Notice Filing & Transition Explanation

Overview
The National Securities Markets Improvements Act of 1996 (NSMIA) divided regulation of investment advisers between the Securities and Exchange Commission (SEC) and the State securities authorities.

In general, under Title III of NSMIA, the Investment Advisers Supervision Coordination Act, a State cannot require the registration, licensing, or qualification of an investment adviser registered with the SEC. However, NSMIA does allow States to require, for notice purposes, that SEC-registered investment advisers file with the States any document that the adviser files with the SEC. Therefore, an investment adviser registered with the SEC may be required by law to provide to state securities authorities a copy of the Form ADV and any accompanying amendments that the investment adviser has filed with the SEC. These filings are called notice filings. To find out whether your SEC registered investment adviser firm must submit a notice filing to a State, please consult the requirements of the appropriate state securities authority in addition to NSMIA.

There may be limited circumstances where a SEC registered investment adviser also will need to register with a state securities authority. This might occur, for example, if an SEC registered investment adviser provides investment advice to a state pension fund. To determine whether state registration is required or to clarify what an adviser’s current registration status is with a particular state, contact the appropriate state securities authority.

Filing for the First Time on IARD
All investment advisers registered with the SEC must make an initial electronic filing on IARD. This marks the transition from the paper filing process to the electronic filing process. When filing for the first time through IARD, an adviser must 1) provide information about the adviser’s current regulatory status with state authorities (notice filings made or separate state registrations in effect) and 2) complete the new electronic Form ADV.

Transition Filing
ALL INVESTMENT ADVISERS THAT ARE REGISTERED WITH THE SEC AND THAT ARE STATE NOTICE FILERS MUST FIRST TRANSITION ONTO THE ELECTRONIC IARD SYSTEM in order for those investment advisers to change from paper to electronic filers. A transition filing requires basic information that will be used to create an investment adviser’s record in IARD. Unless the investment adviser files a transition filing PRIOR to filing its Form ADV, IARD will charge the adviser’s account for the same notice filing fees that the adviser has already paid to the state with the adviser’s paper filings. If the adviser fails to make a transition filing, IARD will not recognize the firm as having already notice filed (and paid the fees) with the states.

Types of Transition Filings
There are two kinds of transition filings: notice transition filings (SEC registered advisers that are notice filed in a state) and registration transition filings (State registered advisers). It is important to remember a transition filing is NOT a full Form ADV filing. Once a firm submits the transition filing to the IARD system, the State will validate in IARD that the investment adviser is currently a notice filer or registrant with that State. Each State that the investment adviser includes in the transition filing will enter the adviser’s “effective date” or “registration date” and, in doing so, complete the firm’s transition onto the IARD system. A firm does not have to wait to file the Form ADV until the State acts on the transition filing. A firm can begin filing its Form ADV anytime AFTER the firm has filed its transition filing on IARD.

Transition Your Current State Regulatory Information Before Starting Form ADV
Information about an adviser’s current state regulatory relationships must be entered on IARD before the adviser begins to complete the electronic Form ADV. Don’t skip this step or it will cause problems later.

There are two categories of state regulatory information that must be entered on IARD: notice filings and state registrations. Most SEC advisers only make notice filings with state securities authorities. This information is entered under Transition State Notice Filing Information. A few SEC advisers may be required to also separately register with a state. This information must be entered under Transition State Registration Information. Any firm registered with a state as an investment adviser does not make notice filings with that state.

The information about notice filings and state registration is entered to establish the adviser’s official record on IARD. This information is sent electronically to the designated state authorities for verification. The state securities authority also will enter the adviser’s “effective date” or “registration date” with the state on IARD. Thereafter, a copy of an adviser’s Form ADV will be sent electronically to designated states. Finally, by entering current state information, an adviser avoids being charged a second time for state notice filing fees or state registration fees that previously were paid.

REMEMBER: State regulatory information must be provided before beginning to work on electronic Form ADV. Questions? Contact the appropriate state securities authorities for information about whether your firm currently makes notice filings with a state or is separately registered.