Form ADV Part 2 - Still on Hold

The approval of the highly anticipated new Form ADV Part 2 is on hold once again. Apparently, the form is ready for implementation through the IARD system, and all that is necessary is final approval. In fact, the IARD system was updated earlier this year to accommodate the new form once it is formally approved. However the latest word is that with the departure of Paul Roye as Director of the Division of Investment Management, the SEC is waiting to approve the form until a permanent replacement has been named. In addition, the recent resignation announcement of SEC Chairman Donaldson may delay the release even further because Paul Roye's replacement may not be announced until Rep. Christopher Cox is formally confirmed and appointed as the new SEC Chairman.

Originally proposed in 2000, the new Part 2 is intended to read like a brochure. It will be written in a narrative, plain-English format and replace the current fill-in-the-blank, yes/no format. This new version will be completed and filed on-line directly with regulators through the IARD system. Notwithstanding electronic filing with regulators, investment advisors will still need to provide it to clients. The SEC hopes that this approach will provide advisory clients with easier to understand disclosures.

In the meantime, advisors must continue to complete and file the current Form ADV Part II and Schedule F. Once the SEC leadership changes are completed, your firm should be prepared for the likelihood that there will be an announcement of a new Form ADV Part 2 requirement.

Labels: Form ADV