On March 5, 2021, the U.S. Securities and Exchange Commission (“SEC”) added three new questions and answers to its website page with Frequently Asked Questions (“FAQs”) on the Form CRS/Form ADV Part 3 for SEC registered investment adviser serving retail investors. The first new Q&A addresses situations in which an investment adviser or broker dealer with a Form CRS/Form ADV Part 3 filing obligation is dually registered or affiliated with a firm that does not have a Form ADV Part 3/Form CRS filing obligation. The second and third Q&A clarify when and how an SEC-registered investment adviser or broker dealer must file and disseminate the Form ADV Part 3/Form CRS (also referred to as a “relationship summary”) if material and/or nonmaterial changes have occurred.
Is an Individual Serving as the Chief Compliance Officer (“CCO”) of an Investment Advisor Firm Registered with the U.S. Securities and Exchange Commission (“SEC”) Required to be Registered with a State Securities Regulator as an Investment Adviser Representative?
November 30, 2012
Assuming an individual serving as the chief compliance officer of an SEC registered investment advisor firm does not regularly solicit, meet or otherwise communicate with investment advisory clients, the Investment Advisers Act of 1940 (“Investment Advisers Act”) and SEC do not specifically require such an individual to be registered as an investment adviser representative. (Please see SEC Rule 203A-3 for additional details.) However, the individual serving as the CCO of an SEC registered investment advisor must be a supervised person of the investment advisor firm. Under the Investment Advisers Act, an SEC registered investment advisor firm is required to appointment a CCO to administer the investment advisor firm’s required compliance policies and procedures. The CCO is typically responsible for overseeing ongoing compliance and provides a resource for giving guidance and answering questions of its supervised persons. The individual serving as the CCO should have a good understanding of applicable investment advisory rules and regulations, and the investment advisor firm should grant the CCO with sufficient authority to enforce the investment advisor firm’s compliance policies and procedures. Although the SEC may not specifically require the CCO of a federally registered investment advisor firm to register as an investment adviser representative, certain state securities regulators may take a contrary interpretation. Consequently, it is recommended that an SEC registered investment advisor firm also review the investment advisory rules of the state securities regulator where the CCO is located. Likewise, a state registered investment advisor firm should consult its state’s investment advisory rules for more information whether an individual serving as the CCO of a state registered investment advisor is required to register with the state securities regulator as an investment adviser representative.