SEC’s Response to COVID-19 – Changes Conditions for Utilizing the 45-Day Extension for Filing/Delivering Form ADV

March 27, 2020

Due to the further disruptions facing investment adviser firms related to COVID-19, the U.S. Securities and Exchange Commission (SEC) modified its original order of March 13, 2020 (“Original Order”), which provided an investment adviser firm registered with the SEC or an exempt reporting adviser (“ERA”) a 45-day extension to file the Form ADV Annual Amendment or Form PF and deliver the Form ADV Part 2A (or summary of material changes) to existing investment advisory clients if certain conditions were met by the investment adviser firm.  (Please see our previous blog entry for more details about the SEC’s initial Response to COVID-19 and the conditions for an investment adviser to obtain relief.)

Under the Original Order, the 45-day extension for filing the Form ADV Annual Amendment and Form PF or delivering the Form ADV Part 2A to investment advisory clients applied to deadlines from March 13 to April 30, 2020.  However, the SEC modified this Original Order on March 25, 2020 (“Modified Order”) so the 45-day extension applied to any original deadline which is due during the period of March 13 through June 30, 2020.  Please understand that the SEC’s Modified Order does not change the requirement that the Form ADV Annual Amendment, Form PF and Form ADV Part 2A be filed/delivered within 45 days of the original due date.

Relief Conditions

In order to obtain this 45-day filing/delivery extension, the SEC set out in the Original Order several conditions that must be met by the investment adviser firm.  The SEC subsequently eliminated the following two conditions in the Modified Order:  (i) the investment adviser firm should explain in its email correspondence to SEC staff and on its website why the investment adviser firm is unable to meet a filing deadline or delivery requirement and (ii) the investment adviser firm should provide an estimated date of filing or delivery completion.  The SEC now requires only the following conditions be met by an investment adviser which is relying upon the Modified Order:

(a) The registered investment adviser or exempt reporting adviser is unable to meet a filing deadline or delivery requirement due to circumstances related to current or potential effects of COVID-19;

(b) The investment adviser relying on this Order with respect to the filing of Form ADV or delivery of its brochure, summary of material changes, or brochure supplement required by Rule 204-3(b)(2) or (b)(4), promptly notifies the Commission staff via email at IARDLive@sec.gov and discloses on its public website (or if it does not have a public website, promptly notifies its clients and/or private fund investors) that it is relying on this Order.

 (c) Any investment adviser relying on this order with respect to filing Form PF required by Rule 204(b)-1 must promptly notify the Commission staff via email at FormPF@sec.gov stating that it is relying on this Order. 

(d) The investment adviser files the Form ADV or Form PF, as applicable, and delivers the brochure (or summary of material changes) and brochure supplement required by Rule 204-3(b)(2) and (b)(4) under the Advisers Act, as soon as practicable, but not later than 45 days after the original due date for filing or delivery, as applicable. 

Additional Scrutiny?

In response to concerns that even an investment adviser firm which is legitimately utilizing the 45-day extension will be scrutinized by the SEC as to whether its business continuity plan was inadequate, the Office of Compliance, Inspections and Examinations (“OCIE”) of the SEC provided the assurances that reliance upon this regulatory relief would not be a risk factor in determining whether to commence an examination of an investment adviser firm registered with the SEC.  See https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued

Please remember that the SEC’s Original Order and Modified Order described above does not apply to state registered investment advisers.  For details about Form ADV filing/delivering due date extensions by a state securities regulator, please refer to the COVID-19 Updates webpage of North American Securities Administrators Association (“NASAA”) at https://www.nasaa.org/industry-resources/covid-19-updates/ which links to regulatory relief by state securities regulators.

RIA Compliance Consultants Can Help

RIA Compliance Consultants recently hosted a webinar, Compliance Tips for COVID-19. During this webinar we discussed compliance tips and the SEC’s Response to COVID-19. This webinar’s slides are available on our website at https://www.ria-compliance-consultants.com/wp-content/uploads/2020/03/Compliance-Tips-for-COVID-19.Webinar.03.25.2020-4849-0107-5640-Copy.pdf .

Should your investment adviser firm have questions about the SEC’s Response to COVID-19 or needs assistance with compliance issues related to COVID-19 RIA Compliance Consultants is here to help. Existing clients of RIA Compliance Consultants are encouraged to reach out to their assigned Compliance Consulting Teams. If you are not an existing client click here to schedule an introductory phone call.

Posted by Grant Parr
Labels: Annual Amendment, COVID-19, SEC