SEC to Consider Final Amendments to Form ADV Part 2 in December 2008 - Start Preparing by Joining Our Free Webinar on Thursday, November 19, 2008
As we have previously discussed, the SEC originally proposed material changes to the disclosure and format requirements of the Form ADV Part 2 for a registered investment adviser in April 2000. That proposal was never adopted and in March of this year the issue was re-proposed. If the SEC adopts the proposed new Form ADV Part 2 in whole or part, it undoubtedly will take a significant amount of effort by a registered investment adviser over relatively short time period to meet the proposed requirements. However, a registered investment adviser can begin preparing for this possible regulatory change by taking the time now to more fully understand the likely changes and impact of a new Form ADV Part 2. RIA Compliance Consultants encourages registered investment advisor firms to read the proposed rule, particularly the new Form ADV Part 2 instructions. You can view the proposed rule by clicking here. The proposed instructions begin on page 123.
Take the opportunity to better understand the details of the SEC's proposed new Form ADV Part 2 by attending our complimentary webinar, Understanding the SEC's Proposed New Form ADV Part 2, on Wednesday, November 19, 2008 from 12:00 p.m. to 1:00 p.m. CST. Please click on the link below if would you like to attend this free webinar. For more information about this webinar, you may also call Annie Dilocker at 877-345-4034.
Labels: ADV Part 2
posted by bhill at 4:37 PM
New Form ADV Part 2 Proposed Rule
Labels: ADV Part 2, SEC
posted by bhill at 10:15 AM
Proposed New Form ADV Part 2 – Table of Contents and Index Required
According to the proposed new Form ADV Part 2 rule, registered investment advisors will be required to insert a table of contents at the beginning of their brochures and an index at the end of their brochures.
In the proposing rule releaseoffered earlier this year for consideration by the U.S. Securities and Exchange Commission ("SEC"), the SEC stated that registered investment advisors need to provide a table of contents detailed enough to provide clients and prospective clients the ability to locate topics easily. However, the SEC has not settled on whether or not it will require a specific format for the table of contents. In the proposed rule, the SEC appears to be leaning towards allowing investment advisors the ability to develop their own format and method for the table of contents. The reason to allow registered investment advisors the ability to adopt their own table of contents format is that there is a wide variety of registered investment advisors and it may be impractical to develop a uniform method. On the other hand, there are those within the industry that believe a uniform method would allow clients and potential clients to more easily compare multiple investment advisors. A uniform method is used for the current Form ADV Part II and Schedule F.
In addition to a table of contents, brochures filed with regulators through the Investment Adviser Registration Depository (IARD) will be required to include an index of the items required by the new Form ADV Part 2 instructions. The index must indicate where in the brochure the registered investment advisor addresses each item. The index is intended to help facilitate reviews by regulators to ensure requirements of the new Part 2A are met. Registered investment advisors will not be required to insert the index into brochures that are provided to clients and prospective clients.
As with every other item in the proposing rule release, the requirement to include a table of contents and index is open to further discussion. Therefore, registered investment advisors will not know for sure if they must include a table of contents and/or index until the final rule is released. Stay tuned to RIA Compliance Consultants for more information and further updates regarding the new Form ADV Part 2.
If you are interested in engaging RIA Compliance Consultants for its Form ADV Part 2 drafting services, please call us today for a proposal and quote.
Labels: ADV Part 2, Form ADV
posted by bhill at 4:25 PM
Proposed New Form ADV Part 2A Will Require a “Material Changes” Page
Because the purpose of this requirement is to highlight changes made to prior brochures, registered investment advisors will not need to include a summary of material changes in the first versions of their brochures.
The SEC’s intention with a Material Changes page is for registered investment advisors to provide clients and prospective clients with a summary of any and all material changes to the registered investment advisor’s brochure since the last annual update. The SEC believes that this requirement will help clients identify information that has changed since the prior year’s brochure, especially changes that may be important to clients.
As with all items in the proposing rule release, the requirement to include a summary of material changes has not been finalized and is still under consideration. Therefore, registered investment advisors will not know for sure if they must include a summary of material changes until the final rule is released. Stay tuned to RIA Compliance Consultants for more information and further updates regarding the new Form ADV Part 2. If you are interested in engaging RIA Compliance Consultants for its Form ADV Part 2 drafting services, please call us today for a proposal and quote.
Labels: ADV Part 2, Form ADV
posted by bhill at 4:23 PM
Proposed New Form ADV Part 2 Must Be Delivered to All Clients on Annual Basis
Currently, the U.S. Securities and Exchange Commission ("SEC ") and state registered investment advisors must offer their disclosure brochures to all clients at least annually. This annual offer requirement is typically provided along with other annual disclosures made by a registered investment advisor or is made by delivering an annual offer letter. Registered investment advisors are not required currently to provide a complete copy of the disclosure brochure as long as they inform all clients that the current disclosure brochure is available upon request. If a client requests a copy of the current disclosure brochure, the registered investment advisor must ensure the client receives a copy not later than seven days after the request is made.
Assuming the new Form ADV Part 2 rule is approved by the SEC as proposed, simply offering the disclosure brochure will not be sufficient. According to the proposed amendments, registered investment advisors will be required to deliver their current disclosure brochure to all existing clients at least once each year no later than 120 days after the end of the registered investment advisor’s fiscal year. Thus, clients would receive an updated disclosure brochure about the same time each year (identifying changes from the previous year’s disclosure brochure) shortly after the date by which registered investment advisors are already required to file their Form ADV Part 1 Annual Amendments.
The SEC is also proposing to require registered investment advisors to deliver an interim update to clients when the registered investment advisor amends its brochure to add a disciplinary event required to be disclosed under the Form ADV Part 2 instructions or to materially change information already disclosed for a disciplinary event. The SEC has stated that such circumstances warrant a formal delivery requirement because of the importance of disciplinary information to clients. According to the SEC, disciplinary information is more likely to reflect directly upon a registered investment advisor’s integrity and may affect a client’s trust and confidence in the registered investment advisor.
As with some of the other items in the proposing rule release, the requirement to annually deliver a complete copy of the brochure has generated some negative reaction and become fairly controversial. However, after reading many of the industry comment letters regarding the new Part 2 written to the SEC, RIA Compliance Consultants believes the annual delivery requirement will be included in the final rule. Stay tuned to RIA Compliance Consultants for more information and further updates regarding the new Form ADV Part 2. If you are interested in engaging RIA Compliance Consultants for its Form ADV Part 2 drafting services, please call us today for a proposal and quote.
Labels: ADV Part 2, Form ADV
posted by bhill at 4:15 PM
