December 9, 2013

California ratchets up IAR fees

California increases IAR fees

California previously had one of the lowest fees for investment advisor representatives ("IARs") in the U.S. for years. With the financial condition of the state and the number of advisory persons conducting business there, it was always surprising that they did not seek to increase this fee earlier.

So the bad news is that fees are increasing for 2014. The silver lining is that they did not go the route of Texas soak IARs for nearly $300 per year!

California has increased its IAR fees from a one-time fee of $25 per IAR to an annual fee of $35.

Due to the timing of the implementation of this law, the California fee will be paid in January 2014. The full text of the notice is below:


November 22, 2013

Dear licensee,

This letter is to inform you that the California Legislature recently passed Senate Bill (“SB”) 538, authorizing the Department of Business Oversight (“Department”) to charge up to $35 in renewal fees annually for each registered Broker-Dealer Agent (“Agent”) and each registered Investment Adviser Representative (“IAR”). California is the second-to-last state to adopt a renewal fee and the proposed fee will be one of the lowest in the nation. Individuals who are dually registered will be assessed separately for each registration.

Because SB 538 becomes effective on January 1, 2014, the 2014 Agent and IAR renewal fee cannot be assessed through the CRD/IARD Renewal Program. Therefore, for the first renewal fee only, a supplementary assessment will occur in January 2014. The Department will send an invoice to each firm stating the number of Agents and/or IARs and the total amount to be remitted to the Department. The Department will use the December 31, 2013, Regulator Renewal Report generated by CRD/IARD to determine the number of Agents and/or IARs registered with your firm. The payments may be remitted via your CRD/IARD account or sent directly to the Department via check. Additional information regarding your payment will be provided with your invoice.

If your firm intends to reduce the number of individuals registered to conduct business in California as a way to reduce your renewal fee obligation, you will need to file a Form U5. The U5 can be dated on or prior to the date of filing or postdated to December 31, 2013 to permit registered activity to continue through the end of the year. Please note that web CRD will not be available on December 25, 2013, and from December 27, 2013 through January 1, 2014. The last day to file a Form U5 will be December 26, 2013.

Future annual renewals will be made through the annual renewal process handled in December by CRD/IARD.

Should you have any questions please contact the Department at (866) 275-2677.

Jan Lynn Owen
Department of Business Oversight


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