Only 2100 Advisers Have Switched to State Registration
According to a report recently issued by the North American Securities Administrators Association (the organization of state securities regulators), only 2100 advisers switched registration from the SEC to the states as a result of the Dodd-Frank Act. Regulators, when advocating for the Dodd-Frank changes, had expected almost double that number to switch (see SEC Release IA 3110 at www.sec.gov/rules/proposed/2010/ia-3110.pdf). NASAA, which has sought to re-take regulatory jurisdiction over advisers announced that “State regulators are prioritizing examining advisers that recently switched from SEC to state jurisdiction.” The states also intend to “promulgate consistent regulation.”
OUR TAKE: What do these numbers mean? The SEC, which was charged with regulating all the private fund managers, did not get the relief it sought by transferring a large number of registrants to the states. Three years after Dodd-Frank and five years after Madoff, we are still left with an SEC that everybody agrees does not have the resources necessary to regulate the large and growing number of SEC-registered advisers.