Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The Dodd-Frank Act shifts regulatory responsibility for many “mid-sized advisers” to state authorities.  A “mid-sized adviser” is an investment adviser that has between $25 million and $100 million of assets under management.  The SEC has recently posted some frequently asked questions in this area to its web site.  Some of the topics addressed are:

  • Are mid-sized advisers required to register with the Securities and Exchange Commission?
  • In which states would a mid-sized adviser not be “subject to examination” by the state securities authority?
  • How does a mid-sized adviser determine if it is “required to be registered” in the state where it maintains its principal office and place of business?
  • When is a mid-sized adviser that is no longer eligible for Commission registration required to switch to state registration?

In the adopting release related to this topic, the SEC stated “All state securities authorities other than Minnesota, New York and Wyoming have advised our staff that advisers registered with them are subject to examination.”  In these FAQs, the SEC has dropped Minnesota from the list of states where investment advisers are not “subject to examination.”  We are not sure what is going on, as Minn. Stat. § 80A.66 has always provided “audit and inspection” authority.  Perhaps the SEC got it wrong in the first place or the relevant Minnesota authorities did not timely respond (or responded incorrectly) to the SEC request.

Check frequently for updates on the Dodd-Frank Act and other important securities law matters.

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