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New NASAA Model Rule on Investment Adviser Representative Continuing Education

By Robert R. Boeche, Partner of Shustak Reynolds & Partners, P.C. posted on Tuesday, December 21, 2021.

Robert R. Boeche II

Robert R. Boeche II

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 122)
Direct: (619) 546-5502
Fax: (619) 615-5290
E-mail: [email protected]

On January 1, 2022, certain US States will begin imposing new continuing education (“CE”) requirements for Investment Adviser Representatives (“IARs”) registered and doing business in those states. Each year, IARs who wish to remain registered in those jurisdictions now must complete continuing education credits provided by an authorized provider.[i] The content consists of: (i) ethics and professional responsibility content, and (ii) products and practice content.[ii]

Who Must Comply with the New Continuing Education Requirements?

Every IAR registered in a jurisdiction that adopts the model rule will be subject to its CE requirements.[iii] If IARs maintain registration in multiple states, they must meet the CE requirements of the most stringent state regime. For example, if you are registered in both Texas and Mississippi, you will need to meet the CE requirements of whichever state holds the most stringent regime.

As of this writing, the list of adopting states includes Maryland, Michigan, Mississippi, Nevada, Vermont, and Wisconsin.[iv] But due to time constraints, it is possible that some adopting states will miss their window to implement the new rule in time for 2022 and IARs will not be accountable for the new CE requirements until January 1, 2023.

NASAA announced this new model rule as recently as November 30, 2020, so it is likely additional states to adopt it over time. If you would like to check the status of the model rule’s adoption in your state, click through here to the NASAA webpage.

What Happens If the Continuing Education Requirement Is Not Met?

The consequences of failing to satisfy the CE requirements could be severe. If an IAR fails meet their CE requirement with a given year, their IAR registration will renew with the status “CE Inactive” for the next year. An IAR with “CE Inactive” status may continue to operate, but must catch up on their CE requirements for both the current and previous year to remove the “CE Inactive” status from their registration.

An investment adviser who remains “CE Inactive” at the close of the calendar year is not eligible for IAR registration or renewal. They may not serve their clients again until their IAR registration returns to good standing. To return to active status, the IAR must complete all overdue CE requirements along with additional CE for each year they remained unregistered, or take and pass the licensing exam again.[v]

If you have questions about the new IAR Continuing Education rule and how it could affect your practice, we are here to help.
Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes.
We represent many broker-dealers, registered representatives, investment advisors, investors, and businesses.
Attorney Robert R. Boeche can be reached in the firm’s San Diego office at (619) 696-9500.

 


[i] IARs are required to take NASAA-approved CE courses from NASAA-approved course providers. See https://www.nasaa.org/industry-resources/investment-advisers/investment-adviser-representative-continuing-education/

[ii] NASAA Model Rule on Investment Adviser Representative Continuing Education, Model Rule 2002-411(h) (Nov. 2020).

[iii] Investment Adviser Representative Continuing Education Frequently Asked Questions, National American Securities Administrators Association, https://www.nasaa.org/industry-resources/investment-advisers/resources/iar-ce-faq/

[v] NASAA Model Rule 2002-411(h)(9).

 

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