Institute Summarizes State Investment Adviser Filing Requirements

Washington, DC, June 24, 1997 - Summarized below are state investment adviser filing requirements as of July 8, 1997, the date those amendments in the National Securities Markets Improvement Act of 1996 ("NSMIA") relating to investment advisers take effect.

Advisers That Will Be Federally Registered As of July 8
Existing State Registrations
Investment advisers that will be registered with the SEC exclusively after July 8th are generally not required to take any action at that time in connection with their existing state registrations. (However, if a state requests that an adviser file either a copy of its Form ADV-T or any other document that has been filed with the SEC, an adviser should honor such request.) It is our understanding that states will receive information from the SEC informing them whether an adviser qualifies for federal or state registration. For those advisers that, after July 8th, will be SEC registered, it is expected that the states, without any action being taken by the adviser, will convert the adviser's existing state registrations to a "notice filing" for the remainder of the state registration period, without the need for the adviser to pay any additional fees. If, however, an adviser files a Form ADV-W with a state, that state may terminate such adviser's registration and require the adviser to make a notice filing and pay a new fee. Thus, it would not be advisable for advisers to make such a filing.

Renewal of a State Registration
With the exception of approximately ten states, all state investment adviser registrations/notice filings will expire as of December 31st. (The ten exceptions are: New York: 3/31; Tennessee: 1/31; Wisconsin: 4/30; and each of the following states whose effectiveness period runs for one year from the date of effectiveness: Alaska, Illinois, Missouri, Nebraska, Oregon, and West Virginia. Also, South Carolina's period runs two years from effectiveness.) In order to renew the notice filing for calendar year 1998, federally registered advisers will need to make notice filings, which may consist of a current Form ADV and consent to service of process, and pay fees to each state in which the adviser conducts business. Advisers may, however, be able to claim an exemption under state law, such as a de minimis exemption, to avoid having to make such filings.

Those states that do not renew advisers on a calendar year basis may not have received a copy of an adviser's Form ADV-T by the time of renewal. As a result, those states may not be aware as to whether an adviser will be state registered or federally registered for the coming year and may require all advisers, including federally registered advisers, to file a copy of Form ADV-T as filed with the SEC along with a Form ADV, consent to service of process, and fees. Based upon the information reported on Form ADV-T the state will be able to determine whether the adviser is renewing a registration or making a notice filing. Unless expressly requested by a state in connection with the renewal of a registration/notice filing, an investment adviser is requested not to automatically provide each state in which it conducts business a copy of its Form ADV-T.

Advisers That Commence Business On or After July 8
New investment advisers that commence business on or after July 8th that are eligible for SEC registration or SEC-registered advisers who, after July 8, engage in business in states where they are not currently registered (or eligible for an exemption) may, pursuant to NSMIA, be required to make a notice filing in each state in which they conduct business. Under NSMIA, such notice filing may consist of a copy of the adviser's complete Form ADV or any other documents filed with the SEC, a consent to service of process, and fees. Additionally, the representatives of such adviser may be required to be registered in each state in which the representative has a place of business.

Investment Adviser Representatives
With respect to investment adviser representatives that will no longer be required to be registered in those states where they are currently registered because they either are not an "investment adviser representative" as defined by the SEC in Rule 203A-3 under the Investment Advisers Act or have no place of business in such states, it is not necessary to file Forms U-5 to terminate their registrations effective July 8th. Instead, to avoid any potential administrative burdens, advisers may maintain such registrations until such time as they expire at the end of the year and, at that time, not renew them.

Each person who is hired or retained by an SEC- registered adviser after July 8 and who meets the definition of "investment adviser representative" in SEC Rule 203A-3 may be required to register with each state in which such representative has a place of business. States may impose any lawful requirements on such person when applying for registration, including any examination or unique filing requirements.

Branch Offices
Those states that previously required that branch offices of investment advisers be registered may not, after July 8, continue to require such registration. However, they may assess notice filing fees for each office of the adviser that is listed on Schedule E of Form ADV as being located in such state. Accordingly, when a new adviser is making a notice filing or a previously registered adviser is renewing a registration/notice filing, unless otherwise advised by the state, the adviser should continue to pay the branch office fees in those states that previously assessed them. Under NSMIA, however, advisers need not provide the states with any information concerning such offices except as required by Form ADV or Schedule E to Form ADV.