Compliance Solutions for Investment Advisers

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 for calculating regulatory assets under management) have been detailed in previous Compliance Alert! newsletters (all of which can be found at our Compliance “Best Practices” blog: www.uscomplianceconsultants.com/blog/).

Another area that the new rules and rule amendments will significantly impact investment advisers are the changes made to Form ADV Part 1, the Instructions to ADV Part 1, and the Schedules to ADV Part 1. These changes reflect both the new asset threshold and the SEC’s never-ending quest to collect information about your advisory business.

Upon first glance the changes to the ADV Part 1 seemed rather innocuous. It was not until I began to prepare our firm’s annual updating checklist – which is based on the Form ADV Part 1 – that I realized just how onerous the SEC has now made the ADV Part 1 (and how naive I was to think that they would actually make it easier).

I also realized – and this is where the “Alert” part of this comes into play – that advisers are going to have to collect much more information to properly complete the revised ADV Part 1. As a result, the entire annual amendment process will take much longer. I know (from vast experience) that some advisers tend to wait until the very last moment to get started on the annual amendment process. It is strongly suggested that amongst your New Year’s resolutions for the coming year, that you include a resolution to get started on the annual amendment process early.

Rather than inundate you with dozens of Compliance Alert! newsletters, I will be detailing all the important changes to the ADV Part 1 over the coming weeks on our Compliance “Best Practices” blog. You can view the blog by visiting our website (www.uscomplianceconsultants.com) and clicking on “Blog” in the Main Menu that runs across the top of each web page or through the following link: www.uscomplianceconsultants.com/blog/.  In the lower right column you can subscribe to the blog so you will be alerted to any new posts.

Of course, you will still be getting periodic Compliance Alert! newsletters when events dictate. It is just that there is so much to detail with the changes to the ADV Part 1 that it is best broken down into more manageable segments.

The first blog post will detail the changes to Item 2 (SEC Registration) and discuss what you will need to do on your next annual updating amendment.

 

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