In the heart of Manhattan’s Financial District


In the heart of Manhattan’s Financial District

What you need to know about governmental oversight over securities advisers’ actions

| Mar 11, 2021 | Securities |

One of the U.S. Securities and Exchange Commission’s (SEC) primary roles is to enforce federal securities regulations and laws. New York’s Investor Protection Bureau (IPB) maintains oversight over any state securities code violations.

Both of these agencies engage in regulatory work, which involves monitoring the exchange or sale of investment options such as stocks or bonds.

Requirements investment advisors must meet

Federal regulators require anyone who plans to aid consumers in buying or exchanging securities to complete the multiple steps with their respective state regulatory agencies before commencing any investment work on behalf of clients.

Prospective advisers first submit both a Report by Exempt Reporting Adviser and a Uniform Application for Investment Adviser Registration. They must also incorporate their advisory firms in the states where they plan to headquarter their companies.

Security trading has its limits

SEC officials limit the total of investments state regulators can oversee. They only allow them to supervise less than $100 million in investments. Federal officials handle any exchanges over that. Both the SEC and IPB may regulate how much in securities a particular adviser can manage as well.

How government officials keep track of securities traders

The Financial Industry Regulatory Authority (FINRA) maintains a database called the Central Registration Depository that allows government regulators different advisers’ authorizations to trade securities in any given state. FINRA tracks their brokerage affiliations and histories of disciplinary actions as well. Federal officials require state regulators to keep similar records and to make such information available to prospective investors upon their request.

The securities industry and your operation within it

The securities industry is one of the most highly regulated in this country. Government regulatory agencies attribute their intense oversight over this industry to protecting unsuspecting investors from having their funds fall into the wrong hands.

SEC and IPB officials are watching your every action like a hawk. You may unexpectedly expose yourself to legal liability if you make the wrong move as an investment adviser. An attorney here in New York can guide you in making decisions that minimize your legal liability risk and help you navigate any investigations.


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