Investment Advisers Registration Filing with the Securities Division

To file with the Washington Department of Financial Institutions Securities Division complete and send these documents:

  1. Financial Statement
    A balance sheet for the applicant should be submitted. It need not be audited, and should be dated not more than 90 days prior to the date of filing. If the applicant is a sole proprietor, it is the personal balance sheet of the applicant.

    Any applicant who has discretion to trade client accounts, or who has custody of client securities or funds, must comply with the net worth requirements of WAC 460-24A-170, which are $35,000 of net worth for custody, and $10,000 of net worth for discretion. If it is necessary, obtain a surety bond to meet the requirements.
  2. Proposed Client Contract
    Advisers are required to have a written contract with each client, even if the adviser is providing limited financial planning, solely recommends wrap fee arrangements, or is a solicitor. The contract must disclose the items referenced WAC-24A-130

    The contract cannot include:
    • a performance fee arrangement unless it complies with WAC 460-24A-150
    • “hold harmless” or “hedge” clauses, which purport to require clients to waive potential claims they may be entitled to bring under state or federal statutes, or which seeks to hold the investment adviser to a lesser standard of care than is required by statute.
  3. Proof of Passing Qualifying Examinations/Holding Designations, If The Applicant Is A Sole Proprietor
  4. Additional Requirements for Investment Advisers to Pooled Investment Vehicles (private equity funds, hedge funds, etc.)
    Interests in pooled investment vehicles are typically sold via a Regulation D Rule 506 offering to accredited investors, which requires an exemption filing with the Division. In addition to being accredited, investors are almost always “qualified clients” as that term is defined in SEC Rule 205-3, in order for the adviser to be paid a performance fee in addition to or in lieu of a management fee. Please see Notice to Hedge Fund Managers.

    In addition to the documents required to be filed that were listed in the prior sections, these additional documents must be filed with the Division as part of the investment adviser application:
    • Private placement memorandum
    • Subscription agreement
    • Limited partnership (or LLC) agreement. If the adviser is planning on using this agreement to satisfy the client contract required by WAC 460-24A-220(16), then the adviser must submit a written response to each bullet point contained in the Notice to Hedge Fund Managers dated September 28, 2006.
    • Other Requirements:

      Custody: Pursuant to WAC 460-24A-105, all funds and securities invested in the pooled investment vehicle (“the Fund”) must be held by a “qualified custodian,” as that term is defined in WAC 460-24A-005.

      Compliance with WAC 460-24A-107: The investment adviser must comply with the requirements of WAC 460-24A-107. This is accomplished by either:

      (1) utilizing the services of an “independent party” (as that term is defined in WAC 460-24A-005) to act as a gatekeeper for the payment of fees, expenses, and capital withdrawals from the Fund’s custodial accounts. A copy of the agreement signed by the independent party, the investment adviser, and the custodian(s) must be filed with the Securities Division. Advisers employing this method of compliance will be subject to a $10,000 net worth requirement.

      or

      (2) having the fund annually audited by an independent CPA and distributing the audited financial statements to the investors in the Fund within 120 days of the Fund’s fiscal year end. Advisers employing this method of compliance will be subject to a $35,000 net worth requirement.

      Requirement to send quarterly statements: Pursuant to WAC 460-24A-105(4), either the adviser or the custodian(s) must send quarterly statements to the investors in the Fund. The statements must containing all of the information required by WAC-460-24A-105(4) and WAC 460-24A-107(2).
  5. Delivering the Forms
    You can email, fax, or mail the forms to DFI.

    Email: Investment Adviser Licensing at ialicensing@dfi.wa.gov
    Fax: Attn: Investment Adviser Licensing (360) 704-7029.
     

    For U.S. Postal Service:
    Department of Financial Institutions
    Division of Consumer Services
    PO Box 41200
    Olympia WA 98504-1200

    For Overnight Delivery:
    Department of Financial Institutions
    Division of Consumer Services
    150 Israel Rd SW
    Tumwater WA 98501