Source: http://securitiesandinvestmentblog.blogspot.com/2010/07/sec-approves-amendments-to-form-adv.html
Timestamp: 2017-11-18 02:51:16
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SECURITIES AND INVESTMENT BLOG-COSGROVE LAW GROUP, LLC: SEC APPROVES AMENDMENTS TO FORM ADV, PART 2 TO ENHANCE DISCLOSURE REQUIREMENTS FOR INVESTMENT ADVISERS
SEC APPROVES AMENDMENTS TO FORM ADV, PART 2 TO ENHANCE DISCLOSURE REQUIREMENTS FOR INVESTMENT ADVISERS
On July 21, 2010, the SEC unanimously approved amendments to Form ADV, Part 2, the disclosure document investment advisers are required to provide to clients. ADV Part 2 is a detailed document, explaining investment advisers’ qualifications, investment strategies and business practices.
For more than 30 years, the SEC has required registered investment advisers to deliver this written disclosure statement to clients. In 2000, the SEC proposed a complete overhaul of Form ADV. However, the overhaul did not result in a change to Part 2. Accordingly, in 2008, the SEC proposed additional amendments to ADV Part 2, which they finally approved on July 21st.
SEC Chairman Mary L. Schapiro commented that “[i]n its current form, [ADV Part 2] requires advisers to respond to a series of multiple-choice and fill-in-the-blank questions organized in a ‘check-the-box’ format. But, the format frequently does not correspond well to an adviser's business. And, in some cases, the required disclosure may not describe the adviser's business or conflicts in a way that is truly accessible to the investor.”
The new amendments will require investment advisers to provide a narrative that is “well-suited to serve investors’ needs.” The narrative will include the investment advisers’ conflicts, compensation, business activities and disciplinary history. The amendments will further require that ADV Form 2 be available electronically through the SEC website, thereby providing investors with greater and more easily attainable access to investment adviser disclosures.
Chairman Schapiro expressed the utmost confidence in the new amendments at a recent SEC open meeting, stating that the new changes “will allow clients ready access to information about advisers of a wholly different character and quality than is available under the current regime. It will enable investors to better evaluate their current advisers, or comparison shop for a new adviser that best serves an investor's needs.” Chairman Schapiro even went so far as to predict that the new disclosure requirements “may result in advisers modifying business practices and compensation policies which might pose conflicts, in ways that better serve the interests of clients.”
The amended rules will be effective 60 days after publication in the Federal Register, and investment advisers should begin distributing and publicly posting new ADV Form 2 disclosure in early 2011.
Our attorneys have experience with investment adviser and broker state registration matters, including annual and as-need ADV updates and reviews. If you or your company has concerns about the new amendments to ADV Part 2, please do not hesitate to contact us.
A copy of the SEC press release detailing the ADV Part 2 amendments is available here.
Posted by Richard D. Worth at 5:22 PM
Labels: ADV, Investment Advisor, SEC