A federal covered investment adviser (FCIA) with its principal office in State A frequently advises clients in State B. The FCIA does not have a physical office in State B. Under the Uniform Securities Act (USA), what is generally required of this FCIA in State B?
- AThe FCIA is exempt from all state-level requirements in State B.
- BThe FCIA must register as an investment adviser in State B.
- CThe FCIA must obtain a separate license in State B for each IAR advising clients there.
- DThe FCIA must make a notice filing with the Administrator of State B.
Show answer & explanationAnswer & explanation
Correct answer: D. The FCIA must make a notice filing with the Administrator of State B.
Federal covered investment advisers (FCIAs) are generally exempt from state registration requirements. However, states typically retain the power to require FCIAs to make a 'notice filing' if they have a place of business in the state or have a certain number of clients in the state, allowing the state Administrator to maintain oversight and collect fees.
Why the other options are wrong
- A. FCIAs are not exempt from all state-level requirements; notice filings are a common state requirement.
- B. FCIAs are exempt from state registration as IAs.
- C. IARs of FCIAs may need state registration, but the question is about the FCIA firm's requirement in State B.
FCIA State Notice Filing
Federal Covered Investment Advisers (FCIAs) are generally not required to register at the state level, but states may require them to make a 'notice filing' if they have a place of business in the state or have a specified number of clients in the state.
- FCIAs register with SEC, not states.
- States can still require notice filings.
- Notice filings include copies of SEC Form ADV and consent to service of process.
- Allows states to collect fees and monitor compliance.
Memory trick: Federal boss, but state still wants a paper trail.