Document ID: SEC-2011-0004-0001
Agency: sec
Document Type: Rule
Title: Amendments to Form ADV; Extension of Compliance Date
Posted Date: 2011-01-04T05:00Z

[Federal Register Volume 76, Number 2 (Tuesday, January 4, 2011)]
[Rules and Regulations]
[Pages 255-256]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33142]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 275 and 279

[Release No. IA-3129; File No. S7-10-00]
RIN 3235-AI17

Amendments To Form ADV; Extension of Compliance Date

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; extension of compliance date.

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SUMMARY: The Securities and Exchange Commission is extending the 
compliance date for Part 2B of Form ADV, the brochure supplement, and 
for certain rule provisions that relate to the delivery of brochure 
supplements. The Commission is extending the compliance date generally 
for four months to provide certain investment advisers additional time 
to design, test and implement systems and controls to satisfy their 
obligations to prepare and deliver brochure supplements.

DATES: The effective date for amendments to Part 2 of Form ADV and 
related rules under the Advisers Act remains October 12, 2010. The 
compliance date for Form ADV, Part 2B and the provisions of rule 204-3 
concerning the delivery of brochure supplements is extended generally 
for four months as described in the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Vivien Liu, Senior Counsel, or Daniel 
Kahl, Branch Chief, at (202) 551-6787 or IArules@sec.gov, Office of 
Investment Adviser Regulation, Division of Investment Management, U.S. 
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-8549.

SUPPLEMENTARY INFORMATION: On July 28, 2010, the Commission adopted 
amendments to Part 2 of Form ADV [17 CFR 279.1], and related rules 
under the Investment Advisers Act of 1940 [15 U.S.C. 80b] (``Advisers 
Act''),\1\ to require registered investment advisers to provide clients 
with a brochure and brochure supplements written in plain English 
(``Adopting Release'').\2\ The brochure contains information about the 
advisory firm, whereas the brochure supplement contains information 
about the advisory personnel on whom clients rely for investment 
advice.
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    \1\ See e.g., rule 204-3 [17 CFR 275.204-3], which requires 
registered advisers to deliver brochures and brochure supplements.
    \2\ Amendments to Form ADV, Investment Advisers Act Rel. No. 
3060 (July 28, 2010) [75 FR 49234 (Aug. 12, 2010)].
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    When we adopted amendments to Form ADV last July, we established 
two separate compliance dates for delivering brochure supplements. New 
investment adviser registrants, i.e., those that apply for registration 
on or after January 1, 2011, would begin providing brochure supplements 
to clients upon registering. Existing investment adviser registrants 
would provide brochure supplements to new and prospective clients upon 
filing their annual updating amendment to

[[Page 256]]

