Federal Covered Advisor (FCA)

Posted in Finance, Accounting and Economics Terms, Total Reads: 1389
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Definition: Federal Covered Advisor (FCA)

A federal covered advisor is an investment advisor in the U.S. that provides advice on investment in securities as well as on purchase and selling decisions for securities. Federal Covered Advisors are registered with the U.S. Securities and Exchange Commission (SEC).


A Federal covered advisors are thus registered advisers:

1) who manage at least $30 million in assets,

2) provide investment advice to SEC registered investment companies,

3) provide advisory services in 15 or more states,

4) are U.S. recognized national statistical rating organisations,

5) are U.S. pension consultants and those who are deemed to serve as FCA’s as specified by the National Securities Markets Improvement Act (NSMIA).

FCA’s are required to file a notification as per the regulations of the State department via the Investment Adviser Registration Depository (IARD) system.


Investment advisers and Investment Adviser Representatives provide investment advice to customers. Investment advisers are required to register or get licensed with the State Department regulators or with the SEC. Based on the license/registration, they are classified as State-registered Investment Advisers and federally covered Advisers (FCA’s). FCA’s are required to have $100 million or more in client assets as per the revised regulations.


FCA’s are required to make a notice filing with the state if 1) they have a place of business in that state or 2) they serve 6 or more clients in that state within a period of 12 months. Employees of the FCA may be required to register as Investment Adviser Representatives. Investment adviser representatives provide investment advice service on behalf of the FCA firm that holds the license.

 

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