New Form ADV Part 2 Filings After 3/31/11 Deadline

March 23, 2011

For many investment advisors, the deadline for preparing and submitting the new Form ADV Part 2 is just days away.

The new Form ADV Part 2 adopted by the U.S. Securities and Exchange Commission (“SEC”) became effective in October 2010. Each investment advisor currently registered with the SEC is required to file a new Form ADV Part 2 or disclosure brochure meeting the new requirements with its annual updating amendment, which is required within 90 days of the investment advisor’s fiscal year end.  Most state securities regulators have adopted the same or similar requirements. If your investment advisor is registered with a state securities regulator, you should contact each state securities regulator with jurisdiction over your firm to determine the deadlines for submitting your investment advisor’s new Form ADV Part 2. For most investment advisors with a fiscal year end of December 31, this means that the new Form ADV Part 2 or disclosure brochure should be filed by no later than March 31, 2011.

It is anticipated that there will be a number of investment advisors that will not meet the upcoming deadline. RIA Compliance Consultants has assisted more than 250 investment advisors with drafting the new Form ADV Part 2 in order to comply with the March 31 deadline. Due to the volume of engagements with a March 31 deadline, RIA Compliance Consultants was forced earlier this year to stop accepting any new Form ADV Part 2 engagement with a deadline of March 31.  According to various reports, there were many compliance professionals forced to take this approach due to the number of investment advisors that were looking for assistance with preparing the new Form ADV Part 2.  Nonetheless, the calls still keep coming into RIA Compliance Consultants from investment advisors looking for a compliance professional to assist them. 

Unfortunately, an investment advisor missing the filing deadline for the new Form ADV Part 2 likely will be in violation of several investment advisory rules. It is not clear what will happen to those investment advisors that do not file the new Form ADV Part 2 by the deadline.  There are a wide range of possible actions availabe to the securities regulator such as a warning to the investment advisor and a demand that the appropriate submission be made within a limited number of days, a fine of the investment advisor, the suspension of the investment advisor until the appropriate filing is made, and/or the revocation of the investment advisor’s registration.  At a minimum, an investment advisor should be aware that not filing the new Form ADV Part 2 by the required deadline may flag the investment advisor as lacking strong compliance controls and requiring heightened scrutiny by the securities regulator.  It is also important to note that the regulatory response will vary among the securities regulators.

What should your investment advisor do if it has a March 31 deadline and is not prepared to file the new Form ADV Part 2 by that date?  Obviously, you should use your best efforts in the next few days to prepare an accurate new Form ADV Part 2 and file it by March 31.  To the extent that your investment advisor prepared and filed the new Form ADV Part 2 without the assistance of a compliance profession, we recommend that you hire RIA Compliance Consultants to review and revise this already submitted new Form ADV Part 2. 

We will be available in April to start working on such projects, which will be handled on a first-in/first-out basis. While we still have availability to assist investment advisors in April, we do not anticipate this availability will last for very long. 

If you need assistance with preparing and filing your new Form ADV Part 2 or any other upcoming projects, please click here to access an online calendar to schedule a time for a senior compliance consultant to contact you to discuss your needs. You can also contact us directly at 877-345-4034 extension 109 or extension 110.

Posted by Bryan Hill
Labels: ADV Part 2