Form ADV for fiscal year ends beginning on December 31, 2010, and to 
existing clients within 60 days of filing the annual updating 
amendment. Most registered advisers have fiscal years ending on 
December 31 and must, as a result, file an annual updating amendment by 
March 31, 2011.\3\ Absent an extension of the compliance date, these 
advisers would be required to deliver their first brochure supplements 
to new and prospective clients no later than March 31, 2011 and to 
existing clients no later than May 31, 2011.
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    \3\ Based on Investment Adviser Registration Depository data as 
of December 1, 2010, 92% of SEC-registered investment advisers 
report a December fiscal year end.
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    We have received correspondence from the Securities Industry and 
Financial Markets Association (``SIFMA''), requesting that we delay the 
compliance date for at least an additional four months, until July 31, 
2011, solely with respect to requirements regarding delivery of the 
brochure supplement.\4\ SIFMA asserts that preparing and disseminating 
brochures with respect to thousands of supervised persons to tens of 
thousands of clients presents its members with substantial logistical 
challenges in meeting the compliance date. It asserts that its members 
need additional time to design, test and implement systems and controls 
that will assure that each client receives an accurate brochure 
supplement with respect to the supervised person who provides advice to 
that client.
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    \4\ Memorandum from Morgan Lewis on behalf of certain SIFMA 
member firms dated Dec. 16, 2010 available at http://www.sec.gov/rules/proposed/s71000.shtml.
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    Based on the concerns expressed in the correspondence, and in light 
of similar concerns that have been expressed by other investment 
advisers to our staff, we are persuaded that a limited extension of the 
compliance date for the delivery of brochure supplements for existing 
registered advisers is appropriate.\5\ We have based this decision on 
the information SIFMA has provided and our experience in overseeing the 
industry. In addition, to provide consistent treatment for newly 
registering advisers, we are also persuaded that the limited extension 
of the compliance date for the delivery of brochure supplements is 
appropriate for these advisers as well. We are not extending the 
compliance date for the filing and delivery of the brochure required by 
Part 2A of Form ADV and related rules under the Advisers Act, which is 
required for newly registering investment advisers beginning on January 
1, 2011, and for existing registered advisers when they file their 
annual updating amendments for fiscal years ending on and after 
December 31, 2010.
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    \5\ The North American Securities Administrators Association has 
recommended that the State securities authorities provide the same 
extension for State-registered investment advisers. However, State-
registered advisers should contact the States where they are 
registered to confirm compliance dates.
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    Accordingly, the Commission believes it is appropriate to modify 
and extend the compliance date for brochure supplements for the 
following investment advisers: \6\
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    \6\ Advisers may choose to deliver brochure supplements earlier 
than the dates outlined in this release.
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    Existing Registered Investment Advisers. All investment advisers 
registered with the Commission as of December 31, 2010, and having a 
fiscal year ending on December 31, 2010 through April 30, 2011, have 
until July 31, 2011, to begin delivering brochure supplements to new 
and prospective clients. These advisers have until September 30, 2011 
to deliver brochure supplements to existing clients. The compliance 
dates for delivering brochure supplements for existing registered 
investment advisers with fiscal years ending after April 30, 2011 
remain unchanged.
    Newly-registered Investment Advisers. All newly registered 
investment advisers filing their applications for registration from 
January 1, 2011 through April 30, 2011, have until May 1, 2011 to begin 
delivering brochure supplements to new and prospective clients. These 
advisers have until July 1, 2011 to deliver brochure supplements to 
existing clients. The compliance dates for delivering brochure 
supplements for newly-registered investment advisers filing 
applications for registration after April 30, 2011 remain unchanged.
    The Commission finds that, for good cause and the reasons cited 
above, including the brief length of the extension we are granting, 
notice and solicitation of comment regarding the extension of the 
compliance date for Part 2B of Form ADV and the provisions of rule 204-
3 that relate to the delivery of brochure supplements are 
impracticable, unnecessary, or contrary to the public interest.\7\ In 
this regard, the Commission also notes that investment advisers need to 
be informed as soon as possible of the extension and its length in 
order to plan and adjust their implementation process accordingly.
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    \7\ See Section 553(b)(3)(B) of the Administrative Procedure Act 
(5 U.S.C. 553(b)(3)(B)) (``APA'') (an agency may dispense with prior 
notice and comment when it finds, for good cause, that notice and 
comment are ``impracticable, unnecessary, or contrary to the public 
interest''). This finding also satisfies the requirements of 5 
U.S.C. 808(2), allowing the rules to become effective 
notwithstanding the requirement of 5 U.S.C. 801 (if a Federal agency 
finds that notice and public comment are ``impractical, unnecessary 
or contrary to the public interest,'' a rule ``shall take effect at 
such time as the Federal agency promulgating the rule determines''). 
Also, because the Regulatory Flexibility Act (5 U.S.C. 601-612) only 
requires agencies to prepare analyses when the Administrative 
Procedures Act requires general notice of rulemaking, that Act does 
not apply to the actions that we are taking in this release. The 
change to the compliance date is effective upon publication in the 
Federal Register. This date is less than 30 days after publication 
in the Federal Register, in accordance with the APA, which allows 
effectiveness in less than 30 days after publication for ``a 
substantive rule which grants or recognizes an exemption or relieves 
a restriction.'' See 5 U.S.C. 553(d)(1).

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    Dated: December 28, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-33142 Filed 1-3-11; 8:45 am]
BILLING CODE 8011-01-P