Registration & Filings
Regulatory registration is determined by several factors depending on a firm’s business model, assets under management, location of firm and clients, and type of investment offering. Before doing business or providing investment advice and receiving compensation, it is critical that a firm operate with the appropriate registration.
Bates provides the following registration services:
- Exempt Reporting Adviser (ERA)
- State Investment Adviser
- SEC Investment Adviser
- Transition (State to SEC or SEC to State)
- Broker-Dealer Registration (NMA)
Exempt Reporting Adviser
Advisers that claim an exemption from registration, typically private fund or venture capital advisers (“private fund advisers”) must still report certain information to regulatory authorities (the SEC and/or State) and comply with applicable regulations. Generally, the exemption is available to private fund advisers that have assets under management below $150 million.
Bates will aid in the drafting and submission of all required documents to report Exempt Reporting Adviser (“ERA”) firm. Bates takes a holistic approach to the registration process by first working with your firm to design, create and implement the ERA’s compliance obligations prior to completing your report process. The SEC (as well as state regulators) will expect that, upon approval, your firm is meeting all the regulatory requirements.
The ERA will receive upon completion a host of various documents that include, but are not limited to:
- Form ADV 1
- Policies addressing ERA compliance requirements, including but not limited to:
- Conflicts of interest, including gifts and other employee conduct
- Insider Trading
- Investor Privacy
- Proxy Voting
- Regulation D filings
In addition, the client will be able to leverage the knowledge of the Bate’s consultant to explain the exempt reporting adviser obligations.
Once approved by the SEC, we recommend speaking a Bates consultant to inquire about additional services Bates can offer to help the ERA maintain compliance with various ongoing obligations. This can include, but it not limited to, assistance with your Annual Updating Amendment (“AUA”), your Form D filing requirements, other state specific requirements, modifications to offering documents and marketing materials, special considerations for ERISA investors, and annual bad actor certifications.
Bates will aid in the drafting and submission of all required documents to register a Registered Investment Advisors (“RIA”) firm. Bates takes a holistic approach to the registration process by first working with the firm to design, create and implement the RIA’s compliance program prior to completing its registration. The SEC (as well as state regulators) will expect that, upon approval, the firm is meeting all the regulatory requirements from that point forward.
The RIA will receive upon completion a host of various documents that include, but are not limited to:
- Form ADV 1
- Form ADV 2
- Form U4(s)
- Compliance Manual
- Form CRS
- Client Agreements
In addition, the client will be able to leverage the knowledge of the Bate’s consultant to explain the content and implementation of all required documents.
Once approved by the SEC, we recommend speaking with a Bates consultant to inquire about additional services Bates can offer to help the RIA maintain compliance with various ongoing obligations. This can include, but it not limited to, assistance with Annual Updating Amendment (“AUA”), Annual Review (i.e. 206(4)-7 Review), 13F Filings, or compliance document updates.
State to SEC/SEC to State Transition
Bates will assist a Registered Investment Advisors (“RIA”) with transition filings from State to SEC registration. Rule requires State registered RIAs transition to SEC jurisdiction based upon a number of “triggers”. Most commonly, this happens when firms hit $100M in regulatory assets undermanagement.
Bates with review and/or draft various required documents for adherence to SEC rule(s) that include, but are not limited to:
- Form ADV 1
- Form ADV 2A & 2B
- Form U4(s)
- Compliance Manual
- Form CRS
- Client Agreements
Once approved by the SEC, Bates will also assist with the formal withdrawal from State registration. In addition, the client will be able to leverage the knowledge of the consultant to explain the content and implementation of all required documents.
Please note that once RIA is newly transitioned to the SEC, the RIA will likely undergo their first SEC Examination within 12-18 months from the approval date. This is a good time to talk to a Bates consultant about the additional requirements your RIA will be required to meet. Some requirements, such as the required Annual Review of compliance Policies and Procedures under Rule 206(4)-7, are all services provided by Bates Compliance.
Broker-Dealer Registration (NMA)
The Exchange Act requires that any broker-dealer effecting securities transactions by means of interstate commerce be registered. Broker dealers are subject to regulation by the SEC, FINRA and any other Self-Regulatory Organization (“SRO”) in addition to the states where they do business. Unless a registration exemption is available, state laws require registration of any broker dealer doing business from or with residents of their state and the representatives doing business within the state.
