RICE Frequently Asked Questions
Investment Adviser and Investment Adviser Representative Registrations
See Mass. Gen Laws ch. 110 and 950 Mass. Code Regs. 12.205 for complete details.
Q: What is the total fee to register an investment adviser that is a sole proprietorship?
A: $350 ($300 for the IA/Firm and $50 for the IAR/Representative) plus any costs assessed by FINRA.
Q: Is there a de-minimis exclusion from the definition of investment adviser?
A: Yes. A firm need not register or notice file with the Securities Division if it has:
- no office or other physical presence in Massachusetts and
- no more than 5 clients during any 12-month period.
Q: My firm is an SEC-registered investment adviser (a notice-filer in Massachusetts). Must I register all of my representatives who provide investment advice to clients in Massachusetts?
A: You need only register those representatives who have a “place of business” in Massachusetts and who meet the federal definition of investment adviser representative.
Q: Are there any registration (and examination) requirements for officers, directors, or partners of an advisory firm?
A: Yes. Every officer, director, partner, or person occupying a similar status or performing similar functions is automatically registered as a representative of the firm and must file a Form U4, pay the registration fee (both via the CRD), and meet the Securities Division’s examination or certification requirements. If any such person does not desire automatic registration because he or she does not meet the definition of an investment adviser representative, he or she must file a Form U4 and an affidavit (PDF) stating that he or she does not act as an investment adviser representative of the firm in Massachusetts. The affidavit must be filed directly with the Securities Division while the Form U4 may be filed either directly with the Securities Division or electronically via the CRD.
Q: What are the certification or examination requirements in Massachusetts?
A: Each investment adviser representative submitting an application for registration must demonstrate compliance with either (A) or (B) below:
- Currently hold one of the following professional designations:
- Certified Financial Planner (CFP)
- Chartered Financial Analyst (CFA)
- Chartered Financial Consultant (ChFC)
- Chartered Investment Counselor (CIC)
- Personal Financial Specialist (PFS)
- Have obtained a passing score on (i) the Uniform Investment Adviser Law Examination (“Series 65”), or (ii) on both the Uniform Combined State Law Examination (“Series 66”) and the General Securities Representative Examination (“Series 7”).
Note: The Series 65 and the Series 66 must be those examinations available since January 1, 2000. A passing score on either examination prior to January 1, 2000 does not qualify as meeting the above requirements.
Q: Will a Master’s Degree in Business Administration satisfy the examination/certification requirements for registration as an investment adviser representative?
A: No. One way of meeting the requirements is a passing score on the Series 66 plus a passing score on the Series 7. The Regulations offer certain alternatives to the Series 7, including a degree from an accredited institution of higher education in a subject involving significant financial and investment analysis.
Q: I plan to solicit clients for a state-registered investment adviser. Does this raise any registration issues?
A: Yes. Solicitation for compensation on behalf of a state-registered investment adviser will require you to register as a representative of that adviser. A person who will only solicit for a single investment adviser and offer no investment advice or perform any other advisory services may request that the examination requirement be waived but that person must register as an investment adviser representative.
Senior Financial Designations
Q. When do the Massachusetts “Senior Designations” regulations become effective?
A. The regulations on the use of senior designations became effective June 1, 2007.
Q. Has the Massachusetts Securities Division recognized any accreditation organizations that may accredit senior designations, as called for in 950 CMR 12.204(2)(i) and 12.205(9)(c)(15)?
A. Yes. The Secretary may recognize accreditation organizations by rule or order. A list of accredited organizations that the Secretary has recognized may be found on the Massachusetts Securities Division’s website.
Q. Does the Massachusetts Securities Division maintain a list of credentials or designations that have been accredited?
A. No. Interested persons should check with the sponsor of the credential or designation to determine whether the particular credential or designation has been accredited. In addition, the accreditation organizations recognized by the Secretary thus far maintain lists of credentialing programs that they have accredited.
Q. Are there grace periods built into the regulation?
A. Yes. There is an initial two month grace period (until August 1, 2007) for all credentials and designations. In addition, a six month grace period (and the potential for additional, discretionary grace periods, as provided by the regulation) is triggered when an application for accreditation has been filed with an accreditation organization recognized by the Secretary.
Q. For purposes of Subsections 12.204(2)(i) and 12.205(9)(c)(15), what constitutes an “application” to the National Commission for Certifying Agencies?
A. The Massachusetts Securities Division has been informed by personnel at the National Commission for Certifying Agencies (“NCCA”) that an application for accreditation by NCCA must be complete upon submission. This differs from the American National Standards Institute, which has an application process that allows an initial application to be submitted, and the bulk of the application materials to be submitted following the initial application. NCCA accepts applications three times a year, in January, April and September. The Division has agreed that an “application” to NCCA under Sections 12.204(2)(i) and 12.205(9)(c)(15) may be a letter of intent indicating that the full application will be submitted at the next NCCA application deadline, as long as the application is actually submitted within 90 days after the letter of intent. A letter of intent indicating that the full application materials will be submitted in the indefinite future would not constitute an application under the regulations. Similarly, a letter of intent indicating that an application would be submitted by a date certain would likely not constitute an application if the application is not actually submitted by that date.
Q. How does the new regulation apply to degrees or certificates evidencing completion of an academic program at an accredited institutions of higher education?
A. Subsections 12.204(2)(i) and 12.205(9)(c)(15) shall not apply to a degree or certificate evidencing completion of an academic program at an accredited institution of higher education, unless the facts and circumstances associated with the provision or use of such degree or certificate indicate that it improperly suggests or implies certification or training beyond that which the degree holder or certificate holder possesses or that it otherwise misleads investors.
For the purposes of subsections 12.204(2)(i) and 12.205(9)(c)(15), “accredited institution of higher education” means any institution of higher education that is on the United States Department of Education’s list titled “Accrediting Agencies Recognized for Title IV Purposes, ” which is a list of accrediting agencies whose accreditation enables institutions to establish eligibility to participate in the federal student financial assistance programs administered by the Department of Education under Title IV of the Higher Education Act of 1965, as amended.
Please note that accreditation organizations that accredit institutions of higher education, referenced in the reference to “accredited institution of higher education” under these exemptions 12.204(2)(i)(4) and 12.205(9)(c)(15)(d), are different from the accreditation organizations referred to in subsections 12.204(2)(i)(1) and 12.205(9)(c)(15)(a), such as the American National Standards Institute and the National Commission Certifying Agencies, which accredit credentials and professional designations.
The Division notes that the “facts and circumstances” requirement included in these subsections 12.204(2)(i)(4) and 12.205(9)(c)(15)(d) is similar to the requirements of NASD Conduct Rule 2210 and IM-2210-1, which require that brokerage firms and their representatives must ensure that statements to customers are not misleading within the context in which they are made.
*The information provided herein is for general guidance to the public, but should not be considered to be legal advice or a definitive interpretation of the law.