Federal ERA status does not automatically satisfy state requirements. Failing to make required state filings is a compliance gap that can result in fines or restrictions on your fundraising.
The Mistake
Managers file Form ADV with the SEC and assume they are done. They do not check the state boxes in Item 2.C, do not pay state fees, and do not investigate whether any state requires separate registration beyond a notice filing.
Why It Happens
The federal-state divide is confusing. Many managers assume ERA status is a complete regulatory solution. It is not. States have their own rules, and not all of them mirror the federal framework.
Remote work has made this worse. A portfolio manager working from home in a state with registration requirements can create a filing obligation the firm did not anticipate.
The Fix
Identify every state where you have a place of business (including remote employees), and check whether that state requires notice filings, separate registration, or neither for federal ERAs. Select the appropriate states in Item 2.C of Form ADV, and pay any required fees. Review your state footprint annually, especially if you have hired in new locations.
How Capital Company Helps
Capital Company prepares and files Form D, blue sky filings, and Form ADV for funds on the platform. Schedule a demo to learn more.
This article is for informational purposes only and does not constitute legal advice. Consult qualified legal counsel for advice specific to your situation.