Under Rule 204-3 of the Investment Advisers Act of 1940, the U.S. Securities and Exchange Commission (“SEC”) requires registered investment advisers (“investment adviser”) to deliver to each client, annually within 120 days after the end of the investment adviser’s fiscal year and without charge, if there are material changes to the investment adviser’s brochure since the investment adviser’s last annual updating amendment:
(1) a current copy of the investment adviser’s disclosure brochure (Form ADV Part 2A or if a wrap-fee client, Form ADV Part 2A Appendix 1); or
(2) a summary of material changes to the investment adviser’s disclosure brochure with an offer to provide a current copy of the disclosure brochure upon request. The offer to provide a current copy of the disclosure brochure must include the investment adviser’s website address (if available), an e-mail address (if available), a telephone number by which a client may obtain the current disclosure brochure from the investment adviser, and must include the Investment Adviser Public Disclosure (IAPD) website address (http://www.adviserinfo.sec.gov/) and identify the IAPD website address as an address for obtaining information about the investment adviser.
SEC registered investment advisers with a fiscal year end of December 31 must make the delivery by April 30. Many state regulations have the same requirements as the SEC but a state registered investment adviser must review its state regulations for disclosure brochure delivery requirements.
SEC investment advisers that have not made any material changes to their disclosure brochure since the last time they provided, or offered to provide, each client with a copy of the disclosure brochure may elect not to make an annually delivery of the disclosure brochure. However, it is important to remember that each year investment advisers are required to update the amount of assets under management reported at Item 4 of the Form ADV Part 2A Disclosure Brochure and to update any information that is outdated or otherwise inaccurate. Additionally, material changes made to the disclosure brochure must be summarized in Item 2.
Also, under the requirements of Regulation S-P, investment advisers are required to annually provide clients with a copy of the investment adviser’s privacy policy. Therefore, we recommend that investment adviser’s satisfy both the ADV Part 2 and the privacy policy delivery requirements at the same time.
Posted by Bryan Hill
Labels: ADV Part 2, Privacy, SEC
