Effective registration

Once an investment adviser has submitted all the necessary paperwork and complied with general requirements, the appropriate regulator (the Securities and Exchange Commission (SEC) for federal-covered advisers or the state administrator for state-registered advisers) will review their request. Let’s review the important items submitted:

• Form ADV disclosures
• Filing fees
• Consent to service of process
• Net worth requirements
• Surety bonds

If “all the boxes are checked,” the adviser will be granted effective registration. The SEC requires a 45-day review period, while the state administrator requires a 30-day review period. Similar to broker-dealers and agents, the adviser may not imply their registration is approval from regulators.