Frequently Asked Questions

 
 

What is the best way to create a true culture of compliance?

Newly registered? Risk Alert with helpful resources included

Stark & Stark compliance attorney (and Investment Advisor columnist) Tom Giachetti provides a comprehensive description of what the SEC examiners are asking about when they come into a firm's office.  See Creating a True Culture of Compliance.

Questions Advisers Should Ask While Establishing or Reviewing Their Compliance Programs - see Adviser Compliance Questions.

Does The Securities and Exchange Commission have general guidance on the regulation of investment advisers?

Yes.  Regulation of Investment Advisers provides information on the definition of an investment adviser, which investment advisers must register, how an investment adviser registers, and requirements applicable to a registered investment adviser.

SEC Marketing Rule

Press Release
FAQs
Compliance Guide
Final Rule

In what way is NASAA a resource for investment advisers?

The following information can be found on NASAA resources for investment advisers:  state investment adviser registration information, cybersecurity checklist, FAQs, investment adviser guide, and privacy guidance.

When am I required to update my Form ADV?

You must amend your Form ADV each year by filing an annual amendment within 90 days of your fiscal year-end.  Be sure to review all responses to ensure everything is correct.  When information becomes materially inaccurate, you must file an "other than annual" amendment.  

We can help with these filings.

What is the definition of a High Net Worth Individual?

A high net worth (HNW) individual is an individual who is a “qualified client.” The Commission issued an order increasing for the effects of inflation the dollar amount threshold of the assets under-management test from $1,000,000 to $1,100,000 and the dollar amount threshold of the net worth test from $2,100,000 to $2,200,000.

https://www.sec.gov/files/rules/final/2021/ia-5904-fact-sheet.pdf

What are the distinctions between sub-advisory and third-party asset manager arrangements?

For many investment advisers, using an outside money manager provides a valuable means to increase efficiencies.  See subadvisor article from Jacko Law Group for more information.

Where can I find the SEC’s risk alerts?

https://www.sec.gov/exams Other Resources - Risk Alerts

What are some basic requirements for Texas-registered firms?

  • Code of Ethics and policies and procedures manual must be in place and updated when there are changes.

  • Personal trades must be reported to firm within 10 days of quarter-end.

  • Suitability information for clients must be retained and updated every three years.

  • Registration certificate must be current and posted in the office.

  • Emails must be retained.

  • Form ADV 2A and 2B must be filed with the ADV 1 on the IARD system.

  • Disaster recovery/business continuity plan must be in place.

  • No regulatory fee is required for annual ADV amendments.

  • Annual review of compliance program is not required.

What are some basic requirements for SEC-registered firms?

  • A Chief Compliance Officer must be designated.

  • Code of Ethics and policies and procedures manual must be in place and reviewed/updated and attested to by employees annually.

  • Personal trades must be reported to firm within 30 days of quarter-end.

  • Outside business activities and personal holdings must be reported to firm annually.

  • Review of compliance program must be performed and documented annually.

  • Form ADV 2A must be filed with the ADV 1 on the IARD system and amended annually within 90 days of fiscal year-end.

  • Regulatory fee is required for annual ADV amendment.

  • Emails must be monitored, backed up, and tested.

  • A written best execution review must be performed annually. See Risk Alert regarding best execution reviews.

  • Disaster recovery/business continuity plan must be in place and tested annually.

Does an SEC-registered firm need to pay state renewal fees?

Yes.  See IARD Renewal Program for renewal and notice filing fee requirements, payment instructions, and FAQs.

What is the de minimis for having clients in other states?

Texas, Louisiana, and New Hampshire don't have a de minimis.  You must register (if State-registered) or notice file (if SEC-registered) in those states if you have one client located there.  All other states have a de miminis of 6 or more client addresses.  

We can help with these filings.