If an advisor's existing client has simply moved into such state before registration is complete, a truthful disclosure in the affidavit will trigger an enforcement response from the state regulator. Many require preparation of statements in accord with general accepted accounting principles which has the effect of requiring a small advisor keeping its books on the cash basis to incur substantial professional fees to convert the cash basis balance sheet to audited accrual basis statements. Several States dictate what must be in or what is not permitted in an investment advisory contract which otherwise meets the requirements of the federal Investment Advisors Act. Often, language required by one state will directly contradict language accepted in another. Independent Contractor equals Employee.
Many states interpret their statute's reference to employee as including independent contractor.
We stand one hundred percent committed to support of this proposed legislation. We do believe that it might be preferable to deal with the investment advisory industry in specific terms preserving the ability of the states to preserve their fee base and require local registration for informational purposes, as is proposed for the brokerage industry. Only in this manner may uniformity among the states be achieved so that this form of interstate commerce can expand and flourish.