The SEC adopted changes to the Form ADV in an effort to modernize and enhance the disclosure requirements. These changes will go into effect October 1, 2017. The SEC anticipates that the amended form will fill data gaps and improve risk monitoring initiatives. In addition to the detailed reporting requirements with respect to separately managed accounts (those advisory accounts that are not pooled investment vehicles) and umbrella registration, several notable amendments include:
With respect to SMAs, advisors are asked to report the approximate percentage of their SMA assets invested in twelve broad asset categories. However, the SEC declined to provide definitions of these terms and instead permits investment advisers to use their own methodologies in determining appropriate asset categories.
Advisers with at least $500 million in regulatory assets under management attributable to SMAs must report information in connection with their use of borrowing and derivatives in such SMAs.
Umbrella registration is not applicable to exempt reporting advisers, including those relying on the private fund adviser exemption.
Advisers are required to disclose their presence on specific publicly available social media platforms.
If an adviser uses a chief compliance officer that is compensated or employed by any person other than the adviser or its related person the adviser is required to provide that person’s name and specific information regarding the chief compliance officer’s employer.
The new form will apply to all investment advisers: those registered with the state, the Securities and Exchange Commission, and exempt reporting advisors. In addition to investment advisers filing their initial Form ADV, those filing an annual amendment or other-than-annual amendment will be required to use the revised form.
Also on October 1, 2017, new recordkeeping requirements go into effect that require advisers to maintain additional written materials related to the calculation and distribution of performance information.