When is SEC registration optional for Investment Advisers?

The correct answer is linked to the Assets Under Management (AUM) thresholds that are significant in determining SEC registration requirements for investment advisers.

When an investment adviser has AUM between $25 million and $100 million, they are indeed in a position where SEC registration is optional. Advisers in this range can choose to register with either the SEC or the state regulatory authorities, depending on their business model and the nature of their clients. This flexibility allows smaller advisories to potentially operate under state regulations, which may have different or less stringent compliance requirements, while still being able to engage in advisory activities.

For advisers with AUM below $25 million, registration with the SEC is generally not an option, as they would typically need to register with state regulators. Additionally, advisers with AUM exceeding $100 million are required to register with the SEC. Hence, the significance of the $25 million to $100 million range is crucial in understanding the optionality of SEC registration for investment advisers.

Other scenarios, such as having less than 15 clients or being located in a particular state like New York, do not directly relate to AUM thresholds in the same regulatory context, making them less relevant to the question of when SEC registration is optional. Furthermore, the