Happy New Year! With the new year comes important annual and new filing requirements that are necessary to keep your firm compliant with applicable regulations. With this in mind, we are providing you with a summary of filing deadlines and other important annual compliance program reminders.
IARD Final Renewal Statement
Your Final Renewal Statement has been posted on the IARD system. This statement reflects any adjustments made by the Financial Industry Regulatory Authority (“FINRA”) resulting from registration approvals or terminations subsequent to the posting of the Preliminary Renewal Statement in November 2014. You can retrieve your final statement on or after January 2, 2015, by logging on to your Investment Adviser Registration Depository (“IARD”) account and selecting the Renewal Statement link from the Accounting section of the site map.
If your final statement reflects an amount due, the payment must be received by FINRA and posted to your Renewal Account no later than January 16, 2015. If you pay by check, you should allow adequate time for U.S. mail delivery and payment processing. If there is a credit reflected on your final statement, the monies were deposited by FINRA to your firm’s Flex Funding Account as part of their year-end renewal processing.
SEC and State Registered Adviser Filing In accordance with both the Securities and Exchange Commission (“SEC”) and state regulations, registered investment advisers must file an annual amendment to Form ADV within 90 days of their fiscal year-end. Advisers with a fiscal year-end of December 31, 2014, must file an amendment to Form ADV between January 1, 2015, and March 31, 2015.
|Document Type||Filing Due Date*|
|Form ADV Part 1 Annual Update||March 31, 2015|
|Form ADV Part 2A Update (and Appendix 1, if applicable)||March 31, 2015|
Please Note: Form ADV Part 2B only needs to be updated, if information becomes materially inaccurate.
Client Disclosure Brochure – Form ADV Part 2
As you are reviewing your disclosure information in Form ADV Part 2A as part of the annual update, you should be sure to note any changes to your business and compensation arrangements, including any conflicts of interest that may not be included. Please keep in mind that any information that becomes materially inaccurate during the year needs to be amended promptly (i.e., within 30 days), with a summary of the material changes delivered to your clients, along with a copy of the updated Form ADV Part 2A, or an offer to deliver the updated brochure.
Client Annual Delivery Requirements:
Both SEC and State registered investment advisers must provide current clients with a summary of the material changes (Item 2 of Form ADV Part 2A), along with either a copy of the updated Form ADV Part 2A or an offer to deliver the full brochure. For advisers with a fiscal yearend of December 31, this information must be delivered to current clients no later than April 30, 2015 (120 days after fiscal yearend).
While Form ADV Part 2B is not required to be updated annually (only upon material changes), advisers should review their Form ADV Part 2B(s) at least annually to determine if any updates are necessary. State registered advisers must file all updates to Form ADV Part 2B on the IARD system. SEC registered advisers are only required to maintain copies and no filing is required. When material amendments are made, both SEC and state-registered advisers must promptly provide copies to current clients.
Exempt Reporting Advisers
All advisers to private funds that filed as an Exempt Reporting Adviser (“ERA”) with the SEC or state must file an annual amendment within 90 days of their fiscal yearend. An ERA with a fiscal year-end of December 31, 2014, must file an amendment to their Form ADV Part 1 between January 1, 2015, and March 31, 2015.
Filing Fees for Annual ADV Amendments
The 2015 filing fees assessed by the IARD system to advisers for their annual amendments are noted below. Please note that no fee is required for an “other than annual amendment” filing.
|Assets Under Management||Annual Fee|
|State Exempt Reporting Adviser||$0|
|SEC Registrant Under $25 Million||$40|
|SEC Registrant $25 Million – $100 Million||$150|
|SEC Registrant Over $100 Million||$225|
|SEC Exempt Reporting Adviser||$150|
Before submitting your ADV filing, please remember to deposit the requisite fee amount in your firm’s IARD Flex Funding Account to cover all associated filing costs. Instructions may be found here.
Core Compliance is happy to assist with updating and submitting, or reviewing your drafts of the completed Form ADV. It is important to get an early start on required amendments to ensure deadlines are met, so please contact Core Compliance at (619) 278-0020 at your earliest convenience for assistance or questions.
Privacy Notice – Annual Delivery and Update
As a reminder, your firm’s Privacy Notice must be delivered to your clients no less than annually (i.e., within 12 months from the last annual delivery). If you have not already done so, evaluate whether your firm should consider using the SEC’s Model Privacy Form. For more information, please review Co’s Risk Management Update on “Federal and State Regulations Governing Investment Adviser Privacy Safeguards” by clicking here.
SAA Annual Certification
During the first quarter of each year, FINRA designates a 30-day period during which Super Account Administrators (“SAAs”) of organizations with more than one user must certify their users’ access to comply with FINRA’s Entitlement User Accounts Certification Process. This certification process requires the person assigned as the SAA to review their firm’s IARD user accounts to ensure that:
- each user (called a “sub-administrator”) has a continuing need to access application(s) provided by FINRA;
- sub-administrators only have the application privileges they need to perform current job responsibilities; and
- only the sub-administrators who require access to sensitive data (e.g., criminal history record information, Social Security or tax identification numbers, dates of birth) have access to this type of data.
Please note for 2015, FINRA will be sending an email to the SAA of each registered firm during January that will contain instructions and the deadline for performing the certification.
Continuing Evaluation of Compliance Controls
The upsurge in regulatory oversight, new data, and analytical tools available to regulators, and heightened scrutiny of the financial services industry by state and federal regulators in 2014, are demanding more time and resources of compliance professionals to keep pace with the never-ending regulatory environment. Overseeing and advancing a firm’s compliance program is a continuous process that demands the critical attention of compliance personnel and senior management.
To assist firms with their continuing evaluation of compliance controls, Core Compliance published a Risk Management Update in October 2014 that focused on areas that should be reviewed by compliance professionals and senior management. Please review the “Compliance End-of-the-Year Checklist Update 2014” by clicking here.
Regulatory Exams Focus
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) was very busy in 2014 with several examination initiatives pertaining to investment advisers, broker-dealers, hedge funds, private equity firms, municipal advisers, and other SEC-regulated firms. There were a number of unprecedented enforcement cases brought by the SEC in 2014, so it’s important for firms to be prepared.
Both Core Compliance and our sister company, Jacko Law Group, PC, perform mock regulatory exams for clients, along with mock interviews with senior management. This process not only helps the firm and its employees prepare for the inevitable but allows firms to identify and correct any compliance gaps before the regulators come in. Take time to consider your plan of action should the SEC decide to perform an audit and how we can help you prepare.
Compliance Monitoring With Technology
In October 2011 the SEC announced its “Compliance Program Initiative”, which was implemented in an effort to ensure that effective compliance programs are in place at advisory firms. Since that time, the SEC has brought six enforcement actions against firms and their CCOs for having inadequate programs and not correcting previously noted compliance deficiencies.
Ensuring a strong compliance program is a continuous process that demands the full time and attention of compliance personnel. Using technology can provide a cost-effective tool that assists with monitoring and maintaining a reasonably designed compliance program.
Global Investment Performance Standards (“GIPS”)
As of January 1, 2015, firms claiming compliance with the GIPS Standards must notify the CFA Institute. Firms will have until June 30, 2015, to submit a notification to comply. Please click here for further information.
Core Compliance is Here to Help throughout 2015! For more information about how we can customize outsourced compliance consultation solutions for you, please contact us at (619) 278-0020 to schedule a consultation.