Investment Advisers FAQs

The revisions to 13 NYCRR Part 11 noted in the December 2, 2020 State Register are not effective until February 1, 2021.

GENERAL

Title 13, Part 11 New York Code of Rules and Regulations (NYCRR) 13 NYCRR 11 can be found here. It is recommended you read 13 NYCRR 11 in its entirety, as well as the guidance referenced below, before starting the process. The SEC website www.sec.gov/iard has other helpful information for both state IAs and FCIAs.

Guidance can be found at IPB Rule Proposal

All firms seeking to register or notice file to conduct investment advisory or solicitor business in New York must file the form ADV through the IARD system. Firms applying for state registration must submit Parts 1A, 1B, 2A and 2B. In addition, at the time the Form ADV is submitted, those firms must provide financial statements for their business directly to OAG. New York does not currently require ADV Part 3. FCIAs notice filing in New York must submit Parts 1A and 2A.

Beginning February 1, 2021, and subject to the implementation period described in 13 NYCRR 11.4(i) which runs until December 2, 2021, investment adviser representatives will be required to file Form U4 on CRD. CRD can be accessed at www.FINRA.org. Principals and supervisors of state registered investment advisers must also register through the Form U4. See our guidance posted at https://ag.ny.gov/ipb-rule-proposal and below for further details.

Probably not. Industry participants who lawfully provided investment advisory services prior to February 1, 2021 will be covered by the implementation period established in 13 NYCRR 11.4(i), and thus will be permitted to continue providing investment advice until December 2, 2021 without an approved registration subject to the limitations in the rule. 11.4(i) states:

  • Implementation Period. Except as provided below, any person who, prior to February 1, 2021, was serving continuously and permissibly in any capacity covered under this Part, and who, through continued service, is subject to the registration requirements under this Part on or after February 1, 2021, may continue such service without an approved registration until December 2, 2021 without violating the registration provisions of GBL § 359-eee or this Part, so long as a Form U4 requesting investment adviser representative registration in New York for that person is submitted on or before August 31, 2021. Should an applicant be notified of a non-examination related deficiency in the application, the applicant will have fourteen (14) days to correct such deficiency and communicate the correction to the Department of Law. Any applicant whose application is denied, or who fails to correct the deficiency and communicate the correction within fourteen (14) days, and who continues to engage in activity requiring registration after notification of such denial or expiration of those fourteen days, shall be in violation of this Part and GBL § 359-eee. Applicants with examination-related deficiencies must correct such deficiencies in accordance with the requirements of section 11.6 or 11.7 of this Part. Nothing in this section shall excuse, relieve or limit liability of any person who violated examination or registration requirements in existence prior to February 1, 2021, nor shall it provide any extension, grace period or waiver to such person.

You should view the OAG’s guidance on this topic, here: https://ag.ny.gov/sites/default/files/part11-iar-registration-guidance.pdf

Yes.

The initial and annual filing fee is $200 and is paid though the IARD system.

FIRMS: INVESTMENT ADVISERS, SOLICITORS AND FEDERALLY COVERED INVESTMENT ADVISERS

Registration or notice filing is required when the investment adviser or solicitor has six (6) or more New York clients.

File Parts 1 and 2 of Form ADV on IARD and ensure that its principals, supervisors and all investment adviser representatives, as defined in 13 NYCRR 11.12(g) are appropriately registered on CRD. Note: An implementation period generally allows practicing unregistered IARs to continue to practicing without an approved registration until December 2, 2021 as long as they submit a Form U4 on CRD by August 31, 2021. See 13 NYCRR 11.4(i). Principals and supervisors may also take advantage of the implementation period.

Registration or notice filing is required when the FCIA has six (6) or more New York clients.

If you have six (6) or more New York clients, you must submit a notice filing by adding NY as a notice filing state on the IARD. The FCIA should also ensure that all investment adviser representatives with a place of business in the State and who satisfy the requirements of Rule 203A-3 (17 CFR § 275.203A-3), as defined in 13 NYCRR 11.12(g), register on CRD. Note: An implementation period, conditioned on submission of the Form U4 on CRD by August 31, 2021, generally allows practicing unregistered IARs to continue practicing without registration until December 2, 2021. See 13 NYCRR 11.4(i).

Firms with a principal place of business in New York must register with the SEC if they have $25 million dollars or more in assets under management. Firms with a principal place of business in another state with under $100 million in assets, that meet the definition of investment adviser in New York State must register with New York State. Firms with principal places of business located in other states already registered with the SEC should remain SEC registered with more than $90 million dollars of assets under management. You should also consult the rules of the SEC and your local jurisdiction.

