Investor Bulletin: 

Transition of Mid-Sized Investment Advisers from Federal to State Registration

 www.investor.gov

The SEC’s Office of Investor Education and Advocacy 

is issuing this Investor Bulletin to make investors aware 

of upcoming changes in the registration rules for some 

investment advisers. 

On July 21, 2010, the Dodd-Frank Wall Street 

Reform and Consumer Protection Act (“DoddFrank Act”) was signed into law. The Dodd-Frank 

Act amends certain provisions of the Investment 

Advisers Act of 1940 by delegating generally to the 

states responsibility over certain mid-sized investment 

advisers – i.e., those that have between $25 million 

and $100 million of assets under management 

(“AUM”).

As discussed in greater detail below, the new law and 

rules adopted by the SEC will require a significant 

number of advisers currently registered with the 

SEC to withdraw their registrations with the SEC 

and to switch to registration with one or more state 

securities authorities. This means that state securities 

authorities will have primary regulatory authority 

over a substantial number of investment advisers that 

previously were subject to primary regulation by the 

SEC. Larger investment advisers, generally, those 

with over $100 million of AUM, will continue to be 

registered with the SEC and will be subject to federal 

regulation (state investment adviser laws requiring 

registration, licensing, and qualification have been 

preempted for these advisers).

These changes began to apply to new applicants for 

SEC registration on July 21, 2011, but will not apply 

to advisers currently registered with the SEC until 

2012.

New AUM Thresholds for SEC Registration

The Dodd-Frank Act and SEC rules increased the 

threshold above which all investment advisers must

register with the SEC from $30 million to $110 

million of AUM. Prior to July 2011, an investment 

adviser regulated by the state in which it maintained 

its principal office and place of business generally 

was prohibited from registering with the SEC unless 

the adviser had at least $25 million of AUM, and was 

required to register with the SEC once it had at least 

$30 million of AUM. Investment advisers with less 

than $110 million of AUM may be prohibited from 

registering with the SEC, depending on the size of the 

adviser’s AUM and whether the adviser meets other 

requirements.

The new thresholds and requirements for registration 

are as follows:

•	 A small adviser with less than $25 million of

AUM is prohibited from SEC registration if its 

principal office and place of business is in a state 

that regulates advisers (currently all states except 

Wyoming).

Investor Assistance (800) 732-0330

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•	 A mid-sized adviser with AUM between

$25 million and $100 million of AUM:

•	 Is required to register with the SEC if 

its principal office and place of business 

is in New York or Wyoming, unless a 

registration exemption is available, e.g., 

exemption for certain advisers to private 

funds.

•	 Is prohibited from SEC registration if its 

principal office and place of business is in 

any state except New York or Wyoming, 

and the mid-sized adviser is required to be 

registered in that state. If the mid-sized 

adviser is not required to be registered in 

that state, then the adviser must register 

with the SEC, unless a registration 

exemption is available. 

•	 An adviser approaching $100 million of

AUM may rely on a registration “buffer” that 

ranges from $90 million to $110 million of 

AUM. The adviser:

•	 May register with the SEC when it acquires 

$100 million of AUM;

•	 Must register with the SEC once it reaches 

$110 million of AUM, unless a registration 

exemption is available; and

•	 Once registered with the SEC, is not required 

to withdraw from SEC registration and register 

with the states until the adviser has less than 

$90 million of AUM.

•	 A large adviser with at least $110 million of 

AUM is required to register with the SEC, 

unless a registration exemption is available.

Timing of Transition

The SEC has adopted transition rules which are geared 

toward implementing the transition to state registration 

in an orderly manner. The following table summarizes 

the key dates for the transition:

Investor Assistance (800) 732-0330 www.investor.gov

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July 21, 2011 to 

December 31, 

2011

January 1, 2012 March 30, 2012 June 28, 2012

New registration 

thresholds and 

requirements apply 

to new applicants, 

but not to existing 

SEC-registered 

advisers until the 

dates indicated 

in this table, as 

applicable.

Each SEC-registered 

adviser as of July 21, 

2011 must remain 

registered with the 

SEC until this date 

(unless relying on an 

exemption).

Last day for all SECregistered advisers to 

file the required Form 

ADV amendment.

Mid-sized advisers 

not eligible for SEC 

registration must file 

form ADV-W to 

withdraw by this date.

July 21, 2011 to 

December 31, 2011

January 1, 2012 March 30, 2012 June 28, 2012
•	 Existing Registrants. As described in the table 

above, each SEC-registered adviser as of July 21, 

2011 must remain registered with the SEC until 

January 1, 2012 (unless an exemption from SECregistration is available).

•	 Each SEC-registered adviser as of January 

1, 2012 (regardless of size) must file a Form 

ADV amendment by March 30, 2012, 

which for most investment advisers will 

be their annual updating amendment. The 

adviser should reflect the current market 

value of its AUM determined within 90 

days of the filing, and should update all of 

the other questions on the form.

•	 Mid-sized advisers that are no longer 

eligible for SEC registration will need 

to be registered with the state securities 

authorities by June 28, 2012, and must 

withdraw their SEC registrations by 

filing Form ADV-W, indicating a “partial 

withdrawal,” no later than that date.

•	 New Applicants. All new mid-sized advisers 

are prohibited from registering with the SEC and 

must register with the state securities authorities. 

These advisers must register with the applicable 

state, unless a registration exemption is available 

in that state, e.g., exemption for certain advisers to 

private funds.

Who Regulates Your Investment Adviser?

It is important to know which regulator oversees 

your investment adviser. Is your investment adviser 

regulated primarily by the SEC or by a state securities 

authority? Do you know whether your investment 

adviser is small, mid-sized, or large (based on its 

AUM)? Consider contacting your investment adviser 

to find out who has primary responsibility for 

regulating it.

Investor Assistance (800) 732-0330 www.investor.gov

 Related Information

Check Out Your Investment Adviser on 

the Investment Adviser Public Disclosure 

Database (IAPD)

Frequently Asked Questions Regarding MidSized Advisers

The adopting release amending Form ADV, 

dated June 22, 2011, can be found at: http://

www.sec.gov/rules/final/2011/ia-3221.pdf.

Amended Form ADV can be found at:

http://www.sec.gov/rules/final/2011/ia3221-appd.pdf.

Amended Form ADV instructions can 

be found at: http://www.sec.gov/rules/

final/2011/ia-3221-appa.pdf and http://

www.sec.gov/rules/final/2011/ia-3221-

appb.pdf.

For information on how the new law and 

rules adopted by the SEC might affect small 

businesses, see the Small Entity Compliance 

Guide: Rules Implementing Dodd-Frank Act 

Amendments to the Investment Advisers Act.

The North American Securities 

Administrators Association (NASAA) 

provides information for mid-sized 

investment advisers regarding the switch from 

federal to state registration:

http://www.nasaa.org/1719/ia-switchresource-center/

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The Office of Investor Education and Advocacy has 

provided this information as a service to investors. It 

is neither a legal interpretation nor a statement of 

SEC policy. If you have questions concerning the 

meaning or application of a particular law or rule, 

please consult with an attorney who specializes in 

securities law.

Investor Assistance (800) 732-0330 December 2011

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