Differentiate Adviser Classifications - Series 65

1. Which adviser category is generally required when AUM is less than $100\text{ million}$?

   State-registered investment adviser (with state). Advisers with AUM below $100\text{ million}$ generally must register with states unless qualifying for an exemption.

2. Identify the adviser type: AUM is $60\text{ million}$ and the firm is not otherwise eligible for SEC registration.

   State-registered investment adviser. AUM below $100\text{ million}$ without SEC eligibility requires registration with the state securities administrator.

3. Which type of adviser is typically associated with private fund adviser exemptions under federal law?

   Exempt reporting adviser (ERA). Federal exemptions for advisers to private funds or venture capital funds classify them as ERAs with SEC reporting obligations.

4. Which adviser category is generally required when AUM is $110\text{ million}$ or more?

   Federal covered adviser (SEC-registered). Advisers with AUM of $110\text{ million}$ or more are required to register with the SEC under federal rules.

5. What is the primary regulator for an exempt reporting adviser (ERA) at the federal level?

   The SEC (reporting only; not full SEC registration). ERAs are exempt from full SEC registration but must submit reports like Form ADV Part 1 to the SEC for oversight.

6. What is the simplest way to distinguish the three categories in one phrase?

   State-registered; SEC-registered (federal covered); SEC-exempt but reporting (ERA). This distinction highlights registration levels: state for smaller firms, federal for larger, and exempt with reporting for specific cases.

7. What is the AUM threshold at which a state-registered adviser must switch to SEC registration?

   When AUM reaches $110\text{ million}$ or more. State-registered advisers must transition to SEC registration once AUM meets or exceeds this threshold to comply with federal requirements.

8. Identify the adviser type: AUM is $200\text{ million}$ with typical advisory business (no special exemption claimed).

   Federal covered adviser (SEC-registered adviser). AUM exceeding $110\text{ million}$ mandates SEC registration for advisers without exemptions.

9. What is the AUM threshold at which an SEC-registered adviser must switch to state registration?

   When AUM falls below $90\text{ million}$. SEC-registered advisers are required to deregister and switch to state registration if AUM drops below this level.

10. Identify the adviser type: AUM is $105\text{ million}$ and the firm is already SEC-registered.

    Federal covered adviser may remain SEC-registered. Within the $100\text{ million}$ to $110\text{ million}$ buffer, existing SEC-registered advisers can retain their federal status.

11. Identify the adviser type: AUM drops to $85\text{ million}$ for an SEC-registered adviser.

    Must register with the state (state-registered adviser). Falling below $90\text{ million}$ AUM disqualifies the adviser from SEC registration, necessitating state registration.

12. Which classification best describes an adviser that is exempt from SEC registration but must file as an ERA?

    Exempt reporting adviser. Certain advisers exempt from SEC registration must still report to the SEC as ERAs to ensure transparency.

13. What is the typical state authority over a federal covered adviser under NSMIA?

    Notice filing and fees; limited enforcement (no registration). NSMIA limits states to requiring notice filings and fees from federal covered advisers, with authority over fraud only.

14. Which adviser category is created by NSMIA to describe SEC-registered advisers?

    Federal covered adviser. NSMIA established this term to denote advisers registered with the SEC and preempted from state registration.

15. What is the key difference between an SEC-registered adviser and an ERA?

    SEC-registered: full registration; ERA: exemption with reporting. SEC-registered advisers undergo comprehensive regulatory oversight, while ERAs have lighter requirements focused on disclosure.

16. Which adviser classification is most directly tied to the AUM-based "mid-sized adviser" framework?

    State-registered versus SEC-registered (federal covered) advisers. The mid-sized adviser rules under federal law delineate registration based on AUM thresholds between state and federal levels.

17. What is the AUM "buffer zone" range in which an adviser may stay with its current regulator?

    $100\text{ million}$ to $110\text{ million}$ AUM. The buffer zone allows advisers to maintain current registration status within this AUM range to avoid frequent switches.

18. What is the typical state authority over an exempt reporting adviser (ERA)?

    Possible state registration/notice requirements vary by state. States may impose registration or notice filings on ERAs depending on local laws, as they lack federal preemption.

19. Which adviser category is generally subject to SEC registration and SEC examinations?

    Federal covered adviser (SEC-registered adviser). SEC registration subjects advisers to federal oversight, including routine examinations by the SEC.

20. Which classification best describes an adviser that is SEC-registered and therefore "covered" from state registration?

    Federal covered adviser. SEC registration provides federal coverage, preempting state registration requirements under NSMIA.

21. Identify the adviser type: AUM is $105\text{ million}$ and the firm is already state-registered.

    State-registered adviser may remain state-registered. State-registered advisers in the buffer zone may continue state registration until AUM reaches $110\text{ million}$.

22. Which adviser category is generally subject to state registration, state exams, and state rules?

    State-registered investment adviser. Advisers not qualifying for SEC registration are subject to state-level requirements, including registration and examinations.

23. What is the primary regulator for a state-registered investment adviser under the USA?

    The state securities administrator (state regulator). Under the Uniform Securities Act, state-registered advisers are primarily overseen by the state administrator for compliance and enforcement.

24. Which adviser category is NOT fully registered but must file a limited report with the SEC?

    Exempt reporting adviser (ERA). ERAs qualify for exemptions from full SEC registration but are required to file periodic reports with the SEC.

25. What is the primary regulator for a federal covered investment adviser (SEC-registered adviser)?

    The Securities and Exchange Commission (SEC). Federal covered advisers register with the SEC, which conducts examinations and enforces federal securities laws.

Study these flashcards