While last week’s RIA compliance blog post discussed the state of California’s move to now charge an annual individual investment adviser representative (IAR) registration renewal fee, this week we wanted to provide an investment advisor compliance update on the state of Minnesota’s transition to the Form U4 system for IAR registration. The Form U4 system officially opened to IARs within the state of Minnesota at the end of October 2013. Previously, Minnesota allowed IARs to conduct business without Form U4 registration. Now, all individuals are required to meet the recent mandate outlined in Amended Order Pursuant to MN STAT. 80A.61(e).
We have provided a brief summary of the state of Minnesota’s new investment adviser representative registration requirements that every Chief Compliance Officer (CCO) with a registered investment advisory firm registered in the state of Minnesota at the state or SEC level should review. As RIA compliance consultants, we want to remind all RIA firms that the registration of IARs is administered at the state level. Thus, regardless of whether your advisory firm is registered at the SEC or state level, this new Minnesota registration requirement impacts all RIA firms with individual representatives in the state.
All IARs are subject to the following new state of Minnesota registration requirements:
- IARs must submit a Form U4 via the investment adviser registration depository (IARD) system
- The initial registration period lasts until January 31, 2014, which is the deadline for submitting the Form U4 for any current IARs
- For any IARs (including Firm Principals) employed the RIA firm as of August 1, 2013, there are no investment advisor exam qualification or professional designation requirements. Such “grandfathered” IARs will not be required to take the traditional Series 65 exam, etc.
IARs who have joined the RIA firm after August 1, 2013, are subject to Minnesota’s exam and qualification requirements. Advisers can satisfy one of the following criteria to qualify as an IAR in Minnesota:
- Successful passage of the series 65 within the past 2 years
- An active combination of the Series 7 and Series 66 license
- An active CFP, ChFC, MSFS, CFA, PFS or CIC professional designation
- Individual Advisers currently registered in any additional states who were required to pass the Series 65 or combination of Series 7 and Series 66 exams at the time of initial registration with the other state(s).
It is very important to note that the “grandfathering window” for any existing IARs in Minnesota who were employed as of August 1, 2013 to become registered without meeting the exam requirements, etc. closes on January 31, 2014. After January 31, 2014, all existing IARs, regardless of when they were first employed, will need to meet the new IAR registration criteria.
This new Minnesota IAR registration requirement also applies to all new individuals starting an RIA firm. This recent change by Minnesota now brings the state’s RIA registration requirements into alignment with the vast majority of other states that utilize the Form U4 system to registered investment adviser representatives*. However, for new RIA firms registering with the state of Minnesota, it is important to note that Minnesota has a unique experience requirement for any individuals that will be in a supervisory or control capacity.
* The states of New York and Wyoming do not participate in the traditional IAR registration process or utilize the Form U4 system.