In July, the U.S. Securities & Exchange Commission (“SEC”) announced much-anticipated revisions to Form ADV Part 2 (the “Disclosure Brochure”), requiring investment advisers to provide clients and prospective clients with narrative, “Plain English” disclosures of the adviser’s business practices, investment strategies, conflicts of interest, and other information. More detail on the specifics of the amendments to Form ADV Part 2 is available in the August 2010 Core Compliance Risk Management Update, available here.
Although these changes were expected for SEC registrants, what was not initially clear was whether, and to what extent, the individual states would adopt the amended form. Despite early indications that the California Department of Corporations (the state agency charged with registering and regulating investment advisers doing business in California ) would continue to accept the old “check-the-box” version of Form ADV Part II, the DOC recently announced that it has determined to adopt the new Part 2, effective October 12, 2010.
As for compliance dates, the DOC has indicated that between October 12, 2010, and January 1, 2011, new applicants and currently licensed advisers filing amendments to their Form ADV may use either the current Part II or the new Part 2. However, beginning January 1, 2011, all new investment adviser applicants will be required to complete and file the new Part 2 of Form ADV as part of their application and all existing registrants will need to incorporate the new Part 2 with any subsequent filing of an amendment to Form ADV, including the annual amendment.
For questions or to inquire as to how Core Compliance may be of assistance in making the transition to the new Form ADV Part 2, contact us at (619) 278-0020 to schedule your consultation.