Attention State Registered Investment Advisors - Deadline to Post Form ADV Part II on IARD
In a previous blog this month, RIA Compliance Consultants, Inc., told you about the IARD/Web CRD’s new functionality allowing registered investment advisors to post their Form ADV Part II online. According to an e-mail sent from the California Securities Regulation Division, any amendments to Form ADV Part II after April 24 should now be posted directly on the IARD system. All California registered investment advisors must post their current Form ADV Part II directly with IARD within 60 days after April 24. The Virginia Division of Securities and Retail Franchising also issued an e-mail, dated April 26, 2007, requiring state registered firms to post their Form ADV Part II online as well.
In the time since our original blog on this topic, the Florida Office of Financial Regulation issued a letter dated May 23, 2007. According to the letter, all registered investment advisors in Florida must eventually submit the Form ADV Part II online and are strongly encouraged to transition their existing Form ADV part II onto the IARD system within sixty days of May 23.
The Massachusetts Securities Division has also issued a deadline for state registered investment advisors to submit Part II online. According to a May 21, 2007 press release, state registered investment advisors have until September 1 to submit their Part II on IARD. However, all amendments to Part II made before September 1 must be filed through IARD.
Also, the Texas State Securities Board and the Office of the Kansas Securities Commissioner are now requiring all new registered investment advisor applicants to submit Form ADV Part II through IARD, and current registered firms may submit Part II at their convenience.
If your investment advisor firm is registered at the state level, you should be on the lookout for notices or e-mails requiring you to submit the Form ADV Part II through IARD. If your registered investment advisor firm is located in California, Florida, Massachusetts, Virginia, Texas, Kansas or another state that already requires the posting of Part II on IARD, give us a call. For a low fixed fee of $97.50, RIA Compliance Consultants, Inc., will ensure your Part II is posted online by the appropriate deadline in a format that meets all required standards. In addition to ensuring your Form ADV Part II is posted in the proper manner, your investment advisor firm can also retain us under a separate engagement to conduct a thorough review of your entire Form ADV and provide your firm with an objective review of the document. Not only is the Form ADV an application document, it also serves as the disclosure document that must be provided to all clients. A well-written Form ADV should not only provide clients with a description of all advisory services and fees, but it should also be used to protect registered investment advisors. The Form ADV is the primary document to disclose conflicts of interest, material considerations, business arrangements, and all background information regarding the investment advisor firm and its associates.
In the time since our original blog on this topic, the Florida Office of Financial Regulation issued a letter dated May 23, 2007. According to the letter, all registered investment advisors in Florida must eventually submit the Form ADV Part II online and are strongly encouraged to transition their existing Form ADV part II onto the IARD system within sixty days of May 23.
The Massachusetts Securities Division has also issued a deadline for state registered investment advisors to submit Part II online. According to a May 21, 2007 press release, state registered investment advisors have until September 1 to submit their Part II on IARD. However, all amendments to Part II made before September 1 must be filed through IARD.
Also, the Texas State Securities Board and the Office of the Kansas Securities Commissioner are now requiring all new registered investment advisor applicants to submit Form ADV Part II through IARD, and current registered firms may submit Part II at their convenience.
If your investment advisor firm is registered at the state level, you should be on the lookout for notices or e-mails requiring you to submit the Form ADV Part II through IARD. If your registered investment advisor firm is located in California, Florida, Massachusetts, Virginia, Texas, Kansas or another state that already requires the posting of Part II on IARD, give us a call. For a low fixed fee of $97.50, RIA Compliance Consultants, Inc., will ensure your Part II is posted online by the appropriate deadline in a format that meets all required standards. In addition to ensuring your Form ADV Part II is posted in the proper manner, your investment advisor firm can also retain us under a separate engagement to conduct a thorough review of your entire Form ADV and provide your firm with an objective review of the document. Not only is the Form ADV an application document, it also serves as the disclosure document that must be provided to all clients. A well-written Form ADV should not only provide clients with a description of all advisory services and fees, but it should also be used to protect registered investment advisors. The Form ADV is the primary document to disclose conflicts of interest, material considerations, business arrangements, and all background information regarding the investment advisor firm and its associates.
posted by bhill at 11:34 AM
IARD Form ADV Part II Functionality Goes Live for Registered Investment Advisors
With IARD/Web CRD Release 9.0, the NASD implemented several changes that went into effect on April 23, 2007. The most significant of these changes is the ability for registered investment advisor firms to post their Form ADV Part II online. This new update has not received the widespread media coverage that the release of the new Form ADV Part II will certainly see, but its implementation is significant. With the new functionality, the general public is now able to view registered investment advisor firm disclosure brochures through the Investment Adviser Public Disclosure site (www.adviserinfo.sec.gov).
