Notice Filing Requirements

The sections below cover the two triggers for a notice filing, what the filing package contains, and how far a state's authority reaches once an adviser is federal covered.

When Must a Federal Covered Adviser Notice File?

Federal covered advisers must notice file in states where they:

• Have a place of business, OR
• Have 6 or more retail clients who are residents of that state in a 12-month period

Only non-institutional (retail) clients count toward that 6-client threshold. Clients that are investment companies, other investment advisers, federal covered advisers, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with at least $1,000,000 in assets, or governmental agencies don't count toward the number, no matter how many of them the adviser has in the state.

Think of it this way: Notice filing is like telling a state "I'm here and doing business," without asking for their permission. The SEC is still the primary regulator.

Exam Tip: Gotchas

• Only one trigger has to be met, not both. A place of business in the state is enough on its own; so is 6 or more resident retail clients in a 12-month period, even with no office there.
• The 6-client count only includes retail clients. Institutional clients (investment companies, other investment advisers, federal covered advisers, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with at least $1,000,000 in assets, and governmental agencies) don't count toward the threshold, no matter how many the adviser has in the state.

What Does Notice Filing Require?

Notice filing typically consists of:

• Copy of Form ADV (as filed with the SEC)
• Consent to service of process (Form U2): an irrevocable filing appointing the Administrator as the adviser's agent to receive legal process, giving the state jurisdiction to serve the adviser in an enforcement action
• Payment of state filing fees

Notice filing does not create state registration. The investment adviser (IA) remains federal covered.

Does Notice Filing Cover the Firm's IARs Too?

No. Notice filing is a firm-level filing and stops at the firm. An investment adviser representative (IAR) who has a place of business in that state, such as someone working out of a branch office where the firm notice files, must still register individually as an IAR with that state. The firm's federal covered status does not extend to its representatives.

See Investment Adviser Representative Regulation for the full IAR registration requirements.

Exam Tip: Gotchas

• The firm's notice filing does not cover its IARs. An IAR with a place of business in the state must register there individually, even though the firm itself only notice files.

What Authority Do States Retain Over Federal Covered Advisers?

• States cannot impose substantive regulatory requirements on federal covered advisers beyond the notice filing
• States retain antifraud authority over all advisers operating within their borders, including federal covered advisers

Exam Tip: Gotchas

• Notice filing is NOT registration. A federal covered IA that notice files is still regulated by the SEC, not the state. But the state CAN bring antifraud actions against it.
• States retain antifraud authority over all advisers in their borders, federal covered or not.

What Should You Check on Exam Day?

• Remember notice filing applies to federal covered advisers only, not to advisers registering with a state.
• Know the two triggers: a place of business in the state, or 6 or more resident retail clients in a 12-month period. Institutional clients (banks, insurance companies, other investment advisers, federal covered advisers, broker-dealers, trust companies, savings and loan associations, employee benefit plans with at least $1,000,000 in assets, and governmental agencies) don't count toward that number.
• Remember notice filing does not create state registration; the SEC stays the primary regulator.
• Know the notice filing package: a copy of Form ADV as filed with the SEC, Form U2 consent to service of process, and state filing fees.
• Remember the firm's notice filing does not cover its IARs; an IAR with a place of business in the state must still register there individually.
• Remember states retain antifraud authority over every adviser operating within their borders, federal covered or not.