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On May 20, 2015, the SEC issued proposed amendments to Form ADV and the Investment Advisers Act rules. In the release, the SEC proposed amendments to Form ADV that would require advisers to disclose additional information, such as information about separately managed account business, and allow private fund adviser entities operating a single advisory business to file one Form ADV. The release also contains proposed amendments to the Advisers Act books and records rule.
Form ADV was originally designed for use by an investment adviser that is a single legal entity. Private fund advisers, however, are frequently organized using multiple legal entities. The proposed amendments would permit “umbrella registration” of multiple private fund adviser entities operating a single advisory business on a single Form ADV. This has been happening informally under SEC guidance but with this change the form will embody common practice. Umbrella registration would be available for advisers that meet the following conditions, which constitute “indicia of a single advisory business”:
Changes to Form ADV
If the rules proposed in the release are adopted without revision, private fund managers would be required to collect and report a great deal of new information. Following are some of the key new data they would have to track going forward:
Proposed Amendments to Investment Advisers Act Books and Records Rule (Rule 204-2)
The SEC has also proposed that advisers retain additional records related to reporting of performance claims, namely:
In general, the SEC’s proposed rules, if adopted unchanged, will not be a significant burden to most investment advisers. The provisions related to umbrella registration, will in fact be helpful.
Read more articles by Alexander Davie at Strictly Business, a business law blog for entrepreneurs, emerging companies, and the investment management industry.
© 2015 Alexander J. Davie — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
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