With hundreds (thousands?) of private fund managers set
to register with the Securities and Exchange Commission next quarter, the new
form ADV is on the IARD system and
ready for you to start uploading information.
I noticed the first problem.
Question 5 asks you to "determine your regulatory assets
under management based on the current market value of the assets as determined
within 90 days prior to the date of filing this Form ADV." I expect most
private fund managers to wait until the filing deadline in the middle of
February. That means third quarter valuations, presumably accurate as of
September 30, will be older than 90 days. For private equity firms with very
illiquid assets like interests in real estate and private companies, they are
unlikely to have valuations as of December 31 finalized by the middle of
February. Even if they do have final valuations, they probably have not yet
disclosed the final valuations to the investors in their funds.
With a normal end of March annual filing deadline for
Form ADV, this is less likely to be a problem. But initial registrants need to
file 45 days ahead of that deadline to meet the SEC's 45 approval period.
Perhaps I'm missing something, but I'm wondering if
anyone else has thought about this issue and how they are handling it. One
option is to use the third quarter valuations and be worried about getting a
negative SEC response. Another is to get valuations finalized and disclosed
earlier than usual.
I'd appreciate any of your thoughts on this. You can
leave a comment or send an email to firstname.lastname@example.org.
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"One option is to use the third quarter valuations and be worried about getting a negative SEC response. Another is to get valuations finalized and disclosed earlier than usual."
I'm thinking that door number two is the most circumspect by way of appearance. The first option could cause a lot of questions to be raised.