Rule_203A-5_Supporting_Statement PRA Extension 12 2013

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 203A-5

A.

JUSTIFICATION
1.

Necessity of Information Collection

Pursuant to section 203A of the Investment Advisers Act of 1940 (“Advisers Act”
or “Act”), an investment adviser that has at least $25 million in assets under management
generally is prohibited from registering with the Securities and Exchange Commission
(“Commission” or “SEC”). 1 In 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act (“Dodd-Frank Act”) 2 amended section 203A to prohibit from Commission
registration an investment adviser that has assets under management between $25 million
and $100 million (a “mid-sized adviser”), and: (i) is required to be registered as an
investment adviser with the state in which it maintains its principal office and place of
business; and (ii) if registered, would be subject to examination as an adviser by that
state. 3
The Commission adopted rule 203A-5 to provide for a transitional process by
which an adviser no longer eligible for Commission registration would transition to state
registration. The rule required each investment adviser registered with the Commission

1

15 U.S.C. 80b-3a. An adviser must register with the Commission if it is not regulated or
required to be regulated as an investment adviser in the state in which it maintains its
principal office and place of business or if it advises a Commission-registered investment
company. Id.

2

Pub. L. No. 111-203, 124 Stat. 1376 (2010).

3

See section 410 of the Dodd-Frank Act. A mid-sized adviser may register with the
Commission if it would be required to register with 15 or more states, or if it is an adviser
to a registered investment company or business development company under the
Investment Company Act of 1940. See id.

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on January 1, 2012 to file an amendment to its Form ADV no later than March 30, 2012. 4
Each adviser was required to amend its Form ADV to declare whether it remained
eligible for Commission registration and to report the market value of its assets under
management determined within 90 days of the filing. 5 An adviser no longer eligible for
Commission registration was required to withdraw its Commission registration by filing
Form ADV-W no later than June 28, 2012. 6 The rule does not contain any continuing
requirements after the June 28, 2012 withdrawal deadline.
The rule’s requirement to file an amendment to Form ADV was a “collection of
information” for Paperwork Reduction Act (“PRA”) purposes. The title of the collection
of information is: “Rule 203A-5.” The respondents to this information collection were all
investment advisers registered with the Commission on January 1, 2012. This collection
of information has been approved by the OMB under control number 3235-0688. An
agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB control number. This
collection of information is found at 17 CFR 275.203a-5 and is mandatory.

The

information collected on Form ADV is not kept confidential.
2.

Purposes and Use of Information Collection

The rule does not require information to be collected after the June 28, 2012

4

Rule 203A-5(b). Advisers registered with the Commission on July 21, 2011 that had at
least $25 million in assets under management were exempt from the new prohibition on
Commission registration for mid-sized advisers until 2012, when the rule required them
to switch to state registration and withdraw their SEC registration. See rule 203A-5(a).

5

See rule 203A-5(b).

6

Rule 203A-5(c)(1). The rule also permits the Commission to postpone the effectiveness
of, and impose additional terms and conditions on, an adviser’s withdrawal from SEC
registration if the Commission institutes certain proceedings before the adviser files Form
ADV-W. Rule 203A-5(c)(2).

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withdrawal deadline. The Form ADV filing required by rule 203A-5 enabled investment
advisers to determine in 2012 whether they met the revised eligibility criteria for
Commission registration, and provided the Commission and the state regulatory
authorities with information necessary to identify those advisers required to transition to
state registration and to understand the reason for the transition or basis for continued
Commission registration. 7
3.

Consideration Given to Information Technology

Investment advisers file their Form ADV electronically on the IARD system.
This method of collecting information reduces the regulatory burden upon investment
advisers by permitting them to file applications for registration, and amendments thereto,
at one central location, rather than filing Form ADV separately with the Commission and
the states for notice filing purposes. The deadlines for information collected pursuant the
rule wcre March 30, 2012 (for Form ADV amendments) and June 28, 2012 (for
withdrawals). The Commission is no longer collecting any information pursuant to the
rule.
4.

Duplication

The collection of information requirements of rule 203A-5 are not duplicated
elsewhere for investment advisers that were required to comply with the collection
requirements. The Commission is no longer collecting any information pursuant to the
rule.
5.
7

Effect on Small Entities

Amended Item 2.A. of Form ADV, Part 1A reflects the requirements of the Advisers Act
(as amended by the Dodd-Frank Act) and the related rules, and requires an investment
adviser to mark Item 2.A.(13) if the adviser is no longer eligible to remain registered with
the Commission.

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The requirements of rule 203A-5 are the same for all investment advisers
registered with the Commission on January 1, 2012, including those advisers that were
small entities as of that date. The Commission is no longer collecting any information
pursuant to the rule, thus the rule no longer affects any advisers regardless of size.
6.

Consequences of Not Conducting Collection

Rule 203A-5 required each investment adviser registered with the Commission on
January 1, 2012 to file an amendment to its Form ADV that, among other things, required
each adviser to declare whether it remained eligible for Commission registration and to
report the market value of its assets under management determined within 90 days of
filing. The deadlines for the information collected pursuant the rule were March 30, 2012
(for Form ADV amendments) and June 28, 2012 (for withdrawals). The Commission is
no longer collecting any information pursuant to the rule.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultations Outside of the Agency

The Commission and the staff of the Division of Investment Management
participate in an ongoing dialogue with representatives of the investment adviser profession
through public conferences, meetings and informal exchanges.

These various forums

provide the Commission and the staff with a means of ascertaining and acting upon
paperwork burdens facing the industry. The Commission is no longer collecting any
information pursuant to the rule.
The Commission requested public comment on these collections of information
requirements before it submitted this request for extension and approval to OMB. The

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Commission received no comments in response to its request.
9.

Payment or Gift

None.
10.

Confidentiality

The information collected pursuant to rule 203A-5 was provided through Form
ADV filings with the Commission. These disclosures are not kept confidential. The
deadlines for information collected pursuant the rule were March 30, 2012 (for Form
ADV amendments) and June 28, 2012 (for withdrawals). The Commission is no longer
collecting any information pursuant to the rule.
11.

Sensitive Questions

Not applicable/No PII collected.
12.

Burden of Information Collection

The current approved burden for rule 203A-5 is 49,323 hours, based on an
estimated 3,900 respondents filing an amendment to Form ADV. The deadlines for
information collected pursuant the rule were March 30, 2012 (for Form ADV
amendments) and June 28, 2012 (for withdrawals).

The Commission is no longer

collecting any information pursuant to the rule. Accordingly, the staff estimates that
there will be no further burden associated with the rule. Although Commission staff
estimates that there is no further burden associated with rule 203A-5, the staff is
requesting a one hour burden for administrative purposes.
13.

Costs to Respondents
$0.

14.

Costs to the Federal Government

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$0.
15.

Changes in Burden

As the requirements of the rule are no longer applicable, the one-time total burden
of 49,323 hours is also no longer applicable. The deadlines for information collected
pursuant the rule were March 30, 2012 (for Form ADV amendments) and June 28, 2012
(for withdrawals).
16.

Information Collections Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exception to Certification for Paperwork Reduction Act Submissions

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL
METHODS
Not applicable.

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