Banking Commissioner Reminds Exempt Reporting Advisers of their Form ADV State Filing Obligations Post Dodd-Frank

In 2011, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).  Among other things, Dodd-Frank exempts from federal investment adviser registration those investment advisers who: 1) act as an investment adviser solely to one or more venture capital funds; or 2) act as an investment adviser solely to private funds and who have assets under management in the United States of less than $150 million (collectively, “ERAs”).

To clarify state requirements governing ERAs, on July 11, 2011, the Banking Commissioner issued an Order Governing Certain Investment Advisers Exempt from Federal Registration Following Passage of Dodd-Frank (“2011 Order”).  The 2011 Order exempted ERAs from state registration as long as they “make the reports required by SEC Rule 204-4 available to the Commissioner in electronic format once the IARD [Investment Adviser Registration Depository] system has been updated to accept such reports and relay them to affected states.” 

In the five years since the passage of Dodd-Frank and the issuance of the 2011 Order, the federal reporting requirements for ERAs have been formalized, and the IARD system has been updated to accept filings made on behalf of ERAs subject to the 2011 Order.  Moreover, the SEC has recently signaled that it may begin conducting books and records examinations of ERAs.  Therefore, the Commissioner is now issuing this reminder to all investment advisers relying on the ERA exemption that they must complete key portions of Part IA of Form ADV in order to be considered compliant with the 2011 Order. 

Investment advisers relying on the Connecticut ERA exemption should review their form filings and ensure that any deficiencies are corrected no later than June 30, 2017.  Subsequent to June 30, 2017, if the Commissioner becomes aware of an ERA’s failure to make required filings, the Commissioner may pursue such enforcement measures as may be appropriate, including but not limited to administrative fines under Section 36b-27 of the Connecticut Uniform Securities Act.

Required filings

Investment advisers relying on the state ERA exemption must complete the Form ADV items prescribed by the Securities and Exchange Commission.  Currently, the requirements consist of Form ADV Items 1, 2, 3, 6, 7, 10 and 11 of Part IA, as well as corresponding schedules.  Per federal requirements, new ERAs must file within 60 days of becoming an ERA.  As a reminder, the filing requirements are set forth in 17 CFR 275.204-4. 

Questions concerning this release should be directed to Salvatore Cannata, at 860-240-8245.

Issued March 2017.