What is an Exempt Reporting Adviser (ERA)?

Advisers that are exempt from registration with the SEC are known as "Exempt Reporting Advisers" (ERA). Advisers can claim ERA status with the SEC in two ways: either by using the Private Fund Adviser Exemption (if they are managing less than $150M in assets) or the Venture Capital Fund Adviser Exemption (for advising a qualifying venture capital strategy fund). You can learn more about this requirement in the SEC’s "VC Exemption," Rule 203(l)-1 of the Advisers Act.

A Form ADV is a regulatory disclosure form required for investment advisers who must register with the U.S. Securities and Exchange Commission (SEC) or who are claiming an exemption from registration with the SEC.

Compliance with State Laws

While federal laws don’t necessarily require ERA’s to file a Form ADV, advisers must also comply with their respective state laws. Generally, all states recognize the same exemptions as the SEC (the Private Fund Adviser Exemption and the Venture Capital Fund Adviser Exemption), but with the typical condition that the investment adviser must file a Form ADV to claim the applicable ERA exemption and provide "filing notice" to the state.

Consequently, to comply with local state laws, an adviser may need to file a Form ADV as an ERA. This website summarizes the notice filing requirements (i.e., Form ADV filing) for advisers in each state. Common requirements that would necessitate an adviser to file a Form ADV as an ERA include:

• Having a place of business in the state; and

• Having more than 5 or 6 in-state clients.

  
  

Some states automatically require you to file a Form ADV and give it notice if you maintain a place of business in the state.

Conclusion

Review your state’s laws on registration requirements as an ERA and determine if you have met the requirements to file a notice filing by filing a Form ADV as an ERA.