October 1, 2017 is the compliance date for the Form ADV amendments and the books and records rule amendments which were adopted in August 2016.
Form ADV Filings
Investment advisers who file an initial registration or make any amendments to Form ADV on or after October 1, 2017 will be required to complete the revised Form ADV in its entirety. The revised Form ADV includes some clarifying and technical amendments, but also includes more substantive changes in particular areas such as:
- Separately managed accounts;
- The adviser’s identifying information, advisory business, and affiliations, including information about the adviser’s social media pages and branch offices;
- Outsourced Chief Compliance Officers; and
- Umbrella registration.
Advisers should be prepared to include the additional information on all Form ADV filings after September 30, 2017.
Advisers should also note that, last month, the SEC’s Division of Investment Management issued an Information Update clarifying the process for advisers that need to file an other-than-annual amendment after October 1, 2017 but do not have all of the data necessary to respond to all of the new questions on Form ADV (e.g., information as of the adviser’s fiscal year end), specifically in Item 5 or Schedule D. The guidance provides that, during the period between October 1, 2017 and the adviser’s next annual amendment, the adviser may use “0” as a placeholder for any unavailable information.
Furthermore, as noted in the no-action letter issued to the Investment Adviser Association on February 21, 2017, beginning with the next annual updating amendment after October 1, 2017, advisers must include in their responses to Item 9 of Form ADV, client assets that are subject to a standing letter of authorization which cause the adviser to be deemed to have custody of the assets.
Books and Records
In addition to the new Form ADV, there are also changes to the required books and records that advisers must keep. The books and records rule amendments will apply to any communications circulated or distributed after October 1, 2017. Specifically:
- If an adviser circulates or distributes any communication with performance information, directly or indirectly, to any person, the adviser must maintain materials listed in Rule 204-2(a)(16) that demonstrate the calculation of the performance or rate of return.
- Advisers must maintain original communications received and copies of written communications sent by the adviser relating to the performance or rate of return of any or all managed accounts or securities recommendations.
Advisers not already capturing this information should develop policies and procedures to ensure retention of this information after September 30, 2017. Advisers should also review and update their compliance manuals and any required books and records lists, matrices, charts, and other compliance documents to ensure that they accurately reflect the new requirements in effect on October 1, 2017.
For More Information
ACA will reach out to its clients to begin working on the Form ADV updates later this year for all firms with a December year end who must file in March 2018. If you are required to file at any time prior to March 2018, please contact your ACA consultant or ACA Partner Damon Zappacosta at (212) 951-1030 with any questions.