[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76499-76500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30701]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-3119; File No. S7-38-10]


Approval of Investment Adviser Registration Depository Filing 
Fees

AGENCY: Securities and Exchange Commission.

ACTION: Notice of intent to charge revised IARD filing fees for 
advisers registering with or registered with the Commission.

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SUMMARY: The Securities and Exchange Commission (``Commission'' or 
``SEC'') is revising Investment Adviser Registration Depository annual 
and initial filing fees that will be charged beginning January 1, 2011.
    Hearing or Notification of Hearing: An order approving the IARD 
filing fees will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary. Hearing requests should be received by the SEC by 5:30 p.m. 
on December 21, 2010. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-1090.

FOR FURTHER INFORMATION CONTACT: Keith Kanyan, IARD System Manager, at 
202-551-6737, or [email protected], Office of Investment Adviser 
Regulation, Division of Investment Management, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-8549.

SUPPLEMENTARY INFORMATION: Section 204(b) of the Investment Advisers 
Act of 1940 (``Advisers Act'') authorizes the Commission to require 
investment advisers to file applications and other documents through an 
entity designated by the Commission, and to pay reasonable costs 
associated with such filings.\1\ In 2000, the Commission designated the 
Financial Industry Regulatory Authority Regulation, Inc. (``FINRA'') as 
the operator of the Investment Adviser Registration Depository 
(``IARD'') system. At the same time, the Commission approved, as 
reasonable, filing fees.\2\ The Commission later required advisers 
registered or registering with the SEC to file Form ADV through the 
IARD.\3\ Over 11,000 advisers currently use the IARD system to register 
with the SEC and make state notice filings electronically through the 
Internet.
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    \1\ 15 U.S.C. 80b-4(b).
    \2\ Designation of NASD Regulation, Inc., to Establish and 
Maintain the Investment Adviser Registration Depository; Approval of 
IARD Fees, Investment Advisers Act Release No. 1888 (July 28, 2000) 
[65 FR 47807 (Aug. 3, 2000)]. FINRA was formerly known as NASD.
    \3\ Electronic Filing by Investment Advisers; Amendments to Form 
ADV, Investment Advisers Act Release No. 1897 (Sept. 12, 2000) [65 
FR 57438 (Sept. 22, 2000)].
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    Commission staff, representatives of the North American Securities 
Administrators Association, Inc. (``NASAA''),\4\ and representatives of 
FINRA periodically hold discussions on IARD system finances. In the 
early years of operations, SEC-associated IARD revenues exceeded 
projections while SEC-associated IARD expenses were lower than 
estimated, resulting in a surplus. In 2005, FINRA wrote a letter to SEC 
staff recommending a waiver of annual fees for a one-year period.\5\ 
The Commission concluded that this was appropriate and waived annual 
fees.\6\ In 2006, 2008, and 2009 FINRA wrote to the staff again, 
recommending a two-year, a nine-month, and a five-month waiver, 
respectively, of all fees to continue to reduce the surplus.\7\ The 
Commission agreed and issued orders waiving all IARD fees.\8\ At the 
conclusion of the 2009 waiver, FINRA wrote to the staff again, 
recommending reduced levels of fees be charged in

[[Page 76500]]

2010.\9\ The Commission concluded this was appropriate and issued an 
order reducing the level of fees charged for one year.\10\ As a result 
of the four waivers and reduced fee levels, the surplus was reduced 
from $9 million in 2005 to a level of approximately $3 million.
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    \4\ The IARD system is used by both advisers registering or 
registered with the SEC and advisers registered or registering with 
one or more state securities authorities. NASAA represents the state 
securities administrators in setting IARD filing fees for state-
registered advisers.
    \5\ NASD letter dated September 9, 2005, available at http://www.sec.gov/rules/other/nasdlet090905.pdf.
    \6\ Approval of Investment Adviser Registration Depository 
Filing Fees, Investment Advisers Act Release No. 2439 (Oct. 7, 2005) 
[70 FR 59789 (Oct. 13, 2005)].
    \7\ NASD letter dated October 13, 2006 and FINRA letters dated 
October 10, 2008 and July 8, 2009 available at http://www.sec.gov/rules/other/2006/nasdletter101306-iardfee.pdf, http://www.sec.gov/rules/other/2008/finraletter101008-iardfees.pdf, and http://www.sec.gov/rules/other/2009/finraletter070809-iardfees.pdf, 
respectively.
    \8\ Approval of Investment Adviser Registration Depository 
Filing Fees, Investment Advisers Act Release No. 2564 (Oct. 26, 
2006), Investment Advisers Act Release No. 2806 (Oct. 30, 2008) [73 
FR 65900 (Nov. 5. 2008)], and Investment Advisers Act Release No. 
2909 (July 31, 2009) [74 FR 39352 (Aug. 6, 2009)].
    \9\ FINRA letter dated September 29, 2009, available at http://www.sec.gov/rules/other/2009/finraletter092909-iardfees.pdf.
    \10\ Approval of Investment Adviser Registration Depository 
Filing Fees, Investment Advisers Act Release No. 2959 (Dec. 10, 
2009) [74 FR 66710 (Dec. 16, 2009)].
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    FINRA has again written to Commission staff, recommending revised 
annual and initial IARD filing fees commence on January 1, 2011.\11\ 
The new recommended fee levels would increase the fee for advisers with 
assets under management of $100 million or higher, but would not change 
the fee levels for advisers with assets under management under $100 
million.\12\ The recommended annual filing fees due beginning January 
1, 2011 are $40 for advisers with assets under management under $25 
million; $150 for advisers with assets under management from $25 
million to $100 million; and $225 for advisers with assets under 
management of $100 million or higher. The recommended initial IARD 
filing fees due beginning January 1, 2011 are $40 for advisers with 
assets under management under $25 million; $150 for advisers with 
assets under management from $25 million to $100 million; and $225 for 
advisers with assets under management of $100 million or higher. Based 
on projections of expected revenues and expenses and taking into 
account an expected reduction in the number of advisers registered or 
reporting to the SEC as a result of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act,\13\ the Commission believes these revised 
fee levels would be reasonable, as the Commission projects that they 
will provide adequate funding to cover IARD system expenditures.\14\ 
This reduction in fees is expected to reduce aggregate filing fees that 
SEC-registered advisers would incur by approximately $2 million 
annually compared to the filing fees that would be collected based on 
the fee levels established in 2000. The revised filing fees will apply 
to all annual updating amendments filed by SEC-registered advisers 
beginning January 1, 2011 and to all initial applications for 
registration filed by advisers applying for SEC registration beginning 
January 1, 2011. The Commission will reassess the fee levels and issue 
orders, if necessary, to adjust these levels.
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    \11\ FINRA letter dated November 12, 2010 available at http://www.sec.gov/rules/other/2010/finraletter111210-iardfees.pdf.
    \12\ The revised fee level for advisers in the largest category 
would newly include advisers that report assets under management of 
exactly $100 million (not just over $100 million). We are making 
this revision to track the new mid-sized adviser category for 
advisers reporting assets under management of $25 million up to, but 
not including, $100 million. See section 410 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (Pub. L. 111-203, 124 
Stat. 1376 (2010).
    \13\ The threshold, for most advisers, to be eligible for SEC 
registration will be increased from $25 million to $100 million in 
assets under management. The Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Pub. L. 111-203, 124 Stat. 1376 (2010).
    \14\ The fee levels for advisers with assets under management 
under $100 million are not changed as the number of advisers in 
these categories are expected to fall as a result of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act.

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    By the Commission.

    Dated: December 2, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-30701 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P