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The National Securities Markets Improvement Act of 1996 eliminated regulatory duplication of effort and established registration requirements for investment advisers. A federally covered investment adviser must register with the SEC and is any investment adviser:

. That manages at least $110,000,000.

• That manages investment company portfolios.

• That is not registered under state laws.

All federally registered investment advisers must pay state filing fees and notify the administrator in the states in which they conduct business. The state securities administrator may not audit a federally covered investment adviser unless that adviser's principal offices is located in that administrator's state. Investment advisers are required to register with the state if they manage less than $100,000,000. Once investment advisers reach $100,000,000 in assets under management (AUM), they become eligible for federal registration.

Investment advisers who manage between $100,000,000 and $110,000,000 may choose to register either with the state or with the SEC. Investment advisers who think that their asset base will exceed $110,000,000 should register with the SEC. Investment advisers who manage $110,000,000 or more must register with the SEC.

If a federally covered investment adviser's AUM falls below $90,000,000, the adviser must withdraw its federal registration by filing Form ADV-W and register with the appropriate states within 180 days. Like most regulations, there are rare exceptions to the rule of when an investment adviser may register with the SEC. The Dodd-Frank Wall Street Reform Act of 2010 increased the AUM for federal registration to its current levels and defined three categories of investment advisers:

. Small adviser: Advisers with less than $25,000,000 AUM.

. Mid-size advisers: Advisers with $25,000,000-$100,000,000 AUM.

. Large advisers: Advisers with more than $100,000,000 AUM.

Pension consultants must have at least $200,000,000 AUM to be eligible to become federally registered.

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