Episode 9: Major Compliance Deadlines in 2018 - Second Quarter

There are some major deadlines approaching for investment advisers as we near the end of the first quarter and look ahead to Q2. Tune in to hear about some of the big ones to be aware of, and how to prepare so you don't miss the filing due dates.

Transcript: 

Jennifer: 

This is the CCO Buzz, and I'm Jennifer Greene, the marketing strategist here at Core Compliance and Legal Services. With me this week is Adam Stutz, one of our compliance consultants, and this week we'll be discussing some of the major deadlines to be aware of as we've reach the end of the first quarter and look forward to Q2. 

Adam, there's a huge deadline coming up for advisers whose fiscal year ended December 31st of last year, right? 

Adam: 

Yes, Form ADV Annual Amendments are due. It's a huge focus for us here at Core Compliance℠ right now, as we help most of our clients prepare for them. The new updates required mean that preparing the form is taking longer than usual this year, so anyone who hasn't started their Form ADV yet should definitely be placing a focus on that right now. 

Jennifer: 

A lot of people are focusing on just Part 1, as that had the form updates that became mandatory in October last year, but is there anything else related to Form ADV that advisers should be thinking about or updating? 

Adam: 

Well, in addition to Form ADV Part 1, any changes they make to part 1 will also need to be reflected in part 2. The brochure is just as important as the form, and as soon as Part 1 is completed, firms really need to turn their attention to part 2. 

Jennifer: 

Does part 2 have a different deadline than part 1? 

Adam: 

No, it doesn't. 

Jennifer: 

Oh, okay, so are there any other Form ADV related deadlines that investment advisers should be aware of? 

Adam: 

For advisers whose fiscal year ended on December 31st, 2017, they'll need to distribute that updated Form ADV Part 2A by April 30th, which is 120 days after the fiscal year end. 

The Form PF annual amendment also needs to be submitted within 120 days of fiscal year end. That applies to private fund advisers that manage more than $150 million in regulatory assets under management, but are not large hedge fund advisers or large liquidity fund advisers. 

Jennifer: 

Ah, okay, so then moving right along, May has a few deadlines too, right? 

Adam: 

Yes, the Form 13F quarterly filing for Q1 of 2018 is due within 45 days of the end of the calendar quarter. 

ERISA 408 (b) (2) disclosures are also required to be provided to ERISA clients. Covered Service Providers, or CSPs, have ongoing disclosure obligations as outlined in the DOL's fact sheet about the section rule. The two disclosure obligations are: 

1 - Changes to initial information as soon as practicable, but no later than 60 days from when the CSP is informed.

2 - Changes to investment related information which requires disclosures at least annually. 

The other disclosure obligation is reporting and disclosure requirements. Service providers must disclose compensation or other information related to their service arrangements at the request of the responsible plan fidicuciary or plan administrator. This needs to be disclosed reasonably in advance of the date upon which such person states they must comply with ERISA's reporting and disclosure requirements. 

Jennifer: 

ERISA sounds complicated. If someone is unsure of what they should disclose, when to disclose it, or how to properly disclose it, what do you suggest they do? 

Adam: 

Review the DOL rule, or reach out to their compliance consultant to get more information. 

Jennifer: 

And that's the case for any of these filing requirements, right? Because they can be complex and how they apply or when file them can be confusing, it's always a good idea to talk to an experienced third-party consultant so they can review your documents and filings for accuracy and completeness. 

Adam: 

Exactly, and that's why in June, we generally recommend that investment advisers perform their yearly risk assessments. 

Annual reviews and risk assessments are important components of a compliance program in that they help identify where to deploy compliance resources, as well as pinpoint those policies and procedures which require updating and refinement. 

Many firms are about to file their Form ADV annual amendments now, in March, and by the time June or July rolls around, they're not thinking about Form ADV anymore. There's other-than-annual amendments that may still need to be filed for material changes, and an annual review is often one of the ways that gaps in Form ADV updates are found. 

Jennifer: 

Wait, so even if a firm just filed their annual amendment on March 31st, they might still need to file another amendment again as soon as June? 

Adam: 

That's correct, Form ADV needs to be a very up to date document, and for any material changes, an amendment needs to be filed as soon as reasonably possible. 

Jennifer: 

What counts as a material change? 

Adam: 

This could include any updates in address, changes in ownership, changes in business structure, and disclosable events. 

Jennifer: 

From what I've heard Michelle, our CEO, talk about, if a firm is updating their website, chances are, they need to look at their Form ADV again, right? 

Adam: 

Yes. 

Jennifer: 

Okay, so then, material changes like that can be caught in an annual review? 

Adam: 

Yep, the review looks for changes, but it's generally more focused on your overall compliance program, such as your plans and procedures manual, disclosures, and everything involved in the compliance space. Having a comprehensive and thorough compliance program is a lot more than just the filings that are required, and that's really what we specialize in here at Core Compliance℠.

Jennifer: 

A comprehensive compliance program - sounds difficult to set up and maintain. 

Adam: 

It doesn't have to be. Here, at least, we really work with our clients through the entire process, so we set them up with a program that's customized to their firm's specific needs. 

Jennifer: 

And that's especially ideal for things like setting up a program to make sure firms don't miss the deadlines we talked about in this podcast? A good compliance should set the firm up for success.

Adam: 

Yes, exactly. There's multiple ways that can be implemented, but what's important is to find a methodology that works best for the firm. 

Jennifer: 

Good point. Thank you, Adam, for joining me for this week's podcast. If anyone has any questions or would like to learn more, I invite them to give us a call at 619.278.0020 or email us at info@corecls.com 

contact core compliance