In addition to making it potentially harder for investors to get apples-to-apples background information on investment advisors under federal and state oversight, the emergence of a "bifurcated" disclosure regime could make it harder for investment advisors to go from SEC to state oversight or vice versa, says Lubin. This movement takes place fairly frequently as small firm's assets under management rise or fall.
In a July 13 letter to SEC Chairman Mary Schapiro, Crawford asks that the SEC drop the idea and move forward with "a joint form for use by state- and federal- regulated advisors as proposed by the commission in 2000 and reproposed in 2008."
At the very least, writes Crawford, the SEC should "seek public comment on the need for a Part 2 specific to SEC-registered advisors."
In an interview with Dow Jones, Crawford said, "It doesn't bode well for our future relationship with the SEC, in terms of making the transition for state-regulated investment advisors and all those things we need to be working on cooperatively."
Out of approximately 26,340 investment advisor firms, about 14,830 are state-registered, according to Nasaa. In terms of individual practitioners, states oversee more than 270,000 investment advisor representatives.
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