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May 01, 2011 at 08:00 PM
The Securities and Exchange Commission (SEC) says that while it fully intends to adopt final rules by July 21 implementing three provisions of Dodd-Frank involving the “switching” of advisors to state registration, as well as private fund and venture capital fund advisors’ registration with the SEC, the agency will lengthen the date for complying with such rules.
Robert Plaze, associate director of the SEC’s Division of Investment Management, told David Massey, president of the North American Securities Administrators Association (NASAA), in a April 8 letter that the SEC will finalize rules by July 21 on requiring those advisors with less than $100 million in assets under management (AUM) to switch to state registration; requiring advisors that rely on the private advisor exemption to register; and exempting from that requirement certain venture capital fund advisors as well as advisors to private funds with less than $150 million in AUM in the U.S.
Under Section 410 of Dodd-Frank, “mid-sized advisers”—those having between $25 million and $100 million of assets under management–will have to withdraw from registration with the SEC and register with one or more states pursuant to state law. Plaze explained in the letter that once the SEC adopts its final rule, the Investment Adviser Registration Depository system (lARD) will require “re-programming to accept advisers’ transition filings.” Because the re-programming process will take until the end of the year to complete, he continued, the SEC “expects that the Commission will consider extending the date by which mid-sized advisers must transition to state regulation such that all SEC-registered advisers would be required to report their eligibility for registration with the Commission in the first quarter of 2012.”
Those mid-sized advisors that are no longer eligible for Commission registration, Plaze said, “would have a grace period providing them time to register with the appropriate state regulators and come into compliance with state law before withdrawing their Commission registration.”
In response to Plaze’s letter, Massey (left) said that “NASAA has committed to implementing the ‘switch’ in active coordination with the SEC” and that “NASAA members continue to plan to handle the mechanics of the transition in accordance with the schedule that the Commission ultimately adopts.”