In response to the NASD's release, the U.S. Securities & Exchange Commission's official position is that posting the Form ADV Part II is neither encouraged nor discouraged. In other words, at this time SEC registered investment advisor firms can certainly post their Form ADV Part II online, but a mandatory deadline has not been set. On the other hand, at least two states have mandated the use of this functionality. According to an e-mail sent from the California Securities Regulation Division, any amendments to Form ADV Part II after April 24 should now be posted directly on the IARD system. All California registered investment advisor firms must post their current Form ADV Part II directly with IARD within 60 days after April 24. The Virginia Division of Securities and Retail Franchising also issued an e-mail, dated April 26, 2007, requiring state registered firms to post their Form ADV Part II online as well.
If your investment advisor firm is registered at the state level, be on the lookout for notices or e-mails requiring you to submit the Form ADV Part II through IARD. Also, stay tuned to our website as we will continue to post updates to this new requirement when they become available. If you are registered with a state that requires the posting of Part II on IARD, give us a call to find out how we can assist your investment advisor firm in complying with the new rule. In addition to ensuring your Form ADV Part II is posted in the proper manner, we also can conduct a thorough review of your entire Form ADV and provide your investment advisor firm with an objective review of the document.
In response to the NASD's release, the U.S. Securities & Exchange Commission's official position is that posting the Form ADV Part II is neither encouraged nor discouraged. In other words, at this time SEC registered investment advisor firms can certainly post their Form ADV Part II online, but a mandatory deadline has not been set. On the other hand, at least two states have mandated the use of this functionality. According to an e-mail sent from the California Securities Regulation Division, any amendments to Form ADV Part II after April 24 should now be posted directly on the IARD system. All California registered investment advisor firms must post their current Form ADV Part II directly with IARD within 60 days after April 24. The Virginia Division of Securities and Retail Franchising also issued an e-mail, dated April 26, 2007, requiring state registered firms to post their Form ADV Part II online as well.
If your investment advisor firm is registered at the state level, be on the lookout for notices or e-mails requiring you to submit the Form ADV Part II through IARD. Also, stay tuned to our website as we will continue to post updates to this new requirement when they become available. If you are registered with a state that requires the posting of Part II on IARD, give us a call to find out how we can assist your investment advisor firm in complying with the new rule. In addition to ensuring your Form ADV Part II is posted in the proper manner, we also can conduct a thorough review of your entire Form ADV and provide your investment advisor firm with an objective review of the document.
posted by bhill at 2:20 PM
Legislation Proposes Required Hedge Funds to Register as an Investment Advisor
Investment News is reporting that U.S. Senator Charles Grassley, the ranking Republican on the Senate Finance Committee, has introduced legislation that would require hedge fund managers to register as an investment advisor with the U.S. Securities and Exchange Commission.
Labels: Hedge Funds
posted by bhill at 8:45 AM
Broker/Dealer Exemption Rule Vacated
In a 2-1 decision issued at the end of March, the U.S. Court of Appeals for the District of Columbia Circuit threw out what is commonly referred to as the Merrill Lynch Rule, formally known as Rule 202(a)(11)-1 of the Investment Advisers Act of 1940. Under this rule, the SEC exempted certain broker-dealers from investment advisor registration even if the broker-dealers provide what many contend to be advisory services and charge a fee for such services. From its inception, the Financial Planning Association fought the rule and ultimately received a successful outcome with last week's ruling. In the ruling, Judge Judith Rogers and Judge Brett Kavanaugh noted that the SEC exceeded its authority by exempting brokerage firms that charge asset-based fees from registration under the Advisers Act.
While RIA Compliance Consultants, Inc. agrees with the ruling, we do not think this will have much of an effect on our current clients, who are already registered as investment advisors. This ruling will affect broker-dealers that have been relying on the rule to avoid investment advisor registration. It should be noted that the rule remains in effect until the D.C. court's decision is final, which should occur on May 21, 2007, unless the SEC requests a rehearing. If your firm is interested to learn about the steps necessary to become registered as an investment advisor, please contact us and ask for Jarrod James, Senior Compliance Consultant. RCC offers a comprehensive turnkey approach to investment advisor registration at competitive prices. We also invite you to check out the Registration Services and FAQ – IA Registration pages of our website.
While RIA Compliance Consultants, Inc. agrees with the ruling, we do not think this will have much of an effect on our current clients, who are already registered as investment advisors. This ruling will affect broker-dealers that have been relying on the rule to avoid investment advisor registration. It should be noted that the rule remains in effect until the D.C. court's decision is final, which should occur on May 21, 2007, unless the SEC requests a rehearing. If your firm is interested to learn about the steps necessary to become registered as an investment advisor, please contact us and ask for Jarrod James, Senior Compliance Consultant. RCC offers a comprehensive turnkey approach to investment advisor registration at competitive prices. We also invite you to check out the Registration Services and FAQ – IA Registration pages of our website.
