Unit 9 Flashcards
Definition of Investment Adviser
Any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities
Three “non-persons”
Minor, deceased individual, individual declared mentally incompetent
Aspects of three-prong test
- Gives advice to others on securities
- Does so as part of a regular business activity
- Receives compensation for performing this activity
Two criteria to qualify for “Investment counsel”
- Principal must be giving investment advice 2. Adviser must provide investment supervisor services
Who is included in definition of investment advisor after SEC Release IA-1092
Financial planners, pension consultants, sports & entertainment representatives
“Excluded” person
Someone who is not included in the definition of a financial adviser
“Exempted” person
Someone not subject to the registration provisions of the acts even though that person meets the definition
Federal covered investment adviser
Individuals who are solely under federal jurisdiction and are specifically excluded from the definition of investment adviser in the Uniform Securities Act
7 exclusions from definition of financial adviser
- Bank holding company 2. L.A.T.E. 3. Broker who receives no compensation for services 4. Publishers who qualify 5. Investment adviser representatives 6. Federal covered advisor 7. Anyone Administrator includes
Federal Law Exemptions
Intrastate advisers, advisors to insurance companies,
Large Investment Advisers
Those with at least $100m or more in AUM, registers with SEC
Small Investment Advisers
Those with under $25 million in AUM, registers with state
Mid-size Advisers
Those with AUM between $25m and $100m, registers with state
Exemptions from prohibition of registration under Dodd-Frank
Pension consultants providing services to benefit plans with at least $200m in assets, midsize advisers between $100m and $110m, advisers expecting to be eligible for SEC registration within 120 days of filing application, internet advisers
$20 million buffer
Once an adviser is registered with the SEC it doesn’t give up registration until reaching below $90m in AUM ($20 million below $110m requirement)
Time requirement to withdraw from SEC and register with state if AUM drops below $90m
180 days
Time requirement to register with SEC once AUM reaches above $110m
90 days