RIA Family of Companies

Do you need to Register your Advisory Firm Office or “Branch Office”?


By Cory Roberson, Principal at RIA Review and RIA Consults

Supervising an office


The role of the registering a location or (“branch office”) is a convoluted issue in the investment advisory and broker-dealer worlds.  On one hand, all FINRA broker-dealer “branch offices” are supervised by the Office of Supervisory Jurisdiction (OSJ).  For advisors, including state securities regulators, the SEC, and other SRO’s, its application takes a different course.
We’ve made some distinctions below for investment advisors who want to take a closer look at defining your firm's offices.

What is an (“investment advisor/securities”) branch office?
Generally, FINRA, NASAA, SEC, NYSE, and state jurisdictions define a “Branch Office” as any location in a state of an investment adviser at which one or more supervised persons regularly conduct the business of rendering investment advice or effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security or any location.  
In this context, the branch office can include the principal (main) office as described on a FINRA notice here: http://www.finra.org/sites/default/files/NoticeDocument/p015121.pdf

Should I file under state registration and/or as a branch office?
State Registration of principal offices:  Most advisors, who are not under explicit branch office filing/notice requirements, are able to conduct business in their home state with registration (State advisors) and/or a notice filings (SEC).   
Registration in other states: Typically, firms who serve up to five clients (Texas requires a notice for one client) in another state can avoid registration under De minimis exemptions.  Confirm with each state for specific guidelines to this rule.
Branch Offices
As mentioned above, SEC/State advisors may be required to register a location in a jurisdiction as a “branch office.”  Registration is usually filed through a Form BR (via web CRD/IARD) or a direct notice to the state (via mail/email). 
According to the IARD filing system, only 9 out of 50 states enforce branch office filing fees for advisors: Arkansas, Connecticut, Florida, Maine, Texas, Vermont, Virgin Islands, West Virginia and Wisconsin.

States, such as Alaska, just require a notice of branch office activity. 

We encourage firms to contact their states to determine if a formal notice and/or filing is required for branch office activity.

General Branch Office exemptions

Some states may apply branch office exemptions if certain conditions are met.

Florida - Rule 69W-200.001(8), exempts firms with the following conditions:

Any location that is established solely for customer service or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office,

Any location that is the associated person’s primary residence provided that:
Only one associated person, or multiple associated persons, who reside at that location and are members of the same immediate family, conduct business at the location,
The location is not held out to the public as an office and the associated person does not meet with customers at the location,
Neither customer funds nor securities are handled at that location, 
The associated person is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements and other communications to the public by such associated person, 
The associated person’s correspondence and communications with the public are subject to the firm’s supervision in accordance with NASD Rule 3010, as incorporated in Rule 69W-200.002, F.A.C.,
Electronic communications (e.g., e-mail) are made through the registrant’s electronic system,
All orders are entered through the designated branch office or an electronic system established by the registrant that is reviewable at the branch office,
Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the registrant
“Offices of Convenience” exemptions
Vermont - Section 5102(21)(D) mirrors NASD Rule 3010(g)(2)(A) provides an exemption for the following condition:  Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, that is not held out to the public as an office;
Advisors can access more resources for supervising its office location(s) on our Compliance Management Software





Email us at: cory@riareview.com or call us at: 650-305-2688.

Regulators:

Securities and Exchange Commission (SEC)
Financial Industry Regulatory Authority (FINRA)
National Association of Securities Dealer (NASD –merged with FINRA)
North American Securities Administrators Association (NASAA)
Investment Advisory Registration Depository (IARD)
New York Stock Exchange (NYSE)

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Cory Roberson is Principal of RIA Review, a compliance and document management portal (www.riareview.com) - 110+ users and growing.  He is also Principal of RIA Consults -Roberson Consults Group), a consulting firm providing compliance, operations, and business development services for registered investment advisors and next-gen fintech entrepreneurs (www.robersonconsults.com) more than 160 SEC & State advisors clients across the US (including a few in Europe).   Through his mission-driven arm, SoCap Missions, he has volunteered in countries such as S. Korea, China, S. Africa, Thailand, and India.





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