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17 CFR Ch. II (4–1–12 Edition) § 275.203A–3

to register as an investment adviser with the state securities authorities in the respective States or, in the case of an amendment to Form ADV, it would be required by the laws of at least 15 States to register as an investment ad-viser with the state securities authori-ties in the respective States, within 90 days prior to the date of filing Form ADV; and

(ii) Undertaking on Schedule D of its Form ADV to withdraw from registra-tion with the Commission if the ad-viser indicates on an annual updating amendment to Form ADV that the in-vestment adviser would be required by the laws of fewer than 15 States to reg-ister as an investment adviser with the state securities authority in the re-spective States, and that the invest-ment adviser would be prohibited by section 203A(a) of the Act (15 U.S.C. 80b–3a(a)) from registering with the Commission, by filing a completed Form ADV–W within 180 days of the ad-viser’s fiscal year end (unless the ad-viser then is eligible for SEC registra-tion); and

(3) Maintains in an easily accessible place a record of the States in which the investment adviser has determined it would, but for the exemption, be re-quired to register for a period of not less than five years from the filing of a Form ADV that includes a representa-tion that is based on such record.

(e) Internet investment advisers. (1) An investment adviser that:

(i) Provides investment advice to all of its clients exclusively through an interactive website, except that the in-vestment adviser may provide invest-ment advice to fewer than 15 clients through other means during the pre-ceding twelve months;

(ii) Maintains, in an easily accessible place, for a period of not less than five years from the filing of a Form ADV that includes a representation that the adviser is eligible to register with the Commission under paragraph (e) of this section, a record demonstrating that it provides investment advice to its cli-ents exclusively through an interactive website in accordance with the limits in paragraph (e)(1)(i) of this section; and

(iii) Does not control, is not con-trolled by, and is not under common

control with, another investment ad-viser that registers with the Commis-sion under paragraph (b) of this section solely in reliance on the adviser reg-istered under paragraph (e) of this sec-tion as its registered adviser.

(2) For purposes of paragraph (e) of this section, interactive website means a website in which computer software- based models or applications provide investment advice to clients based on personal information each client sup-plies through the website.

(3) An investment adviser may rely on the definition of client in § 275.202(a)(30)–1 in determining whether it provides investment advice to fewer than 15 clients under paragraph (e)(1)(i) of this section.

[62 FR 28133, May 22, 1997, as amended at 63 FR 39715, 39716, July 24, 1998; 65 FR 57450, Sept. 22, 2000; 67 FR 77625, Dec. 18, 2003; 76 FR 43012, July 19, 2011]

§ 275.203A–3 Definitions.

For purposes of section 203A of the Act (15 U.S.C. 80b–3a) and the rules thereunder:

(a)(1) Investment adviser representative. ‘‘Investment adviser representative’’ of an investment adviser means a super-vised person of the investment adviser:

(i) Who has more than five clients who are natural persons (other than ex-cepted persons described in paragraph (a)(3)(i) of this section); and

(ii) More than ten percent of whose clients are natural persons (other than excepted persons described in para-graph (a)(3)(i) of this section).

(2) Notwithstanding paragraph (a)(1) of this section, a supervised person is not an investment adviser representa-tive if the supervised person:

(i) Does not on a regular basis solicit, meet with, or otherwise communicate with clients of the investment adviser; or

(ii) Provides only impersonal invest-ment advice.

(3) For purposes of this section: (i) ‘‘Excepted person’’ means a nat-

ural person who is a qualified client as described in § 275.205–3(d)(1).

(ii) ‘‘Impersonal investment advice’’ means investment advisory services provided by means of written material or oral statements that do not purport

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Securities and Exchange Commission § 275.204–1

to meet the objectives or needs of spe-cific individuals or accounts.

(4) Supervised persons may rely on the definition of ‘‘client’’ in § 275.202(a)(30)–1 to identify clients for purposes of paragraph (a)(1) of this sec-tion, except that supervised persons need not count clients that are not residents of the United States.

(b) Place of business. ‘‘Place of busi-ness’’ of an investment adviser rep-resentative means:

(1) An office at which the investment adviser representative regularly pro-vides investment advisory services, so-licits, meets with, or otherwise com-municates with clients; and

(2) Any other location that is held out to the general public as a location at which the investment adviser rep-resentative provides investment advi-sory services, solicits, meets with, or otherwise communicates with clients.

(c) Principal office and place of busi-ness. ‘‘Principal office and place of business’’ of an investment adviser means the executive office of the in-vestment adviser from which the offi-cers, partners, or managers of the in-vestment adviser direct, control, and coordinate the activities of the invest-ment adviser.

(d) Assets under management. Deter-mine ‘‘assets under management’’ by calculating the securities portfolios with respect to which an investment adviser provides continuous and reg-ular supervisory or management serv-ices as reported on the investment ad-viser’s Form ADV (17 CFR 279.1).

(e) State securities authority. ‘‘State securities authority’’ means the securi-ties commissioner or commission (or any agency, office or officer performing like functions) of any State.

[62 FR 28134, May 22, 1997, as amended at 63 FR 39715, July 24, 1998; 69 FR 72088, Dec. 10, 2004; 76 FR 43012, July 19, 2011]

§ 275.203A–4 [Reserved]

§ 275.203A–5 Transition rules.

(a) Temporary exemption from prohibi-tion on Commission registration for mid- sized investment advisers. Until January 1, 2012, the prohibition of section 203A(a)(2) of the Act (15 U.S.C. 80b– 3a(a)(2)) does not apply to an invest-

ment adviser registered with the Com-mission on July 21, 2011.

(b) SEC-registered advisers—Form ADV filing. Every investment adviser reg-istered with the Commission on Janu-ary 1, 2012 shall file an amendment to Form ADV (17 CFR 279.1) no later than March 30, 2012 and shall determine its assets under management based on the current market value of the assets as determined within 90 days prior to the date of filing the Form ADV.

(c) Mid-sized investment advisers—with-drawing from Commission registration.

(1) If an investment adviser reg-istered with the Commission on Janu-ary 1, 2012 would be prohibited from registering with the Commission under section 203A(a)(2) of the Act (15 U.S.C. 80b–3a(a)(2)), and is not otherwise ex-empted by § 275.203A–2 from such prohi-bition, such investment adviser shall withdraw from registration with the Commission by filing Form ADV–W (17 CFR 279.2) no later than June 28, 2012. During this period while an investment adviser is registered with both the Commission and one or more state se-curities authorities, the Act and appli-cable State law will apply to the in-vestment adviser’s advisory activities.

(2) If, prior to the effective date of the withdrawal from registration of an investment adviser on Form ADV–W, the Commission has instituted a pro-ceeding pursuant to section 203(e) of the Act (15 U.S.C. 80b–3(e)) to suspend or revoke registration, or pursuant to section 203(h) of the Act (15 U.S.C. 80b– 3(h)) to impose terms or conditions upon withdrawal, the withdrawal from registration shall not become effective except at such time and upon such terms and conditions as the Commis-sion deems necessary or appropriate in the public interest or for the protec-tion of investors.

[76 FR 43012, July 19, 2011]

§ 275.203A–6 [Reserved]

§ 275.204–1 Amendments to Form ADV. (a) When amendment is required. You

must amend your Form ADV (17 CFR 279.1):

(1) At least annually, within 90 days of the end of your fiscal year; and

(2) More frequently, if required by the instructions to Form ADV.

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