Under rules approved at an SEC open meeting on Wednesday, some 3,200 advisors will find themselves “switched” to state, rather than SEC, regulation because of a change in the way they are classified as mandated by Title IV of the Dodd-Frank Act. The new rule takes effect June 28, 2012.
Investment advisors had been classed by AUM. Those with more than $25 million AUM had been required to register with the SEC, while those with less than $25 million had been subject to state regulation. The AUM value was set in 1996 by Congress and had not changed since its inception.
However, under the new rules, designed to lessen the load on the SEC, advisors with between $25 million and $100 million AUM will find themselves no longer under the jurisdiction of the SEC. They will instead be subject to state jurisdiction, unless their states do not consider advisors subject to examination.