If you have six (6) or more clients in New York, add New York (check NY box on the ADV) as a registration state (the $200 annual fee must be paid to FINRA through the IARD system). See sections11.6, 11.7, 11.9, and 11.14 of the investment adviser regulations for information about financial statements and the exam requirement.

Yes.

Yes.

Entities are counted as clients except where those entities meet the definition of “institutional buyer” or “financial institution”, see 13 NYCRR 11.12(c) and (e). Entities that meet either of these definitions do not count as clients for purposes of determining registration requirements under the current regulations. See 13 NYCRR 11.13, 11.12(a) for the rules governing exemptions and client counting generally.

A firm that qualifies as an exempt reporting adviser under SEC rules may still have NY registration requirements. An investment adviser with six (6) or more New York clients that do not qualify as institutional buyers or financial institutions under 13 NYCRR 11.12 must register in NY, unless it is otherwise excluded under GBL 359-eee(1)(a)(1)-(6) or 13 NYCRR 11.13.

It is available at www.sec.gov/iard or forms. It is recommended you read the entire application before starting the process. The SEC website may have other helpful information for both state and federally registered advisers.

You must file electronically via IARD. Please visit www.iard.com.

The Part 2 is entirely narrative. Part 2A has 19 items and Part 2B has seven items, all with multiple parts. Each Part must be read completely. The heading for each item must be included in the brochure and must be in the order of the Form ADV instructions and application. If any part of an item is not applicable, you must reference the substance of each item and explain why it does not apply. The narrative must be in plain English, using short sentences. Review the instructions carefully and address each completely.

Yes, financial statements as of the close of the IA’s last fiscal or calendar year prepared by the adviser's accountant or by management must be submitted as well. These financial statements must include an income statement and balance sheet either audited or certified by management. FCIAs are not required to file financial statements with the State of New York. There is currently no net capital or bonding requirement in New York.

Yes.

Yes, see 13 NYCRR 11.14 of the investment adviser regulations.

We do not require that an accountant prepare the financial statements, however they must be prepared according to GAAP. The financial statement must be prepared in accordance with the specific type of entity. For example, the balance sheet for a corporation must have a stockholders’ equity section and a LLC must have the member capital section; neither financial presentation may have a net worth section. The income statement must have three sections: revenue, expenses and net income (profit/loss). The balance sheet and the income statement must be consistent with each other and should not contain the personal expenses, assets or liabilities of its principals. The submission must state in substance: “I hereby certify that the above financial statement has been prepared in accordance with generally accepted accounting principles and is true and correct.” The submission must be signed by an accountant or management.

There is no strict template. See above for further information.

For new applications only, you should email financial statements to IPBIA@AG.NY.GOV. Do not send annual financial statements to this email address.

For already registered investment advisers, annually, each investment adviser shall submit a balance sheet and an income statement as of the close of its last fiscal or calendar year within 90 days after completion of its fiscal or calendar year end directly to the Department of Law at IPBREG@AG.NY.GOV.

New applicants and already-registered investment advisers who cannot provide information by email may mail financial statements to:

NYS Department of Law
Investment Protection Bureau
Investment Advisory Unit
28 Liberty Street, 15th Floor
New York, NY 10005

No. But FCIAs must ensure that their investment adviser representatives are properly registered.

For state registered investment advisers, you will need to be registered in your home state before you can be registered. Your home state is the state of your principal place of business.

Yes, file a Form ADV-W using the IARD system.

Yes, in addition to the annual $200 fee, (1) an annual updating amendment must be made on the IARD system and (2) fiscal year-end financial statements must be submitted all within 90 days after your fiscal year end.

It is your responsibility to submit annual filings on a timely basis as well as comply with all sections of the investment adviser regulations, including provision of financial statements, whether or not you receive a notice from this office, FINRA or the SEC.

No. For purposes of investment adviser registration requirements, the SEC governs entities outside of the United States.

No. The out-of-country investment adviser representative must register with the SEC and cannot be employed by or associate with a New York registered investment adviser.

Potentially. Any hedge fund that qualifies as an institutional buyer or financial institution under 11.12(e) is not counted as a client in New York for either IAs or FCIAs in accordance with the exclusion in GBL § 359-eee(1)(a)(5), GBL § 359-eee(1)(c), and 11.13. If all of your funds meet this criteria, you have no clients in New York and are not required to register. See GBL 359-eee(1)(a)(5) and 13 NYCRR 11.13(a)(5). Any fund that does not satisfy the institutional buyer or financial institution criteria will count as a client in accordance with 11.12(a). If you have six(6) or more such funds/clients, you are required to register unless any other exemption applies.

