By Karen A Steighner, MBA
Compliance Advisers, Inc.
October 2017 – In August 2016, the SEC adopted amendments to Form ADV that became effective on October 1, 2017. This means that most investment advisers will likely need to address the requirements of these amendments for the first time when they file their annual updating amendment in 1Q 2018. However, registered investment advisory firms are encouraged to consider how these amendments impact their specific business well in advance of the filing deadline.
The Amendments are intended to improve the depth and quality of information that clients receive about their investment advisory firm by modifying Part 1A of Form ADV in three areas: 1) revisions to fill certain data gaps and to enhance current reporting requirements; 2) amendments to incorporate “umbrella registration” for private fund advisers; and, 3) clarifying, technical and other amendments to existing items and instructions. Let’s be clear though—the new information required by these amendments will also benefit the SEC by filling data gaps and facilitating their risk monitoring initiatives. Here is a summary of the new amendments:
Separately Managed Accounts. While detailed information about pooled investment vehicles has historically been collected on Form ADV Part IA, specific information regarding separately managed accounts has not. Several of the amendments related to separately managed accounts include disclosure requirements regarding investments and the use of derivatives and borrowings.
Umbrella Registration. Advisers of private funds frequently are organized using multiple legal entities. The amendments establish a more efficient method for the registration of multiple private fund adviser entities operating a single advisory business on one Form ADV (“umbrella” registration).
Clarifying, Technical and Other Information Amendments. Additional Form ADV amendments attempt to provide clarity to certain existing items as well as technical changes designed to make Form ADV easier to understand, complete and file. Some also require disclosure of additional and/or expanded information about the adviser and its business including its use of social media, branch offices, compliance officer, and asset category breakdowns.
Other Amendments Unrelated to Form ADV – Recordkeeping. Finally, the new amendments also include a revision to Rule 204-2 of the Advisors Act (relating to recordkeeping) requiring investment advisers to maintain additional records of performance calculations and performance-related communications.
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Compliance Advisers Inc. is an industry-leading, boutique regulatory compliance consulting firm that specializes in providing Customized Compliance Solutions™ to Broker Dealers, Investment Advisers and Investment Companies throughout the United States. For more information or assistance preparing and filing New Form ADV, please contact us at (303) 795-0400 by sending us an email at clientservices@complianceadvisers.com