NASAA Series 63Regulation of Investment Advisers and IARsEasy
A state-registered investment adviser (IA) has decided to change its organizational structure from a partnership to a limited liability company (LLC). This change will not affect the identity of the advisory personnel or the services offered to clients. What action is required regarding the IA's registration with the state Administrator?
- AThe IA must notify clients in writing of the change, but no filing with the Administrator is necessary.
- BThe IA is exempt from any filing as long as the beneficial ownership and services remain unchanged.
- CThe IA must file a new, full registration application (Form ADV) and pay new fees, as this is considered a new entity.
- DThe IA must file an amendment to its existing Form ADV, updating the organizational structure information.
Show answer & explanationAnswer & explanation
Correct answer: D. The IA must file an amendment to its existing Form ADV, updating the organizational structure information.
A change in an investment adviser's organizational structure, such as converting from a partnership to an LLC, requires an amendment to the existing Form ADV to reflect the updated information. This is generally not considered a new entity requiring a full re-registration if the core business and personnel remain the same.
Why the other options are wrong
- A. Client notification may also be required, but it does not replace the regulatory filing requirement.
- B. All material changes to an IA's operations or structure must be reported to the Administrator.
- C. A full new registration is typically only required if there's a complete change of control or a new entity is formed with different owners/business.
IA Form ADV Amendment
Investment advisers must file amendments to Form ADV to update information that has become inaccurate or changed since the last filing.
- Required for material changes (e.g., organizational structure, disciplinary actions, assets under management).
- Filed within 30 days of the change, or annually.
- Ensures the Administrator and public have current, accurate information.
Memory trick: When an IA's 'ADV' details shift, an 'AMENDMENT' is the swift fix.