AdvisersSEC

FYI: Information Update on Form ADV

FYI: The SEC Division of Investment Management issued an IM Information Update addressing glitches that could occur with the significant ADV form amendments coming into effect on October 1, 2017. You may recall that, as a result of amendments adopted last year, extensive new information is required to be reported on Form ADV by all advisers filing ADV amendments on or after the compliance date of October 1. This new information includes, for example, information about an adviser’s separately managed accounts and related information correlated to the end of the adviser’s last fiscal year.
However, if an adviser determines that it must file an other-than-annual ADV amendment AFTER the October 1 compliance date but BEFORE its next annual amendment is due, the adviser faces a potential problem. It may not have the data necessary to complete the new form fields because its internal systems may not have captured the historical or prior fiscal year information that was previously not required to be reported. At the same time, the adviser may not be able to submit the other-than-annual amendment without the new information being filled in because the IARD system will not accept filings with incomplete responses.
In those circumstances, the SEC Staff has indicated that it will not recommend enforcement to the Commission if, during that interim period, an adviser files an other-than-annual amendment with “0” as a placeholder in those new or amended fields calling for data the adviser does not have. Advisers taking that approach must also add a note in the Miscellaneous section of Schedule D to identify that a placeholder value of “0” was entered.
While this approach will avoid a potential glitch for advisers filing other-than-annual amendments between the compliance date of October 1, 2017, and the date their next annual ADV amendment is due, it won’t relieve any adviser from having to gather and report the extensive new information in their next ANNUAL ADV amendment after the compliance date, which for many advisers will be due in the first quarter of 2018.
IM Information Update: https://www.sec.gov/divisions/investment/imannouncements/im-info-2017-06.pdf.
Redline of Form ADV Part 1, showing the extensive changes and new information being required after the compliance date of October 1, 2017: https://www.sec.gov/rules/final/2016/ia-4509-form-adv-summary-of-changes.pdf.
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