Prior to 2011, an exemption from registration in New York was available to “hedge fund” investment advisers under 359-eee(1)(a)(7), which explicitly incorporated the federal registration exemption under § 203(b)(3) of the Investment Advisers Act, and Rule 203(b)(3)-1 thereunder. With the repeal of § 203(b)(3) in July 2011, the state exemption similarly is no longer available. However, as stated above, a fund – or any entity – meeting the definition of institutional buyer of financial institution does not count as a client for purposes of counting clients.

Yes. Bookkeeping requirements for state registered investment advisers are found in 13 NYCRR 11.9. The regulations include a new provision requiring that investment advisers document the steps they took to verify that any client is an accredited investor (AI) or qualified purchaser (QP), if such designations are made or acknowledged by the investment adviser. There is no single, definitive course of action that investment advisers must take to sufficiently verify such designations. However, IPB requires more than a simple attestation by a client that they are an AI or a QP if the investment adviser has reason to believe that such client does not meet those standards. For instance, where an investment adviser manages assets significantly below the threshold for an AI or QP client, or is aware that a client’s occupation typically does not justify income above the AI threshold, IPB will deem the investment adviser to have reason to believe that the client is not an AI or QP. Investment advisers in these types of scenarios should seek further information about the client’s eligibility as an AI or QP prior to making or acknowledging any such designations, and should maintain related documentation in accordance with 11.9.

Solicitors are formally classified in the latest rulemaking under 11.12(k), though NY requirements have always applied to solicitors. References to “investor” or “investors” in 11.12(k) are intended to be synonymous with “client,” as that term is used in 11.12(a). Solicitors should note that the term compensation has the broadest of definitions and encompasses all types of compensation related to an interaction with an investor, whether or not such compensation comes directly from the investor and with no de minimis exclusion.

INVESTMENT ADVISER REPRESENTATIVES, PRINCIPALS, SUPERVISORS AND SOLICITOR PERSONS (“RA”) REGISTRATION

For Federally Covered Investment Advisers:

Natural persons acting as investment adviser representatives from a place of business in the State and who satisfy the requirements of Rule 203A-3 (17 CFR § 275.203A-3) adopted under the Investment Advisers Act of 1940.

For State Registered Investment Advisers:

Natural persons acting as investment adviser representatives, principals, supervisors

Solicitors:

Any natural person acting as a solicitor that is not otherwise registered as an investment adviser representative.

The single class of registration available for each different classification above on CRD is an “RA” registration.

See the following definitions from 13 NYCRR 11.12:

  • Investment adviser representative shall mean a natural person who represents: (1) an investment adviser or solicitor in performing any of the acts that define an investment adviser under GBL § 359-eee(1)(a) or, (2) a FCIA from a place of business in the State and who satisfies the requirements of Rule 203A-3 (17 CFR § 275.203A-3) adopted under the Investment Advisers Act of 1940.
  • Supervisor shall mean a natural person who directly supervises one or more natural persons associated with an investment adviser in their capacity as investment adviser representatives.
  • Principal shall mean and include every person or entity directly or indirectly controlling an investment adviser or solicitor. Principals are subject to the same registration and examination requirements of investment adviser representatives under this part.
  • Solicitor shall mean a person who as part of a regular business, engages in the business of providing investment advice to the limited extent that such person receives compensation for introducing a prospective investor or investors to an investment adviser or a FCIA, unless such person would be excluded from the definition of investment adviser under an enumerated exception under GBL § 359-eee(1)(a) or § 11.13 of this part. Solicitors are subject to the same registration and examination requirements as investment advisers, and principals and representatives of solicitors are subject to the same registration and examination requirements as investment adviser representatives, under this part.

You should review the OAG’s guidance on this topic.

Yes. CRD is the only way to effect registration of any investment adviser representative, principal, supervisor or representative of a solicitor. The single class of registration available for each different classification above on CRD is an “RA” registration.

Please review OAG’s guidance, on the manner in which you must register.

Many industry participants will be covered by the implementation period established in 13 NYCRR 11.4(i), and thus will be permitted to continue providing investment advice until December 2, 2021 without an approved registration. Availability of the implementation period is conditioned on application for registration by August 31, 2021 and other limitations as described below:

  • Implementation Period. Except as provided below, any person who, prior to February 1, 2021, was serving continuously and permissibly in any capacity covered under this Part, and who, through continued service, is subject to the registration requirements under this Part on or after February 1, 2021, may continue such service without an approved registration until December 2, 2021 without violating the registration provisions of GBL § 359-eee or this Part, so long as a Form U4 requesting investment adviser representative registration in New York for that person is submitted on or before August 31, 2021. Should an applicant be notified of a non-examination related deficiency in the application, the applicant will have fourteen (14) days to correct such deficiency and communicate the correction to the Department of Law. Any applicant whose application is denied, or who fails to correct the deficiency and communicate the correction within fourteen (14) days, and who continues to engage in activity requiring registration after notification of such denial or expiration of those fourteen days, shall be in violation of this Part and GBL § 359-eee. Applicants with examination-related deficiencies must correct such deficiencies in accordance with the requirements of section 11.6 or 11.7 of this Part. Nothing in this section shall excuse, relieve or limit liability of any person who violated examination or registration requirements in existence prior to February 1, 2021, nor shall it provide any extension, grace period or waiver to such person.

