Investment Advisers Law Alert

On December 1, 2020, the New York State Department of Law finalized proposed amended regulations to the New York Investment Advisory Act, 13 N.Y.C.R.R. Section 11, requiring investment adviser representatives (“IAR”) who engage in business within or from New York to register with the New York Investor Protection Bureau and meet certain exam requirements. Previously, New York state-covered IARs were not required to register like IARs in most other states by filing a Form U4 through FINRA’s CRD/IARD system. That meant that New York IARs were legally able to conduct business without providing the typical publically available disclosures to investors through the FINRA-operated Investment Adviser Public Disclosure (“IAPD”) website.

The new regulations require IARs and principals or supervisors of advisers, among others, to register, by filing a Form U4, or updating an existing Form U4, through FINRA’s CRD/IARD system. The Bureau has given IARs from February 1, 2021 through August 31, 2021 to file the required Form U-4s. IARs will be able to continue to operate, regardless of registration status, until December 2, 2021 as long as they have filed during the February through August time frame. The Bureau cautions IARs to start the process early.

Further, the new regulations require those who are required to register to pass or be granted waiver from the (i) the Uniform Investment Adviser Law Examination (Series 65 examination); or (ii) the Securities Industry Essentials Examination, the General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination). There are three ways an adviser can qualify for a waiver: (1) the continuous registration in any jurisdiction for two years prior to the date of the New York registration; (2) a special waiver granted by the Bureau upon meeting certain requirements; or (3) the retention of certain professional designations by the IAR. Some limitations apply.

For IARs of federally covered adviser engaging in business within or from New York, the adviser firm is required to notice file in New York through an updated ADV filed through IARD. The IAR should then submit a Form U4 updating its registration to include the New York jurisdiction to comply with the new regulations.

More information can be found in guidance provided by the New York Attorney General. For administrative help in filing a ADV or Form U4, FINRA’s call center can be reached at (301) 869-6699.

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