Bates will aid in the drafting and submission of all required documents to register as a broker dealer (“BD”). Bates takes a holistic approach to the registration process by first working with your firm to design, create and implement the BD’s supervisory program prior to completing registration. FINRA will expect the firm is meeting all the regulatory requirements upon approval.
The BD will receive upon completion a host of various documents that include, but are not limited to:
- Reserve the name of the broker-dealer with FINRA
- Prepare Super Account Administrator Entitlement Form
- Member Firm FINRA Contact Form
- Provide a list and samples of all documentation required to file form NMA (New Member Application)
- Provide the project plan for the broker-dealer registration process
- Schedule regular calls to review the progress of the project plan
- Develop financial requirements, initial deposit, and funding process
- Prepare FINRA Form NMA and all required documentation
- Assist in preparation of the Business Plan and the Business Continuity / Disaster Recovery Plan
- Prepare Written Supervisory Procedures
- Prepare the Continuing Education Needs Analysis and Training Plan
- Assist with development of Anti‐Money Laundering Procedures
- Identify required experience and licensing requirements, based on the business model
- Prepare and submit Forms U4 for Principals
- Prepare and submit Form BD
- Prepare and submit Form BR
- Assist in preparation of the initial fidelity bond application
- Prepare Principals for FINRA’s pre‐membership interview
- Attend FINRA’s membership interview (If desired)
- Prepare and submit state applications, as requested
Bates may involve other practice areas as well as our subject matter expert affiliates to provide particular experience to this service.
Regulatory Filing Services
Annual Updating Amendment (AUA)
All Registered Investment Advisers ("RIA") are required to file their Annual Updating Amendment (“AUA”) within 90 days after their fiscal year end.
Bates will assist in the following ways:
- Review Preliminary and/or Final Renewal FINRA Statement to confirm adequate funding is available in the RIA’s FINRA account.
- Update the RIA’s Form ADV 1, ADV 2, and other documents as needed through communications with and data provided by RIA.
- Review the RIA’s client base to confirm firm registrations and notice filings are made in the appropriate jurisdictions.
- Upload/Submit all required documents via FINRA’s IARD/CRD Portal.
This service assists the RIA with all required updates to various filing documents. It does not include new registrations in additional jurisdictions, IAR registration, or writing new regulatory disclosure content for an RIA. These would be separate services.
Registered investment advisers with investment discretion of over $100 million or more of equity securities that trade on an exchange (Section 13(f) securities) must report those holdings quarterly by filing a Form 13F. The Official List of Section 13(f) Securities shows the securities that firms must report on Form 13F. The list is published quarterly. It is available for free by going to https://www.sec.gov/divisions/investment/13flists.htm.
Bates will prepare and submit the Client’s Form 13F including:
- Identification of qualified securities
- Multiple manager reporting
- Preparation of XML Information Table
- Submission of XML Table on EDGAR
This service assists the RIA with identifying, uploading, and submitting reporting data. It does not include evaluating a RIA’s holdings.
FINRA Rule 3120/3130 Report
All Broker/Dealers, as required by FINRA Rule 3120, are required to review & test annually, their system of supervisory procedures and internal controls. This is a review to ensure the adequacy and effectiveness of the compliance controls and to provide a summary of the test results and significant identified exceptions. The review will also consider rule changes, as well as recently regulatory developments.
This, generally, includes an evaluation of the following:
- Has the firm designated one or more principals who are responsible for the establishment, maintenance, and enforcement of a system of supervisory control procedures that:
- Test and verify that the firm’s supervisory procedures are reasonably designed with respect to the activities of the firm and its associated persons to achieve compliance with applicable securities laws and regulations?
- Provide a summary of the test results and significant gaps found; and
- Create additional or amend supervisory procedures where the need is identified by such testing and verification.
Bates will supplement the documents reviewed with interviews with key personnel to ensure that the written report accurately reflects firm practices. Upon completion of the review, Bates will create a written report for management that includes the required CEO certification.