State to SEC Transition Filing

Bates Compliance assists firms transitioning to SEC registration once an adviser meets the SEC requirements. Usually this will be when the firm exceeds $100MM in AUM ($30MM if in New York or Wyoming) within 90 days of their Annual Amendment Filing. 

Each year, advisers are required to file an Annual Amendment Filing with the SEC or State of domicile that must be completed within 90 days of the firm’s Fiscal Year End (FYE). Most firms’ fiscal year ends on December 31st, so the filing must be completed annually by March 31st, but their FYE can be any date the firm determines at the time of registration. If the firm’s FYE is any date other than December 31st, the firm has 90 days from that date to complete its Annual Amendment Filing. 

Once the Annual Amendment has been filed and it is disclosed that the firm has exceed the $100MM AUM threshold, they have 90 days from that filing to complete their transition filing. Bates Compliance can assist the firm with these filings.

Some advisers will want to transition as soon as they exceed the $100MM AUM mark, but this is not always advisable. The issue may arise where their AUM suddenly falls below the $90MM AUM due to unforeseen market conditions, which would require them to transition back to their state of domicile if their AUM at FYE had stayed below the $90MM AUM threshold.

The process for transitioning from state to federal registration includes new disclosure language within the Form ADV Brochure document. It also requires that they withdraw from their state of domicile and register with the SEC. The process happens concurrently, so there is no downtime at all. It is always recommended that, while the transition filing is being completed, the firm have the balance of their Form ADV Brochure reviewed for accuracy. This is because normally, after the transition, the SEC will schedule an onsite exam of the adviser within one year. This is also a good time to talk to your Bates Compliance consultant about the additional requirements your newly registered SEC adviser firm will be required to meet. Some requirements, such as having a Compliance Manual that meets SEC expectations, a Code of Ethics Manual, a designated CCO and an Annual Review of your Policies and Procedures under Rule 206(4)-7, are all services that Bates Compliance can assist you with.