The State of New York Approves Mandatory Registration Requirements for IA Representatives

February 16th | 2021

Commencing February 1, 2021, New York state is mandating enhanced examination and registration requirements for natural persons representing investment advisors. This group includes principals, supervisors, representatives of supervisors or principals, and certain investment adviser representatives of federally covered investment advisers.

Regarding examination requirements, generally, investment adviser representatives will be required to meet examination requirements under NYCRR § 11.6 or obtain waiver under NYCRR § 11.7. Section 11.6 requires that every principal of an investment adviser or solicitor, and every investment adviser representative, including persons representing solicitors, and every supervisor who is required to register in New York’s jurisdiction and does not qualify for a waiver under Section 11.6 must take and receive a passing grade within 2 years[1] prior to the date of filing registration information;

  • (a) the Uniform Investment Adviser Law Examination (“Series 65”), or

  • (b) the Securities Industry Essentials Examination, the General Securities Representative Examination (“Series 7”) AND THE Uniform Combined State Law Examination (“Series 66”).

Regarding registration requirements for natural persons representing investment advisors, requirements vary between state registered investment advisers and federally registered investment advisors. For state registered investment advisers, all principals, supervisors, and investment adviser representatives of any investment adviser registered with the state before February 1, 2021 should have already satisfied the pre-existing examination and waiver requirements of 13 NYCRR 11. For a person who becomes associated with a state registered investment adviser or new firm submitting a form ADV on or after February 1, 2021, he/she must submit a Form U4 requesting RA registration in New York by August 31, 2021. If the person has not met the exam requirements of 11.6 and does not qualify for a waiver under 11.7, he/she must pass all required examinations before registration can be approved or qualify for a waiver.

For federally registered investment advisers, all natural persons that represent a federally covered investment adviser from a place of business in New York and who satisfy the requirements of Investment Advisers Act of 1940 Rule 203A-3 must register as an RA in New York. Notably, principals and supervisors of federally covered investment advisers are not a defined category under the adopted rule. These persons would only be required to register if they otherwise satisfy the definition of investment advisor representative under 11.12(g).

The implementation period for these new regulations extend the compliance period through December 2, 2021, with an application submission deadline of August 31, 2021. The State of New York Office of the Attorney General emphasizes that there may be a longer than usual review process, and to attempt to submit Form U4 applications and requests for waiver before February 27, 2021. If you have any questions about submitting Form U4 applications or whether these rules are applicable to you, consult your compliance specialist and #TradeUptoTitan.

[1] Currently subject to an extended compliance period.

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