Does an RIA have to register in every state its fund's investors live in?
RIAs · Video 3 of 8 · 0:35 ·
Generally not for the adviser. Federal law bars a state from requiring an adviser to register if the adviser has no place of business there and fewer than six clients there in the last 12 months. For that count, a fund is one client, and its investors aren't counted unless the adviser also advises them separately. The offering is separate: selling to investors in a state can still require a notice filing there.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- Advisers Act §222(d): no state registration if no place of business there and fewer than six resident clients in the preceding 12 months.
- Rule 222-2 lets advisers use the Rule 202(a)(30)-1 client definition for this count.
- Under that definition, a fund generally counts as one client.
- Fund investors count only if the adviser also advises them separately.
- State securities notice filings for the offering can still apply.
Transcript
Founder: A sixth client in Texas, and I might have to register in Texas?
Operator: With separate accounts, it can happen. Federal law only stops a state from requiring it if you have no office there and fewer than six clients there in a year.
Operator: A fund changes the count. The fund is one client. Its investors don't count, unless you also advise them separately.
Founder: So investors in ten states...
Operator: Are still one client: the fund, usually where you run it.
Operator: The offering is different. Selling to investors in a state can still mean a notice filing there.
Operator: Many states of investors. One client to count.
Founder: So a sixth client in Texas...