Document ID: SEC-2005-0105-0001
Agency: sec
Document Type: Notice
Title: Approval of Investment Adviser Registration Depository Filing Fees
Posted Date: 2005-10-13T04:00Z

[Federal Register: October 13, 2005 (Volume 70, Number 197)]
[Notices]               
[Page 59789-59790]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13oc05-141]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-2439]

 
Approval of Investment Adviser Registration Depository Filing 
Fees

AGENCY: Securities and Exchange Commission.

ACTION: Order.

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SUMMARY: The Securities and Exchange Commission (Commission or SEC) is 
waiving for one year Investment Adviser Registration Depository (IARD) 
annual filing fees for all advisers.

EFFECTIVE DATE: October 7, 2005.

FOR FURTHER INFORMATION CONTACT: Jennifer L. Sawin, Assistant Director, 
at (202) 551-6787, or Iarules@sec.gov, Office of Investment Adviser 
Regulation, Division of Investment Management, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549-0506.

Discusson

    Section 203A(d) of the Investment Advisers Act of 1940 (Advisers 
Act) authorizes us to require investment advisers to file applications 
and other documents through an entity designated by the Commission, and 
to pay reasonable costs associated with such filings.\1\ In 2000, we 
designated the NASD as the IARD system operator and approved filing 
fees,\2\ and later required advisers registered or registering with us 
to file Form ADV through the IARD.\3\ Approximately 9,000 advisers now 
use the IARD to register with us and make State notice filings 
electronically through the Internet.
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    \1\ See 15 U.S.C. 80b-3a(d).
    \2\ Designation of NASD Regulation, Inc., to Establish and 
Maintain the Investment Adviser Registration Depository; Approval of 
IARD Fees, Investment Advisers Act Release No. 1888 (July 28, 2000) 
[65 FR 47807 (Aug. 3, 2000)]. Following a corporate restructuring in 
2002, the name of the IARD system operator was changed to ``NASD.''
    \3\ Electronic Filing by Investment Advisers; Amendments to Form 
ADV, Investment Advisers Act Release No. 1897 (Sept. 22, 2000) [65 
FR 57438 (Sept. 22, 2000)].
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    IARD filing fee revenues from advisers registering or registered 
with the SEC (SEC-associated IARD revenues) have exceeded projections 
made in 2000 when the current fee schedule was approved. Pursuant to 
that schedule, filing fees vary according to the adviser's assets under 
management. The number of SEC-registered advisers has grown from an 
estimated 8,100 in 2000 to approximately 9,000 today. More 
significantly, advisers' managed assets have increased, which has moved 
many investment advisers to higher fee

[[Page 59790]]

categories. In 2000, the filing fees were set based on estimates that 
nearly half of SEC-registered advisers were in the smallest fee 
category. As of the end of the 2004 fiscal year, however, fully half of 
SEC-registered advisers were in the highest fee category. Furthermore, 
IARD expenses associated with SEC filings (SEC-associated IARD 
expenses) have been less than was projected in 2000.
    As a result, SEC-associated IARD revenues have exceeded SEC-
associated IARD expenses, generating a surplus. As of June 30, 2005, 
the cumulative surplus of SEC-associated IARD revenues over SEC-
associated IARD expenses was approximately $8.5 million (SEC-associated 
surplus). Following discussions among Commission staff, representatives 
of the North American Securities Administrators Association, Inc. 
(NASAA) on behalf of the State securities authorities,\4\ and NASD, 
NASD wrote our staff a letter that ``recommends that the annual IARD 
fee for SEC-registered advisers be waived for a one-year period from 
November 1, 2005 to October 31, 2006.'' \5\ Advisers registered with us 
pay their IARD annual fees when they file their annual updating 
amendment to Form ADV, due within 90 days of their fiscal year end.
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    \4\ The IARD system is used by both advisers registering or 
registered with the SEC and advisers registered or registering with 
one or more State securities authorities. NASAA represents the State 
securities administrators in setting IARD filing fees for State-
registered advisers. State-registered advisers pay their annual 
system renewal fees in December each year, regardless of their 
fiscal year.
    \5\ A copy of the letter is available on our website. NASD has 
not suggested changes to the initial IARD filing fees, which are 
intended to cover the costs associated with entitling new 
registrants on the IARD system. NASD represents that the costs per 
adviser have not changed substantially. We are not changing or 
waiving these IARD initial set-up fees, which remain $150 for 
advisers with assets under management under $25 million; $800 for 
advisers with assets under management between $25 million and $100 
million; and $1,100 for advisers with assets under management over 
$100 million.
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    In light of the SEC-associated surplus, we have determined to waive 
for one year annual filing fees for all SEC-registered advisers. This 
action is expected to waive approximately $3.9 million in IARD system 
fees. The fee waiver will apply to all annual updating amendments filed 
by SEC-registered advisers from November 1, 2005 through October 31, 
2006. Based on current projections of expected SEC-associated IARD 
revenues and SEC-associated IARD expenses in the next several years, 
the Commission believes that the current surplus exceeds the amount of 
surplus needed for system enhancements. Accordingly, the Commission 
believes that a one-year waiver of IARD annual updating amendment 
filing fees is appropriate.
    In addition, we note that NASD's letter further ``recommends that 
annual IARD fees for SEC-registered advisers be reduced 30% beginning 
November 1, 2006.'' \6\ In this regard, current projections of fee 
revenues and system expenses cause us to believe that a reduction in 
annual filing fees will be necessary to more closely align the IARD 
filing fees with the costs of those filings. Under Advisers Act section 
203A(d), the Commission may require advisers to pay filing fees that 
reflect the reasonable costs associated with filings made by SEC-
registered advisers through the IARD.
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    \6\ We note that NASAA has announced a one-year waiver of annual 
filing fees and a subsequent reduction of 30% in annual filing fees 
for State registered advisers.
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    Accordingly, we plan to issue shortly a notice soliciting comment 
on the appropriate level of IARD filing fees for the period after the 
expiration of the one-year waiver. Among the alternatives on which we 
plan to seek comment are a percentage fee reduction for annual updating 
amendments filed by SEC-registered advisers beginning November 1, 2006 
and a second one-year waiver of annual updating amendment fees.
    It is therefore ordered, pursuant to sections 203A(d) and 206(A) of 
the Investment Advisers Act of 1940, that:
    For annual updating amendments to Form ADV filed from November 1, 
2005 through October 31, 2006, the fee otherwise due from SEC-
registered advisers is waived.

    By the Commission.

    Dated: October 7, 2005.
J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E5-5599 Filed 10-12-05; 8:45 am]

BILLING CODE 8010-01-P