Notably, those who have never provided investment advice before do not qualify for the implementation period and must be registered prior to engaging in such activity.

Applicants who were eligible to take advantage of the implementation period on February 1, 2021 would remain eligible even if they switch firms as long as they submit their RA application by August 31, 2021, subject to any other conditions of 11.4(i) e.g. informed that they are deficient or denied.

Principals and Supervisors of State Registered investment advisers must register. Principals and supervisors of FCIAs need register only if they meet the definition of investment adviser representative in 13 NYCRR 11.12(g).

There is no grandfather clause for registration. There is a special waiver created under 11.7(b) which enables those who have been practicing as an investment adviser representative, Principal or Supervisor for 2 years prior to February 1, 2021 and who otherwise qualify under 11.7(b) to skip the exam requirement of registration. You should review 13 NYCRR 11.7(b) and Form NY-IASW, as well as the Guidance on Mandatory Registration for Investment Adviser Representatives 13 NYCRR 11.4, 11.6 AND 11.7 effective February 1, 2021.

Part 11 – IAR Registration Guidance

Investment adviser representatives, principals, supervisors and solicitors as defined under 11.12, must register and meet the exam requirements of 11.6 or be approved for a waiver under 11.7. If you have passed (1) the Series 65 within the two years prior to your application, or (2) have passed the Series 66 within the two years prior to your application and maintain an SIE and Series 7 Topoff marked “valid” on CRD, or (3) satisfy the waiver criteria under 11.7(c), you do not need to take another exam.

If you satisfy the waiver requirements under 11.7(a), you need only submit the Form U4 and request RA registration in NY and do not need to open an exam window.

If you qualify for a special waiver under 11.7(b), exam requirements will also be waived upon submission of a completed form NY-IASW. In addition to submitting a completed NY-IASW form, an applicant’s CRD record must reflect your compensated affiliation with either a state registered investment adviser, a federally covered investment adviser or a dually–registered firm during the time period required under the rule.

If you previously qualified for a waiver through the NY-IAQ process, exam requirements may also be waived.

Your disclosure history may affect your ability to receive an exam waiver. You should follow the instructions in the Guidance on Mandatory Registration for Investment Adviser Representatives 13 NYCRR 11.4, 11.6 AND 11.7 effective February 1, 2021, below. Your application will be marked deficient for the S65 exam if the criteria under either 11.6(a) or 11.7 is not met. Part11 IAR Registration Guidance

During the implementation period and through December 2, 2021, it is expected that processing of U4 submissions will be substantially delayed.

No. In accordance with New York’s transition to the CRD system for registration of investment adviser representatives, a Form U4 NY RA applicant who passed the Series 66 within two years of applying, and with no other issues, will be approved so long as the applicant also maintains a valid Series 7 (including SIE/S7TO) regardless of when the Series 7 was obtained.

Not exactly. If the exam is more than two years old, the applicant must receive a waiver. The State of New York will not grant such a waiver if the applicant has certain disclosures (see 11.7(a)). Generally, customer complaints that have not been brought as arbitrations will not result in a denial of an exam waiver. Pursuant to 11.7(a) the applicant must have been continuously registered to provide investment advice in any jurisdiction for a period of at least two years prior to the date of applying for registration and not have had any lapse in registration exceeding two years.

Prior to providing advice to the public, unless you qualify for the extended compliance period under 11.6(b).

From February 1 through February 26, the answer is yes. On and after Feb. 27, 2021 through August 31, 2021, an exam window will open only if you direct FINRA to open it when prompted. If you do not qualify for any waiver under 13 NYCRR 11.7, YOU MUST OPEN AN EXAM WINDOW AND PASS THE REQUIRED EXAM(S). If you incorrectly decline to open an exam window, and you need one, it will significantly delay your registration application.

No. For information about the Series 65 exam, go to www.finra.org.

After you have reviewed all relevant material at IPB Rule Proposal , the Investor Protection Bureau can be reached at 212-416-8222.

Please note that you will likely need to leave a voice mail message due to the volume of calls.