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Investment Adviser Guide

De Minimis Exemption

If an investment adviser or federal covered adviser is headquartered in another state, it may be able to rely on an exemption from the registration or notice filing requirement if certain conditions are met:

  1. The adviser has no place of business in the state; and
  2. In the preceding 12 month period, has had fewer than 6 Wisconsin clients.

§ DFI-Sec 1.02(7)(b), Wis. Adm. Code ,defines "branch office" as having the same meaning as the definition of “place of business” in s. 551.102(21), Wis. Stats. If you hold out a particular location as a business location of the adviser, whether by business cards, stationery, yellow page listing, formal media advertisement or notifying clients to contact you at that location or the adviser provides investment advisory services, solicits, meets with, or otherwise communicates with clients from that location, it is considered a place of business. This does not include the main office of the adviser. (See Branch Office section of the Guide for more information.) The adviser must have no regularly promoted location where advisory business is conducted in order to meet the “no place of business” test.

The adviser may not have had more than 5 clients who were Wisconsin clients in the preceding 12 month period. This is a rolling 12 month period, so advisers need to be sure that during that time, they have not had a total of more than 5 Wisconsin clients. If there were clients who terminated within the last 12 months but counting those clients would bring the total above 5, the de minimis exemption would not be available. The Division counts clients in the same manner as set forth in SEC regulations.

Investment adviser representatives of an investment adviser or federal covered adviser that is exempt from registration or notice filing based on the above noted de minimis provision are not required to be registered.

This is a self-executing exemption, meaning that the adviser does not need to provide any notification to the Division that it is relying on the de minimis exemption from registration or notice filing. However, the adviser must be mindful that if it rises above the 5 client ceiling, it must take affirmative action to become registered before engaging that sixth Wisconsin client.