Section 203A of the Investment Company generally limits the ability of investment advisers to register with the SEC (and thus force them to register with the States instead) to investment advisers of a certain size, as measured by dollars under discretionary assets under management ("AUM"). See generally the topic page on the IA Registration Requirement. The purpose of this is not to overtax the resources of the SEC with the burden of regulating numerous small advisers. There are a number of "exemptions" that permit advisers with less than the amount of ordinarily requisite amount of discretionary AUM, including for advisers to registered investment companies, pension consultants, advisers affiliated with other SEC-registered investment advisers, advisers that would otherwise be required to register in at least 15 states. In addition, a number of firms have obtained exemptive relief from the SEC that has allowed them to register with the SEC rather than with the states.
There are actually a surprising number of enforcement actions against investment advisers for improperly registering with the SEC rather than with the states. Very often these enforcement actions are an add-on to more substantive violations who may have, for example, committed fraud and who lied as to the amount of their AUM in order to make themselves seem more attractive to potential clients.