Quick Answer
Federal covered advisers register only with the SEC, but a state can still require a notice filing when the adviser has a place of business there or six or more resident clients in 12 months. Notice filing is not registration, and states keep antifraud authority regardless.
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 clients who are residents of that state in a 12-month period
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 clients in a 12-month period, even with no office there.
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)
- Payment of state filing fees
Notice filing does not create state registration. The investment adviser (IA) remains federal covered.
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 clients in a 12-month period.
- 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 states retain antifraud authority over every adviser operating within their borders, federal covered or not.