Form adv annual updating amendment
Additionally, Item 5 will add a new requirement for an investment adviser to report the number of clients for which it provides advisory services but do not have RAUM, for instance, in the case of a non-discretionary account.The Amendments also revise the instructions to Form ADV to clarify that to the extent an investment adviser advises pooled investment vehicles, investment companies or business development companies, it should also include in its Item 5 calculations those assets that it sub-advises as well.
1 “Amendments to Form ADV and Investment Advisers Act Rules,” Investment Advisers Act Release No. 2 We note that the SEC did not specifically address “funds of one” in the Adopting Release.Two notable clarifying changes relate to solicitation of an investment adviser’s clients and audited financial statements: The Amendments clarify that when answering whether the investment adviser's “clients” are solicited to invest in the private fund in Question 19 in Section 7.B.(1) of Schedule D, investment advisers should not consider feeder funds as “clients” of the investment adviser (, the master fund in a master-feeder structure).Additionally, the Amendments include a revision to Rule 204-2 of the Advisers Act (relating to recordkeeping), requiring investment advisers to maintain additional records of performance calculations and performance-related communications.The Amendments will be effective 60 days after publication in the Federal Register, and investment advisers will need to comply with the Amendments on October 1, 2017.Schedule R must be filed for each Relying Adviser and would consolidate in one location important information about each Relying Adviser, including identifying information (Section 1); the basis for SEC registration (Section 2); form of organization (Section 3); and control persons and information regarding the Relying Adviser’s owners and executive officers (Section 4).
Additionally, a Filing Adviser must distinguish whether it or any of its Relying Advisers manage or sponsor the private funds that are reported in Section 7. The Amendments revise the instructions to Form ADV to clarify that all information in Form ADV should be answered on behalf of the Filing Adviser and each Relying Adviser, unless otherwise indicated. However, the Adopting Release clarified that neither of (i) an investment adviser’s employees’ social media accounts, nor (ii) the social media account of an investment adviser’s unregistered affiliate that is used solely to promote the business of such affiliate, are required to be disclosed. F, which previously requested general information about an adviser’s principal office and place of business, now requires advisers to provide the total number of offices in which they conduct business as well as information about their 25 largest offices, based on the number of personnel.
For firms with a December 31 fiscal year end, which describes the majority of investment advisers, this means compliance with respect to Form ADV updates no later than the annual amendment filing in March 2018. The most noteworthy requirements of the Amendments are described below in more detail: 1) Increased Disclosure of Separately Managed Accounts ("SMAs") While the SEC declined to specifically define “separately managed account” in the Adopting Release, for purposes of Form ADV, the SEC deems SMAs to be advisory accounts other than those that are pooled investment vehicles, including (i) investment companies; (ii) business development companies; and (iii) other pooled investments vehicles (such as private funds).
Prior to the effectiveness of the Amendments, Part 1A of Form ADV only required investment advisers to disclose minimal information about their SMAs in Item 5 (e.g., percentage of clients and regulatory assets under management that represent SMAs). state and local bonds; sovereign bonds; corporate bonds – investment grade; corporate bonds – non-investment grade; derivatives; securities issued by registered investment companies and business development companies; securities issued by other pooled investment vehicles; cash and cash equivalents; and "other".
The Amendments also require investment advisers to maintain communications relating to the performance or rate of return of any or all managed accounts or securities recommendations; this requires originals of all communications received and sent relating to the performance of managed accounts or securities recommendations to be maintained.
The Amendments effectively expand Rule 204-2(a)(7) of the Advisers Act, which previously only required certain categories of written communications to be maintained.
F must only be updated as a part of an investment adviser’s annual updating amendment and not more frequently. J, which previously requested the name and contact information of an investment adviser’s chief compliance officer, now requires confirmation of whether the chief compliance officer is employed by someone other than the investment adviser or a related person of the investment adviser (unless it is a registered investment company advised by the investment adviser), and if so, the name and EIN (if any) of that person. O, which previously required advisers to indicate whether they had assets of greater than $1 billion (, assets on the adviser’s own balance sheet, not assets under management), now requires investment advisers with assets of $1 billion or more to provide a range for their total assets: $1-10 billion; $10-50 billion; or $50 billion or more.