The Securities and Exchange Commission has adopted amendments to Form ADV, the primary disclosure document filed by registered investment advisers, that significantly expand the information advisers must provide to regulators and clients. The amendments reflect the SEC’s continued focus on enhancing transparency around adviser practices, particularly in areas such as separately managed accounts, the use of social media, and the structure of advisory fee arrangements.
New Separately Managed Account Disclosures
Advisers managing separately managed accounts must now disclose substantially more information about the types of assets held in those accounts, the use of derivatives and borrowings, and the identity of custodians holding ten percent or more of the adviser’s regulatory assets under management. The SEC’s intent is to give investors and regulators greater visibility into portfolio-level risk in accounts that have historically received less regulatory scrutiny than pooled investment vehicles.
Other Significant Changes
The amendments also require advisers to disclose whether they or their related persons have more than $10 billion in regulatory assets under management, which office locations serve as the principal office and place of business, and any social media platforms used for business purposes. The amended form requires advisers to identify their Chief Compliance Officer and confirm whether that individual is compensated by a third party.
Investment advisers should review the amended form requirements and update their compliance programs accordingly. Snow+Snow’s investment management practice can assist with Form ADV preparation, compliance program design, and SEC examination preparation.
