SEC Moves to Let Advisors Register Online

The Securities and Exchange Commission adopted rules Tuesday that will enable investment advisors to register with regulators via the Internet--making it easier for investors to find out how much advisors charge for their services and whether they have been disciplined by securities regulators.

“For investors, this has tremendous potential,” said Robert Plaze, associate director of investment management at the SEC. “This is going to give them access to information about advisors. Theoretically, they’ve been able to come down into the basement of the SEC and go into our files. But that’s not really practical.”

Beginning in January, advisors registered with the SEC will submit registration forms electronically through an investment advisor registration depository, known as IARD, to be run by the National Assn. of Securities Dealers. NASD already operates the Central Registration Depository for broker dealers.

While easing registration for the advisors, the Web-based filing system will give investors free access to a database that will list advisors’ disciplinary histories and any conflicts of interests, the SEC said. Investors could also find out about the services advisors provide and fees they charge.

The system will let advisors file with the SEC and state regulators from personal computers in their offices.

The agency also voted to update the actual “Form ADV” that advisors will file electronically. It deferred action on a more controversial package of amendments that would require the nation’s 23,000 investment advisor firms to vastly expand the information they supply in the brochures they distribute to investors.

The new rules will be phased in between Jan. 1 and April 30, when most advisors registered with the SEC will begin to file electronically. More than 100 firms are scheduled to file the forms on a pilot basis this October, the SEC said.

NASD will charge advisory firms between $150 and $1,100 to join the system and between $100 and $550 annually to update their registrations, the SEC said.

In 1996, Congress authorized the SEC to modernize advisor registration and oversight. As a result, larger firms--the 8,000 nationwide with at least $25 million in assets under management--register only with the SEC, and the remaining 15,000 register only with the states in which they operate.

Under the SEC’s new rules, advisors registered with the SEC must file electronically beginning in the first half of 2001. The almost 15,000 smaller firms registered only with state securities regulators will be able to file electronically using the new online database when state authorities link up with it, the SEC said in a recent notice.