Investment advisers (IAs) are entities that make recommendations about the purchase or sale of securities. IAs with no office and no representatives located in Kentucky with five or fewer clients in the state are not required to register or notice file in Kentucky. For more information, read the DeMinimis Rules.
Investment Adviser Registration
Applications shall include:
1. Uniform Form ADV Part 1 filed electronically through the IARD (Investment Adviser Registration Depository). For assistance, call (240) 386-4848, which is a Financial Industry Regulatory Authority (FINRA) Gateway number. Visit http://www.nasaa.org and http://www.iard.com/ for additional information.
2. Uniform Form ADV Part 2 filed electronically.
3. $100 filing fee.
4. Copy of client advisory contract(s). The contract(s) must contain the following:
- The nature of the advisory services to be provided.
- The time period for which the contract remains in effect.
- The advisory fee and the formula for computing the fee.
- The amount of prepaid fee to be returned in the event of contract termination or nonperformance.
- Whether the contract grants discretionary power to the adviser and, if so, the terms of the discretionary power.Whether the contract grants custody of customer funds to the adviser and, if so, the terms of the custody.
- A statement that the adviser shall not assign the contract without the prior written consent of the customer.
5. An investment adviser must be solvent.
6. If an investment adviser based in Kentucky has custody of client funds or securities, then the adviser shall maintain a minimum net worth of $35,000 or may be bonded up to $25,000 with surety bond and $10,000 net worth.
7. If an investment adviser based in Kentucky has discretionary authority over client funds or securities, but does not have custody of client funds or securities, then the adviser shall maintain a minimum net worth of $10,000 or be bonded in that amount. For a sample of a surety bond, see the example in the documents list below.
8. A current balance sheet.
NOTE: Any Broker-Dealer (BD) that also is an Investment Adviser (IA) or “covered adviser” must either register as an IA under KRS 292.330 or notice file as a “covered adviser” under KRS 292.332. There is no longer a registered BD exemption from the registration or notice filing requirements for investment advisers.
Federally Registered Investment Adviser Notice Filing Requirements
Notice filing requirements include:
1. Uniform Form ADV filed electronically through IARD.
2. $100 filing fee.
NOTE: Any Broker-Dealer (BD) that is also an Investment Adviser (IA) or “covered adviser” must either register as an IA under KRS 292.330 or notice file as a "covered adviser" under KRS 292.332. There is no longer a registered BD exemption from the registration or notice filing requirements for investment advisers.
How to Terminate Registration
If an investment adviser wants to terminate registration with Kentucky, they must submit a Form ADV-W to DFI through IARD.
For More Information
Contact Anthony McKinney at (502) 782-9063 with questions about investment adviser registration requirements or compliance issues.