Compliance Solutions for Investment Advisers

Category Archives: Brochure & Brochure Supplements

Last Day to File Annual Amendment

Because this year is a Leap Year, the deadline for filing your annual amendment is March 30th and not the usual March 31st. Also, once you are done with your annual amendment filing, you still have one additional “ADV” obligation . . .  Each year you must (i) deliver, within 120 days of the end

ADV Part 2A Disclosures

The SEC’s website specifically lists “Form ADV Disclosures” as a risk that may be present as part of an investment adviser’s everyday operations. Some of the specific risks listed are: Inaccurate, omitted, or unclear disclosures; Out of date disclosures; Misrepresentation of services offered; and Failure to disclose potential conflicts of interest. After going through many,

Duty to Disclose

Investment advisers have a fiduciary duty to act in the best interests of their clients. A central tenant of this duty is full and fair disclosure of all material facts to clients. So what you tell your clients about your business and whether you conduct your business consistent with those disclosures goes to the very

Common ADV Deficiencies

Regulatory examiners always look for inconsistencies between an advisory firm’s Form ADV Part 1 and Part 2. In fact, inconsistencies between these documents is one of the leading deficiencies found by SEC and state examiners during a regulatory audit. The problem lies in the fact that there is overlap in the information called for in

Disclosure Basics

Beyond lack of disclosures, beyond incomplete disclosures and even beyond failure to disclose conflicts of interest, the most problematic disclosure issue is when there are discrepancies between an adviser’s disclosure documents. Examiners take an especially harsh view of investment advisers that fail to reconcile their disclosure documents. In the words of one examiner, the presence of conflicting disclosure documents is evidence that

ADV 2A Delivery Requirements

Advisers still seem a bit befuddled (what a great word) by the annual delivery requirements for their firm brochure (i.e., ADV Part 2A). These are the possible scenarios: If there are no material changes, you can merely offer (in writing) to provide each client with a copy of your ADV 2A if they so desire.

Private Funds Prepare for Monster ADV Changes

If you manage a private fund, the amount of information you are required to disclose in the new ADV Part 1 has increased tenfold (not sure how much tenfold actually is, but it is a lot). Instead of just listing the private fund on Schedule D, you have about 4 – 5 pages per fund

Changes to ADV Part 1 – Item 5

Item 5 is the part of the ADV 1 that requests information about an investment adviser’s business, including information about employees, clients and advisory activities. Again, these changes are part of the SEC’s goal to collect more and more information about advisers in the hopes of correctly assessing their risk profile. The key amendments to

Changes to ADV 1 – “Mid-Sized” Advisers

The revised Instructions to Item 2 in the ADV Part 1 requires certain “mid-sized” advisers (e.g., those advisers with between $25 million and $100 million in regulatory AUM) to remain registered with the SEC. The Instructions state that a  mid-sized adviser must register (or remain registered) with the SEC if they meet at least one

Changes to ADV Part 1 – “Large Advisers”

My previous post discussed the new range of choices in Item 2 for SEC registration. While most of the options were already familiar, the “large adviser” and “mid-sized” adviser options were new. This post discusses the attendant changes to the ADV 1 Instructions regarding the “large adviser” option for SEC registration (the next post will

Changes to ADV Part 1 – Item 2

Item 2 is the section of Form ADV Part 1 that determines whether an adviser is eligible to register (or remain registered) with the SEC. To implement the new prohibition on registration for mid-sized advisers (e.g., those advisers with between $25 million and $100 million in regulatory AUM), Item 2.A. has been amended to reflect

Compliance Alert! Changes to ADV 1

Dear Compliance Professional, The adoption by the SEC of a series of rules intended to effectuate certain provisions of the Dodd-Frank Wall Street Reform Act has ushered in many significant changes for investment advisers. Some of those changes (e.g., the increased AUM threshold for SEC registration, the different scenarios for SEC registration, the new method

SEC Answers Form ADV 2A Questions

On March 18, 2011, the SEC issued “Staff Responses to Questions About Part 2 of Form ADV.” Putting aside for the moment that the SEC waited until 13 days before the deadline to post this helpful material, there are a few helpful tidbits that are worth a look. A full text of the Staff Responses

Some States Extend ADV 2 Deadline

There is an interesting article in today’s Investment News about how some states have extended the filing deadline for the new ADV 2 (and I say this not just because I am quoted in the article). These states include: Connecticut (June 1, 2011); Colorado (June 30, 2011); Kentucky (July 1, 2011); Pennsylvania (Sept. 30, 2011);

Compliance Alert! ADV Part 2A

Dear Compliance Professional, While the SEC has provided detailed instructions regarding the new ADV Part 2, there are many open questions – as there typically are with new requirements – as to the practical implications of these instructions.  Many of these questions will only be answered, and ambiguities clarified, in the crucible of an SEC

Compliance Alert! New Regulatory Initiatives

Dear Compliance Professional, Big doings are certainly afoot in the regulatory world. Did I say big? These “doings” are of gargantuan proportions – earth shattering, paradigm shifting, game changing doings that will affect every financial services firm including all SEC and state-registered investment advisers. No, it is not one of my increasingly rare blog updates,