Form ADV - Disclosure Reminders and Beyond

It’s that time of year again where registered investment advisers with a fiscal year end of December 31st must file their annual amendments to Form ADV. Investment Advisers have 90 days after their fiscal year end to make the filing, which allow them time to review the current version and make both required and appropriate updates based upon changes to their business.

For many advisers, Form ADV serves as the primary document used to disclose conflicts of interest and business practices. The instructions to Form ADV provide areas and topics that must be disclosed and updated by the adviser, and include important guidance on how to satisfy an adviser’s disclosure obligations. More specifically, Form ADV Part 2A, which is required to be delivered to clients in accordance with Rule 204-3 of the Investment Advisers Act of 1940 (the “Advisers Act”), consists of 18 items (19 for state registered advisers) that must be addressed in plain English format. Within those instructions, the SEC provides that an adviser must make full disclosure to clients of all material facts relating to the advisory relationship. To satisfy this obligation, an adviser may have to disclose information not specifically required by Part 2 of Form ADV or in more detail than the brochure items might otherwise require.

This month’s Risk Management Update (“RMU”) discusses additional disclosures not specifically addressed in the Form ADV instructions that investment advisers should consider when updating their Forms ADV. This RMU also provides a summary of some of the more salient changes to Form ADV that were proposed by the Securities and Exchange Commission (“SEC”) in May 2015 (the “Proposed Rule”), and includes tips to help firms ensure a smooth annual amendment process.

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