Post-Registration Requirements

Once an investment adviser (IA) is registered, ongoing obligations kick in. The Administrator has broad authority over recordkeeping, client disclosure, correcting amendments, and examinations.

Books and Records

Every registered IA must make and keep such accounts, correspondence, memoranda, papers, books, and other records as the Administrator prescribes by rule or order.

• Records must be preserved for the period the Administrator prescribes
• The Administrator's recordkeeping authority is subject to the limitations of Investment Advisers Act (IAA) Section 222 (which prevents states from imposing requirements on federal covered advisers)

Exam Tip: Gotchas

• IAA Section 222 limits state authority over federal covered advisers. State recordkeeping rules apply to state-registered IAs only; the Administrator cannot impose additional requirements on federally covered advisers.

Client Disclosure

The Administrator may require IAs to furnish or disseminate information as necessary or appropriate in the public interest or for the protection of investors and advisory clients.

• Compliance with the IAA brochure rule (delivering Form ADV Part 2A/2B) may satisfy state disclosure requirements in whole or in part
• State-registered IAs must deliver the brochure to clients and prospective clients as required (details in Unit 11)

Correcting Amendments

If information in any document filed with the Administrator becomes inaccurate or incomplete in any material respect, the registrant must file a correcting amendment promptly.

• For federal covered advisers, the correcting amendment must be filed when such amendment is required to be filed with the Securities and Exchange Commission (SEC)
• "Material" means the information could affect a client's or the Administrator's decision-making

Exam Tip: Gotchas

• There is no grace period for correcting amendments. The obligation to file arises immediately when information becomes materially inaccurate; "promptly" is the standard.

Examinations

All records maintained by a registered IA are subject to reasonable periodic, special, or other examinations by representatives of the Administrator.

Key points:

• Examinations may be conducted within or outside the state
• The Administrator may cooperate with other state administrators, the SEC, and national securities exchanges or associations to avoid unnecessary duplication of examinations
• The IA cannot refuse a reasonable examination

Exam Tip: Gotchas

• The Administrator's examination authority crosses state lines. Examinations can be conducted outside the state where the IA is registered.