Labels: Registration, SEC
posted by bhill at 2:34 PM
Annual Amendment Filings
Did your firm file its Form ADV Part 1 Annual Amendment by March 30? If your registered investment advisor firm's fiscal year end was December 31, the answer to this question should be a definite yes. If your investment advisor firm has not yet completed the Annual Amendment, give us a call today so we can help you complete this important requirement. It is important to note some investment advisor firms make the mistake of filing an "other than Annual Amendment filing" when attempting to fulfill this duty. In order to meet the SEC's requirement, an "Annual Amendment" must be filed within 90 days after a firm's fiscal year end. If your investment advisor firm missed the 90 day deadline, the filing should be made as soon as possible.
The requirement to file an Annual Amendment is not limited solely to SEC registered firms. The far majority of state regulatory agencies require state registered investment advisors to also file an Annual Amendment. In addition, most states require a Form ADV Part II and Schedule amendment and, when required, updated financial statements showing proof of compliance with the state's minimum net worth/net capital requirements.
Again, hopefully everyone reading this notice has completed these important requirements, but if your investment advisor firm has not, please give us a call so we make sure your firm is in full compliance in order to avoid possible disciplinary action.
The requirement to file an Annual Amendment is not limited solely to SEC registered firms. The far majority of state regulatory agencies require state registered investment advisors to also file an Annual Amendment. In addition, most states require a Form ADV Part II and Schedule amendment and, when required, updated financial statements showing proof of compliance with the state's minimum net worth/net capital requirements.
Again, hopefully everyone reading this notice has completed these important requirements, but if your investment advisor firm has not, please give us a call so we make sure your firm is in full compliance in order to avoid possible disciplinary action.
Labels: Form ADV
posted by bhill at 2:29 PM
First Quarter 2007 Personal Securities Transactions
RIA Compliance Consultants, Inc. would like to remind all SEC registered advisor firms of their obligation to collect and review first quarter personal securities transactions. These reports should have been officially collected by the end of April. If your investment advisor firm has not collected its reports, please make sure you do so as soon as possible. Quarterly transaction reports must be submitted no later than 30 days after the end of each calendar quarter. According to the SEC's Investment Adviser Codes of Ethics rule, specifically Rule 204A-1(b)(2), a federally registered investment advisor's code of ethics must require access persons to submit to the chief compliance officer, or other persons designated in the code of ethics, quarterly securities transaction reports that meet the following requirements:
(i) Content of transaction reports. Each transaction report must contain, at a minimum, the following information about each transaction involving a reportable security in which the access person had, or as a result of the transaction acquired, any direct or indirect beneficial ownership:
(A) The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and principal amount of each reportable security involved;
(B) The nature of the transaction ( i.e. , purchase, sale or any other type of acquisition or disposition);
(C) The price of the security at which the transaction was effected;
(D) The name of the broker, dealer or bank with or through which the transaction was effected; and
(E) The date the access person submits the report.
It is important for investment advisor firms to not only collect these reports, but to also establish a system of reviewing and documenting the reviews of all reports. In particular, the review of personal securities transactions should attempt to detect instances or patterns of when the interests of the firm or its associated persons, including investment advisor reps, are placed ahead of the interests of the clients. Most states also require investment advisor firms to maintain, as part of their books and records, a record of every transaction within a personal account. Most states require the transaction to be reported within 10 days after the end of the calendar quarter in which the transaction occurred. State firms must also implement policies restricting insider trading. If you have questions or concerns about your registered investment advisor firm's requirements to monitor and review personal securities transactions such as what securities are considered reportable securities under the rule, who should review personal securities, and who should be deemed an access person, please consider calling our investment advisor compliance firm to see how we can answer these questions and many more.
(i) Content of transaction reports. Each transaction report must contain, at a minimum, the following information about each transaction involving a reportable security in which the access person had, or as a result of the transaction acquired, any direct or indirect beneficial ownership:
(A) The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and principal amount of each reportable security involved;
(B) The nature of the transaction ( i.e. , purchase, sale or any other type of acquisition or disposition);
(C) The price of the security at which the transaction was effected;
(D) The name of the broker, dealer or bank with or through which the transaction was effected; and
(E) The date the access person submits the report.
It is important for investment advisor firms to not only collect these reports, but to also establish a system of reviewing and documenting the reviews of all reports. In particular, the review of personal securities transactions should attempt to detect instances or patterns of when the interests of the firm or its associated persons, including investment advisor reps, are placed ahead of the interests of the clients. Most states also require investment advisor firms to maintain, as part of their books and records, a record of every transaction within a personal account. Most states require the transaction to be reported within 10 days after the end of the calendar quarter in which the transaction occurred. State firms must also implement policies restricting insider trading. If you have questions or concerns about your registered investment advisor firm's requirements to monitor and review personal securities transactions such as what securities are considered reportable securities under the rule, who should review personal securities, and who should be deemed an access person, please consider calling our investment advisor compliance firm to see how we can answer these questions and many more.
Labels: Compliance Program, PST
posted by bhill at 2:22 PM
