Form ADV is the key disclosure document that investment advisers must file with the U.S. Securities and Exchange Commission (SEC) and state securities regulators. It contains information about the investment adviser's business, including ownership, clients, employees, business practices, and any disciplinary history. The form is used to register with the SEC and state securities regulators, and is also used to update registration information.
The March 31st deadline for many investment advisers to file their annual Form ADV amendment with the SEC is fast approaching. This means that advisers must update any changes to their business since their last filing, including changes to their ownership structure, clients, employees, and business practices.
If an investment adviser fails to file their Form ADV amendment by the deadline, they may face enforcement action by the SEC or state securities regulators. This could result in fines, suspension of registration, or revocation of registration.
Following the collapse of Silicon Valley Bank (SVB) and Signature Bank (Signature), an investigation was launched by the Securities and Exchange Commission (SEC) into potential violations of the Custody Rule. The Custody Rule requires registered investment advisers to take certain steps to safeguard client assets.
The investigation highlights the importance of compliance with the Custody Rule. Non-compliance puts the security of client assets at risk, which can result in significant financial loss for clients and damage to an adviser's reputation.
As a reminder, each registered investment adviser must file an annual updating amendment to its Form ADV within 90 days of its fiscal year end. This means that advisers must update their Form ADV within 90 days of the end of their fiscal year, even if there have been no changes to their business since their last filing.
The SEC recently proposed a new rule and rule amendments that, if adopted as proposed, would require investment advisers to provide more information about their use of derivatives and other complex financial instruments. The proposed rule would also require advisers to implement new risk management programs and policies.
The proposed rule is part of the SEC's ongoing effort to improve transparency and reduce risk in the financial markets. The SEC is seeking public comment on the proposed rule, and it is expected to be finalized in the coming months.
If you are a financial professional and wish to work as an investment adviser to help individual investors manage their assets, you must register with the SEC or state securities regulators. This requires filing Form ADV and complying with a variety of other rules and regulations.
The November 4, 2022, deadline for advisers to implement amended Rule 206(4)-1 (Marketing Rule) and related rules under the Investment Advisers Act of 1940 is also fast approaching. The Marketing Rule requires advisers to make certain disclosures and prohibits certain types of advertising and marketing practices.
Advisers should review their marketing materials and make any necessary changes to ensure compliance with the amended Marketing Rule. Failure to comply with the rule could result in enforcement action by the SEC or state securities regulators.
In conclusion, investment advisers must ensure that they are in compliance with Form ADV filing requirements, the Custody Rule, and other rules and regulations. Failure to comply can result in significant financial and reputational harm. Advisers should review their compliance programs regularly and make any necessary changes to ensure ongoing compliance. Citizens Private Client can help advisers craft a personalized financial plan to meet their clients' needs and comply with regulatory requirements.
