I. Registration Fees.
- Investment Adviser: $125.
- Investment Adviser Representative: $25.
II. Financial & Bonding Requirements. If the firm has discretion it must maintain a minimum net worth of $10,000, preferably $12,000, to preclude the filing of monthly interim reports. If the firm has custody then it must have a minimum net worth of $35,000, preferably $42,000, to preclude the filing of monthly reports. If the firm collects fees of $500 or more in 6 months or more in advance it must maintain a positive net worth.
A Statement of Financial Condition (Balance Sheet), verification form pursuant to California Code of Regulations Rule 260.241.2B, and a worksheet that demonstrates compliance with the minimum financial requirements must be filed. The balance sheet should be dated within 45 days prior to the filing of the application and prepared in accordance with generally accepted accounting principles. For the worksheet to demonstrate compliance with the minimum financial requirements, the firm may use the Minimum Financial Requirements Worksheet (Form 260.237.2). Note: This requirement does not apply if you are also licensed as a broker-dealer in California.
III. Sole Proprietorships. Sole proprietors must file a paper Form U4 with California and provide proof of qualification if not on CRD.
IV. De Minimis. National de minimis provisions.
V. CA Corporations. If the firm is a corporation organized in California, pursuant to California Corporations Code (“Code”) Section 25110, the offer and sale of securities in California must be qualified, unless exempt. If exempt, the firm should file the appropriate limited/small offering exemption notice. The firm must make a securities or exemption notice filing with the California Corporations Commissioner (“Commissioner”). Please note that small corporations organized in California generally file a notice of transaction pursuant to either Code Section 25102(f) or 25102(h).
VI. CA Limited Liability Company. If the firm is a limited liability company organized in California. Pursuant to California Corporations Code (“Code”) Section 25110, the offer and sale of securities in California must be qualified, unless exempt. If exempt, the firm should file the appropriate limited/small offering exemption notice. The definition of “Security” is found in Code Section 25019. The interests in a limited liability company and any class or series of such interests are considered a security and thus subject to either qualification of the securities or the filing of an exemption notice unless all of the members are actively engaged in the management of the limited liability company. The appropriate securities/notice filing should be made with the Commissioner or, if you are not making the securities/notice filing, please provide the reason(s) the filing is not being made and a copy of your Articles of Organization showing that all members are managing members of the company. Please note that, if required, limited liability companies organized in California generally file a notice of transaction pursuant to either Code Section 25102(f) or 25102(h).
VII. Other Required Documents.
- Client contracts including Third Party Solicitor agreements. If an adviser to a pooled investment vehicle, provide private placement memorandum, investment management/fund agreement, subscription documents and Reg D, if applicable.
- Customer authorization of disclosure of financial records (Form QR 500.261)
- Proof of residency.
- Consent to service.
- Method for computing net worth.
For additional information, please contact the state securities administrator.