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Red Oak Blog

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Saturday, August 27 2016

SEC Amendments to Form ADV

The Securities and Exchange Commission (“SEC”) is adopting amendments to Form ADV that are designed to provide additional information regarding advisers, including information about their separately managed account business, incorporate a method for private fund adviser entities operating a single advisory business to register using a single Form ADV, and make clarifying, technical and other amendments to certain Form ADV items and instructions.

Separately Managed Accounts

The SEC currently gathers detailed information about pooled investment vehicles (registered investment companies, business development companies and pooled investment vehicles that are not registered – including, but not limited to private funds) but little specific information about separately managed accounts.  The additional information collected would help enhance SEC staff’s ability to effectively carry out risk-based examination programs and other risk assessment and monitoring activities.

Specifically, Item 5 of Part 1A and Section 5 of Schedule D would require additional information about types of assets held, and the use of derivatives and borrowings in the accounts.  In Section 5K(1) of Schedule D, advisers will report approximate percentage of separately managed account regulatory assets under management that are invested in twelve broad asset categories.  This is intended to provide a better understanding of assets held in separately managed accounts managed by investment advisers of different sizes.

Private Fund Adviser Entities

Guidance has also been issued for more efficient methods for the registration on one Form ADV of multiple private fund adviser entities operating a single advisory business (“umbrella registration”).  While umbrella registration is not required, uniform filing requirements for umbrella registration in Form ADV will provide more consistent data about, and create a clearer picture of, groups of private fund advisers that operate as a single business.

Clarifying, Technical and Other Amendments to Form ADV

The SEC is adopting several amendments to Form ADV that are designed to clarify the form and its instructions.  These amendments should make the filing process clearer and more efficient for advisers and increase the reliability and consistency of information provided by investment advisers.  This more reliable and consistent information will improve SEC Staff’s ability to interpret, understand and place in context the information provided by advisers by improving comparisons across investment advisers and improve the risk assessment and examination program.  Many of these amendments are derived from questions frequently received by SEC staff.

This blog is intended to be a very general overview – more detailed and additional information is available through SEC Release No. IA-4509; File No. S7-09-15.