June 13, 2021

Volume XI, Number 164

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June 11, 2021

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New York Adopts Investment Adviser Representative Registration and Examination Requirements

On February 1, 2021, new regulations issued by the New York State Department of Law took effect, requiring certain investment adviser representatives, principals and supervisors of investment advisers (collectively, IARs) to register with New York, and satisfy certain examination requirements (unless a waiver is available). Registration is required by August 31, 2021, although IARs who permissibly operated under the prior rules and submit the requisite materials by August 31, 2021 can continue to operate under such prior rules until December 2, 2021. Note that prior to the new regulations taking effect, New York had not historically required the registration of IARs.

Under the new regulations, IARs representing an SEC-registered investment adviser from a New York place of business and meeting the definition of IAR under the Investment Advisers Act of 1940, as amended (Advisers Act), are required to register in New York. As relevant, the Advisers Act defines an IAR as a supervised person of an investment adviser that has (i) more than five clients who are natural persons and (ii) more than 10 percent of its clients who are natural persons. For purposes of counting natural person clients, “qualified clients” (as defined under the Advisers Act) are excluded.

Subject to certain available waivers, the new regulations provide that IARs must receive a passing grade on the Series 65 examination or the Series 7 and Series 66 examinations within two years prior to the date of filing for registration. IARs apply for registration with New York by submitting a Form U4 on the Investment Adviser Registration Depository (IARD) system and paying a $200 filing fee.

In general, IARs must be in compliance with the new regulations by December 2, 2021. IARs who permissibly operated under the prior rules can continue to operate under such prior rules so long as a Form U4 is submitted by August 31, 2021.

© 2021 Vedder PriceNational Law Review, Volume XI, Number 133
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About this Author

Jeff VonDruska Investment Services Lawyer Vedder Price Law Firm
Shareholder

Jeff VonDruska is a Shareholder in the Chicago office of Vedder Price and a member of the firm’s Investment Services practice group.

His practice includes the representation of investment advisers, family offices, private funds, registered mutual funds, closed-end funds, exchange-traded funds and other financial institutions on a broad range of legal, regulatory, governance, formation and compliance matters.

Mr. VonDruska has significant experience in regulatory and compliance matters affecting investment advisers, including registration and marketing. He also counsels...

312-609 7563
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