Banking Commissioner Lays Down New Rules

State Banking Commissioner Howard F. Pitkin on Wednesday announced that he has issued three orders providing the securities industry with guidance on how Connecticut would treat certain investment advisers following the passage of The Dodd-Frank Wall Street Reform and Consumer Protection Act.

Pitkin is a Vernon native.
 
The federal legislation allows more investment advisers to pursue state registration by raising the regulatory cap on assets under management to $100 million.  As a result, advisers with up to $100 million in assets under management could register with a particular states rather than the federal Securities and Exchange Commission. 

Before the law change, state registration responsibility was limited generally to advisers with less than $25 million in assets under management.
 
The Dodd-Frank legislation takes effect on July 21.  Pitkin said on that day, the state expects an influx of adviser registrants who had previously been SEC-registered, but whose assets under management no longer qualify them for federal registration. 
 
The first Connecticut order, issued on July 11, states that investment advisers switching from federal to state registration would have until June 28, 2012 to register in Connecticut.  The time frame is in step with new SEC rules. 

The second Connecticut order takes effect on July 21. It provides a state exemption from registration for investment advisers to venture capital funds and small business investment companies. 

Also included in the order are advisers to private funds having less than $150 million in assets under management as long as the adviser complies with federal reporting requirements and is not subject to an administrative, civil or criminal sanctions that would disqualify the adviser from state registration in Connecticut.

Advisers registered with the Commodity Futures Trading Commission were also exempted from state registration.
 
The third Connecticut order updates the definition of “client” for purposes of the state de minimis exemption to reflect federal law changes.
 
“It is my hope that these new orders will allow for investment advisers to continue to provide quality services to their clients here in Connecticut,” Pitkin said.  “Any adviser with questions on these orders is urged to contact the department’s Securities Division for information on how to best work within these new parameters.”