Are Mid-Sized Advisers Subject to Examination by the State Securities Division?

By: Daniel A. Perry

Time for yet another typical lawyer answer … it depends! As discussed in a previous article, a Mid-Sized Adviser is an adviser that manages between $25 million and $100 million in assets under management. Typically, these advisers must register with the state securities division in the state where the adviser conducts business unless the adviser qualifies for an exemption from registration.

However, an adviser is almost always subject to examination by the state securities division. Being an Investment Adviser (IA) or an Investment Adviser Representative (IAR) subjects you to audit and investigation by the state securities division, as well as a whole host of compliance related issues. Nearly every IA and IAR will be subject to examination by their state securities division, except in New York.

New York is the only state where Mid-Sized advisers are not subject to examination by the state securities division. Therefore, Mid-Sized advisers in New York are required to register with the Securities and Exchange Commission (SEC) and are subject to examination by the SEC.

For more information

The rules and compliance requirements are complex. Many people find a benefit in hiring our office as their General Compliance Counsel. If you are an investment adviser and have questions, please contact our office at (513) 241-0400 to schedule an initial consultation. You can also fill out the contact form on our website, and one of our attorneys will respond shortly.