State Regulation of Investment Advisers

STATE REGULATION OF

INVESTMENT ADVISERS

G. Philip Rutledge, Partner

Bybel Rutledge LLP

Fundamentals of Investment Adviser Regulation

PRACTISING LAW INSTITUTE

July 13, 2016

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BLUE SKY IS EVERYWHERE

? Uniform Securities Act

¨C 1956 Act is the basis of regulation in many states

¨C 2002 Act is entirely new act adopted in GA, HI, IA, ID, IN, KS,

ME, MI, MN, MS, NH, NM, OK, SC, SD, VT, VI, WI and WY (eff.

7/1/2017)

? Each state has agency which administers securities laws

? North American Securities Administrators Association

(NASAA) maintains a link to each state securities

regulator at

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THE REGISTRATION DIVIDE

? Unlike broker-dealer registration where both SEC and

states have registration jurisdiction, registration of

investment advisers is exclusive to one or the other

? States, however, can require SEC-registered advisers

operating in their jurisdiction to file a notice on Form

ADV and pay a filing fee

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FRAUD AND DECEIT

? However, SEC and states both have jurisdiction

over all investment advisers with respect to

activities constituting fraud or deceit

¨C Query: do SEC anti-fraud rules (eg pay-to-play,

code of ethics) apply to state-registered advisers

even in the absence of analogous state rules?

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EXCLUSIVE SEC REGISTRATION

? Investment advisers with more than $100 million of

assets under management (¡°AUM¡±)

? Advisers to registered investment companies

? Required to register in 15 or more states

? Provides advice exclusively through the internet

? Pension consultant to plan with $200 million in value

? Advisers in states with no IA regulation (Wyoming)

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