Per FAQ 1. Must I also register or make a filing with the Texas Securities Commissioner? A: As a general rule, if a solicitor is a supervised person, the solicitor is not required to register with the Texas Securities Commissioner. Whether a solicitor for an SEC-registered investment advisor is subject to state registration requirements turns on: 1 whether the solicitor is a supervised person, see FAQ 1.
If a solicitor of an SEC-registered investment adviser does not provide investment advice, the solicitor is not required to register with the Texas Securities Commissioner, but is subject to the fee and notice filing provisions. A third-party solicitor for an SEC-registered investment adviser i. A solicitor who solicits on behalf of both a Texas-registered investment adviser and an SEC-registered investment adviser is subject to Texas registration requirements.
Must I also register or make a notice filing with the Texas Securities Commissioner? A: A solicitor of a Texas-registered investment adviser must register with the Texas Securities Commissioner and meet all state registration requirements contained in the Act and Rules.
Note, however, that Texas still requires in-house solicitors to SEC-registered advisers to pay a fee and notice file in the state. The point is that state rules and regulations can vary dramatically and should be reviewed carefully in nearly every solicitor use case. And as noted above, the rules in each of those states may not be the same. Case in point, state solicitor rules can differ based on whether the solicitor is a natural person or entity, whether the solicited client is a natural person or entity, whether the solicitor is soliciting investments into a private fund, whether the state requires dual-registration of third-party solicitors, and so on and so forth.
Just wait until state-by-state fiduciary rules get layered on top… and now I will step down from my soapbox. If an in-house solicitor to an SEC-registered adviser is considered an investment adviser representative under the federal definition, the solicitor must next look to state rules and regulations to assess licensing, registration, and qualification requirements. Similarly, such state-by-state requirements are going to come into play for nearly all third-party solicitors to SEC-registered advisers, as well as all in-house and third-party solicitors to state-registered advisers.
Like the state-by-state web of rules and regulations imposed on solicitors themselves, the regulatory landscape for state-registered RIAs that retain such solicitors is similarly varied, as Rule 4 -3 of the Investment Advisers Act technically only applies to SEC-registered firms.
States that oversee state-registered investment advisers ultimately set their own state rules for firms registered in their states. The challenge, though, is that the proposed Model Rule is just that… a model of a proposed rule that states can adopt. In the meantime, some states do plainly defer to the Federal Rule via cross-reference like Georgia, which does so indirectly through its recordkeeping rule : Rule The key point, though, is that all, none, or some elements of the Federal Rule may be applicable to state-registered RIAs that have engaged solicitors.
Regardless of what Rule 4 -3 requires or not of SEC-registered investment advisory firms. General Inquiries: Questions Kitces. Members Assistance: Members Kitces. Join 41, fellow financial advisors getting our latest research as it's released, and receive a free copy of The Kitces Report on "Quantifying the Value of Financial Planning Advice"! Practice management advice and tools relevant for your business.
Your email address will be used solely for Kitces. Member Login Search Close Search. Search Term:. Executive Summary With the increasingly competitive environment to attract new clients — especially those with sizable portfolios available to manage — more and more advisory firms are beginning to spend money on their business development efforts.
You might find it beneficial to print this manual for future reference. To register each investment adviser representative, electronic filing of Form U4 applications must be via the CRD system. FINRA does not have regulatory authority over investment advisers; therefore, questions related to investment advisory policy, interpretation, or regulatory requirements should be directed to the State Securities Board at Skip to main content.
Share This. Check Sheet for Investment Adviser Registration. In addition, the following items must be filed directly with the Securities Commissioner at: State Securities Board P.