State Registration Question

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Jun 22, 2010 3:27 am

I live in New York state and I am currently trading some client accounts in different states around the country. It's small: total of 6 clients and total assets around $1.5million. They have given me trading authority in their mutual fund accounts.

I have verified with each state's governmental office to make sure they have a de minimis exemption, and I am in compliance in all the states where my clients reside.

The thing I am unsure about is do I have to be registered in my home state of New York (I have no clients in New York)? I googled this and have not found any information.

Thanks in advance if any of you can shed some light on this.

Jun 22, 2010 3:40 am

And to clarify .... I am not registered in any way, shape or form, in any state.

Jun 22, 2010 7:28 am

I'd play it safe and take the S65 and register in NYS.  The whole thing will cost you less you than $500 and you can go out, solicit more customers, and be legit.

Jun 22, 2010 7:43 am

[quote=FrankNYC]

I'd play it safe and take the S65 and register in NYS.  The whole thing will cost you less you than $500 and you can go out, solicit more customers, and be legit.

[/quote]

Thanks. I figured the same. So I am just got the s65 prep materials.

It's a bit of a dilemma - I think on the ADV application it asks how many clients I have, and I have to list my current clients. I wonder if they can somehow sanction me on a look-back basis (if it's even a sanctionable action).

Jun 22, 2010 9:39 am

This info may be useful to somebody. I just spoke to a person at the New York Attorney General:

She said I need to be registered in NY State only if I am managing money for NY persons (more than 6). Phew!!!!

But I'm going to get registered anyway in case I want to solicit local clientele in the future.

Jun 22, 2010 8:05 pm

An important point to note is that this is VERY state-specific.  In some states, just doing business in that state (no matter where the clients are) is enough to require registration.  CA would be an example.  So anyone else with a similar situation, I advise you to check with your state's AG or, better yet, whichever department regulates financial advisors in your state (e.g., Sec of State).

Jun 22, 2010 8:28 pm

[quote=loneMADman]

An important point to note is that this is VERY state-specific.  In some states, just doing business in that state (no matter where the clients are) is enough to require registration.  CA would be an example.  So anyone else with a similar situation, I advise you to check with your state's AG or, better yet, whichever department regulates financial advisors in your state (e.g., Sec of State).

[/quote]

I thought California was a de minimis state. See link:

http://www.remickcapital.com/files/deminimis.pdf

and paragraph 2 in the following link:

http://www.corecls.com/files/CCLS_Risk_Management_Update_04.2009_-_Investment_Adviser_State_Registration_and_De_Minimus_Exemption.pdf

Jun 23, 2010 1:00 am

Here's the deal; as soon as you have a place of business in the state, you must register with the state, even if your clients are in other states.  The exemption applies only to firms with no "place of business" in the state with < 6 clients.  And if you're wondering how to define place of business, just know that if you live there you will be deemed to  have a place of business even if working out of your house.  I strongly suspect NY has the same requirement (it's usually based on federal boilerplate). 

Wrt to CA, it doesn't help that CA law requires anyone doing any kind of business where they charge others to register their "franchise" with the state (and usually the county) and pay a franchise fee ($800+).  Let's just say ilikecoffee doesn't want to do what he's doing in CA, even if it were legal.

Apr 17, 2013 12:05 pm

"This info may be useful to somebody. I just spoke to a person at the New York Attorney General:She said I need to be registered in NY State only if I am managing money for NY persons (more than 6). Phew!!!!But I'm going to get registered anyway in case I want to solicit local clientele in the future."

To clarify, this is only true if you are not holding yourself out as an advisor to the public or to new prospective clients. It is meant to provide an exemption for those that have existing relationships with a small number of clients. Glad to hear you are registering in NY.

http://blog.advisorassist.com