As I described in a prior article, the duality of the state and federal registration regime for investment advisers has resulted in a bit of a regulatory maze – especially for new advisers seeking registration at the state level. Determining when and where registration is required is not always intuitive, and state investment adviser regulations can vary rather dramatically from state to state.
Yet one state stands out as perhaps the quirkiest: New York.
First of all, New York does not register investment adviser representatives. This means that it does not participate in the Form U4 filing process administered by the Financial Industry Regulatory Authority on behalf of the Securities and Exchange Commission, which is a key data source that the SEC uses to populate its Investment Adviser Public Disclosure or IAPD website. Therefore, an individual associated with a New York state-registered investment adviser will not be searchable from the IAPD website unless that individual happens to be registered in another state besides New York.
In addition to creating a public disclosure void, the lack of an investment adviser representative registration regime also creates a unique registration obligation for “mid-sized” advisory firms in New York that have between $25 million and $100 million in regulatory assets under management. Such obligation is described in Form ADV Part 1 Item 2(A)(2), and it essentially shortcuts the $100 million RAUM threshold that is ordinarily required before qualifying to register with the SEC instead of a particular state.