An investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) is required to file an amendment to the investment adviser’s Form ADV at least annually within 90-days of the investment adviser’s fiscal year end. Most state securities regulators have similar rules requiring the Form ADV annual amendment filing. Many registered investment advisers have a fiscal year end of December 31, which means that a Form ADV annual amendment will need to be filed through the IARD system no later than March 30, 2013, in order to comply with SEC and state securities regulators’ requirements. Failure to amend an investment adviser’s Form ADV is a violation of SEC and similar state securities regulations and could lead to an investment adviser’s registration being revoked.
According to the general instructions of the Form ADV, “…When you submit your annual updating amendment, you must update all your responses to all items, including corresponding sections of Schedules A, B, C, and D. You must submit your summary of material changes required by Item 2 of Part 2A either in the brochure (cover page or the page immediately thereafter) or as an exhibit to your brochure.” Although the entire Form ADV should be reviewed and updated on an annual basis, certain items may require more frequent updates. The Form ADV general instructions provide details regarding which Form ADV items are only required to be updated on an annual basis, which items require updates “promptly” if the information “becomes inaccurate in any way”, and which items require updates “promptly” if the information “becomes materially inaccurate.” Investment advisers must be diligent and thorough when preparing and completing the Form ADV annual amendment. Below are a few examples of common mistakes frequently seen by RIA Compliance Consultants related to Form ADV annual amendment filings made by investment advisers:
- The investment adviser does not file the annual amendment because the investment adviser forgets, is not aware that it is required to make an annual filing, or believes that no amendments need to be made and, therefore, an annual amendment filing is not required
- The investment adviser does not review the entire Form ADV for consistency between the Form ADV Part 1 and Form ADV Part 2 or other advisory documents
- The investment adviser does not properly calculate regulatory assets under management, estimates regulatory assets under management, or includes non-advisory assets in the regulatory assets under management calculation
- The investment adviser does not maintain supporting documentation for the numbers reported in the Form ADV (i.e., assets under management, number of clients, number of discretionary vs. non-discretionary accounts)
For more information on preparing and filing your registered investment adviser’s Form ADV annual amendment, register to attend our upcoming webinar, “Preparing Your Form ADV Annual Amendment,” that will be presented by RIA Compliance Consultants on January 10, 2013, at 12:00pm CST. The registration fee for this webinar is $69.95. During this webinar, RIA Compliance Consultants will discuss the items that must be updated as part of an investment adviser’s Form ADV Part 1 Annual Amendment. In addition, we will review common mistakes made by registered investment advisers when preparing the Form ADV Part 1 Annual Amendment. To register for this event, click here.
RIA Compliance Consultants can assist you with preparing and filing your Form ADV annual amendment. If you would like to discuss our Form ADV Annual Amendment services further, contact your consultant if you are an existing client or click here to schedule a time to speak to one of our consultants.
Posted by Bryan Hill
Labels: Annual Amendment, Form ADV, Webinar