Multi-State Expansion Framework

1 Purpose

This framework establishes procedures for efficient expansion into multiple state jurisdictions while maintaining comprehensive regulatory compliance and operational efficiency.

2 Scope

Applies to all state registrations beyond the primary Utah registration, including: - Notice filing requirements - IAR registration procedures - State-specific examination preparation - Ongoing compliance monitoring

3 Three-Tier Compliance Architecture

3.1 Tier 1: Universal Requirements (90% of compliance)

Investment Advisers Act Section 206 fiduciary duties
SEC Rule 204-2 books and records (adopted by most states)
Form ADV maintenance and annual amendments
Ethical screening methodology and documentation

3.2 Tier 2: State-Specific Overlays (10% variation)

Notice filing procedures and timelines
IAR registration requirements
State examination preferences and focus areas
Renewal deadlines and fee structures

3.3 Tier 3: Automated Monitoring

Multi-state compliance matrix tracking
Deadline and renewal calendar management
AUM and client threshold monitoring
Regulatory change alert system

4 State Addition Process

4.1 Phase 1: Pre-Registration Analysis (Week 1)

Trigger Assessment
- Client count reaching state thresholds
- AUM concentration in target state
- Business development opportunities
Requirements Research
- Notice filing vs. full registration determination
- IAR registration requirements
- State-specific disclosure requirements
- Fee structures and deadlines
Documentation Preparation
- Form ADV amendments required
- State-specific forms and letters
- Updated client agreements and disclosures

4.2 Phase 2: Registration Execution (Week 2)

IARD Filing Process
- Form ADV Item 2.C updates
- State notice filing submission
- Fee payment and processing
- Confirmation tracking
IAR Compliance
- Representative registration requirements
- Examination compliance verification
- State-specific training completion
Documentation Updates
- Internal procedure updates
- Client communication templates
- Website disclaimer modifications

4.3 Phase 3: Operational Integration (Week 3-4)

Compliance Matrix Integration
- Add state to tracking system
- Configure renewal reminders
- Establish monitoring procedures
Examination Preparation
- State-specific examination materials
- Regulatory relationship establishment
- Documentation organization
Quality Assurance
- Process validation and testing
- Staff training and procedures
- Client notification protocols

5 State-Specific Considerations

5.1 High-Priority Expansion States

New York - Requirements: Notice filing + IAR registration (5+ NY clients or NY office) - Complexity: High - most restrictive IAR requirements - Focus Areas: IAR supervision, advertising compliance, client communications

California - Requirements: Notice filing + IAR registration (CA-based representatives) - Complexity: Medium - enhanced privacy requirements - Focus Areas: Data protection, fee disclosure, privacy compliance

Texas - Requirements: Notice filing + exemption letter to State Securities Board - Complexity: Medium - unique exemption claim process - Focus Areas: Notice filing compliance, exemption documentation

Pennsylvania - Requirements: Notice filing + potential financial statement submissions - Complexity: Medium - additional financial requirements possible - Focus Areas: Financial condition, bonding requirements

6 Ongoing Multi-State Compliance

6.1 Monthly Monitoring

Client count and AUM threshold tracking
New client state residence verification
Regulatory change monitoring and assessment

6.2 Quarterly Reviews

Compliance matrix accuracy validation
State-specific requirement updates
Examination preparation status review

6.3 Annual Requirements

Form ADV annual updating amendments
State notice filing renewals (December 31)
Compliance procedure effectiveness review

7 Documentation Standards

7.1 Universal Documentation

Core compliance procedures apply to all states
Ethical screening methodology consistently applied
Standard examination response templates

7.2 State-Specific Documentation

Notice filing confirmation records
State correspondence and communications
Examination reports and follow-up actions
IAR registration and renewal records

8 Risk Management

8.1 Compliance Risks

Missed state filing deadlines
Threshold violations triggering registration requirements
Inconsistent application of procedures across states

8.2 Mitigation Strategies

Automated monitoring and alert systems
Standardized procedures and checklists
Regular compliance training and updates
Professional liability insurance coverage

9 Success Metrics

9.1 Efficiency Targets

State Addition Timeline: <2 weeks from decision to registration
Documentation Accuracy: Zero regulatory deficiencies
Cost Management: <5% increase in compliance costs per new state

9.2 Quality Measures

Examination Results: Zero deficiency letters per state
Client Service: No degradation during multi-state expansion
Regulatory Relations: Positive examiner relationships in all states

10 Implementation Timeline

10.1 Immediate (Next 30 Days)

Finalize target state priorities
Complete compliance matrix development
Prepare IARD account for multi-state operations

10.2 Short-term (Next 90 Days)

Execute first expansion state registration
Implement automated monitoring systems
Complete staff training on multi-state procedures

10.3 Ongoing

Monitor expansion triggers monthly
Review and optimize procedures quarterly
Maintain examination readiness continuously